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Avocats, autres représentants, expert(s), secrétaire du tribunal

Award

List of abbreviations

ARS Argentine Peso
Bianchi IV Fourth Expert Report of Alberto B. Bianchi, dated 3 December 2018
BIT Agreement between the Republic of Austria and the Republic of Argentina for the Promotion and Protection of Investments, signed on 7 August 1992 and in force since 1 January 1995
Boldt Boldt S.A.
BPAS Banco de Préstamos y Asistencia Social
Cachi Valle Cachi Valle Aventuras S.A.
CAI Casinos Austria International GmbH
CAIH Casinos Austria International Holding GmbH
CAPEX Capital Expenditure
CASAG Casinos Austria Aktiengesellschaft
CCL Contado con Liquidación (Implied ARS-USD Exchange Rate)
CEMA I Expert Report of José P. Dapena, Germán Coloma, and Agustín Flah, dated 14 March 2016
Centre or ICSID International Centre for Settlement of Investment Disputes
Claimants’ Memorial on the Merits Claimants’ Memorial on the Merits, dated 2 October 2015
Claimants’ Post-Hearing Brief Claimants’ Post-Hearing Brief, dated 24 January 2020
Claimants’ Reply on the Merits Claimants’ Reply on the Merits, dated 3 December 2018
CMG Complejo Monumento Güemes S.A.
Dapena II Expert Report of José P. Dapena, dated 23 May 2019
DCF Discounted Cash Flow
DEK Dek S.A.
EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortisation
EMBI+ Emerging Markets Bond Index Plus
Emsenor Emsenor S.R.L.
ENJASA Entretenimientos y Juegos de Azar S.A.
ENREJA Ente Regulador del Juego de Azar
EV Enterprise Value
FATF Financial Action Task Force
García Pullés IV Fourth Legal Expert Opinion by Dr. Fernando García Pullés, dated 3 December 2018
ICJ International Court of Justice
Iberlux Iberlux International S.A.
ILC Articles International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts
L&E Leisure & Entertainment S.A.
Marcer I Expert Report of Ernesto Alberto Marcer, dated 14 March 2016
Marcer II Second Expert Report of Ernesto Alberto Marcer, dated 27 May 2019
NAFTA North American Free Trade Agreement
New Star New Star S.R.L.
OECD Organisation for Economic Co-operation and Development
Prodec Prodec S.A.
Respondent’s Counter-Memorial on the Merits Respondent’s Memorial on Objections to Jurisdiction and Counter-Memorial on the Merits, dated 15 March 2016
Respondent’s Post-Hearing Brief Respondent’s Post-Hearing Brief, dated 24 January 2020
Respondent’s Rejoinder on the Merits Respondent’s Rejoinder on the Merits, dated 27 May 2019
Rosen I Expert Report of Howard N. Rosen and Jennifer Vanderhart, FTI Consulting Inc., dated 2 October 2015
Rosen II Expert Report of Howard N. Rosen, dated 3 December 2018
Sigar Sigar S.A.
Transcript Transcript of the Hearing on the Merits
UNIREN Unidad de Revisión y Renegociación de Contratos y Licencias otorgadas por la Administración
UTE Unión Transitoria de Empresas
VCLT Vienna Convention on the Law of Treaties
Video Drome Video Drome S.A.
WACC Weighted Average Capital Cost
WS Witness Statement

 

 

I. Introduction

1.
The present dispute arises out of the revocation, in 2013, of an exclusive 30-year license granted in 1999 to the Argentine company Entretenimientos y Juegos de Azar S.A. ("ENJASA") for the operation of gaming facilities and lottery activities in the Argentine Province of Salta. ENJASA had been established by the Government of the Province of Salta as part of the process of privatizing the Province’s gaming and lottery sector and developing tourism in the region. Following a public tender and various changes in the ownership structure, ENJASA became majority owned and controlled by Claimants, Casinos Austria International GmbH ("CAI"), a limited liability company established under the laws of Austria, and Casinos Austria Aktiengesellschaft ("CASAG"), a share-company established under the laws of Austria (jointly "Casinos" or "Claimants"). Claimants are operators of casinos and games of chance in a number of jurisdictions all over the world. CAI is a subsidiary of CASAG and its international arm of gaming operations.1 Claimants held majority ownership and exercised control of ENJASA through Leisure & Entertainment S.A. ("L&E"), a stock corporation under Argentine law, in which Claimants were majority shareholders.
2.

Claimants contend that the revocation of ENJASA’s license, followed by the transfer of its gaming and lottery operations and personnel to a number of new gaming operators, was an arbitrary exercise of power of the Ente Regulador del Juego de Azar ("ENREJA"), the Province’s regulatory authority for the gaming sector, was politically motivated in order to benefit local gaming operators and to increase the Province’s revenue from gaming, and effectively destroyed Claimants’ investment in Argentina. Claimants invoke the violation of their rights as foreign investors under the Agreement between the Republic of Austria and the Republic of Argentina for the Promotion and Protection of Investments ("BIT"), which was signed on 7 August 1992 and entered into force on 1 January 1995,2 in particular their right not to be expropriated without compensation, to receive fair and equitable treatment, and to enjoy national treatment. They seek, as a result of this conduct, damages from the Argentine Republic ("Argentina" or "Respondent") in an amount exceeding USD 50 million.

3.
Respondent, by contrast, claims that the revocation of ENJASA's license was a legitimate sanction that was provided for by the regulatory framework in place in the Province of Salta, was imposed by ENREJA in observance of administrative due process, and was motivated by both ENJASA's repeated and prolonged non-compliance with rules to prevent money laundering in the gaming sector and the involvement by ENJASA of other operators of gaming activities in the Province without ENREJA's authorization. ENJASA's conduct, Respondent claims, constituted grave and repeated violations of the regulatory framework in place, which justified the revocation of its exclusive operating license. Respondent therefore rejects any claim for breach of the BIT.
4.

Following objections by Respondent to the Centre's jurisdictions and to the Tribunal's competence, the Tribunal determined, in its Decision on Jurisdiction of 29 June 2018, that the Centre had jurisdiction, and the Tribunal competence, under Article 25(1) of the ICSID Convention in connection with the BIT over Claimants' claims for breach of Article 2(1) (fair and equitable treatment) and Article 4(1)-(3) (rules on expropriation) of the BIT, but that it would not entertain claims for breach of Article 3(1) (national treatment) of the BIT. The Tribunal found in particular that Claimants had made, in the form of their indirect participation through L&E in ENJASA, an investment in Argentina in the sense of both the BIT and Article 25(1) of the ICSID Convention, and that the Parties had validly consented to the jurisdiction of the Centre under the BIT. By the present Award, the Tribunal decides on Claimants' claims on the merits, as far as the Tribunal has found them to be under its competence.

II. Procedural history

5.
On 4 December 2014, the International Centre for Settlement of Investment Disputes ("ICSID" or "Centre") received a request for arbitration from Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft against the Argentine Republic (the "Request").
6.
On 18 December 2014, the Secretary-General of ICSID registered the Request in accordance with Article 36 of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of the ICSID Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.
7.
By correspondence of 3 December 2014, 29 December 2014, 13 January 2015, and 15 January 2015, the Parties agreed that the Tribunal would be comprised of three arbitrators; one to be appointed by each Party and the third, presiding arbitrator, to be appointed by agreement of the Parties.
8.
By letter of 13 January 2015, Claimants appointed Prof. Dr. Stephan Schill, a national of Germany, as an arbitrator in this case. Prof. Schill accepted his appointment on 26 January 2015.
9.
By letter of 13 February 2015, Respondent appointed Dr. Santiago Torres Bernárdez, a national of Spain, as arbitrator in this case. Dr. Torres Bernárdez accepted his appointment on 23 February 2015.
10.
On 31 March 2015, Claimants informed the Secretary-General that the Parties had reached an agreement to appoint Prof. Dr. Hans van Houtte, a national of Belgium, as President of the Tribunal. Respondent confirmed the agreement on the same date. Prof. van Houtte accepted his appointment on 3 April 2015.
11.

On 6 April 2015, the Secretary-General, in accordance with Rule 6 of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted on that date. Ms. Giuliana Cane, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal. Following Ms. Cane’s departure from the Centre, on 15 January 2016, in accordance with ICSID Administrative and Financial Regulation 25, the Secretary-General appointed Ms. Alicia Martín Blanco, ICSID Legal Counsel, as Secretary of the Tribunal.

12.
In accordance with ICSID Arbitration Rules 13(1) and 20(1), the Tribunal held a first session and preliminary procedural consultation with the Parties on 5 June 2015 by teleconference.
13.
Following the first session, on 23 June 2015, the Tribunal issued Procedural Order No. 1 recording the agreements of the Parties and the Tribunal’s decisions on procedural matters. Procedural Order No. 1 provided, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006, that the procedural languages would be English and Spanish, and that the place of proceeding would be Paris, France. Procedural Order No. 1 also set out the schedule of the proceedings included as Annex A to that order.
14.
On 2 October 2015, Claimants submitted their Memorial on the Merits.
15.
On 11 February 2016, the Tribunal issued Procedural Order No. 2 on document production.
16.
On 15 March 2016, Respondent submitted her Memorial on Objections to Jurisdiction and Counter-Memorial on the Merits. It included a request to treat the objections to the jurisdiction of the Centre and/or the competence of the Tribunal as a preliminary matter.
17.
On 8 April 2016, Claimants presented observations in opposition to Respondent's request to bifurcate the proceeding.
18.
Having considered the Parties' observations, on 25 April 2016, the Tribunal issued Procedural Order No. 3 ruling that Respondent's objections would be heard as a preliminary question.
19.
On 26 July 2016, Claimants submitted their Counter-Memorial on Jurisdiction.
20.
On 11 October 2016, Respondent filed her Reply on Objections to Jurisdiction.
21.
On 23 December 2016, Claimants filed their Rejoinder on Jurisdiction.
22.
On 13 March 2017, the Tribunal issued Procedural Order No. 4 on the organization of the hearing on jurisdiction.
23.
A hearing on jurisdiction was held in Paris, France, from 23 to 25 March 2017.
24.
On 23 June 2017, the Parties submitted simultaneous Post-Hearing Briefs on jurisdiction.
25.

On 29 June 2018, the Tribunal issued its Decision on Jurisdiction. The operative part of the Decision provides as follows:

341. On the basis of the reasoning above, the Tribunal decides:

1) that it has jurisdiction over the present dispute insofar as Claimants' claims for breach of Articles 2(1) and 4(1)-(3) of the Argentina-Austria BIT are concerned;

2) that it has no jurisdiction over the present dispute insofar as claims for breach of Article3(1) of the Argentina-Austria BIT are concerned;

3) that both Parties will within two months as from the issuance of this Decision take all required measures to withdraw the domestic proceedings relating to the present dispute and inform the Tribunal of their actions;

4) that a decision on costs is reserved for subsequent determination.

26.
The Tribunal's Decision on Jurisdiction forms part of the Award and is attached hereto. A more detailed procedural history of the jurisdictional phase can be found in the Decision on Jurisdiction.
27.
On 29 August 2018, in accordance with the Tribunal's order in its Decision on Jurisdiction to take all required measures to withdraw the domestic proceedings relating to the present dispute, the Parties informed the Tribunal that they had filed their respective withdrawals.
28.
Following consultations with the Parties, an amended procedural calendar, including the hearing weeks, was approved by the Tribunal on 30 October 2018.
29.
In accordance with the amended procedural calendar, Claimants submitted their Reply on the Merits on 3 December 2018.
30.
Following a newly amended procedural calendar, on 27 May 2019, Respondent filed its Rejoinder on the Merits.
31.
On 9 July 2019, the Tribunal instructed the Parties to submit a timetable for the notification of the witnesses and experts to be examined at the hearing, the Parties' agreements on the organization of the hearing, the last opportunity to request leave to submit new documents for the purpose of direct or cross-examination, the submission of skeleton arguments and of a joint electronic hearing bundle, and the pre-hearing conference call.
32.
On 11 July 2019, the Parties notified the Tribunal of their agreed schedule regarding the steps prior to the hearing, and on 19 July 2019, the Parties submitted their respective lists of witnesses and experts called to testify at the hearing.
33.
On 5 August 2019, unable to reach an agreement regarding the agenda for the hearing on the merits, each Party sent their respective proposals.
34.
On 12 August 2019, each Party filed a request for the Tribunal to decide on the admissibility of new documents.
35.
On 13 August 2019, the President held a pre-hearing organizational meeting with the Parties by telephone conference. The following persons participated in the call:

Tribunal:

Prof. Dr. Hans van Houtte President

ICSID Secretariat:

Ms. Alicia Martín Blanco Secretary of the Tribunal

On behalf of Claimants:

Mr. Florian Haugeneder Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mr. Emmanuel Kaufman Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mrs. Selma Tiric Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mr. Nicolás Caffo Knoetzl Haugeneder Netal Rechtsanwälte GmbH

On behalf of Respondent:

Ms. María Teresa Gianelli Procuración del Tesoro de la Nación
Ms. María Alejandra Etchegorry Procuración del Tesoro de la Nación
Ms. Valeria Etchegorry Procuración del Tesoro de la Nación
Ms. Soledad Romero Caporale Procuración del Tesoro de la Nación
Mr. José Martín Ryb Procuración del Tesoro de la Nación

36.
On 16 August 2019, the Parties respectively filed their observations on the other Party's request to admit new documents.
37.
On 23 August 2019, the Tribunal issued Procedural Order No. 5 outlining the organization of the hearing on the merits, including a request for the Parties to indicate the reasons why Mr. Petersen (for Claimants) and Messrs. Marteau and Mata (for Respondent) would not be available to attend the hearing or otherwise provide oral testimony, and a request for Claimants to submit a document indicating the amounts of the fines paid compared to the results of each operational unit. The Tribunal also took note of the Parties' agreement not to submit skeleton arguments.
38.
By email of 27 August 2019, the Tribunal informed the Parties of its decision regarding the admissibility of new documents.
39.
On 27 August 2019, each Party informed the Tribunal of the reasons why Mr. Petersen (for Claimants) and Messrs. Marteau and Mata (for Respondent) would not be able to attend the hearing. On the same date, the Parties also submitted their joint schedule for the hearing and estimated witness and expert examination time.
40.
On 28 August 2019, as requested in Procedural Order No. 5, Claimants submitted a table indicating the amounts of the fines imposed on ENJASA compared to the results of ENJASA's operational units.
41.
On 29 August 2019, Claimants requested the Tribunal to reconsider its decision of 27 August 2019 to reject the evidence relating to Mr. Benvenuto's written statement. Respondent submitted a reply to Claimants’ letter on the same date. The Tribunal addressed this request during the hearing on the merits.
42.
The Tribunal held a hearing on the merits from 2 to 13 September 2019 in Paris. Present at the hearing were:

Tribunal:

Prof. Dr. Hans van Houtte President
Prof. Dr. Stephan W. Schill Co-Arbitrator
Dr. Santiago Torres Bernárdez Co-Arbitrator

ICSID Secretariat:

Ms. Alicia Martín Blanco Secretary of the Tribunal

On behalf of Claimants:

Counsel:

Mr. Florian Haugeneder Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mr. Emmanuel Kaufman Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mrs. Selma Tiric Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mr. Nicolás Caffo Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Mr. Peter Behyl Knoetzl Haugeneder Netal Rechtsanwälte GmbH
Ms. Julia Hildebrandt Knoetzl Haugeneder Netal Rechtsanwälte GmbH

Parties:

Mr. Christoph Zurucker-Burda Casinos Austria International
Ms. Claudia Dotter Casinos Austria

Witnesses:

Mr. Gustavo Anselmi CODERE and Textil Médica
Mr. Juan Pablo Ortiz Fernandez ENJASA
Mr. Claudio Sergio Frade Lo Bruno Estructuras S.A.
Mr. Alexander Tucek Retired (formerly Casinos Austria International)
Mr. Andreas Schreiner
Mr. José Antonio Ocantos Candioti Gatto Bicain & Ocantos
Mr. Juan Ignacio Gómez Naar Gomez Naar y Asociados
Mr. Thomas Kellner Casinos Austria International

Experts:

Mr. Howard Rosen Secretariat International
Mr. Eddie Tobis FTI Consulting
Mr. Fernando García Pullés Estudio O’Farrell
Mr. Alberto B. Bianchi Bianchi, Galarce & Castro Videla
Mr. Liban Kusa Bruchou, Fernández Madero & Lombardi

On behalf of Respondent:

Parties:

Ms. María Teresa Gianelli Procuración del Tesoro de la Nación
Ms. María Alejandra Etchegorry Procuración del Tesoro de la Nación
Ms. María Soledad Romero Caporale Procuración del Tesoro de la Nación
Mr. Juan Manuel Falabella Procuración del Tesoro de la Nación
Ms. Annabella Sandri Fuentes Procuración del Tesoro de la Nación
Mr. José Martín Ryb Procuración del Tesoro de la Nación
Ms. Cintia Emilse Yaryura Procuración del Tesoro de la Nación
Mr. Julián Darmún Procuración del Tesoro de la Nación
Mr. Francisco Javier García Elorrio Procuración del Tesoro de la Nación
Ms. Natalia Paola Guillén Procuración del Tesoro de la Nación
Mr. Nicolás Duhalde Procuración del Tesoro de la Nación
Mr. Braian Joachim Procuración del Tesoro de la Nación
Mr. Nicolás Grosse Procuración del Tesoro de la Nación
Ms. Adriana Marcela Cusmano Procuración del Tesoro de la Nación
Mr. Emiliano Gabriel Leanza Procuración del Tesoro de la Nación
Ms. Cintia Pamela Calletti Fiscal de Estado de la Provincia de Salta

Witnesses:

Ms. Silvina M.C. Cainelli ENREJA
Ms. María Josefina Courel ENREJA
Ms. María Verónica Courel Salas ENREJA
Mr. Federico A. Saravia Sylvester ENREJA

Experts:

Mr. Ernesto Alberto Marcer Expert
Mr. Zenón Alberto Biagosch Expert
Mr. Guillermo Coombes Assistant to Mr. Biagosch
Mr. Hernán Del Debbio Assistant to Mr. Biagosch
Mr. José Pablo Amadeo Dapena Expert

Court Reporters:

Ms. Elizabeth Cicoria Spanish-Language Court Reporter
Ms. Luciana Sosa Spanish-Language Court Reporter
Ms. Anne-Marie Stallard English-Language Court Reporter

Interpreters:

Ms. Anna Sophia Chapman English-Spanish Interpreter
Mr. Jesus Getan Bornn English-Spanish Interpreter
Ms. Roxana Dazin English-Spanish Interpreter

43.
The following witnesses and experts were examined at the hearing on the merits:

Claimants’ Witnesses:

Mr. Gustavo Anselmi CODERE and Textil Médica
Mr. Juan Pablo Ortíz Fernández ENJASA
Mr. Claudio Sergio Frade Lo Bruno Estructuras S.A.
Mr. Alexander Tucek Retired (formerly Casinos Austria International)
Mr. Andreas Schreiner
Mr. José Antonio Ocantos Candioti Gatto Bicain & Ocantos
Mr. Juan Ignacio Gómez Naar Gómez Naar y Asociados
Mr. Thomas Kellner Casinos Austria International

Claimants’ Experts:

Mr. Howard Rosen Secretariat International
Mr. Fernando García Pullés Estudio O’Farrell
Mr. Alberto B. Bianchi Bianchi, Galarce & Castro Videla
Mr. Liban Kusa Bruchou, Fernández Madero & Lombardi

Respondent’s Witnesses:

Ms. Silvina M.C. Cainelli ENREJA
Ms. María Josefina Courel ENREJA
Ms. María Verónica Courel Salas ENREJA
Mr. Federico A. Saravia Sylvester ENREJA

Respondent's Experts:

Mr. Ernesto Alberto Marcer Expert
Mr. Zenon Alberto Biagosch Expert
Mr. José Pablo Amadeo Dapena Expert

44.
The Parties filed their joint revised transcripts on 26 November 2019.
45.
On 27 December 2019, Claimants wrote to the Tribunal informing them that they planned to attach "an updated version of Exhibit C-299 with one additional worksheet, i.e., the 'Control Sheet'", to their Post-Hearing Brief.
46.
On 3 January 2020, the Tribunal invited Claimants to transmit the new version of Exhibit C-299 to Respondent, and invited Respondent to file comments on Claimants' communication of 27 December 2019 by 10 January 2020, which the Parties did. Respondent argued that Exhibit C-299 included new calculations and should therefore not be admitted at such a late stage in the proceeding. In the event that it was admitted, Respondent requested the opportunity to make substantial observations, including new calculations by Professor Dapena, after the filing of the Post-Hearing Briefs.
47.
On 20 January 2020, Claimants submitted a response to Respondent's observations of 10 January 2020. According to Claimants, there were no new calculations in the new version of C-299, and no new data or new assumptions in the additional worksheet. Therefore, they submit, there was no basis for the argument that a substantive review would be required in the event of their admission into the record.
48.
On 22 January 2020, Respondent requested the opportunity to respond to Claimants' letter of 20 January 2020. The Tribunal granted Respondent's request for leave to respond by 30 January 2020, and reassured the Parties that, should Claimants be allowed to submit an updated version of Exhibit C-299 and the corresponding control sheet, as requested on 27 December 2019, the Parties would be afforded a procedural opportunity to submit comments on the newly admitted materials after the Post-Hearing Briefs. Since the Parties submitted their comments on the new materials de bene esse, there was no need for the Tribunal to afford a further opportunity to submit comments once the new materials (and the comments) were admitted into the record (see infra para. 55).
49.
The Parties filed their Post-Hearing Briefs on 24 January 2020.
50.
On 30 January 2020, Respondent submitted its response to Claimants’ communication of 20 January 2020. Respondent indicated that it followed from the preliminary review conducted by Professor Dapena that the new spreadsheet was not a mere updated version of Exhibit C-299. Additionally, Respondent noted that in their Post-Hearing Brief, Claimants had included the title "1.9. Update of Exhibit C-299", and cited materials not included in the record. Respondent reiterated its objection to the late presentation of a new spreadsheet as well as its request for a substantive review in the event of its admission into the record. Respondent further requested the exclusion from Claimants’ Post-Hearing Brief of section IV.1.9 and paragraph 484 together with its footnotes 604 and 605 because section IV.1.9 referred to the new spreadsheet on which admissibility the Tribunal had not yet ruled, and because paragraph 484 and footnotes 604 and 605 referred to pages of a document that were not on the record. On 31 January 2020, Claimants requested an opportunity to respond, by 4 February 2020, to Respondent’s observations. The Tribunal granted Claimants’ request, and on 4 February 2020, Claimants filed a letter in response to Respondent’s letter of 30 January 2020. Claimants requested that the Tribunal authorize the submission of "the updated version of C-299" and reject the request relating to the deletion of paragraph 484 of its Post-Hearing Brief. According to Claimants, "the wording of paragraph 484 represents Mr. Rosen’s explanations in his reports as well as during the Hearing of the Merits. As a result, there is no basis to delete the full paragraph." Claimants acknowledged that there was a clerical mistake in footnotes 604 and 605 in that they contained references to CL-036 that had been "inadvertently not deleted" and were not part of the record. Claimants stated that they would submit a corrected version of the footnotes.
51.
By email of 17 March 2020, the Tribunal notified its decision to the Parties, as follows:

The Tribunal refers to (i) the Claimants’ communications of December 27, 2019, January 20 and February 4, 2020, and to (ii) the Respondent’s communications of January 10 and 29, 2020.

In their communications, the Claimants request that they be allowed to submit "an updated version of Exhibit C-299 with one additional worksheet, i.e. the "Control Sheet", and indicate that they would have no objection to the Respondent producing a similar worksheet. According to the Claimants, the Control Sheet would allow the Tribunal "to calculate the impact on Mr Howard Rosen's DCF Model when selecting different approaches to specific parameters of the calculation." The Claimants contend that that there are no new calculations in the new version of C-299, and no new data, assumptions, calculations or valuation model in the Control Sheet, which only function is "to allow the Tribunal to toggle between the different views of the experts on specific parameters discussed by them." The Claimants further contend that all the parameters considered have already been discussed among the experts. As a consequence, should the Control Sheet be admitted, "the Argentine Republic should not use such opportunity to re-open the discussion about Mr Rosen's expert reports". Finally, the Claimants request that the Respondent's application to exclude certain portions of the Claimants' Post-Hearing Brief be rejected.

In its communications, the Respondent contends that the President's questions at the hearing do not enable the Claimants to submit a new spreadsheet at this stage of the proceeding, that the Control Sheet is not merely an updated version of C-299 given that it includes new calculations not previously submitted and that, should the new spreadsheet be admitted into the record, the Respondent should be given the opportunity to make substantial observations - including Professor Dapena's own calculations. The Respondent further requests the exclusion of section IV.1.9, as well as paragraph 484 together with its footnotes 604 and 605, from the Claimants' Post-Hearing Brief.

The Tribunal considers that, should it become relevant to its decision on the merits, it could be useful to be able to consult a document that enables it to choose between the different opinions of the damages experts on the various parameters discussed. In the absence of a joint document of the Parties, the Tribunal would admit separate documents - or one document supplemented by both Parties' comments thereon. In order to make this decision:

1. On March 24, 2020, the Claimants shall submit the updated version of Exhibit C-299 as well as the Control Sheet ("CCS").

2. On April 21, 2020, the Respondent shall submit its responsive document on CCS as well as, if so wish, its own version of a control sheet ("RCS").

3. On May 5, 2020, the Claimants shall submit a reply to the Respondent's comments on the CCS as well as any comments on admissibility they may have on the RCS, if submitted.

4. On May 19, 2020, the Respondent shall provide a reply to the Claimants' comments on the RCS.

All the above submissions shall be considered to have been filed de bene esse. For the time being, the Tribunal confirms that these documents are not admitted into the record. The Tribunal reserves in full its powers to decide upon their admission or non-admission following consideration of the Parties' complete briefing on this issue.

Regarding the portions of the Claimants' Post-Hearing Brief which exclusion has been requested by the Respondent, the Tribunal understands that the admissibility of section IV.1.9 will follow the admissibility of the updated version of Exhibit C-299 and of the Control Sheet. Regarding paragraph 484 and footnotes 604-605, the Tribunal is satisfied with the Claimants’ explanations and requests that the referred paragraph be corrected. The Tribunal requests that the Claimants submit the amended pages of the Post-Hearing Brief in both languages, without changing the paragraph numbers of the non-amended paragraphs, once the Tribunal has decided on the admissibility of the updated version of Exhibit C-299 and of the Control Sheet. Should the Respondent maintain an objection to paragraph 484 and footnotes 604-605, it shall indicate so within seven days from receipt of the amended pages of the Claimants’ Post-Hearing Brief.

52.
On 23 March 2020, Claimants filed an updated version of Exhibit C-299, including the control sheet.
53.
On 21 April 2020, Respondent submitted its responsive document on Claimants’ control sheet as well as its own version of a control sheet.
54.
On 1 May 2020, Respondent submitted a request for an extension to file the last round of comments on Claimants’ and Respondent’s control sheets. Claimants submitted a response on 4 May 2020. On the same day, the Tribunal decided to grant a short extension for the Parties to file their respective presentations. Claimants’ deadline was extended from 5 May to 12 May 2020, and Respondent’s deadline was extended from 19 May to 29 May 2020. Both Parties complied and filed their respective submissions in accordance with the Tribunal’s instructions.
55.
On 30 July 2020, the Tribunal notified its decision to the Parties, as follows:

The Tribunal refers to its communication of March 17, 2020 requesting that the Parties make the following submissions de bene esse, which the Parties did on March 24, April 21, May 12 and May 29, 2020, respectively:

1. The Claimants were requested to submit the updated version of Exhibit C-299 as well as the Control Sheet ("CCS").

2. The Respondent was requested to submit its responsive document on CCS as well as, if so wished, its own version of a control sheet ("RCS").

3. The Claimants were requested to submit a reply to the Respondent’s comments on the CCS as well as any comments on admissibility they might have on the RCS, if submitted.

4. The Respondent was requested to submit a reply to the Claimants’ comments on the RCS.

The Tribunal has decided to accept these submissions into the record. As a consequence, the Tribunal also confirms the admissibility of section IV.1.9 of the Claimants' Post-Hearing Brief. The Tribunal clarifies that its decision on admissibility is without prejudice to the Tribunal's decision on the probative value of any of these documents.

Finally, the Tribunal reminds the Claimants of its decision regarding paragraph 484 and footnotes 604-605 of the Claimants' Post-Hearing Brief, and requests that the Claimants submit the amended pages of the Post-Hearing Brief in both languages, without changing the paragraph numbers of the non-amended paragraphs, by Wednesday, August 5, 2020. Should the Respondent maintain an objection to paragraph 484 and footnotes 604-605, it shall indicate so within seven days from receipt of the amended pages of the Claimants' Post-Hearing Brief.

56.
Claimants wrote to the Tribunal on 4 August 2020 indicating they had already submitted an amended version of their Post-Hearing Brief containing the requested corrections to paragraph 484 and footnotes 604-605 on 20 February 2020, and noted that Respondent had not objected to the submission of these amendments.
57.
On 11 August 2020, Respondent submitted a word document with corrections to paragraph 484 and footnotes 604 and 605 of Claimants' Post-Hearing Brief. The Tribunal notes that these corrections reflected, apart from minor, but immaterial differences, the corrections Claimants had submitted on 4 August 2020.
58.
On 30 June 2021, the Tribunal invited the Parties to submit a joint proposal regarding the contents of their respective costs statements, which the Parties did on 7 July 2021.
59.
The Parties submitted their respective costs' statements on 30 July 2021. Following the Tribunal's invitation, on 17 August 2021, Respondent filed comments on Claimants' costs statement, and Claimants filed comments on Respondent's comments on 24 August 2021. On the same day, and also pursuant to the Tribunal's invitation, Respondent filed a clarification of its communication of 17 August 2021.
60.
The proceeding was declared closed on 5 October 2021.

III. Requests for Relief

Claimants' Requests for Relief

61.
Claimants request that the Tribunal render an award, stating that:

1. The Argentine Republic has breached Articles 4(1) and (2) of the BIT by unlawfully expropriating Claimants' investment.

2. The Argentine Republic has breached Article 4(3) of the BIT by unlawfully expropriating the license and the gaming operations of Claimants’ subsidiary ENJASA.

3. The Argentine Republic has breached Article 2(1) of the BIT by failing to accord fair and equitable treatment.

4. The Argentine Republic is liable to pay damages for the breach of the Articles 2(1), 4(1), 4(2) and 4(3) of the BIT.

5. The Argentine Republic shall pay not less than USD 51,919,998 to Claimants.

6. The Argentine Republic is ordered to pay to the Claimants interest at a rate of 6% compounded annually from 13 August 2013 until full payment.

7. The Argentine Republic shall pay to Claimants all costs, expenses and fees (including internal costs) relating to this arbitration and appropriate interest thereon.3

Respondent's Requests for Relief

62.
Respondent requests the Tribunal to

(a) reject each and every one of the claims put forward by Claimants;

(b) order Claimants to pay for all costs and expenses arising from these arbitration proceedings, and

(c) grant the Argentine Republic such further relief as the Tribunal may deem fit.4

IV. Factual Background of the Dispute

63.
Most of the facts underlying the present dispute are uncontested between the Parties. This is due not least to the fact that gaming in the Province of Salta is a highly regulated and formalized sector of the economy, with the different administrative proceedings affecting ENJASA being documented in detail, as the large record submitted in the proceedings attests. What the Parties differ on are certain undocumented facts, which principally concern the motive for ENREJA revoking ENJASA’s license, and their legal assessment of the revocation. The present section provides a summary of those largely uncontested facts.

A. The Privatization of the Gaming Sector in the Province of Salta

64.
In accordance with Articles 75 and 99 of the National Constitution of Argentina, the regulation of games of chance falls outside the scope of competence of the Federal Government. Such regulation is thus the competence of the respective Provinces.5
65.
Since the 1970s, gaming facilities and lottery activities in the Province of Salta, which is located in the Northwestern part of Argentina, were operated directly by, or under the control of, Banco de Préstamos y Asistencia Social ("BPAS"), an autonomous entity fully owned by the Province of Salta.6 When it was in charge of the gaming sector in Salta, BPAS had issued a number of licenses for the operation of slot machine halls to individuals and companies.7
66.
In December 1995, the Province of Salta passed the "Principles for the Restructuring of BPAS" as part of its Law No. 6836. This Law foresaw the restructuring of BPAS, including the possible privatization of BPAS’ gaming and lottery operations, which was necessary to attract substantial private investments.8
67.
On 7 September 1998, the Executive of the Province of Salta passed Decree No. 2126/98. It addressed the necessity of constant investments for the continuous development of the gaming sector and also created ENJASA, a company with limited liability under Argentine law in order to manage, commercialize, and exploit games of chance in the Province of Salta.9 ENJASA was to have a duration of 30 years.
68.
Law No. 7020 of the Province of Salta, which entered into force on 30 December 1998, provides the principal regulatory framework for the gaming and lottery sector in the Province.10 The Law created ENREJA as the regulatory agency to oversee the gaming and lottery sector within the Province (Art. 31). ENREJA was to issue operating rules and oversee compliance with the applicable laws and regulations (Arts. 3, 32, and 33). The regulatory framework, inter alia, prohibited the hiring of operators without the authorization of ENREJA and required the appointment in each gaming facility of a person responsible for overseeing and implementing anti-money laundering measures (Art. 5). ENREJA also disposed of disciplinary and sanctioning powers, which included the issuance of warnings, the imposition of fines, disqualification, and the suspension and revocation of operating licenses (Art. 13).11 Operating licenses, however, were not issued by ENREJA, but by the Government of the Province of Salta (Art. 4).
69.
On 1 September 1999, the Executive of the Province of Salta conferred an exclusive license to ENJASA for the operation of games of chance by Decree No. 3616/99.12 The terms of this License, which was granted for a term of 30 years, provided that any breach of the conditions of the License, of Law No. 7020, and of any regulation issued by ENREJA were to be sanctioned pursuant to Law No. 7020 (see Art. 5.1 of the License). The License furthermore specified that it would be extinct or forfeited, inter alia, in case of non-payment of the license fee, non-compliance with the obligations imposed under Article 5 of Law No. 7020, exploitation of any games of chance without prior authorization by ENREJA, (full or partial) cession or transfer of the operations covered by the License without prior authorization of the Executive, and bankruptcy of the licensee (Art. 6). The impact the grant of an exclusive operating license to ENJASA had on licenses issued previously by BPAS to slot machines operators is a matter of controversy between the Parties.
70.
Equally on 1 September 1999, the Ministry of Production and Employment of the Province of Salta approved the Call for a National and International Public Tender to offer 90% of ENJASA’s shares (the so-called "Class A-shares") for sale.13 Participants in the tender needed to have at least ten years of experience in the operation of casinos and games of chance. Moreover, they had to submit an investment plan that included the number of employees to be hired, a tourism development program, and the amount of investments to be made, and stipulate a yearly license fee to be paid to the Province for the term of the License. The remaining 10% of ENJASA’s shares (the so-called "Class B-shares") continued to be held by the Province of Salta under a joint ownership participation program for former BPAS employees.
71.
The only participant in the public tender was the Unión Transitoria de Empresas ("UTE"), a joint venture under Argentine law, consisting of Casinos Austria International Holding GmbH ("CAIH") (5%), Boldt S.A. ("Boldt") (5%) and Iberlux International S.A. ("Iberlux") (90%). The UTE’s bid included the offer to pay an annual license fee for the 30-year period (consisting initially of payments of USD 2,200,000 for the first three years and USD 3,500,000 for the following 27 years) and a commitment to invest USD 20,770,000 into tourism development in the Province of Salta, namely into the construction of a five-star hotel and the establishment of hoteling and gastronomy schools as well as of a fund for the promotion of tourism and culture. Following a request by the Ministry of Production and Employment of the Province, the bid was revised, resulting in an offer with higher annual payments for the License of USD 2,500,000 per year for the first three years, and USD 4,100,000 per year for the following 27 years.14
72.
On 31 January 2000, the tender was awarded to the UTE by Resolution No. 20/00. On 15 February 2000, by Decree No. 419/00, the Executive of the Province of Salta15 approved the Transfer Agreement which transferred the tendered shares in ENJASA to the UTE. The Transfer Agreement also extended the sanctions of Law No. 7020 to the buyer’s breaches of the Transfer Agreement, the bid, or any other documentation that formed part of the tender.16

B. Development of Claimants’ Investment

73.
The UTE shortly thereafter requested ENREJA to authorize the transfer of its shares in ENJASA to L&E, a stock corporation under Argentine law, which was formed by the members of the UTE in accordance with their respective participation in the UTE (i.e., CAIH with 5%, Boldt with 5%, and Iberlux with 90%). ENREJA authorized this transfer, and consequently L&E was registered as the owner of the Class A-shares of ENJASA in the company register.17
74.
The ownership structure of the shareholding in L&E changed over the course of the years.18 In 2001, Iberlux purchased the shares in L&E held by Boldt, thus increasing its participation to 95%. In February 2007, CAIH, which initially held 5% of the shares in L&E, increased its participation to 60% as a result of purchasing 55% of L&E shares from Iberlux. On 26 March 2010, pursuant to an internal structuring, CAIH transferred its (then) 60% of L&E shares to CAI.
75.
Also the shareholdership in respect of ENJASA changed over the years. On 19 October 2009, most of the beneficiaries of the joint ownership participation program authorized the Government of Salta to sell their parts in the Class B-shares in ENJASA. On 4 November 2009, L&E purchased almost all of these shares in ENJASA with the exception of a minor participation that remained with the Province of Salta because some of the former employees of BPAS had not agreed to the sale of their shares in ENJASA to L&E.19
76.
At the end of 2009, Complejo Monumento Güemes S.A. ("CMG"), a stock corporation under Argentine law, which was jointly owned by L&E (94.79%) and ENJASA (5.21%), received a minor participation in ENJASA in exchange for transferring to ENJASA the good will ('fondo de commercio') in the five-star hotel in the City of Salta that had been built by CMG in fulfilment of the UTE’s investment obligations under the Transfer Agreement.20
77.
Moreover, L&E established Cachi Valle Aventuras S.A. ("Cachi Valle"), a stock corporation under Argentine law, in order to develop and administer real estate projects and to promote tourism in Salta. L&E held 99% of the shares of Cachi Valle, while ENJASA held the remaining 1% of the shares.21 Cachi Valle was the owner of the building in which the five-star hotel, as well as one casino, Casino Salta, were located.22 Cachi Valle made those premises available for the operation of Casino Salta under a joint venture agreement in which ENJASA had a 70% and Cachi Valle a 30% participation.23
78.
As a result of the above transactions, and taking into account a capital increase that had taken place in the meantime, the ownership structure in ENJASA therefore looked as follows as of 13 August 2013, when ENJASA's operating license for games of chance was revoked:24
79.
The shareholder structure underwent further changes after August 2013. On 15 November 2013, CAI purchased the remaining 40% of the shares in L&E from Iberlux and became the 100% shareholder of L&E. It then transferred 2% of the shares in L&E to CAIH, whose sole shareholder is CASAG. Thus, at present, CAI directly holds 98% of L&E. CASAG in turn indirectly holds 2% of L&E through its participation in CAIH and the remaining 98% through its participation in CAI. Consequently, CASAG indirectly controls 100% of L&E. Through L&E, CAI and CASAG in turn indirectly hold 99.94% of ENJASA's shares. The resulting ownership structure in ENJASA looks as follows:25
80.
The above group of companies further developed the gaming, lottery, and tourism sector in the Province of Salta. In August 2013, when its operating license was revoked, ENJASA had become one of the most significant employers in the Province. It operated four casinos, 15 slot machine halls, 14 lottery games, 1,376 slot machines, and 46 live games tables; it employed around 750 employees and had a network of 700 lottery agencies and 11 local lottery branches.26
81.
ENJASA had also invested more than USD 20,000,000 into the construction of the Sheraton Hotel Salta, the first five-star hotel in the region, which opened in August 2005.27 The construction of the hotel was part of the investment program that was promised as part of the privatization process. In addition, ENJASA sponsored two schools, one for hotel trade and one for gastronomy, and created the "ENJASA Foundation" for the promotion and research of cultural, tourist, hotel and gourmet activities in the Province of Salta, in fulfilment of the promises made in the course of the privatization of ENJASA.28 Respondent agrees that all obligations to invest in tourism undertaken under the Transfer Agreement by the UTE have been fulfilled.29

C. Development of Regulatory Framework and License Fee in the Province of Salta

82.
The regulatory framework under which ENJASA operated games of chance in the Province of Salta consisted of a combination of different legal instruments. These included the License itself, which had been granted to ENJASA by the Province of Salta, the statutory framework established under Law No. 7020, and regulations to implement that Law, which were passed by ENREJA.
83.
ENJASA's exclusive license provided, in its Article 5, that any breach of Law No. 7020 or of regulations issued by ENREJA were to be sanctioned with the penalties and sentencing provided for in Law No. 7020. The License also provided that the determination of any penalty was subject to

the gravity of the offense, the damage caused upon the legal certainty, the morality and good customs, the consequences suffered by the Provincial Government and/or individuals, the social upheaval caused and the infringer's records of relapses.30

84.
Law No. 7020, inter alia, contained a prohibition for license holders for games of chance to engage "operators" without ENREJA's authorization and imposed duties in respect of anti-money laundering (Art. 5). It further laid down the extent of ENREJA's sanctioning powers (Arts. 13 and 41) and contained provisions on the determination of sanctions (Arts. 42, 43, 45, 48), as well as a statute of limitations (Art. 49). The relevant provisions of Law No. 7020 are as follows:

Article 5

The licensee's business shall be subject to this law. The licensee shall be responsible for the selection and employment of the methods for the exploitation and maintenance to secure compliance with the provisions set forth hereunder, and in no event it shall be authorized to engage operators without the authorization by [ENREJA], which shall establish the requirements and conditions to be complied with by each operator.

The licensee shall appoint an individual who shall be in charge of the anti-money laundering tasks and who shall be responsible for:

a) Centralizing all the information concerning customers, transactions known, suspected or having reasons to suspect.

b) Reporting any transaction where the individual’s transaction has no reasonable relationship with the development of business activities likely to be declared.

c) Identifying through the Identity Document or Passport all those customers to which a check is drawn or a transfer is made to offshore accounts for amounts in excess of ten thousand pesos ($10,000.00).

Article 13

The violations or breaches to this law, its regulations, to the license agreement and to all the regulations enacted by [ENREJA], shall be punished by [ENREJA] with:

a) Warning

b) Fine

c) Inability to operate

d) Suspension of the License

e) License Revocation.

The penalties above shall be applied taking into consideration due proportionality between the penalties and the violation, notwithstanding the criminal liability and misdemeanor liability.31

Article 40

Individuals and/or legal persons that with or without authorization, for profit or not carry out [games of chance] in violation of one or more rules hereof, its regulatory decree and [ENREJA’s] resolutions, shall be liable to administrative penalties, without prejudice to the misdemeanor and criminal penalties and the civil liability that may be applicable.

Article 41

[ENREJA] may impose jointly or indistinctly the penalties of fine, inability to operate and closure.

Article 42

The fine shall consist in payment of a sum of money from one hundred pesos ($ 100) to one hundred thousand pesos ($ 100,000).

Article 43

The inability to operate games of chance by an individual or legal person may not exceed the term of one year.

Article 45

Whenever the violation is committed by reason of the exploitation of an agency, premises or business location, closure thereof may be ordered which may not exceed thirty (30) days.

Temporary closure may be ordered for a maximum term of ten (10) days extendable by another term, whenever it is deemed advisable by reason of the gravity of the factual events.

Article 48

For purposes of the graduation of the penalties, [ENREJA] shall bear in mind the gravity of the offense, the damage caused upon the legal certainty, the morality and good customs, the consequences suffered by the Provincial Government and/or individuals, the social upheaval caused and the infringer's records of relapses.

Article 49

Statutes of limitation applicable to the actions and penalties shall be of one year. Actions shall be barred by the statutes of limitation as from the date of the event and penalties as from execution of the resolution that imposes such penalty. Statutes of limitation shall be interrupted with the commencement of the summary investigation proceeding or the reiteration of the violation, and the amounts of penalties shall be cumulative.32

85.
Articles 40-49 reproduced above were not yet part of Law No. 7020 when it was adopted in 1998. These provisions were introduced by Law No. 7133 of 9 May 2001 as amendments to Law No. 7020.
86.
In addition to Law No. 7020, ENJASA's gaming activities were governed by administrative regulations enacted by ENREJA in the form of resolutions. Of particular importance for the present proceeding was ENREJA's Resolution No. 26/00, which was published in Salta's Official Bulletin on 8 June 2000.33 It provided for details in respect of the rules on anti-money laundering laid down in Article 5 of Law No. 7020. Resolution No. 26/00 required that operators of games of chance had to keep a so-called "Anti-Money Laundering Book" (Art. 1), which had to be made available to ENREJA for inspection (Art. 2), and in which information on relevant transactions had to be recorded, including in particular the identity of involved players (Art. 3). Relevant transactions included payments made by check or money transfer exceeding the amount of Argentine Pesos (ARS) 10,000, as laid down in Art. 5 c) of Law 7020 (Art. 3), as well as any other suspicious payment or transfer independently of the amount in question and the means of payment (Art. 6).
87.
As of 1 May 2012, Resolution No. 26/00 was replaced by Resolution No. 90/12.34 This Resolution laid down expressly as an instrument of combatting money laundering that any prize above ARS 10,000 had to be paid by check or wire transfer. Resolution No. 90/12 provides in relevant part:

Article 1

With the purpose of complying with the anti-money rules, set forth in Law No. 7020 as amended, the games of chance licensees and concessionaires shall:

1) Pay through check or wire transfers to accounts in foreign countries all prizes for amounts exceeding ARS 10,000. ...

88.
Not only the regulatory framework, but also the calculation of the operating fee that ENJASA had to pay to ENREJA changed over time.35 Initially, the fee consisted of fixed annual amounts (see supra para. 71). This changed, however, when the operating fee was renegotiated as part of a broader effort of the new Governor, Mr. Juan Manuel Urtubey, who took office in December 2007, to renegotiate contracts concluded by the predecessor government of Mr. Juan Carlos Romero in order to maintain the financial benefits derived from those contracts for the Province, considering in particular the inflation and depreciation of the Argentina currency following the pesification of US dollar-denominated debt in the context of the country's economic and financial crisis in 2001/2002.36
89.
Thus, in 2008, the license fee was renegotiated at the request of the Province of Salta through an agency created specifically for the review and renegotiation of public contracts and licenses, the so-called Unidad de Revisión y Renegociación de Contratos y Licencias otorgadas por la Administración ("UNIREN"). The change in conditions of ENJASA's gaming license was formalized in the so-called "Acta Acuerdo", an agreement concluded on 7 May 2008 between ENJASA and UNIREN and ratified by the Government of Salta on 11 August 2008 through Decree No. 3428/08.37 The Acta Acuerdo changed the operating fee from a fixed to a dynamic fee, which was calculated henceforth as a percentage of ENJASA's annual net income and which rose over the years in steps to 15% for lottery games and to 16% for live games and slot machines.38
90.
The Acta Acuerdo also stated (i) that ENJASA and its controlling shareholder, L&E, had complied with their obligations to increase ENJASA's capital and invest in the tourism sector, (ii) that there had been no breaches of the Transfer Agreement, and (iii) that "in connection with the joint venture agreements ... entered into by and between EN.J.A.S.A and Video Drome S.A. and Cachi Valle Aventura S.A. ... no breach of the license terms has been incurred by the Licensee."39
91.
Following the change in the way the annual fee was calculated, ENREJA introduced a new control system for ENJASA's gaming operations, which required all slot machines to be linked to a real-time online system that could be controlled by ENREJA. To this end, ENREJA introduced certain changes for the operation of slot machines, including in particular new technical requirements that the machines had to fulfil, and required the replacement of slot machines that did not comply with the new regulations.40

D. Investigations and Sanctions Prior to the Revocation of ENJASA’s License

92.
Compliance of ENJASA with the regulatory framework in place in the Province of Salta was ensured through the exercise of supervisory powers of ENREJA as laid down in Law No. 7020. To this end, ENREJA regularly made inquiries and conducted investigations into ENJASA's compliance with the regulatory framework in place. In a number of cases, ENREJA also imposed sanctions against ENJASA for breaches of the regulatory framework.
93.
Before the conclusion of the Acta Acuerdo, ENJASA was sanctioned for breaching the regulatory framework on two occasions. In 2005, ENREJA fined ENJASA in the amount of ARS 20,000 for implementing unauthorized restrictions on bets in a lottery game.41 In 2007, ENREJA fined ENJASA in the amount of ARS 10,000 for operating a slot machine without authorization.42
94.
In the years between the conclusion of the Acta Acuerdo and the time when ENJASA’s license was revoked, the number of administrative sanctions increased. Between 2007 and August 2013, ENREJA conducted several administrative inquiries into ENJASA’s compliance with the regulatory framework in place and imposed several sanctions. Sanctions involved the following incidents.

- In Resolution No. 31/08 (dated 10 March 2008), ENREJA fined ENJASA in the amount of ARS 5,000 for issuing a check that did not contain the words "no a la orden", which makes the check non-transferable, as required by Resolution No. 26/00.43

- In Resolution No. 32/08 (dated 10 March 2008), ENREJA fined ENJASA in the amount of ARS 10,000 for the loss of the anti-money laundering book, for irregularities in recording payments, and for issuing transferable instead of non-transferable checks for paying out prizes.44

- In Resolution No. 232/08 (dated 18 November 2008), ENREJA fined ENJASA in the amount of ARS 62,000 because the payment of certain prizes of over ARS 10,000 at Casinos Golden Dream had not been made by check.45

- In Resolution No. 244/08 (dated 25 November 2008), ENREJA issued a warning against ENJASA because of the unauthorized removal of gaming devices from Casino Salta and Casino Rosario de la Frontera, and for irregularities in the results of poker tournaments.46

- In Resolution No. 286/09 (dated 16 December 2009), ENREJA fined ENJASA in the amount of ARS 15,000 for amending betting limits in Casino Golden Dreams without prior authorization.47

- In Resolution No. 39/10 (dated 9 March 2010), ENREJA fined ENJASA in the amount of ARS 100,000 for holding a poker tournament at Casino Golden Dreams without authorization.48

- In Resolution No. 46/10 (dated 16 March 2010), ENREJA fined ENJASA in the amount of ARS 20,000 because a payment of over ARS 10,000 had not been made by check.49 This Resolution was confirmed by Resolution No. 106/10 (dated 3 May 2010), which was issued to decide on a recourse for reconsideration that ENJASA had interposed against Resolution No. 46/10.50

- In Resolution No. 104/10 (dated 3 May 2010), ENREJA fined ENJASA in the amount of ARS 100,000 for paying a slot machine prize won on 13 December 2009 in Casinos Golden Dream in cash, rather than by check or wire transfer, and without properly recording it. In addition, ENREJA fined ENJASA in the amount of ARS 200,000 for paying a slot machine prize won on 4 January 2010 in Casinos Golden Dream in cash, rather than by check or wire transfer, and without properly recording it. ENREJA also formally warned ENJASA that violations of anti-money laundering rules could lead to an extinction or revocation of ENJASA's license.51

- In Resolutions Nos. 128/10, 129/10, and 130/10 (all dated 18 May 2010), as well as Resolutions Nos. 151/10, 152/10, and 153/10 (all dated 7 June 2010), ENREJA temporarily suspended the operation of certain gaming halls for periods between 7 and 13 days because of irregularities in the operation of slot machines.52

- In Resolution No. 161/10 (dated 15 June 2010), ENREJA fined ENJASA in the amount of ARS 172,000 for paying prizes exceeding ARS 10,000 in cash, rather than by check or wire transfer, and for failing to properly record the identities of certain winners of prizes.53

- In Resolution No. 200/10 (dated 27 July 2010), ENREJA fined ENJASA in the amount of ARS 200,000 for operating a slot machine hall in the town of Metan without the necessary authorization.54

- In Resolution No. 178/12 (dated 10 July 2012), ENREJA fined ENJASA in the amount of ARS 550,000 for irregularities in lottery drawings, which included the use of too many balls for a drawing, an incorrect publication of the winning ticket in another drawing, and other irregularities in further drawings.55

- In Resolution No. 161/13 (dated 28 May 2013), ENREJA fined ENJASA in the amount of ARS 200,000 for modifying prize limits without authorization in poker games at Casino Golden Dreams, and in the amount of ARS 500,000 for operating unauthorized jackpots in poker games at Casino Golden Dreams and Casino Salta.56

E. ENREJA’s Investigations Leading up to the Revocation of ENJASA’s License

95.
On 11 December 2012, ENREJA opened three separate investigations into breaches by ENJASA of the regulations governing games of chance in the Province of Salta.57 One investigation principally concerned charges for breach of the anti-money laundering rules in the administration of a lottery game by ENJASA (Resolution No. 380/12);58 one concerned charges for breach of anti-money laundering rules in the operation of one of ENJASA’s casinos (Resolution No. 381/12);59 and one concerned charges for breach of the prohibition to hire operators without ENREJA’s authorization (Resolution No. 384/12).60

1. Resolution No. 380/12

96.
Resolution No. 380/12, which was notified to ENJASA on 11 December 2012, charged ENJASA with the following breaches of Article 5 c) of Law No. 7020 as well as of Resolutions Nos. 26/00 and 90/12:

- Late registration and payment of an expired prize of ARS 11,080 won on 4 December 2011 in the lottery game "Tómbola";

- Failure properly to register in the anti-money laundering book the payment of a prize of ARS 12,000 won on 30 January 2012 and of a prize of ARS 15,000 won on 2 March 2012 in the lottery game "Tómbola"; and

- Failure properly to identify the personal data of the winner of a prize of ARS 11,480 won on a slot machine on 14 May 2012.61

97.
ENJASA responded to this investigation on 2 January 2013.62 It challenged ENREJA’s allegations both on factual and legal grounds, and presented explanations to ENREJA for the conduct in question.
98.
In respect of the prize won on 4 December 2011, ENJASA claimed that that prize, contrary to ENREJA’s allegations, had not expired. While the payment of the prize had only been made and registered on 19 January 2012, i.e., more than one month after the prize was won, the winning lottery ticket, ENJASA claimed, had been submitted for payment two days after the lottery draw had taken place and, therefore, within the ten days period foreseen by the rules of the lottery game "Tómbola".63 The delay in payment, ENJASA explained, had been due to a misunderstanding of the owner of the lottery agency, who happened to be the winner of the prize, but who mistakenly believed that the prize was going to be credited to the checking account of the lottery agency. After the winner complained to ENJASA that the amount had not been credited, the required information was submitted to ENJASA’s local branch and sent to ENJASA’s headquarters for registration in the anti-money laundering book. ENJASA therefore was of the view that the prize was paid in accordance with Article 3 of ENREJA’s Resolution No. 26/00 and registered correctly in the anti-money laundering book after the check had been issued.64
99.
In respect of the prize won on 30 January 2012, ENJASA submitted that its payment was not formally registered in the anti-money laundering book due to an administrative oversight, although all information required to make the registration had been collected, as ENREJA itself confirmed, in the course of an inspection conducted on 24 April 2012. ENJASA therefore considered that it had taken all necessary steps to fulfil the requirements for registration set up by ENREJA's Resolution No. 26/00.65
100.
In respect of the prize won on 2 March 2012, ENJASA submitted that that prize had expired because it had not been submitted for payment within the ten days foreseen by the rules of the lottery game "Tómbola". As the prize had expired, no payment occurred. Consequently, no payment had to be registered in the anti-money laundering book. ENJASA further explained that ENREJA's allegation was triggered by a wrong entry in the accounts of ENJASA, which was caused by a bug in the electronic online registration system for lottery prizes and an error of ENJASA's staff, which was manually correcting ENJASA's accounting books. The error was corrected after ENREJA had issued Resolution No. 380/12.66
101.
In respect of the payment of the prize of ARS 11,480 won on a slot machine on 14 May 2012, ENJASA submitted that that prize had been duly registered in the anti-money laundering book. ENJASA admitted that the information was incomplete when ENREJA reviewed the book on 16 May 2012. ENJASA submitted, however, that the missing information was completed on 17 May 2012; the check making the payment of the prize, in turn, was only issued after the missing information had been entered in the anti-money laundering book.67 ENJASA therefore submitted that no breach of anti-money laundering rules had occurred.

2. Resolution No. 381/12

102.
Resolution No. 381/12, which was notified to ENJASA on 11 December 2012, charged ENJASA with the following breaches of Article 5 of the Law No. 7020 as well as of Resolutions Nos. 26/00 and 90/12:

- Making payments between August and September 2011 in Casino Golden Dreams and Casino Salta in excess of ARS 10,000 in cash rather than by check; and

- Making cash payments in September 2011 to two customers in Casino Salta that had not been registered in the anti-money laundering book and that differed from the amounts reported in the Casino's internal reports.68

103.
ENJASA responded to this investigation on 2 January 2013.69 It challenged ENREJA's allegations both on factual and legal grounds, and presented explanations to ENREJA for the conduct in question.
104.
In respect of the cash payments made in Casino Golden Dreams and Casino Salta, ENJASA submitted that, at the relevant time in August and September 2011, no obligation existed to pay prizes above ARS 10,000 by check or international wire transfer and hence no registration of such payments was necessary in the anti-money laundering book. The requirement to pay amounts above ARS 10,000 by check or international wire transfer, ENJASA noted, was only introduced by Resolution No. 90/12, which entered into force on 1 May 2012, adding that ENREJA was not permitted to apply Resolution No. 90/12 retroactively.70
105.
Moreover, even if a legal obligation to make payments of prizes by check had existed, ENJASA submitted that ENREJA's actions were time-barred pursuant to the one-year statute of limitations contained in Article 49 of Law No. 7020 because ENREJA had started the administrative inquiry more than one year after the alleged breaches.71 This time-bar, ENJASA submitted, could only be interrupted by the initiation of an administrative inquiry or by the repetition of the breach in question, neither of which had in fact, nor was alleged to have, occurred.
106.
Finally, ENJASA submitted that there was no factual basis to conclude that the payments made above ARS 10,000 actually concerned prizes won by casino customers. The information on which ENREJA's charges had been based - namely so-called "Daily Reports", "Rating Card Forms", and "internal checks" - provided no details of the prizes actually won by individual customers. The Daily Reports and the Rating Card Forms, on which ENREJA relied, only provided general estimates of the amounts won on each live game table. Internal checks were obtained against money deposited by customers in the casino's treasury. Although internal checks could be exchanged for chips at the gaming tables, there was not necessarily a correlation between the amount of the internal checks and the chips a client subsequently cashed.72 Moreover, no regulations in the Province of Salta forbade to use internal checks in casinos.73
107.
In respect of the cash payments made to two unregistered customers, ENJASA submitted that it was unclear to it what legal rule had supposedly been breached. ENJASA pointed out that it did not have any obligation to pay an amount above ARS 10,000 by check at the time and that it was impossible to determine whether the amounts paid involved money won during live games or money that had been brought into the casino by the customer. As for money that had been shared between the two individuals, ENJASA observed that it was not uncommon for two individuals to pool their money for playing and at the end of the day distribute it again amongst them.74

3. Resolution No. 384/12

108.
In Resolution No. 384/12, ENREJA charged ENJASA with having breached Article 5 of Law No. 7020 by sub-licensing the operations of several slot machine halls in different locations to third operators without ENREJA's approval.75 The charges involved ENJASA having allowed:

(1) Emsenor S.R.L. ("Emsenor") to operate a slot machine hall in the city of Salvador Mazza;

(2) Mr. Navarrete to operate two slot machine halls in the cities of Tartagal and Salvador Mazza;

(3) Mr. Colloricchio to operate two slot machine halls in the cities of General Güemes and Rosario de la Frontera;

(4) Video Drome S.A. ("Video Drome") to operate slot machines at Casino Golden Dreams in the City of Salta (in a joint venture with ENJASA) and at five rented gaming halls in the cities of San Ramón de la Nueva Orán, Tartagal, Metán, J.V. González, and Rosario de la Frontera;

(5) Prodec S.A. ("Prodec") and its predecessor, Dek S.A. ("DEK"), to participate in the management of, and share profits from, tables for Caribbean poker at Casino Golden Dreams and Casino Salta; and

(6) New Star S.R.L. ("New Star") to operate slot machines in the cities of San Ramón de la Nueva Orán, Metán, Rosario de la Frontera, General Güemes, and Embarcación.76

109.
Resolution No. 384/12 was notified to ENJASA on 7 June 2013.77 ENJASA’s response to the investigation under Resolution No. 384/12 followed on 28 June 20 1 3.78 ENJASA contended that the seven companies and individuals identified in Resolution No. 384/12 were either operators of slot machine halls that had received authorizations to operate by BPAS before ENJASA had been granted its exclusive license for games of chance or were not operators of games of chance at all, but merely providers of slot machines, premises for the operation of games of chance, or other hardware and software for games of chance that ENJASA operated. Specifically, ENJASA submitted the following:
110.
Emsenor was not operating the slot machine hall in Salvador Mazza City; it merely had leased the premises in which the slot machine hall operated to ENJASA; the hall itself, however, was operated solely by ENJASA’s personnel without any involvement of Emsenor. The fact that the monthly rent consisted of a payment of 10% of the income generated by the slot machines did not make Emsenor a partner or operator of the business, but reflected a common practice in lease agreements in Argentina to protect lessors against inflation.79 Moreover, ENREJA had been notified of the lease agreement in 2004 and had approved the conditions. Emsenor’s financial statements and bylaws further confirmed that Emsenor was not a gaming operator.80
111.
Mr. Navarrete had been authorized to operate slot machine halls in Tartagal and Salvador Mazza by BPAS. ENREJA was fully aware that he continued to operate these slot machine halls: ENREJA was provided with a copy of the contract with ENJASA, which required Mr. Navarrete to obtain ENREJA’s approval for new slot machines;81 and ENREJA regularly was informed of the payment of Mr. Navarrete's share in the license fee, and had received the full roster of slot machines he operated.82
112.
Mr. Colloricchio operated two slot machine halls on the basis of permits granted by BPAS to his predecessors from whom he had taken over their businesses on 17 September 2008 and 24 February 2009 respectively. On 19 March and 24 April 2009, ENJASA had duly informed ENREJA of these transfers and had received no objection. ENREJA had also been provided with a copy of the contract between Mr. Colloricchio and ENJASA, regularly had been informed of Mr. Colloricchio's share in the license fee, and also had received the full roster of slot machines operated by Mr. Colloricchio.83
113.
Video Drome was only a provider of slot machines operated by ENJASA outside the City of Salta, but did not operate slot machine halls itself. The five contracts for the lease of slot machines with Video Drome, which had been submitted to ENREJA, stated that the halls were operated by ENJASA's employees and that Video Drome did not participate in the costs of the operation. The rent for the slot machines was between 30 and 35% of the gross income generated by the slot machines, i.e., the difference between the bets and the prizes paid.84
114.
Prodec and its predecessor, DEK, were not operators of games of chance in Casino Salta; they merely supplied hardware and software for jackpot systems and poker gaming tables, which were operated by ENJASA's personnel.85
115.
New Star, finally, was operating four slot machine halls (in San Ramón de la Nueva Orán, Metán, Rosario de la Frontera, and General Güemes) based on an authorization granted by BPAS.86 ENREJA was fully aware that New Star had continued to operate the slot machine halls: it was provided with a copy of the contract between New Star and ENJASA and was regularly informed of the payment of New Star's share in the license fee. As regards the slot machine hall in Embarcación, New Star was merely leasing the premises to an operator who had been previously authorized by BPAS.

F. Revocation of ENJASA’s License and Subsequent Events

116.
On 13 August 2013, ENREJA proceeded to issue and notify ENJASA of Resolution No. 240/13 in which it made a joint determination on the three investigations initiated by Resolutions Nos. 380/12, 381/12, and 384/12.87 In respect of all three investigations, ENREJA concluded that the charges brought against ENJASA were well-founded and that ENJASA hence had violated its obligations under the regulatory framework. Finding that ENJASA had violated anti-money laundering provisions and had breached the obligation not to hire operators without ENREJA's authorization, ENREJA concluded that the appropriate sanction was the revocation of ENJASA's license.
117.
On 13 August 2013, within 40 minutes after ENREJA had notified ENJASA of the revocation of its license, the President of ENREJA, Mr. Sergio Mendoza, and the Minister of Economy, Infrastructure, and Public Services of the Province of Salta, Mr. Carlos Parodi, held a joint press conference to inform the public about the revocation of ENJASA's license.88 During the press conference, Mr. Mendoza stated, inter alia, that "ENJASA had an irresponsible attitude in the compliance with anti-money laundering provisions, breaching them in a systematic manner."89
118.
Equally on 13 August 2013, by Decree No. 2348/13, the Governor of Salta ordered ENREJA to prepare a transition plan to transfer ENJASA's operations, including its employees, to new operators.90
119.
On 28 August 2013, ENJASA filed a Recourse for Reconsideration of Resolution No. 240/13.91 In this Recourse, ENJASA argued that Resolution No. 240/13 was unlawful and should be revoked. It claimed, inter alia, that several of the investigated instances, which were found to be in breach of the regulatory framework, had prescribed under the statute of limitations; that ENREJA had disregarded evidence submitted by ENJASA showing that ENJASA had not breached any anti-money laundering rules; and that ENJASA had not hired "operators" in the meaning of Law No. 7020, but merely contracted out certain services to third parties, or had engaged persons that were allowed to operate games of chance under pre-existing authorizations issued by BPAS. ENJASA further claimed that Resolution No. 240/13 was issued in breach of its right to be heard and its right to offer and produce evidence, was issued without warning, that the Resolution’s motivation was insufficient, was based on the retroactive application of certain regulatory rules, was arbitrary, and constituted a disproportionate reaction to minor breaches or mere human errors.
120.
On 5 September 2013, ENJASA requested the First Instance Court of Salta, to suspend the implementation of Resolution No. 240/13 pending its Recourse for Reconsideration.92 This request for interim relief was granted on 4 October 2013.93
121.
On 15 November 2013, Claimants purchased the remaining 40% of the shares in L&E from Iberlux.94
122.
On 19 November 2013, ENREJA dismissed ENJASA’s Recourse for Reconsideration in Resolution No. 315/13.95 On the same day, ENJASA shut down all of its gaming operations.96
123.
On 20 November 2013, Mr. Tucek and Mr. Schreiner, two representatives of CAI, met with the representatives of ENREJA and of the Province of Salta to discuss the modalities of transition of ENJASA’s operations to new operators and an offer made to Claimants to continue operating Casino Salta.97
124.
On 20 November 2013, by Decree No. 3330/13, the Government of the Province of Salta approved the Temporary Plan for the exploitation of games of chance prepared by ENREJA.98 The Plan established conditions for the issuance of licenses to new operators and contained a list of 11 individuals and companies that were to receive such licenses; the list included Video Drome, New Star, and Mr. Navarrete.
125.
On 26 November 2013, ENJASA requested the extension of the interim relief granted by the First Instance Court of Salta, pending an Action for Annulment of Resolutions Nos. 240/13 and 315/13.99 The request for interim relief was rejected on 23 December 2013.100
126.
On 28 and 29 November 2013, by Resolutions Nos. 332-339/13, ENREJA implemented the Transition Plan, appointed on a provisional basis new operators in respect of three casinos (Casino Golden Dream, Casino Oran, and Casino Boulevard), 15 slot machine halls, and four lottery operations, and approved the transfer of ENJASA’s employees to these new operators.101
127.
On 3 December 2013, ENJASA filed another administrative recourse to suspend the revocation of the Licence and the transfer of the operations, which was rejected as inadmissible by Decree No. 1002/16 on 12 July 2016.102
128.
On 12 December 2013, ENJASA filed further administrative recourses to revoke ENREJA’s Resolutions Nos. 332-339/13, which implemented the Transition Plan.
129.
On 30 December 2013, ENREJA passed Resolution No. 364/13 with which it implemented the Transition Plan for Casino Salta, granting a provisional permit to operate the casino to a joint venture consisting of New Star and Sigar S.A. ("Sigar") and transferring a number of ENJASA’s employees to the joint venture.103
130.
On 5 February 2014, ENJASA initiated proceedings before the First Instance Court of Salta against Resolutions Nos. 240/13 and 315/13 for the annulment of the revocation of its operating license.104 It not only claimed that the revocation was contrary to domestic law, but also that it breached the BIT.105
131.
On 30 April 2014, CAI put Respondent officially on notice of its claim under the BIT and invited it to participate in amicable consultations. By the same notice, it accepted the commitment of Respondent to submit the dispute to arbitration under Article 8 of the BIT.106
132.
On 29 May 2014, the Province of Salta, by Decree No. 1502/14, granted the new operators ten-year licenses.107 On 24 June 2014, ENJASA filed a recourse for revocation of Decree No. 1502/14, which was dismissed on 12 July 2016.108
133.
Pursuant to the Tribunal's Decision on Jurisdiction, the pending proceedings before the First Instance Court of Salta concerning the challenge of Resolutions Nos. 240/13 and 315/13 were withdrawn in August 2018.109

V. Arguments of the Parties on Liability

134.
While the principal facts, including in particular the content of the administrative record in the relationship between ENJASA and ENREJA, which ultimately resulted in the revocation of ENJASA's license, are uncontested, the Parties differ in respect of the motives that underlie the revocation of the License and in their legal assessment of that revocation. The present section summarizes the Parties' arguments in this respect. These summaries are not intended to be a comprehensive survey of all the points made by the Parties, but rather identify the Parties' principal positions. However, in reaching its conclusions, the Tribunal has taken into consideration the full range of arguments advanced by the Parties both in their written and oral submissions.

A. Claimants’ Arguments on the Facts

135.
Claimants contend that the revocation of ENJASA's gaming license has to be assessed not as an isolated exercise of ENREJA's supervisory powers, but as part of a larger plot through which ENREJA and the Government of the Province of Salta aimed at ousting ENJASA, and by prolongation L&E and its shareholders, from the remainder of their 30-year monopoly in Salta's gaming sector. This was motivated, Claimants claim, by an interest on the side of the Province to redistribute ENJASA's business to domestic operators of games of chance at conditions that were economically more favorable to the Province than the fees paid by ENJASA.110 Claimants claim that, already for years, ENREJA had developed a pattern of harassment and heavy-handed controls of ENJASA in order to fabricate and collect violations of gaming regulations allegedly committed by ENJASA. Towards the end of 2012, the authorities in the Province of Salta then devised a concrete plan to oust ENJASA of its monopoly. This plan, Claimants contend, culminated in the revocation of ENJASA’s exclusive license through Resolution No. 240/13, which ENREJA based on fabricated systematic and serious breaches of anti-money laundering rules, and the subsequent distribution of ENJASA’s business to new operators. The revocation of ENJASA’s license, Claimants claim, was arbitrary and unlawful and lacked any justification, as ENJASA in fact had not committed serious breaches of the regulatory framework in place in the Province of Salta.111

1. Plan to Oust ENJASA from Salta’s Gaming Sector

a) Mounting Interferences with ENJASA’s Operations Starting in 2007

136.
In making their claim that the revocation of ENJASA’s license was part of a larger, politically motivated plan to redistribute ENJASA’s business in the gaming sector to local operators, Claimants draw on a large amount of circumstantial evidence. They claim that already in 2007, after Mr. Juan Manuel Urtubey took office as the new Governor of the Province of Salta, replacing his political rival, former Governor Mr. Juan Carlos Romero, there were indications that the Province wanted to get rid of "the Austrians."112
137.
Starting in December 2007, following the takeover of Mr. Urtubey as new governor, Claimants claim, representatives of the Province of Salta and ENREJA began exerting pressure on ENJASA’s operations. To start with, the Province of Salta insisted on renegotiating the conditions of ENJASA’s gaming license, threatening to terminate ENJASA’s license if ENJASA did not accept the modification of the license fee by paying a dynamic canon fee, instead of the previous fixed-fee arrangement. Claimants consider that ENJASA had no choice but to accept the new license fee in the Acta Acuerdo, which was concluded between ENJASA and UNIREN on 7 May 2008 and ratified by the Government of Salta on 11 August 2008.113
138.
Claimants further submit that, following the conclusion of the Acta Acuerdo, ENREJA multiplied administrative inquiries against ENJASA relating to minor issues. These inquiries, in Claimants' view, were visibly aimed at finding minor formalistic mistakes made by ENJASA. ENREJA allegedly also imposed fines for circumstances discovered during its inspections that had occurred years before the conclusion of the Acta Acuerdo. Claimants consider that the sole purpose of these inspections and fines issued by ENREJA was to harass and exert pressure on ENJASA.114
139.
Claimants also submit that ENREJA started interfering increasingly with ENJASA's conduct of lottery and slot machine operations. In respect of ENJASA's lottery operations, Claimants contend, ENREJA insisted on (i) the installation of a new CCTV system; (ii) replacing newly purchased equipment with equipment that was leased from the Province of Salta; and (iii) imposing disproportionate sanctions for old allegations and minor isolated incidents that were diligently addressed by ENJASA.115 In connection with the operation of slot machines, Claimants contend, ENREJA started requiring an unrealistic and unreasonable minimum number of employees and technicians for their operation. ENREJA also required ENJASA to change a large number of slot machines by imposing new technical requirements. Moreover, Claimants point out, ENREJA increased the administrative formalities for the approval of new slot machines, while systematically delaying the approval of these slot machines.116 Finally, Claimants claim, ENREJA introduced senseless administrative burdens on ENJASA with the purpose of causing minor clerical errors for which ENREJA could then impose harsh sanctions.117
140.
As a consequence of the increasing controls and other conduct of ENREJA, Claimants submit, ENJASA had to make additional investments and ENJASA's management and personnel had to spend a substantial amount of their time in responding to ENREJA's harassment.118

b) Administrative Inquiries and Sanctions from 2008 to May 2013

141.
Claimants also submit that ENREJA increasing the number of investigations and sanctions for alleged breaches by ENJASA of the regulatory framework reflected the harassing attitude taken towards ENJASA and was part of a broader plan to oust it from the Province. Claimants specifically present arguments on the following sanctions that ENREJA imposed on ENJASA between March 2008 and May 2013:

- ENREJA's Resolution No. 31/08 (dated 10 March 2008) imposed a fine of ARS 5,000 because a check issued by ENJASA did not contain the addition "no a la orden" 30 months after this error was discovered during an inspection of the anti-money laundering book for lottery games on 13 July 2005.119 Issuing a sanction after such a long time, Claimants point out, contravened Article 22 of ENREJA's internal rules, which required a decision within 15 days after initiating an administrative investigation. Moreover, Claimants submit, ENREJA disregarded that, while the words "no a la orden" were missing, the check had been "crossed", which had the exact same legal consequences, that is, to make the check non-transferable, as the wording that was required by Resolution No. 26/00.120

- ENREJA's Resolution No. 32/08 (dated 10 March 2008) fined ENJASA ARS 10,000 for the alleged loss of the anti-money laundering book, for alleged irregularities in recording payments, and for the alleged irregular issuance of checks for the payment of prizes.121 ENJASA challenged the timeliness of the fine with respect to the issuance of checks. With respect to the loss of the anti-money laundering book, Claimants note, ENJASA's management diligently informed ENREJA as soon as it had learned about the loss and dismissed the individual responsible for the loss; in any event, no information had been lost as all entries to be made since the loss of the book had been kept by the individual in question in a separate excel sheet and were later copied into the new anti-money laundering book.122

- ENREJA's Resolution No. 232/08 (dated 18 November 2008) imposed fines in the amount of ARS 62,000 on ENJASA because a payment of over ARS 10,000 was not made by check, although at the time, Claimants contend, payment by check was not required.123

- ENREJA’s Resolution No. 286/09 (dated 16 December 2009), which fined ENJASA ARS 15,000 for amending betting limits in Casino Golden Dreams without prior authorization, concerned minor formalistic errors which had not caused any prejudice to customers.124

- ENREJA’s Resolution No. 39/10 (dated 9 March 2010), which fined ENJASA ARS 100,000 for holding an irregular poker tournament in one of its casinos, was issued 17 months after the tournament had taken place; moreover, the irregularity related to the fact that the poker tournament had been held on both a Tuesday and a Thursday, instead of only on a Thursday, as originally approved by ENREJA.125

- ENREJA’s Resolution No. 46/10 (dated 16 March 2010), which was confirmed by Resolution No. 106/10 (dated 3 May 2010), imposed a fine of ARS 20,000 on ENJASA because a payment of over ARS 10,000 had not been made by check, although at the time, Claimants contend, payment by check was not required.126 In addition, ENREJA imposed the fine almost two years after the event had taken place and therefore contrary to the one-year time limit that Article 49 of Law No. 7020 established.127

- ENREJA’s Resolution No. 104/10 (dated 3 May 2010) fined ENJASA ARS 100,000 for making payments of prizes in cash, even though, Claimants contend, no obligation to do so existed at the time.128

- ENREJA’s Resolutions Nos. 128/10, 129/10, and 130/10 (all dated 18 May 2010), as well as Resolutions Nos. 151/10, 152/10, and 153/10 (all dated 7 June 2010) temporarily suspended the operation of specific gambling halls for short periods between 7 and 13 days because of clerical errors in the slot machine rosters submitted to ENREJA.129

- ENREJA’s Resolution No. 161/10 (dated 15 June 2010) imposed a fine of ARS 172,000 on ENJASA for not making payments by check when, Claimants contend, there was no obligation to do so, and for three cases in which ENJASA had not requested an identification of the winners of prizes. In addition, the fine was imposed three years after the payments in questions had been made, thus violating Article 21(2) of ENREJA’s internal rules.130

- ENREJA’s Resolution No. 200/10 (dated 27 July 2010) imposed a fine of ARS 200,000 on ENJASA for opening a slot machine hall in the town of Metan without authorization, even though the hall had been opened in 2004 and had been audited regularly by ENREJA.131

- ENREJA’s Resolution No. 178/12 (dated 10 July 2012) imposed a fine of ARS 550,000 for three minor and isolated incidents in lottery draws, namely the use of too many balls for a drawing, an incorrect publication of the winning ticket in another drawing, and other minor irregularities in further drawings, that were all immediately rectified by ENJASA and did not harm any customers.132

- ENREJA’s Resolution No. 161/13 (dated 28 May 2013), which imposed on ENJASA the maximum fine of ARS 200,000 for modifying prize limits without authorization in poker games, as well as the maximum fine of ARS 500,000 for organizing an unauthorized jackpot, involved merely minor formalistic errors and did not cause any prejudice to ENJASA’s customers.133

142.
Overall, Claimants claim that ENREJA, between 2008 and May 2013, imposed fines on ENJASA in connection with events that partly had occurred years before the actual fines were imposed. Furthermore, many of the sanctions, in Claimants’ view, lacked a legal basis. Others related to what Claimants describe as obviously minor, formal errors that did not affect the integrity of ENJASA’s conduct and administration of games of chance and did not cause any prejudice to ENJASA’s customers. Furthermore, the amounts of the fines imposed on ENJASA, Claimants contend, showed no relation to the facts they were allegedly based upon and increased without explanation from ARS 5,000 in 2008 to ARS 500,000 in May 2013.134 In any event, these prior incidents, Claimants contend, could not give rise to the conclusion that ENJASA had a history of disregarding the regulatory framework in place for operating games of chance, including in particular in respect of anti-money laundering. Rather, the fines imposed by ENREJA formed part of a pattern of harassing conduct that ENREJA had started after Mr. Urtubey had assumed office as Governor of the Province of Salta in 2007.

c) Role of Video Drome

143.
As further support for their argument that the revocation of ENJASA's license was part of a plan to redistribute ENJASA's business among domestic operators, Claimants also draw attention to a letter of 23 November 2012, which was sent to ENREJA by Video Drome.135 Claimants contend that Video Drome had suggested to ENREJA in that letter that it could operate gaming facilities in Salta at more favorable conditions than those in place with ENJASA. In Claimants' view, Video Drome's letter to ENREJA triggered the concrete decision to oust ENJASA from its position in the gaming sector in the Province of Salta by means of revoking ENJASA's license through Resolution No. 240/13.136 This is supported, Claimants submit, by the fact that Video Drome was one of the companies to whom ENJASA's business was transferred after the revocation of the License. In addition, Claimants point out, the canon fee of 20%, which the Province ultimately obtained from all new operators, was in line with the proposal Video Drome made in its letter.137
144.
In this context, Claimants also point out that ENJASA and Video Drome had been in a joint venture relating to slot machines installed in Casinos Golden Dreams and had concluded agreements for the lease of slot machines in other locations. The relationship, however, had turned sour due to various disputes concerning, inter alia, ENJASA's request to Video Drome to participate in the payment of the dynamic license fee negotiated in the Acta Acuerdo and to replace older with new slot machines, which would comply with ENREJA's new technical requirements. Since Video Drome had refused these requests, Claimants submit, ENJASA wanted to discontinue the joint venture and lease agreements which were due to expire by 31 December 20 1 2.138 It is against this background, Claimants contend, that Video Drome sent the letter of 23 November 2012 to ENREJA.

d) Political Motivation of the Revocation of ENJASA’s License

145.
Claimants further submit that political rivalries in the Province of Salta, which already explained the renegotiation of ENJASA’s operating fee in 2008, also played a role in the revocation of ENJASA’s license. To this end, Claimants claim that, during a meeting with representatives of the Government of the Province of Salta on 27 August 2013, they were informed that the real reason behind the revocation of ENJASA’s license was the participation in L&E of Iberlux, which was allegedly held by a strawman of Mr. Romero, the former Governor of the Province of Salta and political rival of Mr. Urtubey.139 It was following this meeting that Claimants purchased, on 15 November 2013, the remaining 40% of the shares in L&E from Iberlux.140
146.
As further indication that the revocation of ENJASA’s license was politically motivated, Claimants point to the close coordination between ENREJA and the Government of the Province of Salta in relation to the revocation of ENJASA’s license. In particular, Claimants note that, on 13 August 2013, within 40 minutes after ENJASA had learned that the License had been revoked, the President of ENREJA, Mr. Sergio Mendoza, and the Minister of Economy, Infrastructure, and Public Services of the Province of Salta, Mr. Carlos Parodi, held a joint press conference, in which they claimed that ENJASA had systematically breached the anti-money laundering regulations in place. In Claimants’ view, the two officials made clear that ENJASA was no longer relevant in the Province of Salta, stating that ENJASA "disappears from this story."141 The two officials also suggested, Claimants submit, that any recourse by ENJASA against Resolution No. 240/13 would be futile.142
147.
Claimants further contend that it was on the same day that the Governor of the Province of Salta instructed ENREJA to prepare a transition plan to appoint new operators.143 One day after the revocation, on 14 August 2013, Claimants submit, the Governor publicly endorsed the revocation of ENJASA's license at a press conference.144
148.
Similarly, Claimants consider that the incredibly quick implementation of the transition plan immediately following the issuance of Resolution No. 315/13 is illustrative of the intention of the Government of Salta to remove ENJASA from the local gaming market and to replace it with national operators.145 In this context, Claimants point out, it was only one day after ENJASA's Request for Reconsideration had been dismissed, when, on 20 November 2013, the Government of Salta approved the transition plan for the exploitation of gaming in the Province and authorized 11 individuals and companies to take over the operation of casinos, slot machines, and lotteries.146 Claimants also note that four of these entities, including Video Drome, were prior suppliers of equipment, and seven were pre-existing operators, including New Star and Mr. Navarrete. Between 20 and 29 November 2013, the Province of Salta then granted licenses to new operators for ENJASA's four casinos, 15 slot machine halls, and four lottery operations and definitely excluded ENJASA from these operations.147
149.
Furthermore, Claimants point out that even though ENJASA had initiated, on 5 February 2014, proceedings in the domestic courts and requested the annulment of the revocation of ENJASA's license and the appointment of new operators, on 29 May 2014, the Government of Salta granted the new operators ten-year licenses in Decree No. 1502/14, without conducting a public tender.148 This confirms, in Claimants' view, that the sole purpose of the revocation of ENJASA's license, and the transfer of its business and staff to the new operators, was an orchestrated action aimed at ousting ENJASA from Salta's gaming and lottery operations in order for the Province to benefit from more lucrative fees under newly issued licenses with operators other than ENJASA.149
150.
Claimants also submit that they and ENJASA had undertaken all measures available to them to remedy the situation. In the weeks following the issuance of Resolution No. 240/13, CAI's representatives Mr. Tucek and Mr. Schreiner attended several meetings with representatives of the Province of Salta and of ENREJA. During these meetings, Claimants contend, ENJASA’s alleged non-compliance with the applicable gaming regulations was not even raised once. The only topic that the Provincial Government and ENREJA were arguably focusing on was the alleged involvement in ENJASA, through the shareholding of Iberlux in L&E, of Mr Carlos Juan Garramon, a supporter of the political rival of Governor Urtubey. It is also for this reason, Claimant submit, that CAI had purchased, on 15 November 2013, the remaining 40% of the shares in L&E from Iberlux as a sign of good will and of CAI’s strong interest and commitment to continue ENJASA’s operations in the Province of Salta.150
151.
Claimants further point out that a few weeks after the revocation, in November 2013, Mr. Tucek and Mr. Schreiner of Casinos met with representatives of ENREJA and the Province of Salta to discuss the modalities of transition of ENJASA’s operations to new operators. During that meeting, Claimants allege, they were offered the possibility to continue operating two casinos, namely Casino Salta and Casino Boulevard, provided they waived all claims against the Province, an offer they, however, declined.151
152.
The proposal to continue operations on a reduced scale was unacceptable to Claimants. Casino Salta merely represented 2% of ENJASA’s total revenues and Casino Boulevard even less. Moreover, Claimants note, they could only acquire new licenses for the two casinos in question if they forfeited, in return, all claims against ENREJA and the Province.152 In Claimants’ view, the fact that the Province and ENREJA offered them to continue operations on a reduced scale confirms that there was no genuine concern about ENJASA’s alleged breaches of the applicable regulatory framework.
153.
All of the above, in Claimants’ view, support their submission that the revocation of the License was part of a politically motivated plan to oust ENJASA from its monopoly in the gaming sector in the Province of Salta and to redistribute its business under conditions that were more favorable for the Province than the conditions ENJASA was operating under.

2. The Revocation of ENJASA’s License

154.
The politically motivated plan to oust ENJASA from the gaming sector in Salta also becomes apparent, Claimants argue, when considering the revocation of ENJASA’s license. Claimants submit that there was neither a legal nor a factual basis for the underlying administrative inquiries and the breaches ENREJA found ENJASA had committed. In Claimants' view, the revocation of ENJASA's license was arbitrary, disproportionate, and politically orchestrated. In addition, Claimants' submit, due process was violated in the administrative proceedings leading to the revocation of ENJASA's license.

a) Charges Underlying Resolution No. 240/13

155.
Claimants submit that there were no grounds for ENREJA to conclude that ENJASA had systematically breached the anti-money laundering regulations of the Province of Salta or hired third operators without ENREJA's authorization. Instead, the charges against ENJASA were fabricated and based on incidents that were either non-existent, consisted of minor errors, partly dated from years before the revocation of the License, or involved arbitrary interpretations or applications of the regulatory framework in place. Claimants concretize their submission in respect of the charges brought forward by ENREJA in the three investigations that Resolution No. 240/13 took as a basis for the revocation of ENJASA's license as laid down in the following sections.

(1) Allegations in Resolution No. 380/12

156.
In respect of Resolution No. 380/12, in which ENREJA had charged ENJASA with having breached anti-money laundering rules in its lottery operations and by making a payment in respect of a prize won in a slot machine game, Claimants reiterate the same arguments that ENJASA had already made in answering to ENREJA's charges (see supra paras. 97-101). They therefore claim that no breach of anti-money laundering rules had occurred. At the most, minor administrative mistakes may have occurred in some of the instances investigated by ENREJA in Resolution No. 380/12.153 To the extent ENREJA based the revocation of ENJASA's license on these instances, ENREJA had relied on an incorrect factual basis and had not taken into account the explanations ENJASA had furnished in response to ENREJA's investigation under Resolution No. 380/12. Claimants also point out that they submitted the winning ticket for the prize of ARS 11,080 in the present proceeding to prove that the prize indeed existed.154 In addition, the minor errors that had occurred could not be qualified as serious breaches of the regulatory framework in place.

(2) Allegations in Resolution No. 381/12

157.
In respect of Resolution No. 381/12, which concerned alleged breaches of anti-money laundering rules in live games, Claimants reiterate the same arguments that ENJASA had already made in answering to ENREJA’s charges (see supra paras. 103-107).
158.
As for the charges relating to cash payments made to customers in August and September 2011, Claimants submit that, at the relevant time, no obligation had existed to pay prizes above ARS 10,000 by check or international wire transfer and to register the payments in the anti-money laundering book.155 Consequently, ENREJA’s conclusion that ENJASA had acted in breach of anti-money laundering rules by making cash payments was an arbitrary exercise of its supervisory powers.
159.
In this context, Claimants observe that Law No. 7020 only required registering the identity of the recipient in case amounts above ARS 10,000 were paid by check, but did not oblige ENJASA to make all payments above ARS 10,000 by check. Similarly, Resolution No. 26/00 of 10 April 2000, which ENJASA also had to comply with, did not require payments of amounts above ARS 10,000 to be made by check. This only changed, Claimants point out, as from 1 May 2012, when Resolution No. 90/12 replaced Resolution No. 26/00.156
160.
In Resolution No. 90/12, ENREJA introduced the obligation for ENJASA to pay prizes in excess of ARS 10,000 by check or via international wire transfer. The checks had to mention the beneficiary and, if the amount payable by check was in excess of ARS 50,000, the check was to be made non-transferable. Thus, Claimants submit, before the introduction of Resolution No. 90/12, no use of checks and identification of beneficiaries were required for payments above ARS 10,000.157
161.
Claimants further observe that, at the relevant times, no federal law in Argentina required payments above ARS 10,000 to be made by check. Resolution No. 151/98 of the Federal Tax Authority and National Law No. 25,345 only refused tax deductions when certain means of payment (such as non-transferrable checks) were not used.158 To confirm that ENJASA had not breached anti-money laundering regulations, Claimants also refer to the fact that inspectors of Argentina's federal agency for the prevention of money laundering in 2013 did not find reasons to further investigate ENJASA for breaches of anti-money laundering laws.159
162.
Nevertheless, and in spite of the clear regulations, Claimants submit, ENREJA stated in Resolution No. 381/12 that even before 1 May 2012 ENJASA had to make payments over ARS 10,000 by non-transferrable check and register the beneficiary in the anti-money laundering book. ENREJA's position, Claimants contend, could only be based upon a retroactive - and hence unlawful - application of Resolution No. 90/12 to facts that had occurred before 1 May 2012.160
163.
Moreover, Claimants submit that even if a legal obligation to make payments of prizes by check had existed in August and September 2011, ENREJA's investigation under Resolution No. 381/12 against ENJASA was time-barred. Claimants contend that pursuant to Article 49 of Law No. 7020, actions related to administrative infringements were time-barred after one year from the date of the event in question; the statute of limitations could be interrupted only by the initiation of an administrative inquiry or by the repetition of the breach in question, both of which neither had in fact, nor was alleged to have, occurred. Instead, ENREJA had started the administrative inquiry in question more than one year after the alleged breaches.161
164.
In this context, Claimants also submit that the five-year statute of limitations foreseen in Argentina's Federal Criminal Code was not applicable. This would entail a mistaken reliance on the ruling in Filcrosa, where the Argentine Supreme Court had decided that a longer statute of limitations established under local laws was inapplicable. Filcrosa did not, however, allow applying a longer statute of limitations under federal law, when local legislation imposed a shorter statute of limitations, as in the present case. Moreover, Claimants add, a five-year statute of limitations for criminal offences would also not apply, as none of the alleged regulatory breaches constituted crimes in the sense of Argentina's Criminal Code.162
165.
Furthermore, Claimants argue that there was no factual basis to conclude that the payments ENJASA had made above ARS 10,000 actually concerned prizes won by casino customers. The information on which ENREJA’s charges were based - namely so-called "Daily Reports", "Rating Card Forms", and "internal checks" from August and September 2011 - provided no details on prizes actually won by individual customers. The Daily Reports and the Rating Card Forms only provided general estimates of the amounts won on each live game table. Internal checks were received against money deposited by customers in the casino’s treasury. Although internal checks could be exchanged for chips at the gaming tables, there was not necessarily a correlation between the amount of the internal checks and the chips a client subsequently cashed.163 Moreover, no regulation in the Province of Salta forbade the use of internal checks in164 casinos.
166.
In respect of ENREJA’s charge relating to cash payments made in September 2011 to two customers in Casino Salta, Claimants reiterate that it was not clear what legal rule ENJASA’s conduct violated. Claimants stress that ENJASA did not have any obligation at the time to make payments above ARS 10,000 by check.
167.
Claimants also point out that it is impossible to determine whether the amounts paid involved money won during live games or money that had been brought into the casino by the customer. Furthermore, it was not uncommon for two individuals to pool their money for playing and, at the end of the day, distribute what was left over or obtained at the gaming table. In any event, Claimants submit, there was no basis for holding ENJASA responsible for their clients’ behaviour.165
168.
Claimants concede that ENREJA had already sanctioned ENJASA for having paid prizes above ARS 10,000 in cash instead of by check before Resolution No. 90/12 had entered into force, that is, when Resolution No. 26/00 still applied. However, Claimants point out, ENJASA had in fact challenged ENREJA’s interpretation of Resolution No. 26/00 as requiring the making of payments above ARS 10,000 by check or international wire transfer several times.166 ENJASA had only accepted to pay the fines in earlier administrative proceedings in order not to damage the relationship with ENREJA.
169.
Claimants therefore conclude that the charges in Resolution No. 381/12 were based on either an incorrect interpretation of the regulatory framework in place at the time (Law No. 7020 and Resolution No. 26/00) or a retroactive application of Resolution No. 90/12, disregarded the statute of limitations in Article 49 of Law No. 7020, and involved mistakes in the investigations of the facts. The conduct targeted in Resolution No. 381/12 could therefore, Claimants contend, not serve as a basis for the finding of serious breaches of the applicable regulatory framework, which could justify the revocation of ENJASA's license.

(3) Allegations in Resolution No. 384/12

170.
In respect of Resolution No. 384/12, which charged ENJASA with having breached Article 5 of the Law No. 7020 by sub-licensing the operations of several slot machine halls in different locations to third operators without requesting ENREJA's approval, and involving third operators in certain live games, Claimants equally reiterate the arguments that ENJASA had already made in answering to ENREJA's charges (see supra paras.109-115), namely that some of the individuals and companies in question were operating slot machine halls under permits granted by the BPAS (Mr. Navarrete, Mr. Colloricchio, and New Star), while others were not operators of games of chance at all (Emsenor, Video Drome, Prodec, and DEK). Claimants moreover observe that ENREJA could see from the investment plans Mr. Navarrete and New Star had submitted to ENREJA after the revocation of ENJASA's license that both had been appointed as operators of slot machine halls by BPAS.167
171.
Claimants further submit that ENJASA, although it had been granted an exclusive license, had accepted, at the request of both the Province of Salta and ENREJA, who otherwise feared social and political problems, that operators authorized by BPAS could continue operating and that their status would not be altered due to the exclusivity of the license granted to ENJASA.168 Moreover, Claimants point out, ENREJA was aware of all contractual arrangements ENJASA had with these pre-existing operators concerning the operation of slot machines and had accepted that the fees from these operators would be paid to ENREJA through ENJASA. Claimants also maintain that ENREJA had, at all times, meticulously audited ENJASA’s operations of slot machine halls and therefore had known about these arrangements all along.
172.
Claimants also point out that Article 5 of Law No. 7020 forbids the licensee to appoint operators without ENREJA’s authorisation, but does not provide a definition of what an "operator" is. Claimants argue that ENREJA made an unjustifiably broad interpretation of the term "operator" in Article 5 of Law No. 7020 if it included companies under that definition that merely rented property to ENJASA for the operation of a slot machine hall (Emsenor), that supplied hardware and software for games of chance to ENJASA (Prodec and DEK), or leased slot machines to ENJASA (Video Drome). In this context, Claimants further argue that one does not become an "operator" by the mere fact of sharing revenues and profits from gaming operations.
173.
Claimants further point out that the Acta Acuerdo confirms that there had been no breaches of the applicable regulatory framework by ENJASA with respect to engaging some of those alleged operators.169 Indeed, one of the parameters that was considered during the negotiations with UNIREN at the time was the level of regulatory compliance of ENJASA. Thus, Claimants note, Decree No. 3428/08, which approved the Acta Acuerdo, confirmed that ENJASA’s compliance was examined.170 Moreover, the Acta Acuerdo contained specific assurances about ENJASA’s regulatory compliance, namely that (i) ENJASA had complied with the payment of the license fee; (ii) ENJASA had complied with its investment plan in the area of tourism and the increase of capital of ENJASA; (iii) there were no factual or legal circumstances that could constitute a breach of the terms of the public tender and transfer agreement through which ENJASA obtained the gaming license; and (iv) the joint ventures of ENJASA, inter alia with Video Drome, were not contrary to the terms of the License, but complied with Article 5 of Law No. 7020.171
174.
Claimants finally observe that, as part of the transition plan, ENREJA had transferred 600 of ENJASA’s employees to the companies that took over four casinos, 15 slot machine halls, and four lottery operations from ENJASA. The large number of employees transferred, Claimants submit, indicates that no third parties had been operating ENJASA's sites. Claimants also note that ENREJA granted permits to the very same companies, namely Video Drome and New Star, and one individual, Mr. Navarrete, that had participated in what ENREJA claimed had been "serious breaches", namely the involvement of operators of games of chance without ENREJA's authorization.172 All in all, the allegation that ENJASA had illegally appointed third party operators was thus, Claimants submit, merely a pretext to revoke ENJASA's license.173

b) The Revocation of the License Was Arbitrary and Disproportionate

175.
Claimants conclude from the above that there was no legal justification to revoke ENJASA's license. ENREJA simply accepted the findings of the administrative inquiries described in Resolutions Nos. 380/12, 381/12, and 384/12, without addressing any of ENJASA's explanations and arguments. Resolution No. 240/13, through which ENJASA license was revoked, retroactively applied Resolution No. 90/12 to facts that had occurred before its entry into force and misrepresented the facts underlying each allegation. Claimants insist that ENJASA complied with the applicable anti-money laundering regulations and did not illegally transfer its gaming license to unauthorized operators. As a result, Claimants conclude, ENREJA's revocation of ENJASA's gaming license was arbitrary.174
176.
Claimants also cast into doubt the legal basis on which ENJASA's license was terminated. Whereas ENREJA relied on Article 13 of Law No. 7020 to revoke ENJASA's license for breaches of Article 5 of Law No. 7020, the allegations made in Resolutions Nos. 380/12, 381/12, and 384/12, which Resolution No. 240/13 confirmed, concerned, Claimants submit, administrative infringements that could only be sanctioned pursuant to Article 41 of Law No. 7020 with fines, a closure of at most 30 days, or an inability to operate of at most one year. However, the revocation of the operating license was not a sanction foreseen in Article 41. Claimants therefore conclude that ENREJA's allegations, even if they had been true, could not lead to a revocation of ENJASA's license.175
177.
Claimants further contend that ENREJA could not have applied Article 13 of Law No. 7020, which provided for the revocation of the License as the most severe sanction, to sanction administrative infringements. Moreover, Article 13 had been repealed by Law No. 7133, which amended Law No. 7020.176 This, Claimants submit, is a further reason for why ENREJA could not have revoked the License on the basis of Article 13 of Law No. 7020.177
178.
Moreover, Claimants contend that irrespective of the question as to whether or not the breaches had occurred, the revocation of the License was in all events excessive. In this context, Claimants point to Article 48 of Law No. 7020, which establishes the principle of proportionality and lists the criteria for the graduation of sanctions (see supra para.84). In Claimants' view, ENREJA did not take into account the proportionality required by the provincial regulations, nor did it take into account, or demonstrate the seriousness of, infringements ENJASA had allegedly committed. ENREJA did not consider how these infringements affected or may have affected the "legal certainty, the morality and good customs" mentioned in Article 48 of Law No 7020. To support their argument, Claimants refer to decisions from Argentina's federal agency in charge of anti-money laundering in cases that involved much more serious allegations, but limited the sanctions imposed to fines. This indicates, Claimants conclude, that the revocation of ENJASA's license was a disproportionate sanction.178
179.
Finally, Claimants reject the argument that ENJASA's previous infringements justified the revocation of the License as a sanction under Article 48 of Law No. 7020, which allows imposing heavier sanctions in light of the licensee's "record of relapses."

c) Violation of ENJASA's Due Process Rights

180.
Claimants further submit that the revocation of ENJASA's license, and the procedure leading up to it, violated elementary due process rights. In addition to the lack of any proportionality in, and the arbitrariness of, the decision ultimately made, ENREJA's conduct breached elementary due process guarantees by (i) not warning ENJASA about the possible consequences of the administrative inquiries; (ii) completely disregarding the facts underlying the allegations; (iii) failing to respect ENJASA's right to be heard by not addressing any of the factual explanations and legal arguments made by ENJASA in response to ENREJA’s investigations; (iv) depriving ENJASA of a fair opportunity to present its defence, because the company was unable to review the complete file relating to the allegations made by ENREJA and was not given adequate time to respond to the administrative inquiries; and (v) revoking the License without adequate reasoning.179
181.
Claimants submit in particular that ENREJA was obliged to alert ENJASA of the possible consequences of the administrative inquiries initiated by Resolutions Nos. 380/12, 381/12, and 384/12. ENREJA did not do so, however. Contrary to Respondent’s contention, Resolutions Nos. 39/10, 104/10, and 161/10 did not contain sufficient warnings about a possible revocation of ENJASA’s license arising out of the conduct investigated under Resolutions Nos. 380/12, 381/12, and 384/12. Moreover, by August 2013, when Resolution No. 240/13 was handed down, these earlier resolutions were three years old and were not mentioned or referenced in Resolutions Nos. 380/12, 381/12, and 384/12.180
182.
Claimants further point out that ENJASA submitted, on 28 August 2013, an extensive Recourse for Reconsideration of Resolution No. 240/13, which contained detailed arguments of fact and law.181 In this Recourse, ENJASA observed, for instance, that ENREJA had misinterpreted the involvement of the third operators and requested ENREJA to produce the permits of the BPAS authorizing these operators. Moreover, ENJASA submitted that Video Drome, Prodec, and DEK were not operating the games in question, but had only rented out slot machines or supplied hardware and software that ENJASA used to operate games of chance. Furthermore, ENJASA submitted that ENREJA had either misinterpreted Law No. 7020 and Resolution No. 26/00 by requesting that all payments above ARS 10,000 had to be made by check, or was retroactively applying Resolution No. 96/12 to conduct that had taken place before that Resolution entered into force.
183.
On 19 November 2013, ENREJA denied ENJASA’s Request for Reconsideration of Resolution No. 240/13 and confirmed the revocation of ENJASA’s license by Resolution No. 315/13. In Claimants’ view, Resolution No. 315/13 merely rubberstamped Resolution No. 240/13 and sweepingly disregarded or misrepresented ENJASA’s arguments, considering its Request for Reconsideration a mere "dilatory activity."182 Claimants further point out that, for the first time in Resolution No. 315/13, ENREJA denied that Mr. Navarrete, Mr. Colloricchio, and New Star had been authorized to operate slot machine halls by BPAS.183 ENREJA also pretended, Claimants contend, that, in accordance with Article 2 b) of UIF Resolution No. 199/11, any payment made to a gambler in a casino, must be considered a "prize", although this provision clearly distinguished between the payment of "prizes" and of other amounts.184 All of this, Claimants submit, are further indications that due process was not respected, as ENJASA was, for the first time in Resolution No. 315/13, confronted with additional legal and factual arguments and allegations and could not respond to ENREJA.

B. Claimants’ Analysis of the Law

184.

In Claimants' view, the plan to oust ENJASA of its business in the gaming sector, which culminated in the revocation of its exclusive license, followed by the transfer of its operations and employees to new operators, destroyed Claimants' investment in the Argentine Republic, with no compensation being paid. This, Claimants argue, constitutes an unlawful expropriation in the sense of Article 4 of the BIT and breaches the obligation of the host State to provide fair and equitable treatment under Article 2(1) of the same treaty, as a result of which Claimants are entitled to damages. The Argentine Republic, Claimants add, is responsible for the actions of the authorities of the Province of Salta, which are attributable to her under international law, as already held by the Tribunal in its Decision on Jurisdiction.185

1. Applicable Law

185.
Given that their action involves a claim for breach of the international law standards set forth in the BIT, Claimants contend that "[w]hen it comes to an issue of liability for a claim founded upon an investment treaty obligation, the applicable law is the investment treaty as supplemented by general international law."186
186.

Claimants stress that Respondent may not rely on her domestic legislation "as a justification for acts that are in violation of its treaty and other international law obligations."187 This, Claimants argue, is confirmed by Article 27 of the Vienna Convention on the Law of Treaties ("VCLT"), by Articles 3 and 32 of the International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts ("ILC Articles"), as well as by "abundant and consistent authority of ICSID tribunals," which confirms that domestic law cannot justify the failure to comply with international law.188

187.

Claimants further contend that domestic law is only relevant in determining a State’s international responsibility as part of the factual matrix of the dispute, not as part of the governing law, as confirmed by numerous international courts and tribunals.189 In this context, Claimants refer to several statements of the International Court of Justice ("ICJ") to this effect, inter alia in the ELSI case, where the Court said:

Compliance with municipal law and compliance with the provisions of a treaty are different questions. What is a breach of treaty may be lawful in the municipal law and what is unlawful in the municipal law may be wholly innocent of violation of a treaty provision.190

188.

For Claimants, the above principle is not altered by the reference to the domestic law of the host State in Article 8(6) of the BIT, which states:

The arbitral tribunal shall decide the dispute with reference to the laws of the Contracting Party involved in the dispute, including its private international law rules, the provisions of this Agreement and the terms of any specific agreements concluded in relation to such an investment, if any, as well as the applicable principles of international law.

189.
This provision, Claimants argue, must be interpreted pursuant to the VCLT and has to be read together with Article 27 of the VCLT and customary international law, "both of which prohibit a party to a treaty to invoke its national law as a justification for its failure to perform a treaty."191
190.
Claimants further contest Respondent's assertion that, in order to be able to rely on Article 27 of the VCLT, Claimants must first establish a conflict between Argentine law and international law. According to Claimants, this assertion "disregards the principle according to which domestic law is not governing the question of liability under international law."192

2. Breach of Article 4 of the BIT

191.

Claimants point out that Article 4 of the BIT protects both against expropriation and measures having an effect equivalent to expropriation, and therefore encompasses both direct and indirect or de facto expropriation.193 According to Claimants, the revocation of ENJASA's license was an abuse of the regulatory powers of ENREJA and constituted an indirect expropriation of Claimants' investment in Argentina. Because of the revocation of ENJASA's license, Claimants claim to be entitled to damages because Respondent thereby permanently deprived them of their investment in Argentina without compensation in breach of Article 4(1) and (2) of the BIT. Claimants further claim to be entitled to damages pursuant to Article 4(3) of the BIT because the revocation of ENJASA's license qualifies as a direct taking of an asset (the License), which belongs to ENJASA, an Argentine company in which Claimants hold shares.

a) The Revocation of the License as an Abuse of Regulatory Powers

192.
Claimants accept that customary international law recognizes a host State's "right to regulate or take measures affecting foreign investors' property interests without a finding of compensable expropriation," as long as such measures pursue a legitimate purpose, are aimed at the general welfare, are not discriminatory, fall within the scope of the State's general regulatory or administrative powers, and are in accordance with due194 process.
193.
According to Claimants, Respondent acknowledged that a State's regulatory measures must be "reasonable and proportionate," and so have many investment tribunals. In order to satisfy the principle of proportionality, a measure must be: (a) one that is suitable to achieve a legitimate purpose; (b) necessary for achieving that purpose in that no less burdensome measures would suffice; and (c) not excessive in that its advantages are outweighed by its disadvantages.195 Claimants also stress that many commentators confirm that the principle of proportionality should be applied to determine whether an expropriation has taken place. Even a generally applicable regulation in the public interest may require compensation if it is obviously disproportionate.196
194.
In the present case, Claimants argue that the revocation of ENJASA’s license was not a regular exercise of ENREJA’s supervisory powers under Law No. 7020, but instead was done "in bad faith, with the specific purpose of transferring ENJASA’s gaming operations to local Argentine companies by fabricating and exaggerating factually incorrect accusations of non-compliance with gaming regulations."197 In particular, Claimants contend that Resolution No. 240/13 was issued without any warning, specifically targeted Claimants’ investment in Salta, and relied on breaches collected over a long period of time that, even if true, were marginal and without serious consequences.
195.
Claimants further consider the revocation of the License to have been politically orchestrated, unlawful, arbitrary, and in breach of due process. According to Claimants, ENREJA applied regulations that had not been in force at the relevant time, disregarded the statute of limitations, and rendered any potential legal recourses moot.198
196.
Moreover, Claimants point out that despite the obvious lack of gravity of the alleged infringements of the regulatory framework in place in the Province of Salta, Resolution No. 240/13 imposed, without warning, the harshest and most severe sanction available. Given that ENREJA could have resorted to less burdensome measures, the revocation of ENJASA’s license was excessive, in violation of due process, and its issuance an abuse of ENREJA’s regulatory powers. Therefore, Claimants conclude, the measures taken by Respondent did not constitute a legitimate exercise of the host State’s regulatory powers and failed to comply with the principle of proportionality.199

b) Substantial and Permanent Deprivation of Claimants' Investment

197.
Claimants argue that a regulatory taking can be an indirect expropriation given that "disproportionate general regulations can be considered as expropriatory if there is a sufficient interference with the investor’s rights."200 Claimants identify two main criteria to determine whether a regulatory measure amounts to an indirect expropriation: the intensity of the effects of the measures on the investment and its duration.201
198.
Regarding intensity, Claimants explain that the host State’s interference with the investment must be substantial. The expropriatory effect of a regulatory measure is a question of degree, with tribunals using language such as "substantial deprivation", rendering an investment "useless", "effectively neutraliz[ing]" the investment, removing the ability to make use of economic rights, depriving the investment of "any real substance", eroding the investor’s rights "to an extent that is violative", or constituting a "persistent or irreparable obstacle" to the use, enjoyment, or disposal of the202 investment.
199.
Claimants point out that whether the investor retains control of the investment is not the most accurate criterion to determine whether an indirect expropriation has taken place. An indirect expropriation leaves the investor’s title untouched, but deprives it of the possibility of using the investment in a meaningful way.203 Criteria such as whether the investor retains the investment’s economic use or the benefit to be reasonably expected are more accurate. According to Claimants, the "decisive point for an expropriation is the destruction of the capability to reasonably use the investment in an economic sense."204 In this case, Claimants contend that the Province’s unlawful measures deprived Claimants of "all of the economic benefits of their shareholding in L&E and ENJASA."205
200.
Claimants further point out that the fact that they formally retained title to their shareholding in L&E and ENJASA fails to take into consideration the essence of an indirect expropriation and does not detract from the fact that the economic use of the investment has been eradicated.206 The same holds true, in Claimants' view, concerning the fact that ENJASA has not been deprived of the use of the five-star hotel, which was never profitable on a standalone basis, was constructed as a condition for Claimants' operations in the Province, and was not an asset having a significant independent commercial value after the revocation of the License. Finally, Claimants contend that Respondent's offer to continue operating two casinos was unrelated to the exclusive right to commercially exploit games of chance in the Province of Salta until 2029 under ENJASA's license. The offer to continue operating two casinos, in addition to never having been made in a formal fashion, only accounted for about 5% of ENJASA's revenues and was made subject to various unacceptable conditions, such as waiving any legal recourse against the revocation of ENJASA's license.207
201.

Regarding duration, Claimants contend that, in addition to the intensity of the measure, tribunals have considered that the interference must not be merely transitional in order to amount to a compensable indirect expropriation.208 In the present case, Claimants point out that the deprivation of the economic benefits attached to the shareholdings in L&E and ENJASA was permanent, as ENJASA had to shut down operations, rendering the purpose of the entire investment to operate games of chance in Salta impossible. As for the remaining assets of ENJASA, Claimants contend that they were ancillary and lost the capacity to generate profits following the revocation of ENJASA license.209 In other words, the revocation of the License constituted "a permanent obstacle to Claimants' use and enjoyment of their investment,"210 thus constituting an expropriation of Claimants' shareholding in ENJASA that was contrary to Article 4(1) and (2) of the BIT. The transfer by ENREJA and the Province of Salta of ENJASA’s gaming operations to local companies consolidated the expropriation.211

c) Expropriation of ENJASA's License Contrary to Article 4(3) of the BIT

202.
Claimants further argue that, in addition to a claim for breach of Article 4(1) and (2) of the BIT, they also have a claim under Article 4(3) of the BIT for damages because the revocation of ENJASA’s license and the forced transfer of its operations to local competitors constitute a direct taking of ENJASA’s license that would entitle Claimants to damages.212
203.

Article 4(3) of the BIT, in the English translation offered by Claimants, provides:

Where a Contracting Party expropriates the assets of a company that, in accordance with the provisions of Article 1, paragraph 2 hereof, is deemed to be a company belonging to that Contracting Party, and in which the investor of the other Contracting Party has shares, the provisions set forth in paragraph 2 of this Article shall be applied by the former so as to guarantee the appropriate compensation of the investor.

204.

According to Claimants, Article 4(3) of the BIT, read in conjunction with the broad definition of investment in Article 1 of the BIT, reveals that the BIT not only protects the shares an investor has in a local company against direct and indirect expropriations without compensation; it also protects individual assets of local companies in which a foreign investor holds shares against expropriation.213 Claimants thus reject the interpretation of Article 4(3) of the BIT offered by Respondent, which is inspired by the limited protection customary international law offers to shareholders, as developed by the ICJ in Barcelona Traction and Ahmadou Sadio Diallo; such an interpretation, Claimants argue, has no place where a BIT expressly protects the individual assets of a company in which the investor holds shares, such as is the case with the BIT.214

205.
Claimants further point out that provisions in other investment treaties that are similar to Article 4(3) of the BIT have been interpreted, in conjunction with the wide definition of investment included in those treaties, to the effect that "[w]hen such companies suffer expropriation it is not the shares which constitute the 'investment’ of the other contracting party but the assets of the local company which are expropriated."215 In such circumstances, the host State's obligation to compensate for the expropriation of the company's assets is owed to the investor in the local company, thus giving rise to claims by the shareholders, not by the local company.216
206.
Claimants also contend that the interpretative tools of the VCLT do not lend support to Respondent's argument that Article 4(3) of the BIT, by providing shareholders direct protection against expropriation of the assets of the company, exclude the shareholder from relying on other standards of protection, such as fair and equitable treatment.217 Neither the ordinary meaning of the terms of Article 4(3) of the BIT, nor the BIT's obj ect and purpose, would support such an interpretation. It would go against the purpose of the BIT, Claimants contend, if the BIT was to protect assets of locally incorporated property only against expropriations, but denied protection granted to shareholders under other standards of treatment contained in the BIT.
207.

As for the type of assets of a locally incorporated company that are protected against expropriations under Article 4(3) of the BIT, Claimants submit that Respondent's interpretation, which limits the protection of Article 4(3), based on the authentic version of the BIT in Spanish language, to "financial assets", contrary to the authentic version of the BIT in German language, which refers only to "assets", is not in conformity with Article 33 of the VCLT.218 In particular, Claimants rely on Article 33(1) and (3) of the VCLT to argue that, except otherwise provided, the text of a treaty is equally authoritative in each authentic language, so that one may assume that one text reflects the will of the parties as expressed in the other languages. Only if, Claimants point out, a difference in meaning persists in different authentic texts, the meaning which best reconciles the texts in light of the treaty's object and purpose should be preferred, as laid down in Article 33(3) of the VCLT.

208.

Thus, Claimants conclude, absent a provision to the contrary, the Spanish and German versions of the BIT are equally authoritative. The relevant German term, "Vermogenswerte", is used consistently in the BIT. It means "assets" and is also translated as such in Spanish ("actzvos") everywhere else in the BIT except in Article 4(3). By contrast, the term "activos financieros" appears only in the Spanish version of Article 4(3) of the BIT, without any further definition or explanation. According to Claimants, an interpretation that limits the protection granted by Article 4(3) of the BIT to only one of the two authentic texts cannot be explained by the text or the object and purpose of the treaty. Instead, in light of the BIT’s object and purpose, Article 4(3) of the BIT must be read as protecting "all assets of a locally incorporated company against expropriation," including ENJASA’s license.219 The term "activos fmancieros" is, Claimants conclude, in all likelihood a translation mistake.220

3. Fair and Equitable Treatment

209.

Claimants further argue that the revocation of ENJASA’s license results in a breach of the fair and equitable treatment standard included in Article 2(1) of the BIT.221 Fair and equitable treatment, Claimants contend, is a standard with legal, not extra-legal, content the application of which depends on the facts of the case. Claimants explain how various tribunals have defined fair and equitable treatment and have given it specific meaning depending on the factual situations at hand.222

a) The Scope of the Fair and Equitable Treatment Standard

210.

Claimants object to Respondent’s understanding that the scope of fair and equitable treatment is contained in, and limited by, the minimum standard of treatment under customary international law. Moreover, the differences between how fair and equitable treatment is defined under the North-American Free Trade Agreement ("NAFTA") and the BIT make Respondent’s reliance on NAFTA jurisprudence unavailing. Claimants contend that the reference to fair and equitable treatment in the BIT must be interpreted pursuant to the VCLT, and that "the overwhelming weight of legal authority and tribunals supports that the FET standard should be understood as an autonomous standard, whose precise meaning must be established on a case-by-case basis."223

b) The Content of the Fair and Equitable Treatment Standard

211.
Claimants submit that, notwithstanding various nuances, there is a broadly shared understanding as to the elements that form part of the fair and equitable treatment standard, namely the protection of the investor's legitimate expectations, procedural propriety and due process, the prohibition of arbitrary conduct and the requirement of good faith, as well as freedom from coercion and harassment.224
212.
Claimants also recall that the Tribunal observed in its Decision on Jurisdiction, that fair and equitable treatment

has been interpreted, inter alia, to protect covered investors and their investments against the arbitrary exercise of public powers, as well as against harassment by public authorities, to require public authorities to administer the applicable law in good faith, to entitle foreign investors and their investments to due process and to protect an investor's legitimate expectations.225

213.
Claimants further contend that the actions of the authorities in the Province of Salta have breached the above elements of fair and equitable treatment "in multiple ways," including by (1) failing to afford due process and procedural propriety; (2) engaging in coercion and harassment; (3) acting arbitrarily and in bad faith; and (4) frustrating Claimants' legitimate expectations.226

(1) Failure to Provide Due Process and Procedural Propriety

214.
Claimants stress that several investment tribunals have interpreted fair and equitable treatment as requiring due process and procedural propriety in both administrative and judicial proceedings. To live up to administrative due process, "the administrative bodies need to conform to generally accepted requirements such as access to a file, reasonable notices, a reasonable opportunity to present one's case by making factual and legal submissions and submitting evidence."227 Claimants contend that serious administrative negligence, inconsistencies, or idiosyncrasy can amount to a violation of fair and equitable treatment.228
215.
In the present case, Claimants argue that "both the context of Resolution No. 240/13 and the actual conduct of the administrative procedure show that ENREJA violated elementary due process rights, thereby breaching the fair and equitable treatment standard."229 In particular, Claimants consider, due process would have required ENREJA to engage with and consider ENJASA’s comments in the proceeding that led to the revocation of the License. However, ENJASA was prevented from addressing ENREJA’s accusations in a meaningful way. In the administrative investigation relating to the alleged hiring of operators without ENREJA’s authorization, ENJASA was notified of the charges only six months after the formal investigations had started and a few weeks before the License was actually revoked.230 Moreover, ENJASA did not get complete access to ENREJA’s files.231 The evidence submitted by ENJASA was rejected without reason and submissions made by ENJASA were completely disregarded by ENREJA. Due process, Claimants note, not only requires giving a right to be heard, but also to consider submissions made in an administrative proceedings in a meaningful way.232 ENREJA, however, distorted the facts and misapplied the local law, including by disregarding the applicable statute of limitations and applying anti-money laundering rules retroactively.233 Besides, ENREJA failed to notify ENJASA in a timely manner of the risk of having its License revoked, thus depriving ENJASA of an opportunity to take measures to prevent such revocation.234
216.
In sum, for Claimants, "the revocation of ENJASA’s license was, as the facts show, an arbitrary act with the purpose of transferring Claimants’ business to local companies. Neither the Provincial Government nor ENREJA were actually concerned about compliance with regulations. The allegations of non-compliance were a facade for an outright taking."235

(2) Coercion and Harassment

217.

Claimants further point out that tribunals have recognized coercion and harassment as breaches of fair and equitable treatment.236 In the present case, Claimants contend, "the revocation of the license was the culmination of a pattern of harassment" that started after the change of government in Salta in December 2007, was conducted "with the sole purpose of preparing the transfer of Claimants' investment to local companies," and manifested itself in "heavy-handed and harassive controls of ENJASA" that focussed on "minimal formalistic human errors" and included fines related to events that had occurred years before the fines were imposed.237 This, Claimants conclude, amounts to a violation of fair and equitable treatment contrary to Article 2(1) of the BIT.

(3) Arbitrary Conduct and Conduct in Bad Faith

218.
Claimants also argue that investment tribunals have acknowledged the obligation to refrain from arbitrary conduct as a necessary element of fair and equitable treatment.238 According to Claimants, a conduct is arbitrary "when it is founded on prejudice or bias without a rational explanation or without serving a legitimate purpose."239
219.
Claimants moreover contend that the principle of good faith is a general principle of law that plays a "significant role in investment law," and that one "obvious application of the notion of good faith is the duty to act for cause, and not for purely arbitrary reasons of domestic politics."240 Accordingly, bad faith would include

the use of legal instruments for purposes other than those for which they were created. It also includes a conspiracy by state organs to inflict damage upon or to defeat the investment, the termination of the investment for reasons other than the one put forth by the government, and expulsion of an investment based on local favouritism.241

220.
In the present case, Claimants contend that Respondent's "overall practice" that led to the revocation of ENJASA's license and to the transfer of its business to third operators was driven by "opportunistic reasons and domestic politics," as ENREJA availed itself of minor infringements accumulated over years to construe a pretext to revoke ENJASA's license and transfer its business to local operators. According to Claimants, this conclusion is supported by the fact that sub-licensing to local companies was one of the reasons for the revocation, yet parts of ENJASA's business were ultimately transferred to the very same local companies. Similarly, although, according to ENREJA, ENJASA’s "lack of compliance" with the regulatory framework justified the revocation of the License, Claimants were later offered to continue operating two of the casinos ENJASA had operated before.242

(4) Failure to Provide Stability and Protect Claimants’ Legitimate Expectations

221.
Claimants finally point out that the overwhelming majority of tribunals have held that the investor’s legitimate expectations constitute a key element of fair and equitable treatment.243 The obligation to protect legitimate expectations does not stem from express language in the treaty, but "from another tenet of the rule of law, namely that justified hopes i.e. legitimate expectations, should not be unreasonably disappointed."244 These expectations "arise out of the legal framework of the host state at the time the investment was made considering also any undertakings and representations made explicitly or implicitly by the host state."245
222.
In the present case, Claimants submit, they relied, at the time of making their investment in Salta, upon "the Province’s invitation to develop the Province’s gaming sector in line with international best practices and with the know-how of a renowned international gaming operator."246 Claimants contend that they had the legitimate expectation to exploit the License undisturbed and without harassment if they continued to operate in the same manner that had been confirmed to be lawful during the renegotiation of the license fee, as laid down in the Acta Acuerdo. This expectation, Claimants contend, was based on the issuance of an exclusive license for a period of 30 years until September 2029.247
223.
Claimants contend that the Province’s undertakings and policies were "completely reversed" with the change of government in Salta in 2007. According to Claimants, there was no legitimate regulatory interest to justify the revocation of the License. On the contrary, the only interest was to transfer ENJASA’s license to local operators based on fabricated circumstances serving as a justification. Accordingly, Claimants contend, the Province of Salta "consciously and overtly breached Claimants' expectations," thus breaching the fair and equitable treatment standard laid down in the BIT.248

C. Respondent’s Analysis of the Facts

224.
Respondent disagrees with Claimants' account of the reasons for, and the evaluation of, the revocation of ENJASA's license. Respondent submits that ENJASA had committed serious breaches of the anti-money laundering rules in the Province of Salta, which amply justified the revocation of ENJASA's license to operate games of chance. In Respondent's view, ENREJA's actions complied fully with the regulatory framework in place and thus constituted a lawful exercise of the host State's regulatory power that was in compliance with the provisions of the BIT.

1. Motives for Revoking ENJASA’s Gaming License

225.
Respondent submits that Claimants' theory that ENJASA's license was revoked to "get rid of the Austrians" who indirectly controlled ENJASA, and to eliminate the involvement of Mr. Garamon, a supporter of Governor Urtubey's political rival, who allegedly owned 40% of ENJASA through Iberlux, was plainly wrong. Respondent highlights that Claimants failed to provide evidence of any of these unfounded speculations. Respondent further points out that Claimants' witness Mr. Tucek, upon whose statement the underlying allegations were based, admitted at the hearing that he had no first-hand knowledge of the matter, but was just reproducing what he had been informed of by ENJASA's local staff.249
226.
Respondent stresses instead that the motives for revoking ENJASA's license lay in the serious and frequent breaches of the applicable anti-money laundering regulations that ENJASA had committed. In this context, Respondent points to the necessity of anti-money laundering regulations and to the State's power to issue them. Furthermore, Respondent submits that Law No. 7020, which required approval of operators of games of chance and imposed on the licensee a certain number of duties, including the duty to exercise due diligence in relation to its customers and to record payments made in excess of ARS 10,000, was in full conformity with the recommendations made for casinos issued by the Financial Action Task Force ("FATF"), an inter-governmental body tasked to combat money laundering and terrorist financing. These recommendations insisted on the need for authorities to regulate and control casino activities, to regulate the admission of operators of games of chance, and to establish mechanisms to know and track the transactions of players.250
227.
Respondent submits that the decision to revoke ENJASA’s license was the result of the company’s frequent breaches of the anti-money laundering regulations in place, which had been introduced in Argentina as one of the consequences of the country’s financial crisis that had occurred at the turn of the millennium. Especially since that grave social, economic, and institutional crisis, financial concerns were important for Argentina. Moreover, the Province of Salta, which borders three different countries (Paraguay, Bolivia, and Chile), was a well-known risk-area, especially since games of chance were forbidden in Bolivia. Respondent therefore insists that the Province of Salta was entitled to introduce efficient anti-money laundering regulations and to vest ENREJA with powers to monitor compliance with them and sanction any breaches.251
228.
Respondent also rejects Claimants’ allegations that ENJASA had started to become a subject of harassments by the Province of Salta when Mr. Urtubey took office in December 2007. In this context, Respondent first points out that the country’s precarious financial situation in 2001/2002 had led to the enactment of an Emergency Law in 2002, which required the renegotiation of public service agreements and licenses.252 It was in this context that the fee for ENJASA’s license was renegotiated by the Province of Salta through UNIREN, an entity specifically created for this purpose. Respondent further stresses that the renegotiation of the license fee was a reasonable and legitimate measure in view of the economic situation of the country at the time.253
229.
Respondent points out that UNIREN and ENJASA agreed upon a new license fee in the Acta Acuerdo, which was based on a different fee structure. Whereas originally a fixed annual amount in USD had been agreed upon, this was changed into a percentage of ENJASA’s net income, which rose over time to 15% for lottery games and 16% for casinos and slot machines.254 This change from a fixed fee to an income-based fee, Respondent submits, required stricter controls over ENJASA's earnings. It was to this end that ENREJA implemented an online information control system and introduced regulatory changes for the operation of slot machines.255
230.
Respondent also notes that two administrative inquiries that resulted in sanctions of ENJASA's business operation pre-dated the appointment of Governor Urtubey. Thus, ENREJA's Resolution No. 15/05 (dated 16 March 2005) fined ENJASA for imposing unauthorized restrictions on bets. In respect of this investigation, ENJASA went from first denying the events to then alleging that it had been a victim of persecution by ENREJA before ultimately acknowledging the breaches in a request for suspension of the sanction imposed.256 ENREJA's Resolution No. 104/07 (dated 11 September 2007), in turn, sanctioned ENJASA for operating a slot machine without authorization. In respect of this investigation, ENREJA considered that ENJASA's defence that the machine was running on a temporary trial basis could not justify ENJASA's failure to report the machine. ENJASA did not challenge the decision and paid the fine.257 These two investigations, in Respondent's view, confirm that ENREJA had carried out administrative investigations well before Governor Urtubey took office in December 2007, thus discrediting Claimants' theory about the existence of a political plan to oust ENJASA of its business in Salta.258
231.
As a further indication that there was no plan to oust ENJASA of its business, Respondent submits that, after ENJASA's license was revoked, gaming operators in the Province of Salta who complied with the legal and regulatory requirements were allowed to continue their activities by means of temporary non-exclusive permits. The interested parties had to demonstrate compliance with a series of requirements and submit their investment plans in order to obtain a final license to operate games of chance.259 Respondent submits that Claimants had an opportunity to participate in this process, but decided not to do so.260
232.
In Respondent’s view, Claimants are distorting the facts, when they claim that ENREJA and the Province of Salta definitively transferred ENJASA’s business to third-party operators in only ten days after the revocation of ENJASA’s license. New licenses were in fact only awarded on 29 May 2014. The verification procedure, the temporary plan, the assessment of compliance with the technical, contractual, and legal requirements for the operation of games of chance, the approval of the investment plans, and the award of the final licenses thus took at least some nine months of intense activity after the issuance of Resolution No. 240/13.261
233.
Respondent also rejects Claimants’ criticism that the new licenses were granted without a public bidding process. ENJASA’s license had also been granted in a direct manner and, unlike the new licenses, it was an exclusive license. The legal requirements to grant the new licenses were therefore met.262
234.
Finally, Respondent rejects Claimants’ criticism that the new licenses were awarded to third parties that had been categorized by ENREJA as previously existing operators of games of chance under arrangements with ENJASA for which authorizations by ENREJA were missing and that therefore were themselves in breach of Law No. 7020. The process following the revocation of ENJASA’s license regularized these illegal operations of games of chance in the Province of Salta. Unlike in the past, ENREJA was now able to supervise the actual gaming operators. Respondent also offered Claimants the possibility to continue operating Casino Salta. However, Respondent points out, Claimants refused this proposal.263
235.
In sum, Respondent submits, that no reasons other than breaches of the anti-money laundering regulations led to the revocation of ENJASA’s license.

2. Administrative Inquiries and Sanctions between 2007 and May 2013

236.
Respondent also submits that the administrative inquiries undertaken, and sanctions imposed, by ENREJA between 2007 and May 2013 prior to the investigations that resulted in the revocation of ENJASA's license had revealed serious and repeated breaches by ENJASA of anti-money laundering and gaming regulations and were all justified. During this period ENREJA had conducted a number of investigations, which had found, inter alia, that ENJASA (i) repeatedly had breached anti-money laundering rules; (ii) had imposed unauthorized restrictions on bets; (iii) had operated slot machines without authorization; (iv) had amended betting limits without authorization; (v) had opened casinos without authorization; (vi) had breached rules concerning lottery games; and (vii) had amended prize limits without authorization.264 In total, twenty-one sanctions had to be imposed on ENJASA for breaches of the regulatory framework in place prior to the revocation of the License.265
237.
Respondent addresses the following investigations in more detail as follows:

- In ENREJA's Resolution No. 31/08 (dated 10 March 2008), which sanctioned ENJASA for issuing checks in breach of anti-money laundering rules, ENREJA rejected ENJASA's defence that the action was time-barred, considering that the initiation of an administrative inquiry in 2005 had stopped the statute of limitations and that the commission of the same breach, which was discovered in another inquiry, prevented the infringement from becoming time-barred; the fine ENREJA imposed also complied with the proportionality principle.266

- In ENREJA's Resolution No. 32/08 (dated 10 March 2008), which sanctioned ENJASA for the loss of the anti-money laundering book, for irregularities in recording payments, and for the irregular issuance of checks for the payment of prizes, ENREJA considered that a severe sanction was in place, inter alia in view of the delayed communication by ENJASA that the anti-money laundering book had been lost and considering ENJASA's record of prior infractions.267

- In ENREJA's Resolution No. 232/08 (dated 18 November 2008), which sanctioned ENJASA for making irregular payments of prizes in excess of ARS 10,000 in cash rather than by check at Casino Golden Dreams, ENREJA rejected ENJASA's defence that the law did not impose such an obligation, pointing out that ENJASA’s interpretation of the law was completely at odds with its own prior statements and with the intended purpose of the law. The fine that was imposed took account of ENJASA’s record of recidivism.268

- In ENREJA’s Resolution No. 244/08 (dated 25 November 2008), which sanctioned ENJASA for the unauthorized removal of gaming devices from Casino Salta and Casino Rosario de la Frontera, and for irregularities in the results of poker tournaments, ENREJA considered mitigating factors and issued a warning rather than imposing a fine.269

- In ENREJA’s Resolution No. 286/09 (dated 16 December 2009), which sanctioned ENJASA for amending betting limits in Casino Golden Dreams without prior authorization, ENJASA did not deny the facts under investigation, but alleged that the resolution initiating the administrative inquiry was null and void because of certain formal errors; ENREJA rejected ENJASA’s defence and imposed a reduced fine, taking into consideration inter alia that ENJASA had no previous record for this particular type of infraction.270

- In ENREJA’s Resolution No. 39/10 (dated 9 March 2010), which sanctioned ENJASA for holding an unauthorized poker tournament, ENREJA rejected ENJASA’s arguments that the breach was an excusable error that was unintentionally committed by an employee of the casino; for ENREJA, the breach was caused by a dysfunctional internal organization and it warned ENJASA that such breaches could give rise to the termination of the License; the fine ENREJA imposed on ENJASA took into consideration that ENJASA had no previous records of this particular type of breach.271

- In ENREJA’s Resolution No. 46/10 (dated 16 March 2010), which sanctioned ENJASA for breaching anti-money laundering rules by making irregular payments in Casino Golden Dreams of prizes in excess of ARS 10,000 in cash rather than by check, and which was confirmed by Resolution No. 106/10 (dated 3 May 2010), ENREJA rejected ENJASA’s defence that the action was time- barred and that no obligation existed to pay prizes in excess of ARS 10,000 by check; ENREJA also took into consideration ENJASA's history of recidivism and imposed a fine.272

- In ENREJA's Resolution No. 104/10 (dated 3 May 2010), which sanctioned ENJASA for paying prizes in Casino Golden Dreams in excess of ARS 40,000 without properly recording them; ENJASA acknowledged the infringement, but invoked material errors of employees of the casino, who had not reported the matter to the authorities, as an excuse; for ENREJA, the responsibility for the breach rested solely with the operator and it imposed the maximum fine of ARS 300,000 (USD 77,160), taking into consideration the four prior administrative inquiries for similar breaches; ENREJA also warned ENJASA about "the effects that new breaches could have on the legal framework of the license" and admonished that, in case of new breaches, ENJASA could lose its License under Article 6 of Decree No. 3616/99.273

- In ENREJA's Resolutions Nos. 128/10,274 129/10,275 and 130/10276 (all dated 18 May 2010) and Resolutions Nos. 151/10,277 1 52/10,278 and 153/10279 (all dated 7 June 2010), which sanctioned ENJASA for irregularities in the operation of slot machines, ENREJA discovered, following inspections carried out between 2009 and 2010, that ENJASA had operated unauthorized slot machines and machines with betting amounts and prizes that differed from the ones approved by ENREJA; ENREJA rejected ENJASA's excuse that these breaches merely consisted of minor clerical errors and sanctioned ENJASA with partial and temporary suspensions of the License.280

- In ENREJA's Resolution No. 161/10 (dated 15 June 2010), which sanctioned ENJASA for paying prizes in excess of ARS 10,000 in cash, and for failing to identify the winners of a poker tournament in Casino Salta, ENREJA imposed a fine, taking into consideration ENJASA’s recidivism; ENREJA rejected ENJASA’s request for reconsideration which alleged that too much time had lapsed between the breaches and the initiation of the administrative inquiry and that prizes in excess of ARS 10,000 did not have to be paid by check.281

- In ENREJA’s Resolution No. 200/10 (dated 27 July 2010), which sanctioned ENJASA for opening a casino in the town of Metan without authorization, ENREJA informed ENJASA that it could revoke its License, but, as it felt that ENJASA had not acted with malice or in bad faith, only a fine was imposed under the condition that ENJASA would cure the breaches within 60 days.282

- In ENREJA’s Resolution No. 178/12 (dated 10 July 2012), which sanctioned ENJASA for the use of the wrong number of balls in a lottery drawing, erroneous publications of results, and other irregularities in lottery games, ENREJA considered these breaches to be "very serious" as they would "hinder and adversely affect the transparency that must be maintained at all times, especially when the operation was granted by means of a State permit;"283 ENREJA considered that ENJASA, while in good faith, had acted carelessly, negligently, and imprudently, imposing, Respondent submits, an appropriate fine, considering the number of breaches and their seriousness.284

- In ENREJA’s Resolution No. 161/13 (dated 28 May 2013), which sanctioned ENJASA for modifying prize limits without requesting authorization and for operating unauthorized jackpots in Casino Golden Dreams and Casino Salta, ENREJA imposed the maximum fines of ARS 200,000 and 500,000, respectively, taking into consideration ENJASA’s history of recidivism as demonstrated by similar breaches sanctioned in Resolutions Nos. 286/09, 128/09, 129/10, and 200/10.285

238.
Respondent submits that the above Resolutions demonstrate that ENJASA had committed serious and repeated violations of the regulatory framework applicable to operating games of chance even before the investigations that resulted in the revocation of ENJASA's license.286 Respondent also points out that ENJASA's argument that certain mistakes by its employees were involuntary and due to the employees' lack of knowledge of specific regulations resulting from insufficient training is incompatible with the admission of Claimants' own witnesses that ENJASA's employees were trained, especially as regards anti-money laundering measures.287
239.
Respondent also observes that ENJASA in most cases simply paid the fines, consenting to and accepting the interpretation of the rules that led to the application of such fines.288 Only in five instances did ENJASA file an administrative appeal, but did not resort to domestic courts, thereby consenting to the administrative sanctions applied.289
240.
Respondent concludes that the above Resolutions, with the inquiries and sanctions they encompass, demonstrate that ENREJA performed its regulatory control over ENJASA from the very beginning, and not only after Governor Urtubey took office in December 2007.290 In its investigations, ENREJA followed a strict internal procedure, granting ENJASA an opportunity to file a defence and submit evidence. ENREJA acted within the scope of its powers, took action in due time, and imposed sanctions that were proportionate to the seriousness of the breach and that gradually increased in view of ENJASA's recidivism and lack of organization.291
241.
Respondent also stresses that, contrary to Claimants' arguments, the Acta Acuerdo did not acknowledge that ENJASA had not committed any breaches of the regulatory framework in place. The second paragraph of the Acta Acuerdo merely acknowledged that (i) ENJASA and its controlling shareholder, L&E, had performed the capital increase and their investment in tourism, and (ii) there had been no breaches of the terms of ENJASA’s Stock Purchase Agreement.292 The terms of the Acta Acuerdo, Respondent submits, are clear and restrictive. It contained no statement on any other type of breaches, let alone breaches after the Acta Acuerdo had been signed on 20 April 2008.293

3. The Revocation of ENJASA’s License Constituted a Regular Exercise of ENREJA’s Powers

242.
Respondent further submits that the revocation of ENJASA’s license did not, as submitted by Claimants, constitute an abuse of ENREJA’s supervisory powers. On the contrary, in Respondent’s view, the revocation of the License had taken place as part of the regular exercise of ENREJA’s powers. The charges brought against ENJASA in the three investigations that lead to the issuance of Resolution No. 240/13 were all well-founded. The sanction imposed on ENJASA, that is, the revocation of its License, was justified and proportionate and did not violate any due process rights.

a) Charges Underlying Resolution No. 240/13

243.
Respondent submits that ENREJA’s conclusions in Resolution No. 240/13, which lead to the revocation of ENJASA’s license, were derived from investigations into three sets of incidents that all qualified as serious breaches of the regulatory framework in place in the Province of Salta. In drawing its conclusions, ENREJA accurately had investigated the factual record and correctly had applied the regulatory framework in place. The serious breaches ENREJA found were an appropriate basis for revoking ENJASA’s license.

(1) Allegations in Resolution No. 380/12

244.
In respect of Resolution No. 380/12, in which ENREJA had charged ENJASA with having breached anti-money laundering rules in its lottery operations and by making a payment in respect of a prize won in a slot machine game, Respondent observes that Claimants do not dispute the facts giving rise to the breaches identified by ENREJA in Resolution No. 380/12; they merely attempt to evade their consequences by alleging that the breaches were due to unintentional human errors by those in charge of the respective games of chance. Respondent submits that these excuses are inadmissible.294 A purported human error by the lottery agent would not justify the late registration and payment of an expired prize; nor would the submission of the winning ticket together with Claimants' Reply on the Merits in the present proceeding cure ENJASA's failure to submit the ticket to ENREJA at the time of the investigation.295

(2) Allegations in Resolution No. 381/12

245.
In respect of Resolution No. 381/12, which concerned breaches of anti-money laundering rules in live games, Respondent observes that spread sheets and records that ENJASA kept internally to control payments to gamblers at gaming tables at Casino Salta and Casino Golden Dreams revealed that, in the audited period, not fewer than 52 payments exceeding ARS 10,000 had been made for prizes won at live gaming tables. These payments had been made in cash or by means of "internal checks"; in addition, the required identification of the winners in the anti-money laundering book was insufficient, even though ENJASA, Respondent argues, had specific and detailed knowledge of the players' winnings and of the amounts paid thanks to the internal records they kept. According to Respondent, Claimants' contention that these records were kept only for statistical purposes lacks credibility. In other words, ENJASA, which held the records, could easily have complied with the legal requirements to make the proper registrations of the payments and of the identity of the players in the anti-money laundering book. However, Respondent submits, ENJASA totally disregarded the anti-money laundering rules in the instances underlying the investigation.296 There was no excuse for ENJASA's failing to record payments in excess of ARS 10,000 in the anti-money laundering book.
246.
Respondent also rejects Claimants' interpretation of the regulatory framework in place. For Respondent, it is beyond question that, since 1 May 2012, prizes in excess of ARS 10,000 had to be paid by non-transferable check. At this point, Resolution No. 26/00 was superseded by ENREJA's Resolution No. 90/12, which made explicit the obligations under Article 5 of Law No. 7020 of the licensee to (i) pay all prizes exceeding ARS 10,000 by check or wire transfer to foreign accounts; (ii) keep records of such payments and any other relevant information about clients where grounds to suspect money laundering existed; and (iii) appoint a person who is responsible for the functions and obligations established by regulations for games of chance. In addition, Resolution No. 90/12 expanded the term for the obligation to keep and preserve documents from 2 to 10 years and set new requirements for the payment of prizes by check for amounts of up to ARS 50,000.297
247.
However, Respondent submits that already before the enactment of Resolution No. 90/12, ENREJA considered that ENJASA had an obligation to pay all prizes in excess of ARS 10,000 by check or wire transfer and to identify the individuals to whom such prizes were paid. Although the legislative texts did not state so expressly, in Respondent’s view, Article 5 of Law No. 7020 and ENREJA’s Resolution No. 26/00 already required that prizes in excess of ARS 10,000 had to be paid by non-transferable check.298 Article 5 of Law No. 7020 imposed certain anti-money laundering measures on ENJASA whenever a quantitative, objective criterion - i.e., payment of prizes in excess of ARS 10,000 - or a qualitative criterion - i.e., the existence of "a suspicious transaction" - existed. In the first case, the identity of the beneficiary had to be registered and the check had to be non-transferrable; in the second case, the transaction needed to be reported. For Respondent, a comprehensive and harmonious interpretation of Article 5 of Law No. 7020, which respects its goal and purpose, thus required the licensee to pay all prizes in excess of ARS 10,000 by check or wire transfer.299 Otherwise, it would simply be sufficient for the licensee to decide not to pay prizes by check or wire transfer to be exempt from the obligation to identify individuals, although such payment would be a suspicious transaction. Such an interpretation would, however, go against the very purpose of Law No. 7020.300
248.
Respondent also points out that ENREJA had clarified this consequence of Article 5 of Law No. 7020 vis-à-vis ENJASA and had indicated to ENJASA, on different occasions, how payments to customers needed to be recorded.301 Thus, ENREJA had insisted, in several of its earlier resolutions addressed to ENJASA, that payments over ARS 10,000 had to be made by check and demanded compliance with this requirement.302 In addition, before Resolution No. 90/12 explicitly required to make payments of prizes above ARS 10,000 by check, ENJASA had expressly acknowledged that Article 5 of Law No. 7020 obliged it to do so.303 ENJASA has also never challenged ENREJA's point of view, nor questioned the fines imposed because of violations of that requirement.304
249.
In respect of the cash payments made in September 2011 to two customers in Casino Salta, Respondent argues that such payments by ENJASA to customers, one of which had not even played, encouraged players to play with third-party funds and, by prolongation, gave rise to money laundering. Such payments did therefore not comply with the anti-money laundering regulations either.305
250.
Finally, Respondent rejects Claimants' argument that Article 49 of Law No. 7020 time-barred ENREJA's conduct because the administrative inquiry in question had started more than one year after the facts had occurred. Respondent submits that the one-year statute of limitations established by Article 49 of Law No. 7020 does not apply to breaches of Article 5. Instead, according to Respondent, the five-year time-bar in Articles 62 and 67 of the Criminal Code applied to sanctions taken on the basis of Article 13 of Law No. 7020. However, regardless of whether a one-year or a five-year statute of limitations applied, the repeated breaches by ENJASA of anti-money laundering rules, as found in ENREJA's Resolutions Nos. 31/08, 46/10, and 161/10, prevented the statute of limitations from expiring.306 Due to ENJASA's successive failures to record prizes in excess of ARS 10,000 in violation of anti-money laundering rules, no statute of limitation would apply to the breaches identified by ENREJA in Resolution No. 381/12.

(3) Allegations in Resolution No. 384/12

251.
In respect of the charges in Resolution No. 384/12 that ENJASA had hired operators without ENREJA's authorization contrary to Article 5 of Law No. 7020, Respondent observes that Decree No. 2126/98 had granted ENJASA an exclusive license for the operation of games of chance in the Province of Salta. The only exceptions to this exclusivity were licenses granted by BPAS in 1999 to two other operators for Casino de las Nubes and Casino Central, which expired in 2003,307 and the possibility that non- profit organizations, authorized by ENREJA, could operate bingos and raffles.308 Claimants' allegation that some of the operators of games of chance had been authorized by BPAS before ENJASA acquired its License and were entitled to continue operating thereafter was therefore incorrect. Except for the two licenses explicitly maintained by BPAS for Casino de las Nubes and Casino Central, all licenses granted by BPAS before 1998 were terminated once ENJASA had been granted its exclusive license.309
252.
Respondent further rebuts Claimants' allegation that ENREJA was fully aware of the existence of third-party operators of slot machines and had accepted their involvement. For instance, any payments of the canon fee for the operation of games of chance that were made by third parties were actually made on ENJASA's behalf and ENREJA was therefore unaware of the true origin of such payments.310

b) The Revocation of ENJASA’s License Was Justified and Proportionate

253.
Respondent stresses that the revocation of ENJASA's license by Resolution No. 240/13 was fully justified. In terms of competence, ENREJA had the disciplinary power to issue the revocation on the basis of Article 13 of Law No. 7020. Article 13, Respondent submits, authorized ENREJA to sanction ENJASA for violations or breaches of Article 5 of Law No. 7020, Resolutions Nos. 26/00 and 90/12, and of the license agreement, which contained the obligation to comply with Law No. 7020.311 One of the sanctions mentioned expressly in that provision - although the most severe one - is the revocation of a license. Article 13 also requires that the sanction is proportionate to the violation committed. Respondent submits that, in the present instance, the revocation of the License was a just, fair, and proportionate sanction.
254.
Respondent argues that Claimants incorrectly allege that Article 13 was superseded in 2001 by the enactment of Law No. 7133, which amended Law No. 7020 and introduced a new provision on sanctions into Law No. 7020, namely Article 41. It is true that Article 41 did not provide for the revocation of a license as a possible sanction, but only provided for fines, disqualification, seizure, and/or closure of gaming locations.312 Claimants, however, incorrectly submit, Respondent argues, that Article 13 was abolished and that ENREJA thus could only issue sanctions on the basis of Article 41 of Law No. 7020. ENREJA could, therefore, still revoke ENJASA’s license on the basis of Article 13.313
255.
Respondent submits that Law No. 7133 did not replace Article 13 with Article 41. Rather, Law No. 7020 now has two different provisions that allow for the imposition of sanctions: one for violations or breaches of gaming regulations and the license agreement, which are subject to the sanctions laid down in Article 13, and one for administrative infractions which can be sanctioned on the basis of Article 41. For Respondent, the fact that Article 13 of Law No. 7020 was reproduced in its entirety in the Official Bulletin of the Province of Salta when the full text of Law No. 7020, as amended by Law No. 7133, was published, confirms the continued validity of Article 13.314
256.
Furthermore, Respondent submits that Law No. 7020, including its Article 13, applies as a mandatory regulation of the gaming sector in the Province of Salta. Furthermore, ENJASA’s license agreement also confirms that Law No. 7020, including its Article 13, apply in relation to ENJASA. Contrary to Claimants’ argument, the license agreement does not exclude the application of Article 13; on the contrary, it confirms the validity of Article 13 and its application to the relationship between ENREJA and ENJASA.315
257.
As for the proportionality of the revocation of ENJASA’s license, in Respondent’s view, Resolutions Nos. 380/12, 381/12, and 384/12 amply established ENJASA’s manifold breaches of anti-money laundering regulations. Moreover, before 2012, ENJASA had committed many other serious breaches of anti-money laundering regulations. Thus, Respondent submits, these previous breaches could, and arguably had to, be taken into consideration in devising the appropriate sanction.
258.
Respondent further submits that anti-money laundering regulations concern the preservation of the social and financial order. A breach of these regulations, in its view, affects the public interest, which ENREJA had to protect. The importance of the regulations, coupled with the consideration that the sanctions previously imposed on ENJASA during the term of the License did not have a deterrent effect on ENJASA, made it impossible not to impose the revocation of the License as a sanction.316
259.
Respondent also submits that, in the past, ENREJA had applied sanctions gradually and progressively from warnings, over fines, to temporarily suspending certain local operations. The following overview indicates this development:

ENREJA's Resolution No. 104/07 (C-240) Irregularities in slot machines Fine
ENREJA's Resolution No. 031/08 (C-150) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 032/08 (C-151) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 232/08 (C-155) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 286/09 (C-153) Unauthorized modification of betting chart Fine
ENREJA's Resolution No. 039/10 (C-164) Unauthorized implementation of a Jackpot Fine
ENREJA's Resolution No. 106/10 (C-156) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 104/10 (C-152) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 161/10 (C-157) Violation of anti-money laundering regulations Fine
ENREJA's Resolution No. 200/10 (C-165) Unauthorized opening of a casino Fine
ENREJA's Resolution No. 178/12 (C-166) Tombola lottery game irregularities Fine
ENREJA's Resolution No. 161/13 (C-154) Modification of highest prize at poker tables and unauthorized implementation of a Jackpot Fine
ENREJA's Resolution No. 128/10 (C-158) Irregularities in slot machines Suspension of the License
ENREJA's Resolution No. 129/10 (C-159) Modification of the approved betting chart Suspension of the License
ENREJA's Resolution No. 130/10 (C-160) Modification of the approved betting chart Suspension of the License
ENREJA's Resolution No. 151/10 (C-161) Irregularities in slot machines Suspension of the License
ENREJA's Resolution No. 152/10 (C-162) Irregularities in slot machines Suspension of the License
ENREJA's Resolution No. 153/10 (C-163) Irregularities in slot machines Suspension of the License
ENREJA's Resolution No. 240/13 (C-031) Breach of anti-money laundering regulations as a consequence of failure to record lottery prize payments Revocation of the License

260.
Respondent also points out that, since 2010, ENREJA had substantially increased the amount of fines due to ENJASA's recidivism, as required by Article 46 of Law No. 7020.317 The amount of fines, as submitted by Respondent, developed as follows:
261.
The increasing intensity of the sanctions notwithstanding, Respondent submits, ENJASA continued to breach the regulatory framework in place, as the breaches identified in Resolutions Nos. 380/12, 381/12, and 384/12 show. ENREJA had also repeatedly warned ENJASA that it had the power to revoke the License in the event of further breaches or violations of the gaming regulations in place.318 Under these circumstances, Respondent concludes, the revocation of ENJASA’s license to operate games of chance in Salta remained the only possible sanction for ENREJA.

c) Respect of ENJASA's Due Process Rights

262.
Respondent also submits that ENJASA’s due process rights and its right of defence were at all times respected. Respondent points out that ENREJA had repeatedly warned ENJASA that it had the power to revoke the License in the event of breach or violation of the anti-money laundering regulations.319 Resolution No. 240/13 also contained a detailed explanation of the reasons and grounds leading to the revocation of the License. Each administrative file referred to in Resolution No. 240/13 was processed separately and maintained its autonomy. Moreover, each of these files, individually considered, warranted the revocation of the License.320
263.
Respondent further submits that, in all administrative inquiries, ENJASA was informed of the charges on which it was being investigated and the evidence relied upon. Furthermore, ENJASA was granted sufficient time to file a defence and to submit the appropriate evidence. It could also always access the files - which it did - without any restrictions from ENREJA.321
264.
Finally, Respondent points out, ENREJA considered the arguments raised in ENJASA’s answers, but concluded that these answers did not affect the sanction imposed. ENJASA was entitled to challenge ENREJA’s decisions with ample room for submitting arguments and evidence.
265.
Respondent also points out that ENJASA submitted a recourse for reconsideration of Resolution No. 240/13 on 28 August 2013. ENREJA addressed this Recourse and confirmed the revocation of ENJASA’s license through Resolution No. 315/13 on 19 November 2013. In this context, Respondent refers to her expert, Prof. Marcer, who confirmed that ENREJA "analysed and addressed all the arguments stated in the appeal for review, and denied the appeal."322 ENJASA also filed a complaint with the Administrative Court of the Province of Salta on 2 February 2014,323 but failed to move the case forward until its complaint had to be withdrawn as a consequence of the Tribunal's Decision on Jurisdiction in the present proceeding. Consequently, ENJASA abandoned the claim and, with ENREJA's consent, withdrew the appeal.324
266.
All of the above shows, Respondent submits, that due process and ENJASA's right of defence were at all times respected.

D. Respondent’s Analysis of the Law

267.

In Respondent's view, the revocation of ENJASA's license, followed by the appointment of new operators and the transfer of ENJASA's operations and employees to new operators, was a lawful exercise of the host State's regulatory powers. It did not, Respondent submits, constitute a breach of either Articles 2(1) or 4 of the BIT.

1. Applicable Law

268.

Respondent contends that the law applicable to the dispute pursuant to the first sentence of Article 42(1) of the ICSID Convention is the law agreed by the Parties; such an agreement is contained in Article 8(6) of the BIT,325 which provides in the translation provided by Respondent:

The arbitral tribunal shall decide the dispute in accordance with the law of the Contracting Party involved in the dispute including its rules on conflict of laws, the provisions of this Agreement, and the terms of any specific agreement concluded in relation to such an investment, if any, as well as the applicable principles of international law.

269.
According to this provision, Respondent submits, the applicable law in the present proceeding is (i) Argentine law; (ii) the BIT itself - which should not be interpreted in isolation from the remaining rules of international law;326 and (iii) the principles of international law on the subject.327
270.
Contrary to Claimants’ argument, Respondent submits that Argentine law is not merely part of the factual matrix of the dispute, but part of the applicable law.328 Amongst other things, Argentine law will "determine the nature and scope of the investor’s rights arising from its investment"329 and "is part of the law to be applied in order to determine whether or not the Treaty has been complied with."330 Argentine law would not be relied upon to justify a breach of international law, but has to be applied in accordance with the agreement of the Parties. In any event, in order to rely on Article 27 of the VCLT, Claimants would have to establish "a clear and concrete conflict" between Argentine law and international law, as they are both applicable to the dispute.331 In sum, Respondent submits, "this Tribunal is required to harmoniously apply Argentine domestic law, the BIT and the relevant principles of international law, so that none of them precludes the application of the others."332
271.
Respondent further points out that Claimants have accepted the regulatory authority of the Province of Salta over the gaming industry. In Respondent’s view, the Tribunal has to consider whether the revocation of ENJASA’s license constituted a regular exercise of ENREJA’s supervisory powers under Law No. 7020 or whether the revocation constituted an abuse of those powers.
272.
Respondent stresses that, as many arbitral tribunals have recognized, investment tribunals must exercise a large degree of deference vis-à-vis the determinations of local authorities. Respondent invokes, inter alia, the award in Koch Minerals, which stated that "a tribunal cannot simply put itself in the position of the State and weigh the measure anew, particularly with hindsight."333 Similarly, the tribunal in Crystallex held that "it is not for an investor-state tribunal to second-guess the substantive correctness of the reasons which an administration were to put forward in its decisions, or to question the importance assigned by the administration to certain policy objectives over others."334 For the tribunal in SD Myers v Canada, a "tribunal does not have an open-ended mandate to second-guess government decision making,"335 and the tribunal in Glamis Gold v United States did not consider it as its role "to supplant its own judgment of underlying factual material and support for that of a qualified domestic agency."336
273.
For Respondent, it is clear that ENREJA was best positioned to assess the facts and impose a sanction, due both to its technical expertise and its direct knowledge of the situation.337
274.
Referring to Laboratoires Servier v Poland, Respondent also insists that Argentina’s international liability should not be presumed.338 Claimants who allege a violation of the BIT have the burden of proof.339

2. Breach of Article 4 of the BIT

275.
In respect of Article 4 of the BIT, Respondent submits that the revocation of ENJASA’s license was a lawful exercise of the host State’s regulatory powers and therefore constituted neither an indirect expropriation of Claimants’ investment in Argentina, nor a direct expropriation of a relevant asset of ENJASA that would entitle Claimants to the payment of compensation pursuant to Article 4(3) of the BIT.

a) No Indirect Expropriation under Article 4(1) and (2) of the BIT

276.

As for the claim for an indirect expropriation contrary to Article 4(1) and (2) of the BIT, Respondent contends that Claimants have failed to show that the three cumulative requirements for an indirect expropriation have been met in this case, namely that (i) the contested measures interfere with the investor’s property rights that qualify as investments; (ii) the interference be substantial; and (iii) the government measures that constitute the interference do not qualify as regulatory measures that have been adopted under the State’s police power.340

277.
Regarding the first two requirements, Respondent submits that Claimants’ arguments to demonstrate substantial interference are "false".341 According to Respondent, no "forced transfer" of ENJASA’s personnel, premises, or title to assets had occurred. Decree No. 3330/13 of 20 November 2013 did not transfer ENJASA’s license to other operators, as the License had already been revoked by Resolution No. 240/13 of 13 August 2013. The Government of the Province of Salta only granted, at first, provisional permits for new operators342 and eventually issued new licenses to them in order to keep the gaming business going.343 For its part, Decree No. 3330/13 sought to preserve jobs by obliging the permit holders to absorb the employees leaving ENJASA or other operators that also stopped operating games of chance. There was no "forced transfer" of ENJASA’s premises or assets. The Temporary Plan, which was approved by Decree No. 3330/13, required the new operators to prove that their facilities were authorized and that they had the devices to operate games of chance. Respondent points out that Claimants’ own valuation experts confirmed that there was no "forced transfer" of ENJASA’s premises or assets, but that some were sold voluntarily to the new operators and resulted in an economic benefit for ENJASA.344
278.
According to Respondent, Claimants do not contend that, after the revocation of ENJASA’s license, they were prevented from participating in the process to obtain temporary operating permits and eventually licenses; Claimants recognize that they were offered to continue operating Casino Salta, but Claimants did not accept this offer.345
279.
In addition, after the revocation of the License, ENJASA continued operating the Sheraton Hotel in Salta until it was sold for a real estate value of USD 4.2 million; also, the goodwill of the hotel was sold later on.346 Respondent contends that the sale of the hotel "proves that there was a purchaser interested in the operation of the hotel;"347 also the hotel to this day continues operating. Respondent moreover stresses that Claimants have not submitted evidence to substantiate their allegation that the hotel only had limited value for them. The sale of the hotel and of its goodwill refutes this allegation.348
280.
As for the third requirement for an indirect expropriation, Respondent contends that a distinction must be made between "compensable expropriation" and "non-compensable regulation." In order to distinguish between the two, most tribunals take into account the purpose of the measure taken by the State, and recognize the State's power to restrict private property rights without compensation through regulatory measures that are adopted in good faith, in accordance with due process, and in pursuit of a legitimate purpose.349 Respondent notes that Claimants admit the existence of the concept of non-compensable regulation, although they incorrectly contend that that concept does not apply to the facts of this case because its requirements are not met.350
281.
Concerning a State's regulatory powers, Respondent refers to awards that have found that it is not the function of an investment tribunal to second-guess the policies that a State may deem useful or necessary for the public good, and that "the standard of review of a State's conduct to be undertaken by an international tribunal includes a significant measure of deference towards the State making the impugned measure."351 Respondent submits that the public purpose of ENREJA's measures to ensure compliance with anti-money laundering rules, which were themselves in line with international standards, cannot be denied.352
282.
Respondent further contends that, far from abusing its powers, ENREJA had warned ENJASA in the past that it could lose its License if it continued breaking the rules.353 The revocation of ENJASA's license was a measure adopted within ENREJA's powers, it was reasonable and proportionate in view of ENJASA's serious and repeated breaches. It was adopted following a long list of lesser sanctions and warnings.354 Respondent also argues that due process was respected at all times, and ENJASA was granted extensions for consulting records, submitting answers, and offering evidence.355
283.
Finally, Respondent refers to the principle recognized in international law that no claim can be brought under international law where an agreement has been revoked according to its terms. Respondent contends that this was the case here, considering that ENJASA’s license had been revoked in accordance with its express provisions and the applicable regulatory framework.356

b) No Direct Expropriation under Article 4(3) of the BIT

284.

Respondent also submits that Claimants are not entitled to compensation or damages under Article 4(3) of the BIT. In this context, Respondent contends that Article 4(3) of the BIT does not protect ENJASA’s license. Respondent invokes two reasons for this. First, the License does not qualify as a "financial asset" ("activos fmancieros"), which is the term used by the authentic Spanish version of Article 4(3) of the BIT. This term is more restrictive than the term used by the German version of the same provision ("Vermogenswerte"), which would translate as "activos" in Spanish or "assets" in English. According to Respondent, interpreting Article 4(3) of the BIT by reference to the Spanish version should be preferred over any broader interpretation based on the German version of the BIT because the Spanish version represents "the minimum point of agreement between the Parties to the Treaty"357 and therefore constitutes the meaning which best reconciles the two texts, as required by Article 33(4) VCLT. Second, Respondent submits, that even if Article 4(3) of the BIT were interpreted to apply to "assets" in general, and not just to "financial assets", its scope of protection would remain limited to the assets of L&E, the company Claimants are immediate shareholders of; it could not extend to the assets of ENJASA in which Claimants are only indirect shareholders.358

3. Fair and Equitable Treatment

285.

In respect of Article 2(1) of the BIT, Respondent submits that the revocation of ENJASA's license was lawful under domestic law and did not breach any of the rights Claimants could derive from the fair and equitable treatment standard.

a) The Scope of Fair and Equitable Treatment under the BIT

286.

Respondent contends that the fair and equitable treatment standard referred to in Article 2(1) of the BIT forms part of customary international law; its content therefore will be determined by its customary law origin.359 By being included in an investment treaty without further specification, fair and equitable treatment does not become an autonomous standard, but continues to reflect the customary international law minimum standard of treatment. Respondent concludes that Article 2(1) of the BIT, interpreted in accordance with Article 31 of the VCLT, "coincides with that customary rule."360

287.
To determine the standard to apply in order to find a violation of the customary international law minimum standard of treatment, Respondent refers to the Neer case361 and Glamis Gold v. United States.362 According to Respondent, "[e]ven though that standard reflects the evolution of customary international law, the threshold for finding a violation of the standard still remains high,"363 and the acts which have been described as amounting to a violation of the standard include "willful neglect of duty," "subjective bad faith," "manifest failure of natural justice in juridical proceedings or a complete lack of transparency and candour in an administrative process," and "gross denial of justice or manifest arbitrariness."364
288.
Respondent further relies on the commentary to Article 1 of the 1967 Organisation for Economic Co-operation and Development ("OECD") Draft Convention on the Protection of Foreign Property and, in the context of NAFTA, on the NAFTA Free Trade Commission's interpretation to the effect that fair and equitable treatment does "not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens."365 Respondent contends that this position has been explicitly referred to by several States and endorsed by international courts and tribunals, as well as international jurists.366 Respondent further submits that the interpretation of the NAFTA Free Trade Commission of the fair and equitable treatment standard contained in Article 1105 of the NAFTA does not only apply to the wording of that provision in the NAFTA, but has to be understood as reflecting "the ordinary meaning of fair and equitable treatment."367
289.

Given that, according to Respondent, the fair and equitable treatment standard contained in the BIT is equivalent to the customary international minimum standard of treatment, Article 2(1) of the BIT does not establish a "general and absolute guarantee of legal stability," does not constitute an "insurance policy," and does not support Claimants’ allegation that "the most important function of the fair and equitable treatment standard [is] to protect the investor’s legitimate expectations."368 To the contrary, such an approach is not contained in the BIT or in any other BIT signed by Argentina.369

290.
Respondent contends that international law cannot be distorted by, on the one hand, recognizing that fair and equitable treatment is equivalent to the customary international law minimum standard and, on the other hand, "incorporating, through the backdoor, a whole series of new concepts that are completely alien to the international minimum standard, such as the protection of the investor’s expectations, the stability of the regulatory framework, etc."370 It would be, in any event, for Claimants to demonstrate that customary international law recognizes these concepts.371
291.
Respondent further points out that several arbitral tribunals have confirmed that the threshold for finding a violation of the international minimum standard remains high. In Genin v Estonia, for instance, it was decided that "[a]cts that would violate this minimum standard would include acts showing a wilful neglect of duty, an insufficiency of action falling far below international standards, or even subjective bad faith."372
292.
For Respondent, the fair and equitable treatment standard contained in the BIT is not aimed at providing a general and absolute guarantee of legal stability or an insurance policy that would preclude the revocation of ENJASA's license when the conditions for this License have not been respected.373
293.
For Respondent, the fair and equitable treatment standard contained in the BIT also does not protect the expectations of investors. The award in Tecmed v Mexico, which relied on the expectations of the investor as the source of the obligations incumbent upon the host State, was much criticized, Respondent argues.374 At the very least, as was elaborated in Saluka v. Czech Republic, a balance would need to be struck between the expectations of foreign investors and the legitimate right of the host State to regulate matters in the public interest.375
294.
Finally, Respondent observes that, as was admitted in Lauder v. Czech Republic, fair and equitable treatment "depends heavily on a factual context"376 and that a breach of the standard cannot be established in the abstract.377 In addition, in matters of public policy, regulatory authorities must have a "margin of appreciation".378

b) Breach of the Fair and Equitable Treatment Standard

295.
Respondent contends that Claimants' allegations of breach of the fair and equitable treatment standard are unsupported. In particular, Respondent contends that (i) the revocation of ENJASA's license was not arbitrary; (ii) due process was observed in the proceeding that led to the revocation; (iii) there was no breach of legitimate expectations; and (iv) there was no harassment or coercion.379
296.
Regarding the allegation that the License was revoked in an arbitrary manner, Respondent submits that the revocation was lawful and reasonable, was decided by ENREJA within its powers as granted by law, following investigations and inquiries already in progress in relation to previous breaches or infractions, and was based on three serious breaches, namely the irregular hiring of other gaming operators, the lack of identification of customers of live games and the payment of prizes in cash, and the failure to identify players of the lottery and to register prices. Given the seriousness and repeated nature of the breaches, and having already imposed numerous, progressively increasing sanctions for previous breaches, "the only valid solution," Respondent submits, was the revocation of ENJASA’s license.380
297.
Respondent also submits that the fact that the government subsequently granted a license to the local business partners with whom ENJASA had subcontracted without proper authorization or knowledge by ENREJA was irrelevant for determining whether ENREJA had breached the regulatory framework by revoking ENJASA’s license.381
298.
Regarding the allegation of a lack of due process in the proceedings leading to the revocation, Respondent contends that ENJASA’s arguments are contradictory and untrue. According to Respondent, due process and ENJASA’s right of defense were observed both during the revocation proceeding as well as in the administrative inquiries filed prior to the revocation of the License. Also, sanctions were applied gradually, reasonably, and proportionately, considering both the seriousness and the frequency of the breaches. In particular, the revocation of the License followed several breaches by ENJASA that were recorded in resolutions and notified to Claimants, and it was based on substantial grounds. ENJASA was notified of the charges against it through Resolutions Nos. 380/12, 381/12, and 384/12. It was given an opportunity to respond and submit evidence, and had deadlines extended for this purpose on many occasions. ENJASA also had access to the relevant files at all times. Despite numerous opportunities, the breaches by ENJASA continued and became increasingly serious and frequent. ENREJA had also warned ENJASA of the potential consequences, including in particular of the possibility that ENJASA might lose its License.382 ENJASA had therefore been able to exercise its right of defense in all phases of the administrative proceedings that concerned the revocation of its license.383
299.
As regards Claimants' expectations, Respondent reiterates that these are not protected under the BIT. However, even if the fair and equitable treatment standard in the BIT was to include the protection of legitimate expectations, it would still not cover Claimants' particular expectations, which were not legitimate.384 Respondent contends that, when Claimants acquired their indirect shareholding in ENJASA, they had been (or should have been) aware of the regulatory framework in place in the Province of Salta and had themselves accepted the different arrangements contained in the License. ENREJA had the authority to impose a range of sanctions, including the revocation of the License, in case of breach of Law No. 7020, of the License Agreement, or of other applicable regulations. ENJASA could not expect that ENREJA would not use its regulatory and sanctioning powers when monitoring whether games of chance operated in full compliance with the law.385 ENJASA could also not expect to keep the License despite breaches of the legal framework that applied to the License, particularly after having been sanctioned and warned that further breaches could lead to the loss of the License.386
300.
Concerning Claimants' allegation of harassment by ENREJA through its supervisory and monitoring activities, Respondent contends that ENREJA merely applied the law and the provisions of ENJASA's license, and that Claimants could not have expected otherwise. In particular, the online monitoring system implemented in 2008 improved the supervision of slot machines as well as of transmission systems and thus contributed towards transparency; it could therefore not be considered as harassing conduct.387
301.
With regard to the reasonableness and proportionality of the revocation of ENJASA's license, Respondent refers to the concept of proportionality as it exists in Argentine law, where "a measure will be proportionate if it pursues a legitimate aim and is appropriate to that end."388 For Respondent, the prevention of money laundering is a legitimate aim and the revocation of ENJASA's license was appropriate to prevent money laundering practices.389 The regulatory requirements imposed were also reasonable. For instance, it was reasonable to require registration of payments above ARS 10,000 (an amount three times the minimum monthly wage and more than one average monthly wage in the private sector). After all, Respondent states, in the bigger slot machine halls, prices above ARS 10,000 were paid on average once or twice a week and in the smaller slot machine halls, on average once a month, while for lottery games, prizes over ARS 10,000 were only won two or three times a week.390
302.
Respondent further submits that the revocation of ENJASA’s license had no hidden purpose that could undermine its legitimacy.391 Respondent also observes that the revocation did not exclude Claimants from the gaming sector. In fact, after the revocation, Claimants were offered to continue operating games of chance in the Province of Salta, but refused to accept that offer.392
303.
Respondent further observes that the revocation of the License was proportionate in view of ENJASA’s recidivism and reluctance to comply with the regulatory framework in place in spite of sanctions imposed on prior occasions. Besides, no appropriate, but less intrusive sanctions were available to achieve the same purpose. A measure, such as a six-month or one-year suspension of ENJASA’s license, would have affected other interests protected by Law No. 7020, which provides that "in order to rank the sanction, [ENREJA] shall take into account ... the damage caused to the Provincial State and/or private persons."393 Suspending ENJASA’s license for six months or a year would have left workers in the sector unemployed and would have deprived the Province of Salta of fiscal resources aimed at funding social and educational policies.394
304.
Respondent finally observes with regard to proportionality, that the Province of Salta took Claimants’ interests into consideration and revoked only ENJASA’s exclusive license for the operation of games of chance, while offering Claimants to continue operating casinos and leaving the operation of the five-star hotel unaffected.395

VI. The Tribunals Analysis of Respondents Liability

305.

As becomes clear from the Parties’ arguments on the facts of the case and their legal assessment, the Tribunal is called to determine whether conduct of the authorities of the Province of Salta, which is attributable under international law to Respondent pursuant to Article 4(1) of the ILC Articles, resulted in a breach of the BIT, specifically its Articles 2(1) and 4. The measures Claimants alleged to breach the BIT consist of the administrative proceedings that resulted in the revocation of ENJASA's exclusive license through Resolution No. 240/13 and its confirmation in Resolution No. 315/13 and the subsequent transfer of ENJASA's operations to third operators. Prior conduct of the authorities in the Province of Salta is not claimed independently to have breached the BIT, but rather is invoked as background in support of Claimants' submission that there was a long-term plan to oust ENJASA of its operation in Salta's gaming sector.

306.

Functionally, the Tribunal is therefore put by the Parties into a role akin to that of an administrative court which is asked by an affected private actor to review the legality of actions by the executive branch of government. However, as the Tribunal will specify in a first step, the legal standard to determine the legality of that conduct does not consist of domestic (administrative) law, but of the standards of treatment contained in the BIT. The Tribunal, therefore, is not asked by the Parties to make a binding determination under domestic law of the legality of the conduct of Respondent, respectively the authorities in the Province of Salta, as would be the case for a domestic court seized of the underlying dispute, but is limited to assessing the legality of that conduct under international law. The Tribunal, in other words, has to exercise a form of internationalized judicial review of administrative action.396

307..

This notwithstanding, in determining the legality of Respondent's conduct under international law, the Tribunal will have to address several questions of domestic law as incidental questions or preliminary matters. Article 8(6) of the BIT clarifies that the Tribunal is empowered to do so. However, rather than reviewing questions of domestic law de novo, as would presumably be the proper course for a court in the host State sought of the underlying dispute, and thereby replacing domestic courts in their exercise of domestic judicial review, the Tribunal will determine any such question of domestic law, as is appropriate for an international adjudicatory body in its position, by exercising a certain degree of deference. After all, the Tribunal’s function in the present proceeding is not to replace domestic courts in exercising domestic judicial review, but to exercise a form of internationalized judicial review. However, exercising deference in the interpretation of domestic law and in the review of domestic legality of the host State’s conduct, does not affect the Tribunal’s task to assess the legality of that conduct under international law and determine whether it has given rise to breaches of the BIT.397

308.

The Tribunal will then, in a second step, address the alleged breaches of the BIT. These encompass breach of the rules on expropriation contained in Article 4 of the BIT and of the fair and equitable treatment standard contained in Article 2(1) of the BIT. In interpreting the BIT, the Tribunal applies the rules on treaty interpretation laid down in the VCLT, which is binding upon both the Argentine Republic and the Republic of Austria.398 These rules - and the interpretive canons flowing from them - are well-known and do not need to be further expounded in the abstract. Specifically for investment treaties, they require that treaty interpretation is not to be guided by presumptions in favor of either investors and their home States or of host States, nor by teleological preferences about investor-State relations that are extrinsic to the treaty commitments made.

309.
Furthermore, the Tribunal notes that, in its analysis of the governing law, it is not limited to the arguments or sources invoked by the Parties, but is required, under the maxim iura novit curia or, better, iura novit arbiter, to apply the law on its own motion. This approach corresponds to the Tribunal’s public function as an adjudicatory body that is part of the administration of international justice. It justifies reliance on arguments and authorities on the governing law not submitted by the Parties, provided the latter are given an opportunity to comment on arguments and legal theories that were either not addressed or could not reasonably be anticipated.399

A. Applicable Law and Causes of Action

310.

The law applicable to the merits of the present proceeding is to be determined pursuant to Article 42(1) of the ICSID Convention. According to this provision, an ICSID tribunal is, in the first place, called to "decide a dispute in accordance with such rules of law as may be agreed by the parties." In the present proceeding, on the basis of Respondent's offer to arbitrate contained in Article 8 of the BIT, which Claimants have accepted, the Parties have agreed on Article 8(6) of the BIT, which provides in English translation as submitted by the Parties (with differences in translation noted), as follows:

The arbitral tribunal shall decide the dispute in accordance with the laws of the Contracting Party involved in the dispute - including its rules on conflict of laws [Respondent]/private international law rules [Claimants], the provisions of this Agreement, and the terms of any specific agreements concluded in relation to such an investment, if any, as well as the applicable principles of international law.400

311.
Pursuant to Article 8(6) of the BIT, the Tribunal is therefore empowered and required to apply Argentine law, the BIT itself, as well as other applicable principles of international law in resolving disputes between investors covered by the BIT and the other Contracting State, which are submitted to international arbitration on the basis of Article 8.
312.

This does not mean, however, that the combination of domestic law, the BIT, and other principles of international law, which is laid down in Article 8(6) of the BIT applies necessarily to every claim or cause of action submitted by the parties, as part of their dispute, to an arbitral tribunal established under Article 8 of that BIT. Article 8(6) is a choice-of-law clause for the merits of the dispute on the basis of which a tribunal established under Article 8 of the BIT is to determine the law that applies to the causes of action before it. In providing that the applicable law encompasses the host State's domestic law, the provisions of the BIT, any specific agreements concerning the investment, and applicable principles of international law, Article 8(6) has to be seen in the context of the jurisdictional grant under Article 8(1), which allows an investor of one Contracting Party to bring "[a]ny dispute with regard to investments ... concerning any subject matter governed by this Agreement" to a treaty-based ICSID tribunal. This provision may be understood as a wide dispute settlement provision that extends jurisdiction to a variety of different causes of actions, including claims for breach of the BIT (i.e., treaty claims), claims for breach of investor-State contracts (i.e., contract claims), or claims for breach of domestic law, provided these claims all regard an investment the claimant investor has made in the host State and the dispute concerns a subject matter governed by the BIT, which would encompass any issue relating to the promotion and protection of investments that comes up in the relations between covered investors and host State. After all, as Article 7 of the BIT clarifies, contracts between covered investors and host State, as well as domestic law governing investor-State relations are covered by the term "subject matter of this Agreement" in the sense of Article 8(1) of the BIT.401

313.

Each of those types of claims, or causes of action, would be governed by its own applicable law, as determined pursuant to Article 8(6) of the BIT. A claim for breach of an investor-State contract would be governed by the law applicable to that contract (as determined either by the host State’s conflict-of-law rules and/or a choice-of-law clause in that contract); a claim for breach of a host State’s domestic statute would be governed by domestic law; and a claim for breach of the BIT would be governed by the BIT itself. In addition, Article 8(6) of the BIT ensures that applicable principles of international law would apply independently of any other law that may be applicable (whether domestic law or treaty law) in order to ensure that the host State’s obligations under international law are always complied with. Article 8(6) of the BIT, therefore, does not substantially differ from the approach to the determination of applicable law contained in Article 42 of the ICSID Convention, where applicable rules of international law also apply as a corrective.

314.
In sum, Article 8(6) of the BIT sets out the permissible range of causes of action that can come before an Article 8 tribunal, but it does not have the effect that any dispute submitted to an Article 8 tribunal, independently of the causes of action upon which the disputing parties rely, is always governed by a combination of domestic and international law. Above all, Article 8(6) does not provide, as seemingly suggested by Respondent, that Argentine law determines the scope of the investor's substantive rights under the BIT and whether or not Argentina has complied with the BIT. Whether the BIT and international law have been complied with can only be assessed on the basis of an autonomous interpretation and application of the rules and principles that form part of the international legal system. A treaty claim, in other words, remains governed by treaty law. As the ICJ has stated in the ELSI case, domestic law and international law, including the BIT, are separate regimes, so that

[c]ompliance with municipal law and compliance with the provisions of a treaty are different questions. What is a breach of a treaty may be lawful in the municipal law and what is unlawful in the municipal law may be wholly innocent of violation of a treaty provision.402

315.

To the same effect, Article 3 of the ILC Articles provides:

The characterization of an act of a State as internationally wrongful is governed by international law. Such characterization is not affected by the characterization of the same act as lawful by internal law.

316.

That a treaty claim remains governed by treaty law does not mean, however, that domestic law is wholly irrelevant for the determination of compliance with, or liability under, a BIT, including the BIT governing the present dispute. Domestic law will remain relevant in governing a variety of incidental questions, or preliminary matters, including questions for the determination of which a BIT may expressly refer to domestic law (such as the determination of the nationality of an investor or compliance with domestic law under an in-accordance-with-host-State-law clause, as is the case under Article 1(1) and (2) of the BIT),403 or questions that must be assumed to be governed by domestic law for other reasons, for example because certain elements of a treaty can only be determined by recourse to domestic law (such as whether an investor has title to a certain asset or what the treatment afforded under domestic law is for purposes of assessing compliance with a national treatment provision).

317.
In the present case, as their prayer for relief indicates, Claimants have brought claims for breach of specific provisions of the BIT, namely of Article 4 (addressing expropriation) and of Article 2(1) (addressing fair and equitable treatment). The law applicable to determining these claims is international law, more specifically the BIT itself, as well as other relevant rules of international law, including customary international law or general principles of international law, to the extent they are not supplanted by the BIT. Claimants have not brought claims before this Tribunal for breach of domestic law or breach of contract. While the assessment of ENREJA's conduct under domestic law, as specified further below, is a relevant factor in the application of the substantive standards of treatment under the BIT, the Tribunal is not called on deciding on a dispute between ENJASA and ENREJA about the legality of the revocation of ENJASA's license under domestic law. This dispute was before the courts in the Province of Salta and has become moot when the Parties withdrew it following the Tribunal's order to do so in its Decision in Jurisdiction.404

B. Expropriation

318.
The Tribunal will first assess Claimants' claim for breach of the rules on expropriation in Article 4 of the BIT, which provides in English translation, with remaining differences between the Parties indicated, as follows:

(1) The term "expropriation" includes both nationalization as well as any other measure having an equivalent effect.

(2) The investments of investors of a Contracting Party shall not be expropriated in the territory of the other Contracting Party except for a public purpose, in accordance with due process of law and against compensation. Such compensation shall amount to the value of the investment expropriated immediately before the expropriation or the impending expropriation became public knowledge. Compensation shall be paid without undue delay and shall bear interest until the date of payment, at the customary bank rate of the State in whose territory the investment has been made; shall be effectively realizable and freely transferable. Assessment and payment of compensation shall be adequately provided for no later than at the time of expropriation.

(3) Where a Contracting Party expropriates the financial [Respondent] assets of a company that, in accordance with the provisions of Article 1, paragraph 2 hereof, is deemed to be a company belonging to that Contracting Party, and in which the investor of the other Contracting Party owns [Respondent]/has [Claimants] shares, the provisions set forth in paragraph 2 of this Article shall be applied by the former so as to guarantee the appropriate compensation of the investor.

319.

As forwarded by Claimants, the claim for breach of Article 4 of the BIT arises from the revocation of ENJASA' exclusive 30-year license and the subsequent transfer of ENJASA's operations to third operators. As compared to the claim for breach of the fair and equitable treatment standard in Article 2(1) of the BIT, which arises out the same set of measures taken by the authorities in Salta, the claim for breach of Article 4 is the more specific one. Article 4 not only requires an interference with a protected investment that must meet a higher threshold and qualify as an "expropriation," it also gives the host State a right to expropriate a covered investment under specific circumstances, namely if the expropriation serves a public purpose, is implemented in accordance with due process of law, and provides for compensation. For this reason, claims under Article 4 of the BIT have to be addressed before claims for breach of other provisions of the BIT, such as the one on fair and equitable treatment in Article 2(1) of the BIT,

320.

In respect of Article 4 of the BIT, Claimants claim that the revocation of ENJASA's license and the subsequent transfer of its operations to third operators gives rise to two (in principle separate) causes of action. In the first place, and as their principal claim under Article 4 of the BIT,405 Claimants claim that the measures in question destroyed their indirect investment in ENJASA, through their shareholding in L&E, resulting in an indirect expropriation contrary to Article 4(1) and (2) of the BIT. Only as an alternative claim do Claimants allege the measures in question to have resulted in an expropriation of ENJASA's assets contrary to Article 4(3) of the BIT, which would entitle Claimants, they claim, as indirect shareholders in ENJASA to compensation.

321.
Respondent, by contrast, claims that neither an indirect expropriation of Claimants' indirect investment in ENJASA that would violate Article 4(1) and (2) of the BIT has occurred, nor that the revocation of ENJASA's license and the subsequent transfer of its operations to new operators has resulted in an expropriation of ENJASA contrary to Article 4(3) of the BIT. Instead, Respondent insists, as its principal argument on the merits, that the revocation of ENJASA's license had occurred in the lawful exercise of ENREJA's regulatory or police powers as provided for under the regulatory framework in place in the Province of Salta. Such exercise of a host State's regulatory and police powers is recognized as lawful under international law and would not, Respondent argues, qualify as an act of expropriation under Article 4 of the BIT. In addition, Respondent submits, the fact that ENJASA could continue operating the Sheraton Hotel in Salta and that Claimants had been offered to continue operating casinos in Salta militated against the existence of an expropriation. Furthermore, Respondent argues that Article 4(3) of the BIT limits the protection of shareholder-investors to claims for compensation arising out of expropriations of "financial assets" of a locally incorporated company, a condition ENJASA's license did not fulfil, thus barring recourse of Claimants as shareholder-investors under Article 4(1) and (2) of the BIT.
322.
Against the background of the Parties' arguments, the Tribunal will, in the following, first set out the legal framework to be applied to claims under Article 4 of the BIT. It will start with Claimants' principal claim for indirect expropriation under Article 4(1) and (2) of the BIT, before turning to Claimants' alternative claim for breach of Article 4(3) of the BIT. The key issue that emerges from the legal framework thus expounded is whether the revocation of ENJASA's license amounted to expropriatory conduct in the sense of Article 4(1) or whether it qualified as a regular exercise of the host State's regulatory or police power, that is, as a lawful administration of a sanction by ENREJA under Law No. 7020, which does not qualify as an expropriation and does not require the payment of compensation.

1. Breach of Article 4(1) and (2) of the BIT

a) The Relevant Legal Principles

323.
Before assessing whether the facts in the present proceeding resulted in a breach of Article 4(1) and (2) of the BIT, the Tribunal will clarify the relevant legal principles governing the interpretation of this provision of the BIT. In order to do so, the Tribunal will first clarify the qualification of Claimants' claim as a claim for indirect expropriation of their investment (see (1)). The Tribunal will then set out the legal test applicable under Article 4(1) and (2) of the BIT to determine whether Respondent's conduct qualified as an indirect expropriation and distinguish such conduct from the non-compensable exercise of the host State's regulatory and police powers (see (2)). Finally, the Tribunal will address in more detail what limits the exercise of the host State's police powers has to comply with in case of the enforcement of pre-existing limitations to the rights an investor enjoys under the host State's domestic law (see (3)).

(1) Qualification of Claimants’ Claim as a Claim for Indirect Expropriation

324.

Article 4(2) of the BIT provides investments of investors in the territory of the other Contracting Party with protection against expropriations that have not been made for a public purpose, in accordance with due process of law, and against compensation.406 Expropriation, in this context, is defined in Article 4(1) of the BIT as encompassing both nationalization and other measures having an equivalent effect. Article 4 therefore protects not only against direct, but also indirect, de facto, or creeping expropriations of covered investments.

325.

The notion of "investments", which are protected against expropriation under Article 4 of the BIT, in turn, encompasses not only direct investments of an investor from the other Contracting Party, but also investments that are held through a holding company that was incorporated in the host State, as in the present case. Indeed, the Tribunal has already found in its Decision on Jurisdiction "that both Claimants' direct shareholding in L&E and their indirect shareholding in ENJASA qualify as 'investments' under Article 1(1)(b) the BIT."407 Claimants as shareholder-investors are therefore protected against expropriations of their (direct and indirect) shareholdings in L&E and ENJASA under Article 4(1) and (2) of the BIT.

326.
By contrast, the Tribunal has found that ENJASA's assets themselves, including in particular its exclusive operating license, do not qualify under Article 1(1) of the BIT as Claimants' investments.408 This notwithstanding, Article 4(3) of the BIT provides shareholder-investors in a company that has been established in the host State with a cause of action in case of expropriations of assets/financial assets of the locally incorporated company in which the investor holds shares.
327.
In respect of the relationship between claims of shareholder-investors under Article 4(1) and (2) of the BIT, on the one hand, and Article 4(3), on the other hand, the Tribunal reiterates what it has explained in its Decision on Jurisdiction, namely that nothing in the text of Article 4(3) of the BIT supports an argument to the effect that this provision would exclude the protection of shareholder-investors under other standards of protection in instances where assets/financial assets of a locally incorporated company have been expropriated. Rather, as the Tribunal explained:

240. ... the formulation of Article 4(3) of the BIT suggests that that provision was intended to grant shareholder-investors an additional cause of action when a local company, in which a covered investor holds shares, is expropriated.

241. This additional cause of action differs from a claim of shareholder-investors under Article 4(2) of the BIT for an (indirect) expropriation of their shareholding. Under Article 4(3) of the BIT, a claimant would only have to show that assets/financial assets of the company were subject to an expropriation, without the need to demonstrate any detrimental effect on the value of the shareholding. By contrast, for a claim under Article 4(2) of the BIT, the shareholder-investor would need to show that the interference of the host State with assets of the company had an effect on the shareholding that was so severe that it qualifies as a "measure having an equivalent effect" on that shareholding.409

328.

Whereas direct expropriations require the taking and transfer of title to the covered investment from the investor to the host State or a third party, indirect or de facto expropriations cover measures that have an equivalent effect to a direct expropriation, but leave the title to the investment unaffected.410

329.
It is this latter category which is the only relevant one in the present proceeding. As the Tribunal equally already has stated in its Decision on Jurisdiction, it is clear that the revocation of ENJASA's license and subsequent events do not constitute a direct expropriation of Claimants' investment, as it is undisputed that Claimants continue to own title to their shares in L&E and ENJASA. The issue is rather whether the revocation of ENJASA's license and the subsequent transfer of its business to new operators constitute an indirect expropriation of Claimants' investment in L&E and/or ENJASA.411

(2) Distinction between Indirect Expropriation and Non-Compensable Exercises of the Host State’s Regulatory and Police Powers

330.

In the past, in determining whether a certain government measure qualified as an indirect expropriation, several tribunals have considered principally, at times even solely, the effects the measure had on the protected investment.412 What tribunals have required in application of this approach, as stated for example in Metalclad v. Mexico, is that the interference of the host State’s measure with the investment "has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be expected economic benefit."413 Other tribunals have used similar formulations that make the existence of an indirect expropriation dependent upon the permanent and substantial deprivation of an investment’s capacity to be employed for economic use and benefit.414

331.

However, looking only at the effect of a measure on the investment in question is too limited. As confirmed by a large number of investment treaty tribunals, not only the impact on the investment of the measures in question has to be examined, but also whether the host State took those measures in the exercise of its police powers or its right to regulate, which are, as numerous tribunals have emphasized, a recognized component of State sovereignty, safeguarded under both customary international law and the law of investment treaties.415 As stated, for example, by the tribunal in Saluka v Czech Republic, "[i]t is now established in international law that States are not liable to pay compensation to a foreign investment when, in the normal exercise of their regulatory powers, they adopt in a non-discriminatory manner bona fide regulations that are aimed at the general welfare."416