On July 28, 2016, the Claimants submitted a Second Request for Provisional Measures (the "Second Request for Provisional Measures") that included a Request for Emergency Temporary Provisional Measures pending the determination of this second request (the "Request for Emergency Temporary Provisional Measures"). In their Second Request for Provisional Measures, Claimants requested the Tribunal to recommend Respondent:
(a) a series of measures related to the documents and information obtained by two divisions of Romania's National Agency for the Fiscal Administration ("ANAF") as a result of two investigations commenced on RMGC; and
(b) to refrain from enforcing or taking any action in connection with a VAT assessment served by ANAF on RMGC on July 7, 2016, in the principal amount of approximately USD 6.7 million (the "VAT Assessment") pending the resolution of RMGC's administrative and judicial challenge of such VAT Assessment.
On September 23, 2016, a hearing on both requests for provisional measures was held in Washington, DC. By agreement of the Parties, the hearing was broadcasted with one hour delay to another room save the confidential part of the hearing. The following participated in the hearing:
Members of the Tribunal :
Ms. Teresa Cheng SC, President of the Tribunal
Prof. Horacio A. Grigera Naón, Arbitrator
Prof. Zachary Douglas QC, Arbitrator
ICSID Secretariat :
Ms. Sara Marzal Yetano, Secretary of the Tribunal
Participating on behalf of the Claimants :
Ms. Abby Cohen Smutny, White & Case
Mr. Darryl Lew, White & Case
Mr. Brody Greenwald, White & Case
Mr. Michael Roche, White & Case
Mr. Andrei Popovici, White & Case
Ms. Samantha Fernández-Micone, White & Case
Ms. Anca Puyascu, Tuca Zbarcea & Asociatii
Ms. Ruxandra Nita, Tuca Zbarcea & Asociatii
Participating on behalf of the Respondent :
Mr. Veijo Heiskanen, Lalive
Ms. Lorraine de Germiny, Lalive
Mr. Christophe Guibert de Bruet, Lalive
Ms. Crenguta Leaua, Leaua & Asociatii
Ms. Andreea Simulescu, Leaua & Asociatii
Ms. Liliana Deaconescu, Leaua & Asociatii
As mentioned above, in their Second Request for Provisional Measures, Claimants requested the Tribunal to recommend that Respondent:
(a) adopt a series of measures related to the documents and information obtained by two divisions of ANAF as a result of two investigations commenced on RMGC; and
(b) refrain from enforcing or taking any action in connection with a VAT Assessment served by ANAF on RMGC on July 7, 2016, in the principal amount of approximately USD 6.7 million pending the resolution of RMGC's administrative and judicial challenge of such VAT Assessment.
For this reason, the present Decision will only address Claimants' request for provisional measures related to the documents and information obtained by two ANAF divisions as a result of the two investigations commenced on RMGC, namely, "that the Tribunal recommend as provisional measures:
(a) With respect to the purported 'anti-fraud' investigation undertaken following Claimants' initiation of this arbitration by the Ministry of Finance through ANAF, that Respondent must ensure that no information or documents coming to the knowledge or into the possession of ANAF as a result of its investigations or audits undertaken in relation to RMGC shall be made available to any person having any role in Respondent's defense in this arbitration;
(b) That, in any event, to avoid any risk to the integrity of this arbitration, Respondent not proffer any evidence gained through ANAF's audits and investigations in relation to RMGC without prior identification to and leave from the Tribunal with an opportunity for Claimants to comment on any such request.3
(d) That Respondent shall refrain from taking any action in connection with [...] ANAF audits or ANAF investigations that may aggravate or extend the dispute."
Claimants submitted that the Tribunal's authority to issue provisional measures have to meet the following four criteria:
(a) The tribunal is properly seized of the dispute submitted to arbitration.59
(b) There is a right that is the subject of the requests. It has to be established that the existence of such right is plausible.
(c) There must be a material risk of harm to that right.
(d) The requested measure must be proportional to the risk of harm.
Respondent summarized the criteria to be met as follows:
As noted in both the Respondent's Observations to the First Request and its Comments on the Claimants' Request for Emergency Relief, under the ICSID Convention and the ICSID Rules, an applicant for provisional measures must make a prima facie showing that the Tribunal has jurisdiction as well as demonstrate that the measures sought (i) seek to protect a right and are (ii) necessary, (iii) urgent, and (iv) proportional.60
It is accepted that the rights to be protected may include a party's right to the procedural integrity of the arbitration.
(a) In Burlington v. Ecuador, the tribunal stated that "the rights to be preserved by provisional measures are not limited to those which form the subject matter of the dispute or substantive rights as referred to by the Respondents, but may extend to procedural rights, including the general right to the status quo, and to the nonaggravation of the dispute. These latter rights are thus self-standing rights."62
(b) In Perenco v. Ecuador, the tribunal referred also to the ICJ decision in the LaGrand case63 pointing out that measures designed "to avoid aggravating or extending disputes have frequently been indicated by the court."64
The procedural integrity of the arbitration encompasses respect for the parties' rights to due process and equal treatment and the non-aggravation of the dispute. The Tribunal's power to issue provisional measures to ensure the procedural integrity of the arbitration has been upheld in cases such as Libanaco v. Turkey,65Quiborax v. Bolivia66 and Churchill Mining v. Indonesia.67
The Tribunal observes that the Parties' submissions regarding the standard and criteria to be met are not substantially different. The Tribunal sets out its findings relating to the test based on both Parties' submissions below:
(a) The recommendation of provisional measures must be urgent such that the order cannot await the final award.69
(b) The provisional measure to be recommended must be necessary for the protection of the right.70 The test of necessity is met where the harm is irreparable or where there is a material risk of serious or grave damage to the requesting party.
(c) The Tribunal must balance the harm caused to the requesting party and to the other side when deciding whether or not the provisional measures should be adopted. In striking the balance, the Tribunal has to take into account the degree and nature of the harm that would be suffered by each party so that the provisional measure ordered would be proportional in all the circumstances of the case.71
Having laid down the general criteria to be met and the applicable standards, the Tribunal turns to the specificities of the objection in this case, namely that:
(a) the actions complained of relate to taxation measures and "taxation measures" are excluded by reason of the tax carve-out provision in Article XII(1) of the Canada - Romania BIT;
(b) by reason of Article XIII(8) of the Canada - Romania BIT, which permits interim measures of protection to preserve rights but prohibits the tribunal to "order attachment or enjoin the application of the measure alleged to constitute a breach of this Agreement," this Tribunal cannot exercise its power to grant the provisional measures sought here;
(c) Claimants have sought to consolidate their claims under the two BITs and hence Gabriel Jersey is subject to the same restrictions as Gabriel Canada.
The two provisions in the Canada - Romania BIT provide:
(a) Article XII(1):
Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
(b) Article XIII(8):
A tribunal may order an interim measure of protection to preserve the rights of a disputing party, or to ensure that the tribunal's jurisdiction is made fully effective, including an order to preserve evidence in the possession or control of a disputing party or to protect the tribunal's jurisdiction. A tribunal may not order attachment or enjoin the application of the measure alleged to constitute a breach of this Agreement. For purposes of this paragraph, an order includes a recommendation.
The Tribunal, after careful consideration, unanimously decides as follows:
(a) Claimants' Second Request for Provisional Measures in paragraph 166(a), (b) and (d) of the Reply is dismissed.
(b) No order is made in relation to paragraph 166(c) of the Reply as it has been withdrawn.
(c) Costs of and occasioned by this application are reserved.
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