von Pezold and others v. Zimbabwe

“(i) confirm that all Respondent’s 9 September 2013 submissions are fully on the record and can be relied upon in all regards;

(ii) confirm that all Respondent’s 23 September 2013 Reply, witness statements, authoritative references, legal cases and/or statutory material have been transmitted to the Arbitral Tribunals and are fully on the record;

(iii) confirm that all Respondent’s 9 September 2013 submissions and its 23 September 2013 Reply, witness statements, authoritative references, legal cases and/or Statutory material may be fully argued during the oral phase of these proceedings;

(iv) in particular, confirm that Mr. Moyo’s Fourth Witness Statement (R5080) is fully on the Record and can be relied upon in all regards, in particular its Paragraphs 9(a) and 10 through 15;

(v) in particular, confirm that Mr Onias Masiiwa’s Second Witness Statement (R5082) is fully on the record and can be relied upon in all regards;

(vi) in particular, confirm that Mr Grasiano Nyaguse Second Witness Statement (R5085) is fully on the record and can be relied upon in all regards;

(vii) in particular, confirm that Dr Kanyekanye’s Fourth Witness Statement (R5081) is fully on the record and can be relied upon in all regards, in particular its Page 11 regarding Exchange Control and pages 5, 6, 9, 31 and 32 regarding ZSE Rules;

(viii) in particular, confirm that Dr Kanyekanye’s Fifth Witness Statement (R5093) is fully on the record and can be relied upon in all regards, in particular its Sections D and E;

(ix) authorise Mr Machaya to submit a legal opinion from his Zimbabwe law perspective confirming the content of R5082, R5085, R5093 and Page 11 regarding Exchange Control and pages 5, 6, 9, 31 and 32 regarding ZSE Rules of R5081 and commenting on the two Zimbabwe law documents regarding these Zimbabwe Law issues key to the determination of the BIT access conditions and jurisdiction;

(x) authorise Respondent to submit the Zimbabwe Stock Exchange Act, Chapter 24: 18 of 1973 and the Securities Act, Chapter 24:25 of 2004, as RP097 and as RP098 respectively, to clarify the law applicable to this issue, key to the determination of the BIT access conditions and jurisdiction;

(xi) were the Arbitral Tribunals to consider any of Respondent’s September submissions, including those referred to above, not to come within the ambit of Respondent’s September 2013 filings, grant this application pursuant to Paragraph 55(i) of PO No. 3, so as to formally submit those documents and to correct the now out dated Request for Relief in Respondent’s 14 April 2013 Rebutter by so amending its pleadings;

(xii) declare the Respondent’s pleadings to be amended to conform to the evidence on the record at all times.”

“...

Respondent’s Request is for a Procedural Order fixing:

(i) Mr Masiiwa’s R-082 on the record in conjunction with the following,

(ii) Claimants’ final opportunity to submit any further approval / illegality exhibits they may have "overlooked," through 10 December 2013 with an unlimited number of pages of accompanying lawyer’s pleadings,

(iii) Respondent’s right to submit any reply exhibits through 20 December 2013 in response, with a 20-page limit on accompanying lawyer’s pleadings,

(iv) Post Hearing Memorials at 15 January 2013, and

(v) Submissions on costs at 31 January 2014.”

“2. Corrections to Mr Levitt’s Damages Calculations

2.1 Respondent does not challenge the admissibility of the updated version of Mr Levitt’s corrections to his Second Report (CE-7) and the associated corrected documents submitted on 15 May 2013 including the consequential amendments to Heads of Loss 9, 10 and 13 and the Claimants’ request for relief (Mr Coleman addressed these materials to the Arbitral Tribunal by three emails on 15 May 2013). The parties agree that the Respondent shall have a right to respond to Mr Levitt’s corrections and the consequential changes and to correct any errors in its own damages calculations, by noon London time on 9 September 2013.

2.2 The Claimants shall have a right to comment on such written response by noon London time on 23 September 2013 (or such later time fourteen days following Claimants’ receipt of the entirety of the Respondent’s written response should any part by late).

2.3 Further, should the Respondent’s written response to Mr Levitt’s corrections and the consequential changes or corrections to its own damages calculations go beyond responding to Mr Levitt’s corrections and consequential changes or go beyond correcting errors in its own damages calculations, Claimants reserve the right to challenge the admissibility of the Respondent’s response, or to respond to any material that is not responsive.”

“Respondent in its 22 September 2013 letter, reserved the possibility of objecting to Claimants’ new arguments.

Procedural Order No 8 makes any such objection unnecessary as the Tribunal states in Paragraph 16:

“the Respondent is also entitled to make submissions on both law and evidence on the record in respect of these objections during the oral hearing, scheduled to commence on 28 October 2013, and in any post-hearing procedures that may be agreed by the Parties and the Tribunals or decided by the Tribunals.”

Thus, Respondent, satisfied by these means to be heard, confirms that it does not make any application to exclude Claimants’ arguments.”

“… all of the evidence that is on the record is only relevant in so far as it relates to the parties’ respective causes of action, defences and objections to admissibility and jurisdiction as stated in the pleadings (as that term is understood in Arbitration Rule 31). The pleadings must of course be within the limits as required by the Arbitration Rules and the Tribunals’ procedural orders. It is completely unreasonable for the Respondent to continue to allege that its evidence forms the basis of defences and objections that have never been pleaded by it in its pleadings.”

“4) Thus, following an initial “explosion” on the part of Claimants to “exclude” all of Respondent’s submissions, other than R--80 (Mr Moyo – discussion as to damages) and R--81 (Dr Kanyekanye – discussion as to ZSE and Exchange Control Regulations), there is, in effect, only one question left for the Arbitral Tribunals to decide, that stated in Section 6.2 of R--079, Respondent’s 29 July 2013 letter: “To Remove and forget --or not to Remove and forget -- discussion of Exchange Control Regulations ? » In support of the Procedural Requests set out in Paragraph 10) below, Respondent reiterates Section 6.2 of R--079. That question underlies Claimants’ 26 and 27 September 2013 procedural “explosion” which is now focussed on the procedural fate of R--082 (Masiiwa) and, to a lessor degree, Respondent’s Corrected Request for Relief.” [emphasis Respondent’s]

“6) The Chairman of the Arbitral Tribunals made clear the duty of the Arbitral Tribunals to ensure both the Respondent’s, but no less the Claimants’ respective rights to be heard.

7) All parties, including the Respondent, see no reason to postpone Oral Hearings. Respondent writes this Procedural Request with that in mind and with the goal of finding a resourceful solution not unlike that which all parties reached during the 11 October 2013 telephonic conference with respect to Respondent’s Requests “ix” and “x.””

“9) The Arbitral Tribunals must not forget that the question of approvals has given rise to at least eight (8) written submissions by Claimants: (i) Urgent Application of 20 December 2013, (ii) 31 December 2012 letter, (iii) 301 pages of 1 March 2013 Surrejoinder, (iv) Mr Coleman’s remark “for the record” at the close of the 21 May 2013 telephonic conference, (v) 18 July 2013 Application … Illegality and Approval Evidence, (vi) 9 September 2013 Response … approval and Illegality, (vii) Mr Paul’s witness statement, C--879 and (viii) C--585, among the most recent and the most important, on which Claimants’ found their case both as to approval and legality. Claimants have thus written about “approv” at least 284 times, since Respondent’s 14 December 2013 Rejoinder, yet they find it inappropriate for Respondent’s expert on this question, Mr Masiiwa, to disagree with their conclusion that “only one of their transactions was within the ambit of the Exchange Control Regulations.” Disagreement in a contradictory debate is not unusual; what is extraordinary here is that Claimants are attempting to persuade the Arbitral Tribunals to muzzle the Respondent on Exchange Control Regulations and the legal consequence of the absence of relevant “approvals’ on the outcome of this arbitration. It must also be recalled that Respondent has “invited” or even “challenged” Claimants to submit any approvals they may have “overlooked”, such as in Section 5.4 of Respondent 29 July 2013 letter, R-079.” [footnotes omitted]

“4. In paras 146 and 147 of Section 6.2 of R-79, the Respondent merely makes limited allegations regarding sl7 of the 1996 Regulations and its alleged relationship to the ZSE Rules, i.e. the same limited allegations that it made in its Re-Rebutter. Therefore the Respondent is simply wrong when it states in para 4 of its 12 October letter that it is now only requesting through its 26 September 2013 pleading and evidence that there is "only one question left for the Arbitral Tribunals to decide [, which is 1 that stated in Section 6.2 of R-079". It is unacceptable for the Respondent to continue to engage in obfuscation as to what it has done in the past and what it intends to do in the future.

5. In any event, after R-79 was filed, the Respondent was granted, by way of P.O. No. 7, one further opportunity to file a pleading by 16 August 2013 (the Re-Rebutter) in order to state its final case regarding Illegality. It now admits that it failed to do so. Moreover, its Approval Objection was to remain confined to that as pleaded in the Rebutter, which did not raise the wide ranging objection concerning exchange control.

6. The Respondent in its 12 October letter ignores the fundamental issue, which is that the Respondent never pleaded in its pleadings (or indeed stated in its witness statements) before 26 September 2013, the wide jurisdictional challenge regarding the alleged breach of the Exchange Control Regulations and how it may affect the Approval and Illegality Objections. Once again the Respondent seeks a further opportunity to do so by essentially requesting that Mr Masiiwa’s Third Statement (filed on 26 September 2013) is read as a pleading, and that the Claimants plead to it after the oral hearing, with the Respondent putting in a further round of pleading in response. Although the parties agreed to post-hearing submissions in para 7.1 of their letter of 8 October 2013 (which has been provided to the Tribunals), they did not agree to a further round of pleadings after the oral hearing. It simply will not do for the Respondent to continue to flout the agreements it enters into with the Claimants and the Procedural Orders of the Tribunals. It is obvious to the Claimants that the Respondent will not comply with the new procedural timetable it suggests and which the Claimants oppose.”

“12. In summary, the reasons stated by the Respondent do not establish the exceptional circumstances which it must establish in order to plead additional objections to jurisdiction out of time. Furthermore, the timetable proposed by the Respondent does not address the concerns regarding time that the Claimants indicated would arise if the Respondent was permitted to make its new wide ranging allegations regarding exchange control. It is an enormous task to review, from an exchange control perspective, each and every acquisition that has been made into the Estates over the period 1988 to 2007, if indeed the records remain available. The fact that the Claimants even address the proposed timetable submitted by the Respondent for a further round of pleadings should not be read as any willingness on their part to concede to a further round of pleadings.”

“Respondent would like to respond to Claimants’ strongly worded letter regarding Respondent’s 12 October 2013 procedural request and time is short. However, as this communication has not been solicited by the Arbitral Tribunals, please do not forward it to them without first seeking their view as to whether they accept to receive this letter. Claimants are receiving copy of this email and the attached letter.”

“The wording of the Respondent’s request is such that particularly those sections of Mr Kanyekanye’s Fourth Witness Statement that address exchange control and the ZSE Rules are to be relied upon by the Respondent. The Claimants note that such issues are entirely irrelevant to responding to Mr Levitt’s corrections or to correcting Mr Kanyekanye’s damages calculation. Mr Kanyekanye’s Fourth Witness Statement was not an opportunity for the Respondent to make further pleadings on the issue of illegality.”

“[t]his is the vocabulary of force majeure and Respondent maintains the position developed in Sections 4.3 and 7 of Respondent’s 29 July 2013 (R-079) that the Arbitral Tribunals must give the proper legal characterisation to the full record before it. The question here is not about procedural “surprise” or “October work schedule” but about the proper legal characterisation directly affecting the outcome of this arbitration.”

“… is simply as written throughout the papers this summer a notion of cases ripening, of people understanding the consequences of what has been already documented and proven and it’s something that is clearly without this document is clearly a legal debate that could take place including during oral argument. “

“57. Whilst it is correct that the proceedings are not closed and that both Parties are entitled to a full and fair hearing of the case, fairness requires that each party know with a reasonable degree of certainty the other party’s case in order to respond to it in writing and during the oral procedure. The time limits fixed by the Tribunals in these proceedings and the procedural rules agreed by the Parties are not merely formalities but also serve the important purpose of ensuring the equality of the Parties and a fair procedure. Accordingly, any “characterisation” that a Party wishes to make with respect to “an issue related to the file” must nonetheless remain within the bounds of what has been pleaded to be in issue. Similarly, no new argument nor any new evidence may be introduced during the oral procedure without the Tribunal’s prior consent.”

“The Claimants object to all of paras 25 and 26 of the Respondent’s 23 September 2013 Reply. They also object to some parts of paras 15, and 27. The objections are made on the basis that the Respondent raises new challenges to jurisdiction/admissibility in those paragraphs. In particular, it alleges that none of the Claimants’ investments in the three Estates comply with the 1977 or the 1996 Exchange Control Regulations (“the Exchange Control Regulations”), i.e. it extensively expands the Illegality and Approval Objections. In particular, in the Re-Rebutter the Respondent only alleged that the 2003 investment into Border breached the 1996 Regulations by reason of the ZSE free float rule being breached, and that the Forrester Loans breached an unidentified regulation of the 1996 Regulations, and directive RE277 (the Claimants’ in their 9 September 2013 Response carefully analysed the content of the Re-Rebutter). The Rebutter did not allege any breach of the Exchange Control Regulations in support of the Approval Objection. The expansion of the Respondent’s argument is extensive, because in effect it covers each and every share purchase, between the period 1988 and 2005 that the von Pezold’s made in the Zimbabwean Companies that make up the three Estates. In addition, it greatly expands upon those parts of the Exchange Control Regulations which it alleges are breached (previously it limited itself to s17 of the 1996 Regulations, which it mistakenly considers to refer to the ZSE free float rule). It would take several months to analyse each of those purchases and collate the necessary evidence to respond. If it had been raised in the Re-Rebutter of 15 August 2013, the Claimants would have responded to it, but would have required an extension.”

“The Claimants object to all of paras 25 and 26 of the Respondent’s 23 September 2013 Reply. They also object to some parts of paras 15, and 27. The objections are made on the basis that the Respondent raises new challenges to jurisdiction/admissibility in those paragraphs. In particular, it alleges that none of the Claimants’ investments in the three Estates comply with the 1977 or the 1996 Exchange Control Regulations (“the Exchange Control Regulations”), i.e. it extensively expands the Illegality and Approval Objections. In particular, in the Re-Rebutter the Respondent only alleged that the 2003 investment into Border breached the 1996 Regulations by reason of the ZSE free float rule being breached, and that the Forrester Loans breached an unidentified regulation of the 1996 Regulations, and directive RE277 (the Claimants’ in their 9 September 2013 Response carefully analysed the content of the Re-Rebutter). The Rebutter did not allege any breach of the Exchange Control Regulations in support of the Approval Objection. The expansion of the Respondent’s argument is extensive, because in effect it covers each and every share purchase, between the period 1988 and 2005 that the von Pezold’s made in the Zimbabwean Companies that make up the three Estates. In addition, it greatly expands upon those parts of the Exchange Control Regulations which it alleges are breached (previously it limited itself to s17 of the 1996 Regulations, which it mistakenly considers to refer to the ZSE free float rules). It would take several months to analyse each of those purchases and collate the necessary evidence to respond. If it had been raised in the Re-Rebutter of 15 August 2013, the Claimants would have responded to it, but would have required an extension.” [emphasis added]

“Mr. Fortier: Okay. Mr. Coleman, would you please reply to what Mr. Kimbrough’s main submission is, that this information has, in fact, been in your hands since December, 2012.

Matthew Coleman: Yes, certainly. Well December 2012 is the date that the rejoinder is filed. And with the rejoinder comes from the first allegation that approval is needed. No approval procedure is set out.

And secondly, there is no allegation regarding illegality. So that point we’re not answering anything in illegality. We then get the rebutter, which says that the approval procedure is that as set out by Mr. [sounds like: Nigussi], which is appearing before the foreign investment committee and [UI] the investment committee formed under the 1993 act. And then he also says that you may need to get permission from the reserve bank if you engage the exchange control regulations and you may also need to appear before the review committee. And then in that pleading in the rebutter, there is an allegation regarding illegality. But the allegation regarding illegality is simply that the failure to appear before the foreign investment committee or its successor, the investment committee, makes the investment illegal.

The next point is a very important point. There is no allegation in the rebutter that the exchange control regulations have been breached. In particular, there is no allegation that each and every purchase into the 3 estates is a breach of either the 1977 and 1996 exchange control regulations. We then get the re-rebutter, which, of course, is the result of procedural order number 7 where the respondent is asked to give a concise statement as to illegality. And it does so, and it does so in the following terms. And I’ll set out what [UI] in relation to each of the 3 estates, Forester, Border and McCandy.

First, in relation to Forester, it says the investment is illegal because no permission was obtained from the foreign investment committee. It also says that the loans are illegal because they breach some unidentified provision of the 1996 regulations and a further provision which we’ve never been provided, which is RE277, which we believe may be a directive of the reserve bank. But there is certainly no allegation that the purchases of shares in regard to Forester breach the exchange control regulations.

Moving on to the Border estate, they say that the illegality arises because we failed to appear before the foreign investment committee or the investment committee. And then there is a very limited allegation in regard to the 1996 exchange control regulations. And the allegation of breach in regard to those regulations is they say that in 2003 when we made a further investment, we breached the 1996 exchange control regulations because we did not follow the free float rule as set by the Zimbabwe stock exchange. There’s absolutely no other allegation regarding breaches of the exchange control regulations in relation to Border for any of the purchases that were made from 1992 up to 2007.

Moving on to the last estate, the McCandy estate, the only allegation there is that the illegality has been caused by a failure to get permission under the 1993 act; in other words, the investment committee. No allegation saying that the purchase of shares breached the 1996 regulations.

We then move on the latest pleading, which was filed pursuant to procedural order number 7, which is the 23 September 2013 pleading, in fact, filed on 26, 2013 with the agreement of the parties. And this is where the case is greatly expanded and one that’s never been made before. And the expansion is that they now say that each and every purchase in all 3 of the estates over a period covering 1988 through to 2007 now breaches the 1977 and 1996 regulations.

There is no specific allegation identifying which specific purchases may have breached and for what reason, it is simply a global challenge. And that greatly expands the case. It’s one we’ve never been asked to answer before, and to do so, we would need to go through each and every share purchase over a 25 year period. We would need to consider the regulations, which are somewhat complex, and then form a position on it. We haven’t done so because we haven’t been asked to do so.

So when Mr. Kimbrough says it’s always been on the table, it simply hasn’t been on the table in terms of the pleadings. In terms of our objection, while the basis of the objection is rule 313, it’s a non-responsive pleading, 263, it’s out of time and because it’s a jurisdiction challenge, it’s also out of time under 411. [UI simultaneous conversation] my submission on that particular point.”

“14. The Respondent has been afforded ample opportunity to present its case and to defend the Claimants’ claims. In Procedural Order No. 3, the Respondent’s challenges to jurisdiction, as pleaded for the first time in the Rejoinder, were admitted. In Procedural Order No. 7, the Respondent was permitted to raise additional jurisdictional objections at an even later stage of the proceedings, was given an opportunity to present those objections cogently in a supplemental pleading to its Rebutter, and was given a right of reply to the Claimants’ 9 September Response. …”.

“Rule 38

Closure of the Proceeding

(1) When the presentation of the case by the parties is completed, the proceeding shall be declared closed.

(2) Exceptionally, the Tribunal may, before the award has been rendered, reopen the proceeding on the ground that new evidence is forthcoming of such a nature as to constitute a decisive factor, or that there is a vital need for clarification on certain specific points.”

“On the items of jurisdiction, we have, when I wrote this, we had an objection that it didn’t come out of the mouth of the right person so we ask to be able to have the right person speak. We’ve resolved that to respondent’s satisfaction in the arrangement of just doing that at oral argument, that’s fine. With respect to the other items, if the debate is whether a certain writing on September 9 does or does not fall into the category of being responsive to what the 22 July procedural agreement was for reasons of interpretation, we ask that it’s not because of what piece of paper it was written on, it’s because of the idea which is known to all that is directly related to jurisdiction that we wish the record to be uncensored. And so perhaps this is something that we can just put, you know, it’s noted until further confirmation but it’s important. And so we don’t want to get tricked by a question of form in being able to have the right to be heard on the essential elements of jurisdiction. And so that’s the purpose of that paragraph.”

(a) PR (i) is granted in part and dismissed in part:

(i) Mr. Moyo’s third witness statement (R-80) is admitted in its entirety, subject to paragraph 70(a)(iii) below;

(ii) Those portions of Mr. Kanyekanye’s fourth witness statement (R-81) that relate to damages and, in particular, Mr. Kanyekanye’s response to Mr. Levitt’s corrections and corrections to the Respondent’s damages calculations, are admitted; those portions of Mr. Kanyekanye’s fourth witness statement relating to the Respondent’s illegality objections are excluded; all of the foregoing subject to paragraph 70(a)(iii) below;

(iii) The Claimants shall be entitled to additional time to address in direct examination of Mr. Levitt any of the matters addressed in R-80 and R-81, the amount of which time shall be fixed by the Tribunals following the pre-Hearing teleconference of 16 October 2013;

(iv) The Respondent’s request regarding its Corrected Request for Relief, specifically the admissibility of its arguments relating to “distress” and force majeure”, is dismissed;

(b) PR (ii) is dismissed save that R-83, R-84, R-85, R-86, R-87, R-88, R-89, R-90, R- 91, R-92, R-94, R-95, R-96, RLEX-32, RLEX-33, RLEX-34, RLEX-35, RLEX-36 and RLEX-37 are admissible;

(c) PR (iii) is granted in part and dismissed in part (see paragraph 70(a) above);

(d) PR (iv) is granted (see paragraph 70(a)(i) above);

(e) PR (v) is dismissed: paragraphs 2, 3, 4, 8, 9, 10 and 11 of Mr. Masiiwa’s second witness statement are not admissible; paragraphs 5, 6 and 7 are admissible only insofar as they do not relate to the Respondent’s expanded illegality arguments;

(f) PR (vi) is granted;

(g) PR (vii) is dismissed (see paragraph 70(a)(ii) above);

(h) PR (viii) is dismissed: paragraph 5 on page 3 of Mr. Kanyekanye’s fifth witness statement is inadmissible;

(i) PR (ix) is denied subject to the Parties’ agreement that Prince Machaya shall be permitted to confirm the content of Mr. Nyaguse’s second witness statement (R-85) during direct examination at the October Hearing;

(j) PR (x) is granted further to the Parties’ October 11 agreement;

(k) PR (xi) is denied;

(l) PR (xii) is denied;

(m) PR (xiii) is denied.