INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
WASHINGTON, D.C.
In the Proceeding Between
JOSEPH CHARLES LEMIRE
(Claimant)
and
UKRAINE
(Respondent)
______________________________________________________________________________
DECISION ON JURISDICTION AND LIABILITY
______________________________________________________________________________
Members of the Tribunal:
Professor Juan Fernández-Armesto, President
Mr. Jan Paulsson, Arbitrator
Dr. Jürgen Voss, Arbitrator
Secretary of the Tribunal:
Mr. Ucheora Onwuamaegbu
Representing Claimant:
Dr. Hamid G. Gharavi
Mr. Julien Fouret
Ms. Nada Sader
Derains & Gharavi
Paris, France
Representing Respondent:
Mr. John S. Willems
Mr. Michael A. Polkinghorne
Ms. Olga Mouraviova
White & Case LLP
Paris, France
Mr. Sergii Svyryba
Ms. Marta Khomyak
Ms. Olha Yaniutina
Magisters
Kyiv, Ukraine
GLOSSARY
[...]
Prof. Juan Fernández-Armesto, President
Mr. Jan Paulsson, Arbitrator
Dr. Jürgen Voss, Arbitrator
Assistant to the Tribunal
Ms. Deva Villanúa Gómez
Attending for Claimant
Mr. Joseph C. Lemire, Claimant’s witness
Mr. Hamid G. Gharavi, Derains Gharavi & Lazareff
Mr. Nabil Lodey, Derains Gharavi & Lazareff
Mr. Julien Fouret, Derains Gharavi & Lazareff
Ms. Nada Sader, Derains Gharavi & Lazareff
Mr. Sergiy Koziakov, Derains Gharavi & Lazareff
Mr. Eric Degand, witness
Mr. Viktor Petrenko, Claimant’s witness
Mr. Paval Shylko, witness
Mr. Piotr Jalowiec, witness
Mr. Sergey Denisenko, witness
Dr. Andre Wiegand, expert
Dr. Klaus Goldhammer, expert
Attending for Respondent
Mr. John S. Willems, White & Case LLP
Mr. Michael Polkinghorne, White & Case LLP
Ms. Olga Mouraviova, White & Case LLP
Mr. Sergii Svyryba, Magisters
Ms. Nathalie Makowski, White & Case LLP
Ms. Olga Boltenko, White & Case LLP
Ms. Olga Glukhovska, Magisters
Ms. Olga Ianiutina, Magisters
Mr. Markiian Kliuchkovskyi, Magisters
Ms. Tuuli Timonen, White & Case LLP
Ms. Renee Bissell, White & Case LLP
Ms. Ludmila Zaporozhets, National Television and Radio Broadcasting Council of Ukraine
Mr. Vitaliy Shevchenko, witness
Mr. Ihor Kurus, witness
33. This dispute was submitted to ICSID by Claimant against Respondent under (1) the Treaty between the United States of America and Ukraine Concerning the Encouragement and Reciprocal Protection of Investment, done in Kyiv on October 17, 1996 (the “BIT”) and (2) an agreement between Claimant and Respondent on the settlement of a dispute, dated March 20, 2000 (the “Settlement Agreement”), which was recorded as an award on agreed terms on September 18, 2000 (ICSID No. ARB (AF) 98/1 (the “2000 Award”).
34. Article VI of the BIT entitles any national of a State party to the BIT to submit to ICSID any dispute with the other State party to the BIT relating to either “an investment agreement between that Party and such national” or “an alleged breach of any right conferred or created by this Treaty with respect to an investment”.
35. On November 14, 1997, Claimant filed with ICSID a first arbitration request (the “First Arbitration”) against Respondent, with regard to the same investments that underlie the present arbitration. This First Arbitration eventually led to the Settlement Agreement, which was then recorded in the 2000 Award. Paragraph 31 of the Settlement Agreement provides for the resolution of all disputes arising from or in connection with the Agreement by ICSID Arbitration in accordance with the ICSID Additional Facility Arbitration Rules.
36. Claimant, Mr. Joseph Charles Lemire, is a national of the United States of America residing at 91 Saksagansko St., Office 8,01032 Kiev, Ukraine. Claimant is a majority shareholder, through CJSC “Mirakom Ukraina” (“Mirakom”) of CJSC “Radiocompany Gala” (“Gala”), a closed joint stock company constituted in 1995 under the laws of Ukraine with its principal office located at the same address as Mr. Lemire’s residence. Gala is a music radio station in Ukraine currently licenced to broadcast on various frequencies in Ukraine.
37. Respondent is the State of Ukraine. With respect to the events giving rise to the present arbitration, Respondent has acted through its President, Prime Minister, Parliament, Ministry of Defence, the National Council for Television and Radio Broadcasting (the “National Council”), the Ukrainian State Centre of Radio Frequencies (the “State Centre”), the State Committee on Communications and Information Technology (the “State Committee”), all of which are organs for which Ukraine is responsible under international law.
38. Claimant seeks relief for alleged breaches of the Settlement Agreement/2000 Award and for alleged breaches of the BIT following the 2000 Award. More specifically, Claimant seeks1:
a) a decision declaring that Respondent has breached the 2000 Award and the BIT;
39. b) a decision ordering Respondent to pay Claimant damages in the amount of 55,173 million USD on account of its breaches of the 2000 Award and the BIT which had the effect of preventing Claimant from developing Gala into a full national network as of January 1, 2001 and from establishing two other national networks (an FM radio network as of January 1, 2002 and an AM network as of July 1, 2004); or
- alternatively ordering Respondent to pay Claimant damages in the amount of 51,277 million USD on account of its breaches of the 2000 Award and the BIT which blocked Claimant from developing Gala into a full national network as of January 1, 2004 and developing a second FM national network as of January 1, 2002; or
- alternatively ordering Respondent to pay Claimant damages in the amount of 34,732 million USD on account of its breaches of the 2000 Award and the BIT which blocked Claimant from developing Gala into a full national network as of January 1, 2001;
c) a decision ordering Respondent to pay Claimant damages in the amount of one million USD for Respondent’s failure to take reasonable measures to correct interference with Gala’s 100 FM frequency, in breach of the Award and the BIT from the year 2000 to August 2008;
d) a decision ordering Respondent to pay Claimant damages in the amount of 958,000 USD representing loss of profits for Respondent’s enactment of the Law on Television and Radio Broadcasting (the “LTR”) and/or application thereof in breach of the BIT;
e) a decision ordering Respondent to pay Claimant moral damages in the amount of three million USD for Respondent’s harassment of Claimant, in breach of the BIT;
f) the costs of this arbitration, including all expenses that Claimant has incurred, legal counsel, experts and consultants, as well as Claimant’s internal costs in pursuing this arbitration, all of the fees and expenses of the arbitrators, fees for use of the facilities of the Centre;
h) any such other and further relief as the Arbitral Tribunal shall deem appropriate.
40. Respondent seeks2:
a) a decision dismissing all Claimant’s claims, or a substantial part thereof, for lack of jurisdiction;
b) a decision dismissing Claimant’s claims in their entirety; and
c) a decision awarding to Respondent its fees, costs and expenses in connection with this proceeding.
41. The Tribunal has decided to join Respondent’s objections on jurisdiction to the merits of the dispute, in accordance with Article 41(2) of the ICSID Convention.
42. Claimant’s basic allegations in this arbitration are twofold:
- first, that Respondent’s actions constitute a breach of the Settlement Agreement; and
- second, that Respondent has breached the BIT by subjecting Claimant to unfair, inequitable, arbitrary and discriminatory treatment, harassment and creeping expropriation and by enacting a new law in violation of Article II.6 of the BIT.
43. Respondent raises a number of jurisdictional objections3:
- that the Centre lacks jurisdiction for claims arising out of the Settlement Agreement;
- that there is no investment underlying the claims related to the tenders for additional frequencies;
- that Claimant’s capital invested did not emanate from abroad as required;
- that Claimant has not made out a prima facie case of expropriation.
44. Claimant denies these jurisdictional objections and affirms the Centre’s jurisdiction and the Tribunal’s competence to decide all claims raised.
45. In order for the Centre to have jurisdiction and for the Tribunal to have competence with regard to these claims, four well known conditions must be met, three deriving from Article 25 of the ICSID Convention and a fourth resulting from the general principle of law of non-retroactivity:
- first, a condition ratione personae: the dispute must oppose a Contracting State and a national of another Contracting State;
- second, a condition ratione materiae: the dispute must be a legal dispute arising directly out of an investment;
- third, a condition ratione voluntatis: the Contracting State and the investor must consent in writing that the dispute be settled through ICSID arbitration;
- fourth, a condition ratione temporis: the ICSID Convention must have been applicable at the relevant time.
“VI.1. For purposes of this Article, an investment dispute is a dispute between a Party and a national or company of the other Party arising out of or relating to (a) an investment agreement between that Party and such national or company; (b) an investment authorization granted by that Party’s foreign investment authority to such national or company; or (c) an alleged breach of any right conferred or created by this Treaty with respect to an investment.
[...]
VI.4. Each Party hereby consents to the submission of any investment dispute for settlement by binding arbitration in accordance with the choice specified in the written consent of the national or company under paragraph 3. Such consent, together with the written consent of the national or company when given under paragraph 3 shall satisfy the requirement for:
(a) written consent of the parties to the dispute for purposes of chapter II of the ICSID Convention (Jurisdiction of the Centre) and for purposes of the Additional Facility Rules; and
(b) an “agreement in writing” for purposes of Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958.”
47. In addition, Article I.1(a) of the BIT defines the term “investment”:
“I.1. For the purposes of this Treaty,
(a) “investment” means every kind of investment in the territory of one Party owned or controlled directly of indirectly by nationals or companies of the other Party, such as equity, debt, and service and investment contracts; ...”
48. Jurisdiction ratione temporis has not been challenged and the Tribunal will not analyze it. It will focus on jurisdiction ratione personae (V.3), materiae (V.4) and voluntatis (V.5).
49. Claimant is, and at all relevant times has been, a national of the United States and thus a “national of another Contracting State” under Article 25 of the ICSID Convention as well as a “national of a Party” under the BIT. Ukraine, since July 7, 2000, is a State Party to both the ICSID Convention and to the BIT.
50. The requirements for ICSID jurisdiction ratione personae are hence satisfied.
51. Article 25(1) of the ICSID Convention further requires a “legal dispute arising directly out of an investment”. Claimant submits that he has made investments in Gala Radio and that he is Gala’s major shareholder. It is undisputed that the present dispute is a legal dispute and that it arose directly out of these investments.
Claimant’s investment
52. Gala was not founded by Mr. Lemire – in fact, Ukrainian legislation requires that radio broadcasters be founded by Ukrainian nationals4. The law however authorizes foreign investments in the broadcasting sector (Article 12.3 of LTR). Mr. Lemire bought participations in Gala, an existing company, which already had a radio licence, and which had been promoted by a Ukrainian citizen, Mr. Glieb Maliutin5, and founded by a Ukrainian company called Provisen. On June 8, 1995, two Investment Agreements were signed by Mr. Lemire providing (somewhat diffusely) for contributions in cash and in kind amounting to 290,000 USD plus 3,000,000 USD6.
53.The actual amount contributed by Mr. Lemire is disputed. Respondent’s expert acknowledges that at least 141,000 USD were invested by Mr. Lemire7 and Respondent has accepted an investment of 236,000 USD8. Claimant himself states that his investment amounts to well over 5,000,000 USD9. This number seems to include real estate held in Mr. Lemire’s name, and let rent free to Gala, and payments made directly by him on behalf of the company10. No document has actually been produced in this arbitration, giving a precise breakdown of Mr.Lemire’s contributions. It seems, moreover, that for accounting purposes, the expenditures made directly by Mr. Lemire on behalf of Gala are not recorded in Gala’s books11.
54. Summing up the evidence, the Tribunal has no doubt that Mr. Lemire actually made an investment in Ukraine, although the undisputed total amount is only 236,000 USD. Respondent has not challenged that Mr. Lemire is – at least since 2006 – indirect owner of 100% of the share capital of Gala. The evidence shows that Mr. Lemire has made payments with his own moneys on behalf of Gala. But the record of the actual amounts paid has not been produced, and that the total exceeds 5,000,000 USD is nothing more than affirmation12.
56. Respondent further submits that Claimant has failed to prove the transfer of his invested funds into Ukraine from abroad. However, neither the BIT nor the ICSID Convention includes an origin-of-capital requirement. Nor is such a requirement to be inferred from the purposes of the BIT and/or the ICSID Convention.
57. In setting out the purposes of the BIT, the Preamble emphasises the promotion of investments of nationals of one party in the territory of the other, without any reference to the origin of the funds invested; and Article I.3 of the BIT implies that reinvested earnings qualify as investments under the BIT; these earnings by definition originate within the host country.
58. Moreover, Claimant’s certificate of registration dated September 18, 1995 shows that at least part of his investment capital originates from abroad; this suffices for jurisdictional purposes.
59. Hence, the requirements for ICSID jurisdiction are also satisfied ratione materiae.
60. A singular feature of this arbitration is that consent to ICSID arbitration was formalized in two different legal instruments: the Settlement Agreement and the BIT. Each will be analyzed separately.
61.The Settlement Agreement contains the following dispute resolution provision in clause 31 (the “Arbitration Clause”):
“All the disputes arising from or in connection with this Agreement shall be settled by negotiations. In the event no solution is achieved within 60 days from the date of beginning of negotiations, either party may address to the ICSID its application for settlement under the ICSID Additional Facility Arbitration Rules.”
Respondent however objects to the Tribunal’s jurisdiction for alleged claims under the Settlement Agreement on two grounds, namely the fact that (a) the Settlement Agreement was recorded as an award, and (b) the Arbitration Clause refers, for settlement of disputes under the Agreement, to the ICSID Additional Facility Arbitration Rules, rather than the ICSID Arbitration Rules.
62. Respondent however objects to the Tribunal’s jurisdiction for alleged claims under the Settlement Agreement on two grounds, namely the fact that (a) the Settlement Agreement was recorded as an award, and (b) the Arbitration Clause refers, for settlement of disputes under the Agreement, to the ICSID Additional Facility Arbitration Rules, rather than the ICSID Arbitration Rules.
63. Respondent argues that the parties voluntarily transformed the Settlement Agreement into an enforceable award, in order to benefit from the jurisdictional effect of such measure. Claimant thus waived his right to the dispute resolution mechanism contained in the original accord13. Awards under the ICSID Additional Facility must be enforced through the New York Convention – there is no scope for enforcement through the arbitration clause inserted in the Settlement Agreement.
64. The Tribunal disagrees with Respondent’s theory. It is not supported by the text of the ICSID Convention or applicable arbitration rules, and it is based on a misunderstanding of the differences between disputes arising out of a contract and enforcement of an award.
65. The Settlement Agreement is first and foremost a contract, product of consent expressed by both parties. Settlement agreements, like all contracts, may give rise to disputes. In the Settlement Agreement Mr. Lemire and Ukraine agreed that disputes arising “from or in connection” with this contract should be settled by arbitration.
66. After executing the Settlement Agreement both parties requested, and the Tribunal in the First Arbitration agreed that “the Tribunal shall record the settlement in the form of an award” (as authorized by Article 49(2) of the ICSID Additional Facility Arbitration Rules).
67. The precise text of the 2000 Award is as follows:
“Accordingly the Tribunal orders unanimously that the said agreement between the Parties as set forth below shall be recorded verbatim as an award on agreed terms”.
And then the award copies ad pedem literae the full text of the Settlement Agreement, including the Arbitration Clause.
68. Respondent’s basic argument is that, by accepting that the Settlement Agreement be recorded as an award, Claimant was waiving his right to the Arbitration Clause.
69. The Tribunal disagrees. There is no hint that, by requesting the Tribunal to issue the consent award, Claimant proposed and Respondent accepted neutralisation of the Arbitration Clause.
70. It is very telling that the 2000 Award reproduces the complete text of the Settlement Agreement, including the Arbitration Clause. The parties could have requested that the Arbitration Clause be excluded from the 2000 Award. They did not. What the 2000 Award proves is that as of the date of the request of its issuance, each party reiterated its consent that all disputes arising from or in connection with the Settlement Agreement be solved by arbitration.
74. The Arbitration Clause provides for “settlement under the ICSID Additional Facility Arbitration Rules” of “all the disputes arising from or in connection with this Agreement”.
75. When the Settlement Agreement was signed on March 20, 2000 Ukraine had not ratified the ICSID Convention, and consequently the Centre could only administer arbitrations involving Ukraine under the Additional Facility Rules (Article 2(a)). Things moved quickly thereafter. On July 7, 2000 the ICSID Convention entered into force in Ukraine. With the effectiveness in Ukraine of the ICSID Convention, the Additional Facility became unavailable and was superseded by arbitration under ICSID Rules. Notwithstanding this fact, the
76. Claimant argues that the reference to the Additional Facility in the Arbitration Clause implicitly includes a reference to ICSID proper, once it became available15.
77. Respondent objects and refers to the clear, unambiguous terms of the Arbitration Clause16.
78. On this issue the Tribunal sides with Claimant.
79. The Arbitration Clause states that “either party may address to the ICSID its application for settlement”, and then adds “under the ICSID Additional Facility Arbitration Rules”. These Rules were available when the Clause was signed, but no longer once the Clause was incorporated into the 2000 Award, and since then they have ceased to be available. They have been superseded by the ICSID Arbitration Rules.
80. Imprecise arbitration clauses are a frequent occurrence in commercial arbitration. They must be interpreted by the arbitrators, in order to restore the true intention of the parties, distorted by the parties’ ignorance of the mechanics of arbitration, error in designating the correct institution or rules, or, as here, supervening legal developments17.
81. In our case, the true intent of the parties is very clear: the Arbitration Clause explicitly says that “either party may address to ICSID its application for the settlement” of the dispute. The very wording of the Arbitration Clause evidences the parties’ wish that disputes arising from the Settlement Agreement be settled through arbitration administered by ICSID, and not through any other dispute settlement mechanism, nor by any national Court.
82. Where the parties were unclear is not in the description of the dispute settlement mechanism which they preferred, but in an ancillary point: the precise rules which the institution entrusted with the administration of the arbitration should apply. The parties correctly referred to the Rules which were applicable at the time the Settlement Agreement was executed – the ICSID Additional Facility Arbitration Rules. And when the Settlement Agreement was recorded as an award a couple of months later, they did not take into account that in the meantime Ukraine had ratified the ICSID Convention, that the applicable arbitration rules now were the ICSID Arbitration Rules, and that the rules which they were referring to– the ICSID Additional Facility Rules – were in fact no longer available.
84. By Article VI.3 of the BIT, Ukraine agreed that investment disputes with American investors be submitted to arbitration administered by the Centre. Claimant accepted the offer by filing this arbitration. Respondent objects to the Centre’s jurisdiction and the Tribunal’s competence, but not with regard to the claims in toto, but only with regard to some specific claims.
85. These claims, and the reasons for objecting to jurisdiction, are explained in the following paragraphs.
86. Respondent objects to the Tribunal’s competence with respect to claims arising out of Claimant’s failure in tenders for additional frequencies on the ground that such tenders precede investments and that pre-investment activities fall outside the ICSID Convention. Respondent, however, seems to concede that such pre-investment activities are within the scope of the BIT18.
87. Claimant disagrees19, arguing that Mr. Lemire established investments in radio networks in Ukraine, and that they were harmed by Respondent’s acts and omissions.
88. The Tribunal sides with Claimant.
Pre-investment activities
89. Mr. Lemire’s claim related to tenders for frequencies and broadcasting licences does not refer to, and cannot be considered as, a pre-investment activity. Pre-investment activities are those which precede the actual investment. Whether pre-investment activities merit treaty protection is debatable. But it is irrelevant for the purpose of adjudicating Claimant’s claims in this arbitration, since the Tribunal has already established that Mr. Lemire has made investments in Gala Radio and is Gala’s sole shareholder, and that these investments qualify for protection under the BIT.
90. If an investor claims that his investment, once made, was subsequently denied frequencies and broadcasting licences in violation of Ukraine’s obligations as assumed in the BIT, this claim constitutes an “investment dispute” for the
99. Respondent has raised the issue that there is an initial threshold that must be crossed by any claimant arguing expropriation: that the facts adduced show at least prima facie the legal requirements of expropriation under international law21. And in Ukraine’s opinion, the very facts alleged by Claimant are not capable of constituting expropriation, and consequently the Tribunal should dismiss this claim for lack of jurisdiction – as did the Tribunal in the Telenor v. Hungary case22.
100. Claimant countered Respondent’s objection arguing that for jurisdictional purposes the prima facie test was in fact easily met. As Claimant explained23, he was presenting claims for:
- expropriation of a beauty salon;
- expropriation of the rights to the Energy trademark; and
- creeping expropriation of the Gala Radio network, a process that yet has
to be completed but which, in Claimant’s submission, appears imminent.
101. In the course of the procedure, Claimant has however dropped the claims for expropriation of the beauty salon and of the Energy trademark24, and the creeping expropriation of the Gala Radio network is subsumed in the allegation of harassment and a request for moral damages (see paragraph 500 below).
102. Respondent’s allegation consequently has become moot.
103. In the Settlement Agreement of March 20, 2000, Respondent assumed the following obligations:
- Clause 13(a):
“By April 15, 2000 the Commission of experts, appointed by the Respondent, shall examine the quality of broadcasting within the radio frequencies band of FM 100-108. Based on the conclusions of the Commission, the Respondent will take necessary, reasonable among others, technical measures to remove the obstacles (if any) for radio broadcasting of Gala Radio on FM 100 in Kiev by June 1, 2000”.
- Clause 13(b):
“By May 15, 2000 the Respondent in person of the State Committee on Communications and Information Technology, agrees to use its best possible efforts to consider in a positive way the application of Gala Radio to provide it with the licences for radio frequencies (provided there are free frequencies bands) in the following cities: [...]
The Claimant can apply for the radio channels in the above cities to the National Council for TV and Radio Broadcasting (hereinafter called “the National Council”) in a due course in accordance with the current legislation after the National Council has been fully personally formed under the existing law of Ukraine. The Respondent, within the limits of its powers, will assist for the positive consideration of this issue at the National Council.
The granting of licences for radio frequencies and broadcasting channels will be made in accordance with the requirements of Ukrainian legislation upon payment of the licence fees”.
104. Claimant alleges that Respondent has defaulted on both sets of obligations. Respondent’s position, on the contrary, is that it has fully complied with these obligations.
105. Before analysing the parties’ allegation, it is necessary to establish the law applicable to the Settlement Agreement (VI.1), and the criteria to be applied in its construction (VI.2).
106. Clause 30 of the Settlement Agreement provides that the applicable law shall be that determined by “Article 55 of the ICSID Additional Facility Arbitration Rules”. The relevant article in the Additional Facility Rules is in fact Article 54. The mistake is an obvious typographical error, and the Tribunal has no doubt that the common intent of the parties was to refer to Article 54. In accordance with this rule the Tribunal shall apply “(a) the law determined by the conflict of laws rules which it considers applicable and (b) such rules of international law as the Tribunal considers applicable”.
112. The parties have discussed the principles of interpretation to be applied to the Settlement Agreement. This issue is extensively dealt with in Clauses 20 through 26 of the Agreement.
113. Claimant has emphasized Clauses 20 (“good faith and fair dealing in international business”), 22 (“common intent of the Parties “), 23 (especially reference to “preliminary negotiations”) and 26 (non-performance to include “improper performance or late performance”) as well as Articles 1.7 and 4.1 of the 1994 UNIDROIT Principles. Respondent has referred to Clause 27 of the Settlement Agreement, pursuant to which the Settlement Agreement “constitutes the entire agreement between the Parties on the subject matter hereof and supersedes all prior correspondence, negotiations and understandings between them with respect to the matters covered herein”. Ukraine also relies on Article 5.5 of the 1994 UNIDROIT Principles (“the way
117. Clause 13(a) of the Settlement Agreement sets out Respondent’s undertaking on this matter as follows:
“By April 15, 2000 the Commission of experts, appointed by the Respondent, shall examine the quality of broadcasting within the radio frequencies band of FM 100-108. Based on the conclusions of the Commission, the Respondent will take necessary, reasonable among others, technical measures to remove the obstacles (if any) for radio broadcasting of Gala Radio on FM 100 in Kiev by June 1, 2000”.
124. Clause 13(a) of the Settlement Agreement entrusts the duty to examine the interferences to “the Commission of experts, appointed by the Respondent”. It does not require that the commission be constituted ad hoc.
125. Furthermore, Clause 13(a) clearly states that the Commission be appointed exclusively by Respondent, without participation of Claimant in the appointment process. The provision does not include any requirements for the composition of the commission, such as a representation of several agencies, or the inclusion of independent experts. Respondent was therefore free to entrust the tasks under Clause 13(a) to any group of experts with the technical skills to do the job.
126. Respondent chose the State Centre as the “Commission of Experts” with the duty to perform the examinations required under Clause 13(a). Claimant has not pleaded that the State Centre was unfit to examine the alleged interferences. In fact, the State Centre is the public entity which in accordance with Ukrainian legislation supervises interferences in radio frequencies, and it is adequately equipped to perform this task. To the Tribunal, the choice of the State Centre is appropriate, given the wording of the Settlement Agreement, and reasonable, given its experience and scope of activity.
127. There is one further argument: the record shows that Claimant never challenged the State Centre’s role as expert commission before instituting this arbitration, i.e. for some seven years. To the contrary, he has co-operated with the State Centre and addressed his complaints to it. He has thus acquiesced to the role of the State Centre.
128. The Tribunal can hence not find a violation of Clause 13(a) in Respondent’s assignment of the State Centre as expert commission.
129. Pursuant to Clause 13(a), the examination of interferences should have taken place by April 15, 2000. In fact, such examinations were carried out between January 1999 and March 10, 2000, i.e. before execution of the Settlement Agreement on March 20, 2000. Claimant argues that these pre-agreement examinations are not sufficient to comply with the undertaking assumed by Ukraine in Clause 13(a) of the Settlement Agreement.
130. In Respondent’s opinion, the March 2000 tests proved the absence of any interference with Gala’s FM 100, so that any further tests were pointless. The Settlement Agreement had been negotiated since November 1999, and during these negotiations, and as a sign of goodwill, Respondent carried out the examinations required by Clause 13(a), even before the Settlement Agreement was signed and came into force. The Settlement Agreement signed on March 20, 2000 provided that the examination of the quality of broadcasting be performed “by April 15, 2000”. In fact, the examination had thus already been performed, before the signing of the Settlement Agreement.
135. Mr. Lemire did not require a second examination, and Ukraine reasonably understood that Claimant felt satisfied with the first examination, and consequently did not carry out a second one. Mr. Lemire cannot now reversetrack and argue that Respondent defaulted on its contractual obligations.
136. Clause 13(a) of the Settlement Agreement obliges Respondent to “take ... technical measures to remove the obstacles (if any) for radio broadcasting of Gala Radio on FM 100 ... by June 1, 2000”. This language clearly limits the scope of the obligation to obstacles that existed before June 1, 2000; obstacles that might have arisen after this date fall outside the scope of the Settlement Agreement. (As to Respondent’s alleged duty to cure such obstacles under the BIT, see paragraph 493 below).
137. To find a breach of the Settlement Agreement, it is therefore crucial that interferences with Gala’s FM 100 preexisted June 1, 2000. Claimant has pleaded this by alleging that interference “has continued unabated from prior to the time of the Settlement Agreement until today30”. Respondent, on the other hand, argues that no interference occurred between March 10 and June 1, 2000 and that any interference which occurred long after June 1, 2000 was isolated and cannot be traced back to a cause pre-existing on June 1, 200031.
142. The second allegation presented by Claimant refers to the granting of frequencies to Gala. Under Clause 13(b) of the Settlement Agreement, Respondent assumed several obligations with respect to the allocation of radio frequencies and broadcasting licences to Gala in 11 cities. The Clause reads as follows:
“By May 15, 2000 the Respondent, in the person of the State Committee on Communications and Information Technology, agrees to use its best possible efforts to consider in a positive way the application of Gala Radio to provide it with the licences for radio frequencies (provided there are free frequencies bands) in the following cities: Kharkiv, Lviv, Donetsk, Zaporizhya, Lugansk, Simpheropol, Dniepropetrovsk, Odessa, Vynnitsa, Kryviy Rog, Uzhgorod.
The Claimant can apply for the radio channels in the above cities to the National Council for TV and Radio Broadcasting (hereinafter called “the National Council”) in a due course in accordance with the current
legislation after the National Council has been fully personally formed under the existing law of Ukraine. The Respondent, within the limits of its powers, will assist for the positive consideration of this issue at the National Council.
The granting of licences for radio frequencies and broadcasting channels will be made in accordance with the requirements of Ukrainian legislation upon payment of the licence fees”.
Summary of facts
143. Under Ukrainian law, broadcasting requires both (i) a “radio frequency licence” from the State Committee on Communications and Information Technology and (ii) a “broadcasting licence” from the National Council. The National Council is a regulatory body established directly by law37, independent of the Government and reporting to both the President and the Parliament of Ukraine.
Delivery of the licences required
144. Claimant obtained all the licences mentioned in Clause 13(b) by October 9, 2002, i.e. within a period of some thirty months from the date of the Settlement Agreement.
145. The 11 radio frequency licences from the State Committee were obtained relatively expeditiously – two of them prior to the Settlement Agreement, four on April 14, 2000, another four on June 13, 2000, and the last on September 1, 2000.
146. The broadcasting licences suffered longer delays: two were received prior to the Settlement Agreement, seven on September 18, 2001, one on March 26, 2002, and the last on October 9, 2002.
147. Two broadcasting licences had already been awarded by the National Council prior to the Settlement Agreement. Thereafter, the National Council was temporarily inoperative. It was reconstituted in June 2000. After building the necessary administrative capacities, it resumed issuance of broadcasting licences in January 2001. Under the Ukrainian Law on Television and Radio Broadcasting, such licences were awarded on the basis of competitive tenders.
148. At its first meeting after its reconstitution on January 1, 2001, the National Council focused on issuing broadcasting licences to companies which were broadcasting on frequencies allocated to them by the State Committee during the time when the National Council was inoperative. Claimant was excluded from this tender. Shortly thereafter, on March 22, 2001, the National Council announced a tender, including eight of the nine frequencies still expected by Claimant under Clause 13(b) of the Settlement Agreement. The broadcasting licences for seven of these frequencies were granted to Gala on September 18,
153. Under Clause 13(b), paragraph 1 of the Settlement Agreement, “by May 15, 2000 the Respondent, in the person of the State [Committee] agrees to use its best possible efforts to consider in a positive way the application of Gala Radio to provide it with the licences for [11] radio frequencies [...]”. In accordance with the express terms of this contractual provision, Respondent undertook only to apply its best efforts, so that the applications from Gala to the State Committee would be granted by May 15, 2000 – not to achieve that result.
154.Article 5.1.4 of the 2004 UNIDROIT Principles defines the duty of best efforts in the following terms:
“[...] To the extent that an obligation of a party involves a duty of best efforts in the performance of an activity, that party is bound to make such efforts as would be made by a reasonable person of the same kind in the same circumstances”.
155. For Claimant to establish a violation of this best efforts obligation, it is not sufficient to prove that by May 15, 2000 the 11 radio frequency licences had not been granted – the required test is that he produce evidence showing that
156. What is the factual situation?
157. In accordance with the Settlement Agreement Ukraine had to use its best efforts to grant the frequency licences within two months of signature (signature was on March 20, and the deadline was May 15). Of the 11 licences envisaged, six were granted by the State Committee before the May 15, 2000 deadline, another four by June 13, 2000 (i.e. within one month of May 15) and the last one on September 1, 2000 (within 2 1⁄2 months of the deadline).
158. Ukraine’s efforts to induce its State Committee to grant the licences resulted in 11 of the 12 licences being issued within one month of the deadline. One licence was then granted with 2 1⁄2 months delay.
159. In the Tribunal’s opinion, these delays do not amount to a violation of Ukraine’s best efforts obligation. There is often a gap between political decision and bureaucratic compliance. Paragraph 3 of Clause 13(b) explicitly requires that “the granting of licences ... will be made in accordance with the requirements of Ukrainian legislation”. There is no evidence that Ukraine abated its pressure on the State Committee to perform. The State Committee issued the licences within time limits which are not unreasonable in the context of Ukrainian administrative practices.
160. It is undisputed that the National Council – which had been founded in 1993 – became inoperative in March 1999, because its members were not appointed. It remained inoperative until it was reconstituted in June 2000.
161. Claimant argues that the time period while the National Council was inoperative was abnormal and could not legitimately be expected38. This constitutes, in Claimant’s opinion, a violation of the Settlement Agreement, and specifically of Respondent’s obligation of good faith and fair dealing (Clause 20 of the Settlement Agreement).
162. The Tribunal is unconvinced.
163. The Settlement Agreement lacks any obligation to reconstitute the National Council, nor even an indication of when this could happen. To the contrary, Clause 13(b), paragraph 2, specifically states that applications for broadcasting licences must be made “after the National Council has been fully personally formed”, without referring to any time frame – an explicit acceptance by Claimant that he was aware that the National Council was not operative at the time, and that the political decision to designate new members had to be implemented before the granting of the licences.
165. When the National Council was eventually reconstituted in June 2000, Claimant immediately made numerous attempts to contact its members and to establish the process for obtaining the frequencies. In Claimant’s opinion, the National Council’s lack of reaction violated Ukraine’s duties to act in good faith (Clause 20) and to cooperate (Clause 24)39.
166. Claimant’s argument is not totally accurate.
167. It is undisputed that on March 20, 2001 the National Council adopted its Resolution No. 36 in which it decided to “recognize priority position of CJSC Radio Company Gala” in the allocation of broadcasting licences for the cities listed in Clause 13(b). It is immaterial whether the National Council’s decision thus acknowledged a legal obligation, or whether it followed political considerations. In any case, it implies an acknowledgement of the Settlement Agreement and it granted Claimant the best position that he could expect.
168. Was this acknowledgement by the National Council unduly late?
169. The National Council had just started in January 2001 the process of organizing tenders for broadcasting licences. Given the complexities surrounding the Gala decision (reconciling “positive consideration” of Claimant’s interests under the Settlement Agreement with the independence of the National Council and competing interests of other applicants), the March 20, 2001 decision cannot be considered as unduly late.
170. The Settlement Agreement regulates the issuance of broadcasting licences by the National Council in subparagraphs II and III of Clause 13(b) (reproduced above). These provisions create an obligation by Ukraine to “assist [Claimant] for the positive consideration of this issue [the awarding of licences] by the National Council”. This obligation is not absolute, but subject to important caveats:
179. The facts regarding the issuance of the broadcasting licences by National Council can be summarized as follows.
Facts
180. On March 1, 2000 (i.e. before the Settlement Agreement had actually been signed), the Minister of Economy of Ukraine wrote a proposal to the Cabinet of Ministers in order to “entrust the [State Committee] and the [National Council] to allocate to CJSC RC “Gala” the following frequency assignments ...41”. The frequencies referred to were five of those mentioned in the Settlement Agreement. Respondent has not provided any similar proposal for
194. The power of frequencies allocated to Gala ranged from 0.1 to 4kW with an average of 1,17 kW. On all its frequencies combined, Gala reaches some 22% of the population of Ukraine.
195. Claimant complains that the power of the frequencies allocated to Gala under the Settlement Agreement was far below his legitimate expectations and failed to meet his business purposes46. He alleges that in the negotiations of the Settlement Agreement as well as in pre-settlement communications with the National Council and other agencies of Respondent, much higher powers had been envisaged. In this respect, Claimant refers to correspondence between the National Council and State Inspection of Electric Communication of July 18 and October 18, 1995 which suggested the availability of much higher powered frequencies for Claimant47.
196. The Settlement Agreement, in any case, is silent on the power of frequencies sought by Claimant. Nor does it include any reference to Claimant’s business purposes – e.g. his desire to cover the whole territory of Ukraine - from which a minimum power could be inferred. While the preliminary negotiations between the parties and the purpose of the Settlement Agreement are to be taken into account in determining the common intent of the parties (per Clauses 23(a) and (d) of the Settlement Agreement), Clause 27 provides that the Settlement Agreement “constitutes the entire agreement between the Parties on the subject matter hereof and supersedes all prior correspondence, negotiations and understandings...”. This disqualifies prior correspondence and negotiations as a basis of obligations deliberately not mentioned in the Settlement Agreement. Claimant can therefore not derive a claim from pre- Settlement Agreement correspondence and negotiations.
197. Furthermore, the power of the frequencies awarded to Claimant was not abnormally low. Claimant has acknowledged that the average power of the frequencies allocated to him matched that of frequencies allocated to major competitors48. If Mr. Lemire felt that he was entitled to higher powered
200. Claimant finally complains that four of the frequencies allocated to him were contested by the Armed Forces of Ukraine49. In Claimant’s opinion, Ukraine failed to de-conflict with the Army the frequencies awarded to Gala.
201. Respondent counters that the contests were prompted by Gala itself, which decided to change the location of its radio transmitters in three cities, by a distance of between 4.6 and 1.87 km, and increased the height of its antenna from 55 to 70 m in another50. These changes require the approval of the State Centre, which issues such authorization only with the approval by the General Headquarters of the Armed Forces. What happened in these four cases is that the General Headquarters of the Armed Forces refused to approve the changes. Refusal however did not mean that the frequencies became contested – Gala Radio in fact continued to broadcast on them. Gala was required only to change the locations and/or parameters of the transmitters following the recommendations of the State Centre, and obtained all required permits in 2008.
202. In the Tribunal’s opinion, the difficulties incurred by Claimant with regard to these four frequencies do not constitute a breach of Respondent’s obligations under the Settlement Agreement.
203. Under Clause 13(b) paragraph 2 Ukraine is bound to “assist” Claimant “within the limits of its powers” to obtain the authorization of the National Council. There is no express reference to the Armed Forces. But in an interpretation based on good faith, and bearing in mind that Clause 24 creates an obligation for each party to cooperate with the other, the Tribunal is prepared to admit
“[...] Dima: Also, we have had interferences for the past few months and we have uncertain situation with Donetsk...
Zhebrodski: I am going to call military department in Donetsk, what happened is back in 2000 we had a straight order to give you licence in Donetsk (107,2 fm) and unfortunately we failed to coordinate it with military dpt. Are they complaining?
Dima: No complaints so far, we have been working there for quite awhile.
Zhebrodski: Good. I am sure we can sort it out at least I am gonna try [...]”.
206. The exchange of words between the officer of Gala and the senior manager of the Centre does not prove a breach by Ukraine of its obligation to assist Claimant. Quite to the contrary. What it shows is that, up to that moment (2005), the Army had not complained about the changes in Donetsk, that Gala was broadcasting there and that the State Centre was offering its help if a problem with the Army eventually arises. The problem afterwards materialized, and it was then, it appears, satisfactorily settled by 2008.
207. Summing up, the Tribunal is of the opinion that the problems which Gala encountered with the Army regarding four frequencies, which were eventually solved, do not amount to a default by Ukraine of its obligations under the Settlement Agreement.
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208. For the reasons explained above, the Tribunal concludes that, although Claimant encountered difficulties and delays in the obtaining of the frequencies expected under the Settlement Agreement, and although the end
209. The Tribunal will first summarize Claimant’s general allegations (VII.1), then Respondent’s (VII.2), before analyzing and deciding the claims:
- in first instance, the Tribunal will study the alleged violation of the FET standard in the awarding of frequencies, and will effectively come to the conclusion that certain actions of Respondent are not compatible with this standard (VII.3);
- a second section will be devoted to the alleged continuous harassment of Claimant, and his request for moral damages (VII.4);
- in the next sections the Tribunal will reject Claimant’s additional allegations, regarding an alleged violation of the FET standard by other actions performed by Ukraine (VII.5) and the applicability of the “Umbrella Clause” (VII.6); and
- the Tribunal will then decide whether the 2006 amendment of the LTR and in particular the 50% Ukrainian music requirement amounts to a violation of the BIT (VII.7), and finally devote a short section to other allegations submitted by Claimant (VII.8).
210. Claimant’s starting point is that, after having made the investment in Gala Radio, he had a legitimate expectation that he would be authorized to increase the size and audience of his radio company, and to establish three radio networks in Ukraine aimed at three different age groups. This plan had been discussed with the National Council members and encouraged by them.
211. As evidence of his expectations, Claimant especially relies on three documents, namely:
- a letter of July 18, 1995 from the Chairman of the National Council to the Chairman of the State Inspection on Electric Communications. This letter advises that “the National Council...considers possibility to issue a licence to radio company GALA” and requests the State Inspection “to consider a possibility to give the company the frequency channels” in 13 cities “up to” a specified power53;
- a letter from the Chairman of the State Inspection on Electronic Communications to Claimant of October 18, 1995 informing of the availability of high power frequencies in the cities concerned and advising that the requisite permissions would be issued after Gala had received the pertinent broadcasting licences from the National Council54; and
220. Respondent submits that its legal procedures for tenders involving radio frequencies are consistent with the requirements of the BIT; the implementation of these procedures also conforms with the BIT requirements.
221. The procedures for allocation of frequencies meet the standards of due process and procedural fairness, including the right to be heard. Frequencies are awarded by means of tenders announced in the press; prospective participants may submit their applications within one month of the notice. Such applications must include an information package. Thereafter, the National Council reviews the requests applying statutory criteria, and especially valuing the programming content proposed by each applicant. The meetings of the National Council are public, and the National Council holds briefings with representatives of the radio industry. A frequency is awarded to a radio company if the application receives at least five of the votes of the eight members of the National Council. All decisions of the National Council are published on the National Council’s official website. Finally, the decisions of the National Council are subject to judicial review.
222. The National Council is an independent body. Each of its members exercises his or her judgment without external pressure, and Claimant’s allegations of corruption and undue pressure are unsupported by any evidence. Furthermore, the LTR was amended in 2006, and since then members may be removed from their functions only by a joint decision from the Parliament and the President. Claimant’s allegations of political influence were not corroborated during the hearing. No member of the National Council has been impeached, no one
229. The main thrust of Claimant’s allegation is that Ukraine has failed to provide fair and equitable treatment to its investment in Gala, and subjected it to arbitrary or discriminatory measures. Ukraine rejects both allegations. The Tribunal will analyze this dispute – which is the basic issue submitted to its adjudication - in a short introduction and three separate sections:
- the first devoted to the concept of FET standard, as defined in the BIT (VII.3.2);
- the second to the procedures for awarding frequencies under Ukrainian law (VII.3.3); and
- the third to the facts surrounding Gala’s applications for frequencies (VII.3.4).
Claimant
230. Claimant, Mr. Joseph Charles Lemire, is an American citizen residing in Ukraine. By profession, Mr. Lemire is a lawyer, although he also has experience in accounting. He is the owner and chairman of Gala, a closed joint stock company constituted in 1995 under the laws of Ukraine. His participation in Gala is held through another Ukrainian company, Mirakom. He initially purchased 30% of Gala, but since 2006 he indirectly owns 100% of the company56. The proven amount of his investment is 236,000 USD. There is circumstantial evidence that Mr. Lemire has made payments with his own monies on behalf of Gala. But the record of the actual amounts paid has not been produced, and Mr.Lemire’s statement that the total exceeds 5,000,000 USD57has not been locked up with hard evidence. The personal assets of Mr. Lemire and those of Gala appear to some extent commingled58.
Gala
231. Gala is a company which since 1995 operates a contemporary music radio station. It holds a licence to broadcast on two frequencies in Kyiv and on 12 other frequencies in nine areas of Ukraine. Gala Radio applied for and received a licence recognizing its status as a national broadcaster on October 17, 200759. In the late 1990’s, Gala ranked amongst the most popular radio stations in Ukraine. Claimant acknowledges that its market share has declined – and attributes this decline to Respondent’s actions.
243. The purpose of this section is to determine the general scope and meaning of the FET standard defined in the BIT.
244. Article II.3 (a) and (b) of the BIT reads as follows:
“3. (a) Investment shall at all times be accorded fair and equitable treatment, shall enjoy full protection and security and shall in no case be accorded treatment less than that required by international law.
(b) Neither Party shall in any way impair by arbitrary or discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion, or disposal of investments. For purposes of dispute resolution under Articles VI and VII, a measure may be arbitrary or discriminatory notwithstanding the fact that a Party has had or has exercised the opportunity to review such measure in the courts or administrative tribunals of a Party”.
245. The origin of Article II.3 (a) and (b) can be traced to the 1992 and 1994 US Model BIT, which proposed the following wording:
“Investments shall at all times be accorded fair and equitable treatment, shall enjoy full protection and security and shall in no case be accorded
treatment less than that required by international law. Neither Party shall in any way impair by arbitrary and discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion or disposal of investments. Each Party shall observe any obligation it may have entered into with regard to investments”68.
246. Article II.3 of the BIT was thus taken literally from the US Model BIT which was in force at the time when the BIT was negotiated, with only the addition of the phrase referring to judicial review. It is a rule of Delphic economy of language, which manages in just three sentences to formulate a series of wide ranging principles: FET standard, protection and security standard, international minimum standard and prohibition of arbitrary or discriminatory measures.
247. A classic debate in investment arbitration law is whether the FET standard established by bilateral or multilateral investment treaties coincides with or differs from the international minimum standard of protection for aliens imposed by customary international law.
248. The starting point of this debate is the very definition of the international minimum standard – a question which is fraught with difficulties69. For claims arising from administrative or legislative acts of Governments – which are the type of claims typically submitted in investment disputes – the historic leading case seems to be Roberts70, issued by the United States – Mexico General Claims Commission in 1926, which defined the minimum treatment as that required “in accordance with ordinary standards of civilization”. Mr. Roberts, a US citizen, had been imprisoned in Mexico in what he held to be inhumane conditions. Mexico had argued that Mexicans were held in identical conditions. And the Tribunal decided:
“Facts with respect to equality of treatment of aliens and nationals may be important in determining the merits of a complaint of mistreatment of an alien. But such equality is not the ultimate test of the propriety of the acts of authorities in the light of international law. That test is, broadly speaking, whether aliens are treated in accordance with ordinary standards of civilization. We do not hesitate to say that the treatment of Roberts was such as to warrant an indemnity on the ground of cruel and inhumane imprisonment”.
249. Roberts is understood to stand for the propositions that a certain treatment may give rise to international responsibility notwithstanding that it affects citizens and aliens alike, and that administrative and legislative actions may amount to
“2. Minimum Standard of Treatment in Accordance with International Law
1. Article 1105(1) prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of another Party.
2. The concept of ‘fair and equitable treatment’ and ‘full protection and security’ do not require treatment in addition to or beyond that, which is required by the customary international law minimum standard of treatment of aliens. [...]”.
251. The same proposition, that the FET standard should be reduced to the customary international law minimum standard, was afterwards adopted in the new 2004 US Model BIT. Article 5 of this model provides72:
“Article 5: Minimum Standard of Treatment73
1. Each Party shall accord to covered investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security.
2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments”.
252. Is this principle of assimilation between customary minimum standard and FET standard also applicable to the US – Ukraine BIT?
253. The answer must be in the negative. The BIT was adopted in 1996, and was based on the standard drafting then proposed by the US. The words used are clear, and do not leave room for doubt: “Investments shall at all times be accorded fair and equitable treatment ... and shall in no case be accorded treatment less than that required by international law”. What the US and Ukraine agreed when they executed the BIT, was that the international customary minimum standard should not operate as a ceiling, but rather as a floor. Investments protected by the BIT should in any case be awarded the level of protection offered by customary international law. But this level of
256. The words used by the Article II.3. are the following: “Investments shall at all times be accorded fair and equitable treatment [...] Neither party shall in any way impair by arbitrary or discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion or disposal of investments”.
257. These general principles require interpretation in order to give them specific content and this interpretation must comply with the requirements of Article 31.1. of the Vienna Convention – it must be done “in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose75”.
a) Ordinary meaning
258. An inquiry into the ordinary meaning of the expression “fair and equitable treatment” does not clarify the meaning of the concept. “Fair and equitable treatment” is a term of art, and any effort to decipher the ordinary meaning of the words used only leads to analogous terms of almost equal vagueness.
259. The literal reading of Article II.3 of the BIT is more helpful. In accordance with the words used, Ukraine is assuming a positive and a negative obligation: the positive is to accord FET to the protected foreign investments, and the negative is to abstain from arbitrary or discriminatory measures affecting such investments. Any arbitrary or discriminatory measure, by definition, fails to be fair and equitable. Thus, any violation of subsection (b) seems ipso iure to also constitute a violation of subsection (a). The reverse is not true, though. An action or inaction of a State may fall short of fairness and equity without being discriminatory or arbitrary76. The prohibition of arbitrary or discriminatory measures is thus an example of possible violations of the FET standard.
260. The literal interpretation also shows that for a measure to violate the BIT it is sufficient if it is either arbitrary or discriminatory; it need not be both.
“a. a measure that inflicts damage on the investor without serving any apparent legitimate purpose;
b. a measure that is not based on legal standards but on discretion, prejudice or personal preference;
c. a measure taken for reasons that are different from those put forward by the decision maker;
d. a measure taken in wilful disregard of due process and proper procedure.”
263. Summing up, the underlying notion of arbitrariness is that prejudice, preference or bias is substituted for the rule of law.
b) Context
264. Words used in treaties must be interpreted through their context. The context of Article II.3 is to be found in the Preamble of the BIT, in which the contracting parties state “that fair and equitable treatment of investment is desirable in order to maintain a stable framework for investment...”. The FET standard is thus closely tied to the notion of legitimate expectations - actions or omissions by Ukraine are contrary to the FET standard if they frustrate
274. Respondent has submitted that Gala Radio, although it asserts a list of errors concerning the tenders, never challenged any of the decisions before the Ukrainian Courts91. In Respondent’s opinion, Claimant should have taken advantage of the available local remedies that would have been capable of correcting the alleged administrative wrong. Claimant did so when confronted with the warnings issued by the National Council, and successfully challenged two decisions before the Ukrainian Courts. Respondent draws the Tribunal’s attention to the Generation Ukraine award, which stressed the need for the
“[...]In such instances, an international tribunal may deem that the failure to seek redress from national authorities disqualifies the international claim, not because there is a requirement of exhaustion of local remedies but because the very reality of conduct tantamount to expropriation is doubtful in the absence of a reasonable – not necessarily exhaustive – effort by the investor to obtain correction92”.
275. The question which the Tribunal must answer is whether, given the fact that Gala Radio has not challenged the decisions of the National Council, it is now precluded from presenting its claim in this arbitration.
276. The starting point of the Tribunal’s analysis must be the text of the BIT. The BIT – unlike other Treaties – does not include any clause requiring the initiation or exhaustion of local remedies before the filing of an investment arbitration. Quite the contrary: Article II.3 deviates from the standard US Model BIT in only one point, the insertion of the following phrase:
“[...] For purposes of dispute resolution under Articles VI and VII, a measure may be arbitrary or discriminatory notwithstanding the fact that a Party has had or has exercised the opportunity to review such measure in the courts or administrative tribunals of a Party”.
277. The literal meaning of this phrase could not be clearer: even if a party has had (and has not exercised), or has exercised (with whichever outcome) the right to judicial review, such action or omission is irrelevant in an investment arbitration deciding whether the measure is arbitrary or discriminatory. The consequence is that in an arbitration under the US-Ukrainian BIT, the possibility to file a claim against a specific measure, is not burdened by any requirement to previously appeal to the national Courts.
278. This does not mean that an investor can come before an ICSID tribunal with any complaint, no matter how trivial, about any decision, no matter how routine, taken by any civil servant, no matter how modest his hierarchical place. In this case, however, the claim is raised against the conduct of the National Council, that is to say the highest regulatory organ for the broadcasting industry. On this basis, the Tribunal considers that there should be no impediment to Claimant seeking to hold Ukraine accountable for an alleged breach of the BIT.
279. Given the clear language of the BIT, the Tribunal rejects Respondent’s submission that Claimant is precluded from pursuing his claims in the present arbitration, due to his failure to appeal the tender decisions of the National Council.
284. The FET standard defined in the BIT is an autonomous treaty standard, whose precise meaning must be established on a case-by-case basis. It requires an action or omission by the State which violates a certain threshold of propriety, causing harm to the investor, and with a causal link between action or omission and harm. The threshold must be defined by the Tribunal, on the basis of the wording of Article II.3 of the BIT, and bearing in mind a number of factors, including among others the following:
- whether the State has failed to offer a stable and predictable legal framework;
- whether the State made specific representations to the investor;
- whether due process has been denied to the investor;
- whether there is an absence of transparency in the legal procedure or in the actions of the State;
- whether there has been harassment, coercion, abuse of power or other bad faith conduct by the host State;
- whether any of the actions of the State can be labeled as arbitrary, discriminatory or inconsistent.
285. The evaluation of the State’s action cannot be performed in the abstract and only with a view of protecting the investor’s rights. The Tribunal must also balance other legally relevant interests, and take into consideration a number of countervailing factors, before it can establish that a violation of the FET standard, which merits compensation, has actually occurred:
- the State’s sovereign right to pass legislation and to adopt decisions for the protection of its public interests, especially if they do not provoke a disproportionate impact on foreign investors;
- the legitimate expectations of the investor, at the time he made his investment;
- the investor’s duty to perform an investigation before effecting the investment;
- the investor’s conduct in the host country.
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286. Once the scope and meaning of the FET standard has been defined in the abstract, the Tribunal must establish the facts and decide whether they constitute a violation of such standard. This will be achieved by reviewing the legal procedure created by Ukrainian law for the awarding of licences in the broadcasting sector (VI.3.3), then by analyzing in detail the facts surrounding the allocation of frequencies which affected Gala (VI.3.4).
287. Two fundamental laws regulate the Ukrainian radio sector:
- the Law on National Television and Radio Council of Ukraine (“LNC”), originally issued on September 30, 199893, amended on a number of occasions, the last on January 12, 2006; the scope of this law is the designation and scope of responsibilities of the National Council;
- the Law on Television and Radio Broadcasting (“LTR”), originally issued on December 21, 1993, amended significantly a number of times, lastly on March 1, 200694, and which provides the general rules regarding the functioning of radio and TV in Ukraine.
288. The LNC establishes the National Council as a “constitutional permanent collegiate agency95”. Its activities “shall be based upon the principles of legality, independence, impartiality, transparency...96”. The eight members of the National Council are appointed in parity by the President and the Parliament respectively, for five-year terms with the possibility of a single reappointment97. Until 2006, the President and the Parliament could at any time disqualify any of their appointees from office. That was no empty threat: on February 2, 2004 the Parliament’s Committee on Freedom of Speech and Information approved a resolution, recommending that Parliament carry out a “credibility impeachment” of all the members of the National Council98.
289. Since 2006 the situation has improved because the LNC has been amended, and the National Council in toto can be dismissed only upon a vote of no confidence carried by Parliament and confirmed by the President99.
290. The National Council derives its status and mandate directly from a constituent law. Its independence and impartiality is expressly guaranteed by that law. Formally, it thus is independent. The appointment of independent regulators by Parliament and/or the Head of State follows wide-spread practice. Before 2006, the power of the President and the Parliament, respectively, to remove their appointees from office indeed represented a threat to Council members’ independence. With the requirement of a concurring decision of both the President and the Parliament for removing the Council in toto from office, a safeguard against undue political pressure was introduced.
“Well, we’re very accustomed to hearing this kind of language, I’ll be honest and frank. Yes, there have been – there are attempts at putting pressure on the council. However, due to the specifics of how the council is formed, such attempts are ineffective, especially since recently, since amendments were made, passed in 2006. Indeed, we now are an independent body and we’re not subject, or rather we’re immune to pressure”.
292. The answer acknowledges that pressure has been exercised on the National Council, but expresses the contention that since 2006 – when the LNC was amended and the Council was given a higher level of independence – the situation has been improving.
293. The LTR is an extensive law, comprising 75 articles, regulating the creation, licensing, functioning, supervision and sanctioning of companies operating in the TV and radio sectors. Section III of the Law, as it now stands, is devoted to the rules governing the tender procedure and the issuance of broadcasting licences.
294. From a historical perspective, the system for granting radio licences has gone through four phases:
- in a first phase, between 1993 and 1995, licences were issued by the National Council under Article 14 of the 1993 LTR, upon individual application of persons interested in setting up a radio station;
- after 1995, radio frequencies were awarded by means of tender announced in the press101;
- the third phase began on December 15, 1998, when the National Council became inoperative because it ceased to have five duly designated members, and consequently could not validly carry decisions; during this interregnum, radio frequencies were awarded directly by the State Committee, in clear violation of the LTR102. The situation was solved in June 2000, when the National Council regained all its members, and a
“While considering the applications the National Council shall prefer TV/radio organization that:
a) is capable to fulfill the licence conditions to the best extent;
b) prefers socially important programs (informational, social and political, children, etc.), satisfies informational needs of national minorities and secures freedom of speech;
c) has an advantage in financial and economical as well as professional and technical capabilities for TV/radio broadcasting;”
296. The system for deciding the winner of the tender is simple: the National Council holds a formal meeting, the various applications for each frequency are presented, each member of the National Council expresses a vote and the licence is awarded to the applicant supported by at least five members of the National Council103. If no applicant reaches this threshold, the frequency is not awarded, although it may be put again to tender on a future occasion.
297. The voting system gives rise to three different issues:
a) Publicity of the vote
298. The first is the publicity of the vote.
299. The LTR contains no provision regarding the formal requirements of the National Council’s decision. Practices seem to have developed. It is undisputed that in an initial phase, the votes would be cast in a private meeting of the Council, behind closed doors, and that there was no transparency of how each member of the National Council had voted. The parties have debated when this phase ended. Claimant has submitted that the change occurred in 1995104; while Respondent’s position is that this happened in 2000105. The evidence submitted by Respondent in order to support its position are minutes of National Council meetings which took place from December 24, 2003 onwards. These minutes list representatives of participating radio companies as “invited persons” present during the discussions.
“A decision on the winner of a tender and on broadcast licence issuance shall be made by the National Council within a 30-day period after application period is finished”.
305. It is very telling that for this decision of awarding frequencies the law omits the requirement that it be “reasoned” – a requirement which the same article of the Law specifically requires for exclusion of applicants.
306. The administrative practice of the National Council when awarding frequencies adhered to the principle established in the LTR. Respondent has presented a great number of minutes of decisions taken by the National Council. These minutes simply state in favour of whom each member is casting his vote. And if a participant received five votes, the frequency was awarded to him. The minutes do not include any discussion among the members or the reasoning of the decision.
307. The evidence presented in this arbitration does not indicate that before the National Council’s meeting, either the administrative staff of the Council, or its members, prepared a reasoned and researched report with a valuation and ranking of the applications submitted. This is surprising, since Article 25.14 of the LTR orders that in considering the application, the National Council “shall prefer” radio organizations that offer socially important programs, satisfy minorities, secure freedom of speech, have better financial resources or professional or technical capabilities. The evidence submitted seems to show
1Claimant’s Post-Hearing Memorial, para. 151.
2Respondent’s Rejoinder, para. 252; Respondent’s Post-Hearing Memorial, para. 653.
3Respondent’s Memorial in Support of its Objections to Jurisdiction; Respondent’s Rejoinder, paras. 146-256.
4Article 13 of the 1993 Law on Television and Broadcasting
5Respondent has presented a Witness Statement from Mr. Maliutin.
6Annex F of EBS Expert Report.
7EBS Expert Report, p. 5.
8Respondent’s Exhibit at the hearing RH-1, p. 23.
9Mr. Lemire, Hearing Transcript 1, p. 279, at 10.
10Mr. Lemire, Hearing Transcript 1, p. 281, at 14.
11Mr. Lemire, Hearing Transcript 1, p. 286, at 23.
12Mr. Lemire, Hearing Transcript, p. 285, para. 20 and p. 304, para. 9.
13Respondent’s Rejoinder, para. 155.
14Article II.3 of the New York Convention provides that: “The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this Article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed“.
15Claimant’s letter dated March 17, 2008, paras. 13 and 14; Claimant’s Reply Memorial, paras. 39-43.
16Respondent’s Memorial in Support of its Objections to Jurisdiction, para. 19.
17This is not controversial: see e.g. Fouchard/Gaillard/Goldman, “International Commercial Arbitration” (1999), p. 263.
18Respondent’s Rejoinder, para. 184.
19Claimant’s Reply Memorial, para. 52.
20Respondent’s Rejoinder, paras.189 and 202.
21Respondent’s Rejoinder, para. 239.
22Telenor Mobile Communication A.S. v. The Republic of Hungary, ICSID Case No.ARB/04/15, Award of 13 September 2006.
23Respondent’s Rejoinder, para. 88.
24See Claimant’s Post-Hearing Memorial.
25The 1994 UNIDROIT Principles have now been superseded by the 2004 edition.
26Claimant’s Post-Hearing Memorial, para. 54.
27Claimant’s Reply Memorial, para.125.
28Claimant’s Post-Hearing Memorial, para. 46.
29Respondent’s Rejoinder, para. 291.
30Claimant’s Reply Memorial, para. 125. 31 Respondent’s Rejoinder, para. 291-293.
31Respondent’s Rejoinder, para. 291-293.
32Claimant’s Exhibit CM-96.
33Claimant’s Witness Statement of Mr. Joseph Lemire dated 14 November 2008, p. 18 et seq.
34Claimant’s Witness Statement of Mr. Sergey Denisenko dated 14 November 2008, pp. 7 and 8.
35Claimant’s Exhibits CM-24, CM-63, CM-88, CM-114, CM-115 and CM-154; Respondent’s Exhibit R- 82.
36See Respondent’s Exhibits R-29, R-63, R-87, R-88, R-104, R-140, R-141, R-146, R-149, R-155, R- 205, R-314, R-315, R-316, R-317, R-318, R-322, R-326, R-347, R-369 and R-396.
37Article 5, Law on Television and Radio Broadcasting dated December 21, 1993.
38Claimant’s Post-Hearing Memorial, para. 57.1.
39Claimant’s Post-Hearing Memorial, para. 57.3.
40Respondent’s Post-Hearing Memorial, para. 207.
41Respondent’s Exhibit R-27.
42Respondent’s Exhibit R-39.
43Respondent’s Exhibit R-40.
44Claimant’s Exhibit CM-101.
45In Kryviy Rog and Uzhgorod.
46Claimant’s Post-Hearing Memorial, para. 57.12.
47Claimant’s Exhibits CM-1 and CM-2.
48Claimant’s Post-Hearing Memorial, para. 57.12.
49Claimant’s Post-Hearing Memorial, para. 57.13.
50Respondent’s Post-Hearing Memorial, para. 271.
51Claimant’s Post-Hearing Memorial, para. 57.13.
52Claimant’s Exhibit CM-143.
53Claimant’s Exhibit CM-1; the English translation by mistake does not include the words “up to” which appear in the Ukrainian original.
54Claimant’s Exhibit CM-2.
55Claimant’s Post-Hearing Memorial, para. 64.
56Mr. Lemire, Hearing Transcript 1, p. 283, at14.
57Mr. Lemire, Hearing Transcript 1, p. 285, at 20 and p. 304, at 9.
58Mr. Lemire, Hearing Transcript 1, p. 288, at 25.
59Respondent’s Exhibit R-153.
60EBS Expert Report, p. 6.
61EBS Expert Report, p. 5.
62Claimant’s Memorial, para. 117.
63Respondent’s Counter Memorial, para. 83.
64Mr. Lemire, Hearing Transcript 1, p. 309, at 3.
65Mr. Lemire, Hearing Transcript 1, p. 166, at 5.
66Claimant’s Exhibit CM-50 and Respondent’s Exhibit R- 353.
67Respondent’s Memorial, para.18.
68As quoted in I. Tudor, “The Fair and Equitable Standard in the International Law of Foreign Investment” (2008) p. 28.
69For a status quaestionis see Paulsson/Petrochilos: “Neer-ly Misled?” ICSID Review: Foreign Investment Law Journal (2007), vol.22.2, pp. 242-257.
70Harry Roberts (U.S.A.) v. United Mexican States; November 2, 1926; U.N. Report of International Arbitral Awards, IV, p. 71.
71While for claims based on denial of justice, aggravating circumstances like outrage, bad faith, willful neglect of duty or other egregious behavior are required; see L.F.H. and P.E. Neer (U.S.A) v. United Mexican States; October 7, 1926; U.N. Report of International Arbitral Awards, IV, p. 60
72Quoted in I. Tudor, “The Fair and Equitable Standard in the International Law of Foreign Investment” (2008) p. 57.
73Footnote omitted.
74In agreement: I. Tudor, “The Fair and Equitable Standard in the International Law of Foreign Investment” (2008) p. 29.
75Emphasis added.
76LG&E Energy Corp., LG&E Capital Corp. and LG&E International Inc. v. Argentina, ICSID Case No.ARB/02/1, Decision on Liability of 3 October 2006, para. 162.
77Saluka Investments BV v. Czech Republic PCA, UNCITRAL, Partial Award of 17 March 2006, para. 313.
78Waste Management Inc. v. United Mexican States, ICSID Case No.ARB (AF)/00/3, Award of 30 April 2004, para. 98, confirmed in Methanex Corporation v. United States of America, UNCITRAL, Award of 3 August 2005, para. 274.
79LG&E Energy Corp., LG&E Capital Corp. and LG&E International Inc. v. Argentina, ICSID Case No.ARB/02/1, Decision on Liability of 3 October 2006, para. 147.
80Ronald S. Lauder v. Czech Republic, UNCITRAL, Award of 3 September 2001, para. 221.
81Tecnicas Medioambientales Tecmed SA v. United Mexican States, ICSID Case No. ARB(AF)/00/2, 29 May 2003, para. 154.
82Loewen Group Inc and Raymons L. Loewen v. United States of America, ICSID Case No. ARB(AF)98/3, Award of 26 June 2003, para. 131.
83Saluka Investments BV v. Czech Republic, UNCITRAL, Partial Award of 17 March 2006, para. 307.
84See EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13, Award of 8 October 2009, para. 303; Professor Schreuer acted as expert and his opinion was quoted and accepted by the Tribunal.
85The relationship between FET and legitimate expectations has been established in a number of decisions: Saluka Investments BV v. Czech Republic PCA, UNCITRAL, Partial Award of.March 17, 2006, para. 302 which then quotes Tecnicas Medioambientales Tecmed SA v. United Mexican States, CME v. Czech Republic and Waste Management v. United Mexican States.
86See Annex to BIT.
87Mr. Lemire, Hearing Transcript 1, p. 121, at 17.
88Claimant’s Exhibit CM-1.
89Claimant’s Exhibit CM-2.
90Claimant’s Post-Hearing Memorial, para. 90.
91Respondent’s Post-Hearing Memorial, para. 625.
92Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award of 16 September 2003, para. 20.30.
93Claimant’s Exhibit CM-2; the Tribunal used Claimant’s translation, to which Respondent has not made any objection.
94Claimant’s Exhibit CM-3; the Tribunal will quote from the translation prepared by Claimant, to which Respondent has made no objection.
95Article 1 of the LNC.
96Article 3.1 of the LNC.
97Article 4 of the LNC.
98See Claimant’s Exhibit CM-31.
99Article 16.5 of the LNC.
100Mr. Lyasovsky, Hearing Transcript 2 p. 73, at 24.
101Mr. Petrenko, Hearing Transcript 4, p. 81, at 25.
102See Claimant’s Exhibit CM-11, letter of National Council member S. Aksenenko to the Vice Prime Minister of Ukraine.
103This is not controversial; see Respondent’s Post-Hearing Memorial, para. 350.
104Claimant’s Reply Memorial, para.104.
105Respondent’s Rejoinder, para. 511.
106See Respondent’s Exhibit R-350, regarding the exclusion of NBCU from two tenders.
107Respondent has submitted that in order to help members of the National Council, an “informational passport” for each region of Ukraine was prepared by National Council Staff (Post-Hearing Memorial, para. 347); but this passport did not include any valuation of the various applications submitted.
108Respondent’s Rejoinder, para. 512.
109Claimant’s Exhibit CM-86.
110In Claimant’s Post-Hearing Memorial, para. 71.3, Claimant submits that it was created; in Claimant’s Memorial, para. 32 and Claimant’s Reply Memorial, para. 170, the assertion is that it was proposed.
111Mr. Lyasovski, Hearing Transcript 2, p. 52, at 17; Mr. Shevchenko, Hearing Transcript 3, p. 13, at 1; Mr. Kurus, Hearing Transcript 4, p. 7.
112Respondent’s Reply, para. 167; see also Claimant’s Exhibit CM-99 with a list of the applications.
113Respondent’s Exhibit R 344-A.
114Respondent’s Post-Hearing Memorial, paras. 434 and 453.
115Claimant’s Reply, para. 168.
116Claimant’s Exhibit CM-129.
117Claimant’s Post-Hearing Memorial, para.106.
118Claimant’s Exhibits CM-105, CM-116 and CM-124 and Mr. Lemire’s Witness Statement, para. 123.
119Respondent’s Post-Hearing Memorial, para. 438.
120Respondent’s Post-Hearing Memorial, para. 447.
121Claimant’s Exhibit CM-45.
122Mr. Shevchenko, Hearing Transcript 3, p. 161, at 19; Claimant has accepted the translation; see Claimant’s Post-Hearing Memorial, fn. 271.
123Claimant’s Exhibit CM-108.
124Claimant’s Post-Hearing Memorial, para. 92.
125Respondent’s Post-Hearing Memorial, para. 398.
126Mr. Shevchenko, Hearing Transcript 3, p. 172.
127Claimant’s Exhibits CM 105 and CM 124; Claimant’s Post-Hearing Memorial, para. 81.
128Claimant’s Post-Hearing Memorial, para. 91.
129See Mr. Lyasovski, Hearing Transcript 2, p. 81, at 23.
130Claimant’s Post-Hearing Memorial, para. 114.
131Respondent’s Post-Hearing Memorial, para. 460.
132Claimant’s Memorial, para. 173.
133Respondent’s Exhibit R-79.
134Mr. Shevchenko, Hearing Transcript 3, p. 102, at 18.
135Claimant’s Reply Memorial, para. 204.
136Claimant’s Exhibit CM-106.
137Claimant’s Reply Memorial, para. 206.
138Mr. Lemire, Hearing Transcript 1, p. 273, at 25.
139Claimant’s Post-Hearing Memorial, para.105.
140Respondent’s Post-Hearing Memorial, para. 433.
141Mr. Kurus, Hearing Transcript 4, p 42, at 12; Mr. Shevchenko, when asked the same question, answered that there “could be different conditions for different frequencies” (Tr. 3, p. 138, 6); the Tribunal, after reviewing the transcript of the National Council meeting, coincides with Mr. Kurus’ opinion, because references to the 40% requirement appear repeatedly when discussing various frequencies.
142Respondent’s Exhibits R-351 and R-352.
143Mr. Shevchenko, Hearing Transcript 3, p 81, at 16.
144Mr. Shevchenko, Hearing Transcript 3, p. 89, at 11.
145Mr. Shevchenko, Hearing Transcript. 3, p. 82, at 23 146 Respondent’s Exhibit R-352, p. 10.
147Claimant’s Post-Hearing Memorial, para. 118.
148Claimant’s Post-Hearing Memorial, para. 98.
149Claimant’s Exhibit CM-143.
150Respondent’s Post-Hearing Memorial, para. 408.
151See Respondent’s Post-Hearing Memorial, para. 410.
152Claimant’s Post-Hearing Memorial, para. 101.
153Claimant’s Exhibit CM-143.
154Claimant’s Exhibit 30 to Request of Arbitration.
155Claimant’s Exhibit CM-39.
156Respondent’s Exhibit R-279.
157Respondent’s Exhibit R-279, p. 3.
158Respondent’s Exhibit R-279, p. 10.
159Respondent’s Exhibit R-279, p. 10.
160Claimant’s Post-Hearing Memorial, para. 67.3.
161Respondent’s counsel, Hearing Transcript 1, p. 71, at 16.
162Claimant’s Post-Hearing Memorial, para. 57.2.
163Claimant’s Exhibit CM-11.
164Claimant’s Exhibit CM-101; Respondent has not challenged the accuracy of the transcript.
165Saluka Investments BV v. Czech Republic PCA, UNCITRAL, Partial Award of 17.March 2006, para 307.
166See Tecnicas Medioambientales Tecmed SA v. United Mexican States, ICSID Case No. ARB (AF)/00/2, Award of 29 May 2003, para. 154 and Loewen Group Inc and Raymons L. Loewen v. United States of America, ICSID No. ARB(AF)98/3, Award of 26 June 2003, para. 131.
167Respondent’s Post-Hearing Memorial, para. 646.
168Claimant’s Post-Hearing Memorial, para. 125.
169Desert Line Projects LLC v. Yemen, ICSID Case No. ARB/05/17, Award of 6 February 2008.
170Respondent’s Post-Hearing Memorial, para. 516.
171Respondent’s Rebuttal Witness Statement of Mr. Shevchenko dated 2 December 2008, p.31.
172Responent’s Exhibit RLA-15 (original text) and RLA-64 (amended text).
173Inspector Iulian Leliukh, Hearing Transcript 4, p.103, at 15.
174Mr. Denisenko, Hearing Transcript 2, p. 209, at 16.
175Respondent’s Exhibit R-270.
176Respondent’s Exhibit R-272.
177Respondent’s Exhibit R-276.
178Respondent’s Exhibit R-282; Respondent submits that the two weeks delay was to permit Gala to cure the irregularities; this does not derive from the transcript.
179See Claimant’s submission to the Court in Respondent’s Exhibit R-312.
180Respondent’s Exhibit R-298.
181Inspector Iulian Leliukh, Hearing Transcript 4, p. 111, at 8.
182Inspector Iulian Leliukh, Hearing Transcript 4, p. 116, at 7.
183Respondent’s Exhibit R-306, p. 2070.
184Respondent’s Exhibit R-373.
185Respondent’s Exhibit R-375 (transcript of the meeting).
186Respondent’s Post-Hearing Memorial, para. 548; not contradicted by Claimant; the transcript of the meeting, however, is not clear; Chairman Shevchenko’s last words are: “But they admit their fault, saying that it was all by accident, and we agree with this point, advising the company to take this fact into account as a warning”
187See Claimant’s Exhibits CRIM-5, 6, 7, 8 and 9.
188Claimant’s Reply Memorial, para. 248.
189Claimant’s Reply Memorial, para. 253.
190Claimant’s Post-Hearing Memorial, para. 147.
191Desert Line Projects LLC v. The Republic of Yemen, ICSID Case No. ARB/05/17, Award of 29 January 2008, para. 289.
192Claimant’s Post-Hearing Memorial, para. 67.
193Claimant’s Post-Hearing Memorial, para. 67.4.
194Claimant’s Post-Hearing Memorial, para. 67.6.
195Claimant’s Post-Hearing Memorial, para. 67.7 and 67.8.
196Claimant’s Post-Hearing Memorial, para. 67.1.
197Respondent’s Post-Hearing Memorial, para. 170.
198Respondent’s Exhibits R-84 and R-85.
199Respondent’s Exhibit R-146.
200Claimant’s Post-Hearing Memorial, para. 48.
201Claimant’s Post-Hearing Memorial, para. 148.
202Respondent’s Post-Hearing Memorial, para. 570.
203Respondent’s Exhibit R-131.
204Claimant’s Memorial, para. 207.
205S.D. Myers Inc. v. Canada, UNCITRAL, First Partial Award of 13 November 2000, para. 263.
206Article 12 I Loi no 86-1067 du 30 septembre 1986 relative à la Liberté de Communication, amended by Loi no 94-88 du 1er février 1994.
207Article 44 A 1 Lei 7/2006 de 3 de março.
208See K. Bhattachrjee: “Local Content Rules in Broadcasting”, reproduced as Respondent’s Exhibit RLA-41.
209See Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/02, Award of 27 August 2008, para 269.
210Emphasis added.