A-38

GUJARAT NATIONAL LAW UNIVERSITY

SECOND INTRA MOOT COURT COMPETITION,2019

IN THE INTERNATIONAL COURT OF JUSTICE

THE PEACE PALACE, THE HAGUE, THE NETHERLANDS

UNDER ARTICLE 36 (2) OF THE INTERNATIONAL COURT OF JUSTICE

IN THE MATTER OF

ATACAMA………………………………………………………………………APPLICANT

IRAM…………………………………………………………………………….RESPONDENT

WRITTEN ON BEHALF OF APPLICANT

 TABLE OF CONTENTS

STATEMENTS OF FACTS ...................................................................................................... 6

ISSUES RAISED ....................................................................................................................... 8
SUMMARY OF ARGUMENTS ............................................................................................... 9
ARGUMENTS ADVANCED ................................................................................................. 11
1. THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL CLAIM
AND ADDITIONAL CLAIM NOT ON COUNTER CLAIM. ............................................................... 11

1.1 THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL
CLAIM..11

1.1.1. THAT THE ICJ HAS JURISDICTION OVER THE PRINCIPAL CLAIM…………………..9

1.1.2. THAT THE ICJ HAS ADMISSIBILITY OVER THE PRINCIPAL CLAIM……………….10

1.2 THAT ICJ DOES NOT HAVE JURISDICTIOM AND/OR ADMISSIBILITY OVER THE
THE
COUNTER CLAIM. ............................................................................................................... 13

1.2.1. THAT THE ICJ DOES NOT HAVE JURISDICTION OVER THE COUNTER CLAIM. …….11

1.2.2. THAT THE ICJ DOES NOT HAVE ADMISSIBILITY OVER THE COUNTER CLAIM…...12

1.2.2.1. THAT THE 35 PERCENT IMPORT TAX IS NOT A VIOLATION OF THE GATT…...13

1.2.2.2. THAT THE 35 PERCENT IMPORT TAX IS NOT A VIOLATION OF THE ATACAMA-
IRAM BIT……………………………………………………………………………..13

1.3 THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE ADDITIONAL
CLAIM. ............................................................................................................................... 16

2. THAT ATACAMA CAN CLAIM DAMAGES SUFFERED BY BOUMANINC.(ATACAMA) AND

OTHERS AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMAIRAM BIT. ..... 18

2.1 THAT THE BOUMAN INC.

(ATACAMA) HAS NOT ABUSED THE PROCESS BY
RESTRUCTURING ITS INVESTMENT. .................................................................................... 18

2.2 THAT THE BOUMAN INC. (ATACAMA) AND OTHERS CAN CLAIM DAMAGES SUFFERED BY
THEM AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMA-IRAM BIT. ... 20

2.2.1 THAT THE IRAM HAS NOT ACCORDED FAIR AND EQUITABLE TREATMENT TO

BOUMAN INC. AND OTHERS…………………………………………………………...18

2.2.2 THAT THE IRAM HAS VIOLATED THE ARTICLE 3 OF THE BIT……………………20

3. THAT ATACAMA CAN SOUGHT RELIEF WITH RESPECT TO THE MESSIERI TAX
THE
ANNOUNCED BY IRAM UNDER THE ATACAMA-IRAM BIT. ..................................................... 24
 3.1. THAT THE BOUMAN INC. (ATACAMA) CAN CLAIM FOR THE ADVERSE ACTION BY
IRAM……………………………………………………………………………………..24
3.2. THAT THE BOUMAN INC. HAVE SUFFERED LOSS BECAUSE OF THE VIOLATION OF THE
ATACAMA-IRAM TREATY BY IRAM. ................................................................................... 25
3.1.1 THAT THE IRAM HAS VIOLATED ARTICLE 3 OF THE BIT…………………….23
3.2.2 THAT THE IRAM HAS VIOLATED THE ARTICLE 2 OF THE BIT………………..24
PRAYER……………………………………………………………………………………….26
INDEX OF AUTHORITIES
 LIST OF ABBREVIATION

Annex Annexure
UNCLOS
nm
WTO World Trade Agreement
GATT
MFN Most favoured Nation
BIT Bilateral Treaty
i.e.
ICJ International Court of Justice
Hon’ble Honourable
UN United Nations
ULC
& And
Ed edition
ICSID
ARB
v. versus
OUP
¶ paragraph
v
Inc.
FET
USA
UNCTAD
 STATEMENTS OF FACTS

I. Atacama is a developed country and a leader in the technology space. Iram is a

developing country, which has made rapid progress and experienced unprecedented
economic growth over the last two decades. The two states do not share either a land
or a maritime border, and lie on two different continents.
II. In 2010, Messieristan initiated an Annex VII arbitration under the default procedure
under the UNCLOS. Iram did not participate in the arbitration, save for informing the
tribunal that it had no jurisdiction over the claim. Eventually, in November 2012, the
tribunal rejected Iram’s public stance (publicised by way of a policy paper released to
the general public) and carried out a delimitation of the area, confirming that about 80
percent of the Horizon Passage lay outside either state’s territorial control - with each
state having 12 nm of territorial waters immediately adjacent to their coasts. Iram
subsequently denounced the decision terming it as a blatant abuse of non-existent
jurisdiction on the part of the tribunal.
III. Following the UNCLOS Tribunal choice in 2012, the Ministry of Trade and
Commerce, Atacama issued an open note empowering all ships bearing the Atacaman
banner to utilize the full length of the Horizon Passage with the exception of the
separate regional waters as set out by the UNCLOS grant. The detailed policy set out
various assessment and traditions benefits that would accumulate to ships going inside
20 nautical miles of Iram's coastline.
IV. On 28 November 2015 MV Hawking, a commercial ship bearing the Atacaman flag
was seized by Iramian authorities. The personnel onboard the ship, all of whom are
Atacaman nationals, were tried and subsequently sentenced to two years
imprisonment for illegally entering Iramian waters by January 2016.
V. These arrests created national outrage in Atacama with several rallies being held in
protest. The Ministry of Foreign Affairs, Atacama issued the following statement:
VI. “The Government of Atacama condemns this deplorable act of cowardice of the
Iramian authorities, who singled out a harmless commercial vessel to further a
hopeless claim of sovereignty over a large portion of the Horizon Passage. The
Government of Atacama finds it disturbing that Iram would take steps based on
nothing more than a hypothetical and unverifiable twelve-dash line conjured up in the
imagination of cartographers of a bygone era. This claim has been rejected
unanimously by a UNCLOS tribunal.”
VII. Bouman Inc. (along with its various group companies) is a leading conglomerate
specialising in the production and sale of mobile phones and other cellular devices.
Bouman Inc. is incorporated in Messierristan, and has made significant investments in
Iram.
VIII. In June 2016, the Atacaman Ministry of Commerce issued a strategy paper
recognizing the "need to decrease the formation of the toxic waste items emerging out
of gear used to make cell phones". At the time, a large majority of Atacaman
consumer demand was met by Atacaman, Messieri, and Iramian organizations with
assembling units in Iram. By July 2016, the Pickering government required, by means
of a correction to enactment, an extra tax of 35 percent on cell phones brought into
Atacama which were manufactured without sans lead generation process (Import
Tax).
IX. Iram initiated proceedings before the WTO challenging the ban as violating the
GATT. The duly constituted WTO panel found in favour of Iram and recommended
that Atacama bring its policies into compliance with its obligations under the GATT.
X. In August 2017, Iram passed a law declaring that all companies in the manufacturing
sector would now be subject to an export tax at the rate of 10 percent, except for
investors incorporated in Atacama or Messieristan who would be subject to 75 percent
export tax (the Export Tax).
XI. Bouman Inc. (Atacama), the parent company of Bouman Inc. (a wholly owned
subsidiary) subsequently issued a notice of intent to initiate arbitration against Iram
and sought discussions on the issue. Bouman Inc. (Atacama) filed an ICSID
Arbitration against Iram arguing that the Export Tax violated the MFN clause of the
Atacama-Iram Bilateral Investment Treaty, which was dismissed.
XII. On 15 January 2019, Atacama initiated proceedings before the International Court of
Justice, against Iram in relation to the Export Tax and claimed damages suffered by
Bouman Inc. (Atacama) and others as a result of the levy of the export tax under the
Atacama-Iram BIT.
XIII. On 21 March 2019, Iram filed a counter-claim in the same proceeding arguing that the
35 percent Import Tax constituted a violation of the GATT as well as the Atacama-
Iram BIT.
XIV. Iram introduced an 87 percent tax on all proceeds generated by Messieri incorporated
mobile phone companies in Iram (Messieri Tax).
 ISSUES RAISED

I. THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL

CLAIM AND ADDITIONAL CLAIM NOT ON COUNTER CLAIM.

II. THAT ATACAMA CAN CLAIM DAMAGES SUFFERED BY BOUMANINC.(ATACAMA) AND

OTHERS AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMAIRAM

BIT.

III. THAT THE ATACAMA CAN SOUGHT RELIEF WITH RESPECT TO THE MESSIERI TAX

ANNOUNCED BY IRAM UNDER THE ATACAMA-IRAM BIT

 SUMMARY OF ARGUMENTS

THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL CLAIM AND
ADDITIONAL CLAIM NOT ON COUNTER CLAIM.

It is submitted thatunder Article 36 paragraph 2 the court has jurisdiction over the principal
claim and additional claim, under article 92 of the un charter the International Court of
Justice is the principal judicial organ of the United Nations but the counter claim does not
have his jurisdiction because the case is already pending in the appellate body of the WTO
therefore the principal of lis alibi pendens apply. The admissibility of the principal claim and
the additional claim is accepted because the principal claim fulfills all the requisite of an
admissible claim i.e.rationetemporis, ratione personae and rationemateriae. However the
admissibility of the counter claim will be discussed in the merits.

THAT ATACAMA CAN CLAIM DAMAGES SUFFERED BY BOUMANINC.(ATACAMA) AND OTHERS

AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMAIRAM BIT.

It is submitted that the Bouman Inc. (Atacama) has not abused the process by restructuring its
investment.
 ARGUMENTS ADVANCED

1. THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL

CLAIM AND ADDITIONAL CLAIM NOT ON COUNTER CLAIM.

1.1 THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE PRINCIPAL CLAIM.

1.1.1. That the ICJ has jurisdiction over the principal claim.

1. It is submitted in the present case before this Hon’ble International Court of Justice that
the ICJ has jurisdiction over the principal claim.
2. The agent brings the present matter under Article 36 paragraph 2 of the statute of the
ICJ which is agreed by both the parties to this case in the compromise.
3. In the present matter that both the parties has submitted to the jurisdiction by virtue of a
unilateral declaration with accordance to article 36 paragraph 2 of the statute of the ICJ.
4. The Article 36 of the statute of the ICJ states that:-
a. The jurisdiction of the Court comprises all cases which the parties refer to it
and all matters specially provided for in the Charter of the United Nations or
in treaties and conventions in force.
b. The states parties to the present Statute may at any time declare that they
recognize as compulsory ipso facto and without special agreement, in relation
to any other state accepting the same obligation, the jurisdiction of the Court
in all legal disputes concerning:
i. the interpretation of a treaty.
ii. any question of international law.
iii. the existence of any fact which, if established, would constitute a
breach of an international obligation.
iv. the nature or extent of the reparation to be made for the breach of an
international obligation.1
5. The jurisdiction of the present chapter falls under Article 36 paragraph 2 clause b which
concerns with any question of international law.
1
 6. The subject matter here is the export tax, import tax which questions the international
law like provisions of GATT and the BIT. If the unfair imposition of import tax by Iram
is allowed then it would lead to breach of an international obligation of GATT as well
as Atacama-Iram BIT.
7. Furthermore, it is contended that both Atacama and Iram are the parties to the UN
charter
8. It is a well established principle of law that Article 92 and Article 93 paragraph 1 of UN
Charter states that:-
9. “The International Court of Justice shall be the principal judicial organ of the United
Nations.”2
10. “All Members of the United Nations are ipso facto parties to the Statute of the
International Court of Justice.”3
11. The states being the party to this charter are ipso facto parties to the statute of the ICJ
and their principle judicial organ is ICJ.
12. The issue as mentioned in the claims does in no way fall under the ambit of any
exception as mentioned in the respective declaration of both the parties. Thus,
submitting their jurisdiction to the ICJ.

Therefore, The ICJ has jurisdiction over the principal claim.

1.1.2. That the ICJ has admissibility over the principal claim .

13. It is submitted that in the present matter ICJ has admissibility over the principal claim.
14. It is generally accepted that for a claim to be admissible, it has to be
rationetemporis, ratione personae and rationemateriae.4
15. RationeTemporis: The dispute must satisfy the time limits in the treaty as to standing
as well as to the arising of the cause of action.5
16. Ratione Personae:-There should be jurisdiction on the basis of the standing of the
claimant to sue.6
17. RationeMateriae:- It is about whether the claim relates to a subject matter that the
treaty in question regulates.7

2
Article 92
3
Article 93 paragraph 1
4
ULC LAW JOURNAL
5
ibid
6
ibid
7
ibid
 18. In the present chapter, the BIT was signed on 01/08/07 and remains in force for ten
years and if the investment is within 10 years, it shall continue for a period of twenty
years. Here, the restructuring happened as late as 2015 and the claim was file on 15
January 2019 which is clearly during the time period when the treaty was in force.
19. The claimant is Atacama who is a party to the Atacama-Iram BIT.
20. The treaty governs the investment between both the contracting parties, and the claim is
about the investment made by the companies of Atacama who suffered loss as a result
of the levy of the export tax by Iram.

Thus, the principal claims fulfills all the requisite of an admissible claim.

Therefore, the ICJ has admissibility over the principal claim

1.2 THAT THE ICJ DOES NOT HAVE JURISDICTIOM AND/OR ADMISSIBILITY OVER THE

COUNTER CLAIM.

1.2.1 That the ICJ does not have jurisdiction over the counter claim.

21. In the present case the ICJ does not have jurisdiction over the counter claim.
22. The principle of lis alibi pendens refers to pending proceedings. When the same dispute
between the same parties and regarding the same subject matter and the same legal
grounds is brought to another forum. Accordingly, proceedings over the same dispute
cannot be commenced in a second forum if the action is already pending in another
one.8
23. Lis pendens is a 'situation in which parallel proceedings, involving the same parties and
the same cause of action, are continuing in two different states at the same time'.9
24. In Benvenuti & Bonfant v. Congo,10 the arbitration tribunal had to decide whether it had
jurisdiction to hear the case when there were proceedings before a national court in
Brazzavile. The tribunal decided that ‘the Government´s plea of lispendens could only
succeed if there were identity of the parties, the object and the cause of action in the two
sets of proceedings.

8
9
James Fawcett (ed.), 'Declining Jurisdiction in Private International Law', Report to the XlVth Congress of the
International Academy of Comparative Law, Athens, 1994 (Oxford University Press, Oxford, 1995) a
10
S.A.R.L. Benvenuti & Bonfant v. People's Republic of the Congo, ICSID Case No. ARB/77/2.
 25. There are three requirements for finding lispendens (the so-called triple identity test):
 the same parties (partes),
 the same legal grounds (causaepetendi),
 the same subject-matter (petitum).11
26. In the present case Atacama appealed the decision to the Appellate Body of the WTO
and the appeal remains in abeyance.12 The parties before and after are same and in the
same position as applicant and respondent, the legal grounds in both the cases are
violation of GATT, the subject matter was and still is 35 percent import tax by
Atacama. Thus, qualifying the triple identity test and falling under the ambit of Lis
Pendens.

Therefore, the ICJ does not have jurisdiction over the counter claim.

1.2.2 That the icj do not have admissibility over the counter claim .

27. In the present case ICJ do not have admissibility over the counter claim.
28. Under amended “Article 80 of rules of court of ICJ”:-

1. The Court may entertain a counter-claim only if it comes within the jurisdiction of the
Court and is directly connected with the subject-matter of the claim of the other party.

2. A counter-claim shall be made in the Counter-Memorial and shall appear as part of the
submissions contained therein. The right of the other party to present its views in writing on
the counter-claim, in an additional pleading, shall be preserved, irrespective of any decision
of the Court, in accordance with Article 45, paragraph 2, of these Rules, concerning the filing
of further written pleadings.

3. Where an objection is raised concerning the application of paragraph 1 or whenever the

Court deems necessary, the Court shall take its decision thereon after hearing the parties.

29. The direct connection of law appeared in that both parties sought the same legal aim.13
30. In the present chapter the counter-claim filed by the Iram is not counter of the principal
claim, as the principal deals with the levy of 97 percent export tax under the Atacama-
Iram BIT whereas the counter claim argues on 35 percent Import Tax constituting of
the violation of the GATT as well as the Atacama-Iram BIT.

11
MCLACHALAN, Campbell, Lis Pendens in International Litigation 283.
12
moot
13
 31. In the Oil Platforms (Iran v. USA) case, the Court held that it was open to the parties to
challenge the admissibility of counter-claims in general at the merits stage of the
proceedings.14

1.2.2.1. That the 35 percent Import tax is not a violation of the GATT.

32. It is submitted that the Import tax by Atacama is not a violation of the GATT.
33. Article XX of the GATT states, “Subject to the requirement that such measures are not
applied in a manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail, or a disguised
restriction on international trade, nothing in this Agreement shall be construed to
prevent the adoption or enforcement by any contracting party of measures:necessary to
protect human, animal or plant life or health.”15
34. In the present matter Atacama has levied an additional tariff of 35 percent on mobile
phones which were manufactured without lead-free production process, the
discrimination was not unfair because it was done in necessity to protect the human,
animal or plant life or health.

Thus, the Import tax by Atacama is not a violation of the GATT.

1.2.2.2. The Import tax was not a violation of Atacama-Iram BIT.

35. In the present case the Import Tax is not a violation of Atacama-Iram BIT.
36. In Parkerings v. iLithuania, the tribunal established that, to constitute a violation of
international law, discrimination had to be unreasonable or lacking proportionality, and
that an objective reason may justify differentiated treatment in similar cases.16
37. The tribunal held that a comparison was necessary with an investor in like
circumstances.17
38. In the present chapter Atacama has done reasonable discrimination and it does not
violate the most favoured nation clause of the BIT as for the violation of MFN under
BIT should be in like circumstances, but here the circumstances are different as the
discrimination is between lead producing manufactures and non producers.

14
Oil Platforms (Islamic Republic of Iran v. United States of America), Judgement, 2003
15
16
Parkerings- Compagniet AS v. Republic of Lithuania, ICSID Case No. ARB/05/8
17
Ibid.
 39. Thus, Import Tax is not a violation of Atacama-Iram BIT.

Therefore, the ICJ does not have jurisdictiom and/or admissibility over the counter claim.

1.3 THAT THE ICJ HAS JURISDICTION AND/OR ADMISSIBILITY OVER THE ADDITIONAL CLAIM.

40. It is submitted that the ICJ has jurisdiction and/or admissibility over the additional
claim.
41. The present matters falls under the jurisdiction under Article 36 paragraph 2 (b) of the
ICJ of the statue that says the states parties to the present Statute in relation to any other
state accepts, the jurisdiction of the Court in all legal disputes concerning: any question
of international law.18
42. In the present case Atacama has submitted an unilateral decision declaring ipso facto
jurisdiction to the ICJ, and the additional claim is submitted by the Atacama on the 87
percent tax imposed Messieri incorporated mobile phone companies in Iram which is a
violation of Atacama-Iram BIT.
43. Although the tax is on Messieri incorporated mobile companies but in Atacama there is
a parent company of the wholly owned subsidiary of a company in Messieristan.
44. The shareholder may then pursue claims for adverse action by the host State against the
local company that affects its value and profitability.19
45. In the case of shareholders, the participation in the locally incorporated company
becomes the investment, and even if the local company is unable or unwilling to pursue
the claim internationally, the foreign shareholder in the local company may pursue the
claim in his own name.20
46. In the present chapter the Atacama is the parent company and the 100 percent
shareholder of the subsidiary company, so it can go in behalf of the company as its own
interest is violated.
47. The MFN clause is meant to operate in all areas, including jurisdictional matters.21

18
2, DOLZER SCHREURER, PRINCIPAL OF INTERNATIONAL INVESTMENT LAW, , (OUP OXFORD, 2012)
19
Schreurer, C, Shareholder Protection in International Investment Law, in Transnational Dispute Management
Volume 2 - Issue No. 03, p. 6
20
Schreurer, C, op. cit, p. 6.
21
National grid v Agentina, Decision on Jurisdiction,¶85 (20 June 2006)
Thus, the ICJ has jurisdiction and/or admissibility over the additional claim.

Therefore, the ICJ has jurisdiction and/or admissibility over the principal claim and
additional claim not on counter claim.
 2. THAT ATACAMA CAN CLAIM DAMAGES SUFFERED BY BOUMAN INC.(ATACAMA) AND
OTHERS AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMA-IRAM

BIT.

It is submitted that Atacama can claim damages suffered by Bouman Inc. (Atacama) and
others as a result of the levy of the export tax under the Atacama Iram BIT.

2.1 THAT THE BOUMAN INC. (ATACAMA) HAS NOT ABUSED THE PROCESS BY

RESTRUCTURING ITS INVESTMENT.

48. It is submitted that the Bouman Inc. (Atacama) has not abused the process by
restructuring its investment.
49. It is generally accepted that the principle of abuse of rights is a general principle of law,
applicable to international courts and tribunals.22The principle concerns not whether a
certain right exists, but rather how the right should be used. In other words, it applies
only where a certain right does exist. If there is no right, there is no abuse of rights.
Moreover, the principle demands that rights not be used in an ‘abusive’ way, although
what constitutes an ‘abusive’ use of rights is not explicitly articulated in any of the
international law instruments.
50. It has been recognized that “an organization or reorganization of a corporate structure
designed to obtain investment treaty benefits is not illegitimate per se, including where
this is done with a view to shielding the investment from possible future disputes with
the host state.”23
51. “Investors” are the legal persons who are nationals of the Contracting Party that is not
the host State, owning or controlling the investment.24
52. Whereas a local investor cannot invoke investment treaty protections under bilateral and
multilateral investment treaties, a foreign investor may be able to do so.
53. In the present matter Bouman Inc. (Atacama), the parent company of Bouman Inc. is
not a local invester but a foreign invester, who has a nationality of Atacama not Iram.

22
Yearbook of the International Law Commission 1960, vol 2, A/CN.4/ SER.A/1960/ADD.
23
Levy and Gremcitel v. Republic of Peru, ICSID Case No. ARB/11/17
24
UNCTAD Series on International Investment Agreement
 54. It is further contended in particular in the above case, restructuring was carried out on
the eve of arbitration, at a time when the claimants could very well foresee the
impending dispute with the Government of Peru.25
55. However, In the present chapter the restructure was carried out as late as 2015 whereas
in August 2017 the Iram Daily, a state-run newspaper, quoted the Under Secretary of
Commerce, Iram as saying that, “Atacama….will not go unanswered.”26which clearly
indicates that there was no correlation between the restructuring and the tax imposition
by Iram as there was a huge time lap when both of these things happened.
56. The tribunal note that the timing of the investment was the first factor to be considered.
The foreign investor had invested in local companies after the government had already
taken alleged adverse actions against these companies.27
57. Whether a corporate restructuring amounts to abuse of process depends on the specific
circumstances of the case. In that regard, arbitration tribunals have considered the
timing of the restructuring to be a critical factor. The closer in time the restructuring is
to the actions that give rise to the investment dispute, the greater the likelihood that the
tribunal will scrutinize the investor’s bone fides. If a restructuring is carried out at a
time when a dispute with the state is imminent in order to enable the investor to invoke
an investment treaty’s protections and obtain ICSID jurisdiction, the tribunal is likely to
find an abuse of process.
58. In Pac Rim Cayman v. Republic of El Salvador,28 explained that a key determining
factor is whether an investor “can see an actual dispute or can foresee a specific future
dispute as a very high probability and not merely as a possible controversy.”
59. Thus, corporate restructurings before this time is reached should ordinarily not be
considered an abuse of process, but thereafter investors proceed at their peril.
60. In the present matter there was a huge time lap when the state run newspaper published
it and the restructuring happened, the restructure was carried out as late as 2015 and the
newspaper published it in August 2017, a time lapse of almost more than a year which
clearly indicates that the company could not foresee any specific future dispute as a
very high probability.

25
Ibid.
26
Moot compromise
27
Phoenix Action v. The Czech Republic
28
Pac Rim Cayman v. Republic of El Salvador
 61. In those cases where judgements were against the invester the time lapse was very less,
as in the case of Levy and Gremcitel v. Republic of Peru the transfer of the shares to
Levy occurred on Oct. 9, 2007, only one day before Resolution 1342 was issued, and
nine days before it was published but in the present case it was more than a year.
Therefore, the Bouman Inc. (Atacama) has not abused the process by restructuring its
investment.

2.2 THAT THE BOUMAN INC. (ATACAMA) AND OTHERS CAN CLAIM DAMAGES SUFFERED BY
THEM AS A RESULT OF THE LEVY OF THE EXPORT TAX UNDER THE ATACAMA-IRAM BIT.

In the present chapter the Bouman Inc. (Atacama) and others can claim damages suffered by
them as a result of the levy of the export tax under the Atacama-Iram BIT.

2.2.1 That the Iram has not accorded fair and equitable treatment to Bouman Inc. and
others.

62. In the present chapter Iram has not accorded fair and equitable treatment to the
companies.
63. Again In MTD v Chile, the tribunal said, “fair and equitable treatment should be
understood to be treatment in an even handed and just manner, conducive to fostering
the promotion of foreign investment. Its terms are framed as a pro-active statement-‘to
promote’, ‘to create’, ‘to stimulate’- rather than prescriptions for a passive behavior of
the state or avoidance of prejudicial conduct to the investors.”29
64. It is generally accepted that under the BIT, the fair and equitable standard of treatment
has to be interpreted in the manner most conducive to fulfill the objective of the BIT to
protect investments and create conditions favorable to investments.30
65. In Genin v Estonia,31 the tribunal stated that acts violating the fair and equitable
standard would include acts showing a willful neglect of duty, an insufficiency of action
falling far below international standards, or even subjective bad faith.
66. In Saluka v Czech Republic,32 the tribunal found that there was a violation of FET and
described the requirements of the FET standard in the following terms:
67. “A foreign investor whose interests are protected under the treaty is entitled to expect
that the host state will not act in a way that is manifestly inconsistent, non-transparent,

29
Ibid or supra
30
31
Genin v Estonia,award 25 june 2001,17 icsid review –filj (20002) 395
32
Case name and partial award, 17 march 2006
 unreasonable (i.e. unrelated to some rational policy), or discriminatory (i.e. based on
unjustifiable distinctions).”
68. Discrimination against foreigners has been regarded as an important indicator of failure
to grant fair and equitable treatment.33
69. Article 2 of the Atacama-Iram BIT states about the Promotion and Protection of
Investment that they should create favourable conditions for the companies, should be
accorded fair and equitable treatment etc.34
70. In the present Iram after passing a law declaring that all companies in the manufacturing
sector would now be subject to an export tax at the rate of 10 percent, except for
investors incorporated in Atacama or Messieristan who would be subject to 75 percent
export tax (the Export Tax) clearly shows its passive behavior, does not encourage,
protect or create favorable conditions but act in a way that is manifestly inconsistent,
non-transparent, unreasonable (i.e. unrelated to some rational policy), or discriminatory
(i.e. based on unjustifiable distinctions).
71. There are certain specific principles which specifies the fair and equitable treatment.
1. Legitimate expectations
2. Compliance with Contractual obligations

LEGITIMATE EXPECTATIONS

72. The investor’s legitimate expectations are based on the legal framework or any
undertakings and representations made explicitly or implicitly by the host state.35 A
reversal of assurances by the host state that have led to legitimate expectations will
violate the principle of fair and equitable treatment.36( pg 134 para 2)
73. There are statements that the standard requires stable conditions to be maintained so
that the foreign investor could obtain profits through the life of the investment.37
74. In the present chapter under Article 2 of the Atacama-Iram BIT the host state agrees that
it would create favorable conditions, nor is going to impair any unreasonable or
discriminatory measures but after imposing 75 percent export tax violates the
companies’ legitimate expectations.

33
Lowen v usa,award,26 june 2003,42ILM (2003) 811
34
moot
35
36
37
Occidental v. Ecuador, London Court of International Arbitration (Award, 1 July 2004), para. 183
COMPLIANCE WITH CONTRACTUAL OBLIGATIONS

75. The protection of investor’s legitimate expectations are actually based on contractual
arrangements with the host state. The violation of obligations under a contract may give
rise to claim a violation of FET standard.38
76. It is said that the success of the claimant’s reliance on the FET standard would depend
on whether impugned activity by the host state would involve puissance publique, ie
activity beyond that of an ordinary contracting party. 39
77. In this matter the host state has violated the Article 2 and Article 3 of the contracts by
subjecting to the tax of 75 percent only to the investors incorporated in Atacama and
Iram.

Thus, Iram has not accorded fair and equitable treatment to Bouman Inc. and others.

2.2.2 That the Iram has violated the Article 3 of the BIT.

78. In the instant matter Iram didn’t follow the Most-favoured-nation Provisions thus
violating the Article 3 of the Atacama Iram BIT.
79. Article 3 ( Most-favoured-nation Provisions) states that :-

(1) Neither Contracting Party shall in its territory subject investments or returns of nationals
or companies of the other Contracting Party to treatment less favorable than that which it
accords to nationals or companies of any third State.

(2) Neither Contracting Party shall in its territory subject nationals or companies of the other
Contracting Party, as regards their management, maintenance, use, enjoyment or disposal of
their investments, to treatment less favorable than that which it accords to nationals or
companies of any third State.40

80. The simple goal of MFN clauses in treaties is to ensure that the relevant parties treat
each other in a manner at least as favorable as they treat third parties.
81. In MTD v Chile,41 the most-favoured-nation clause was combined with the obligation to
accord fair and equitable treatment in the same provision of the applicable BIT between
Chile and Malaysia i.e. “ Investments made by investors of either Contracting Party in

38
Sgs v Philippines,29 jan 2004,8 icsid reports 518
39
Impreligo v pakistan
40
moot
41
MTD v Chile, Award,25 may 2004
 the territory of the other Contracting Party shall receive treatment which is fair and
equitable, and not less favorable than that accorded to investments made by investors of
any third state.”
82. In this case one of the contracting party (Iram) has treated the another contracting party
(Atacama) less favourably by subjecting an export tax of 75 percent to their and
Messieristan companies, whereas others were subjected to pay an export tax of mere 10
percent.

Therefore, Iram has violated the article 3 of the Atacama Iram BIT.

Therefore, Bouman Inc. (Atacama) and others can claim damages suffered by them as a result
of the levy of the export tax under the Atacama-IramBIT.
 3. THAT THE ATACAMA CAN SOUGHT RELIEF WITH RESPECT TO THE MESSIERI TAX

ANNOUNCED BY IRAM UNDER THE ATACAMA-IRAM BIT.

It is submitted that Atacama can sought relief with respect to the Messieri tax.

3.1.THAT THE BOUMAN INC. (ATACAMA) CAN CLAIM FOR THE ADVERSE ACTION BY

IRAM.

83. It is submitted that Bouman Inc. (Atacama) can claim for the adverse action by Iram.
84. Article 1 of the BIT read as “investment” means every kind of asset and in particular,
though not exclusively, includes shares in and stock and debentures of a company and
any other form or participation in a company.
85. “Investors” are the legal persons who are nationals of the Contracting Party that is not
the host State, owning or controlling the investment.42
86. It is generally accepted that "shareholding in a company is a form of investment that
enjoys protection. Even if the affected company does not fulfil the nationality
requirements under the relevant treaty, there will be a remedy if the shareholder
does"43 . Thus, damage inflicted on such company, which indirectly concerns the
investor, entitles the investor to seek treaty protection.
87. "The shareholder may then pursue claims for adverse action by the host State against
the local company that affects its value and profitability".44
88. In the case of shareholders, "the participation in the locally incorporated company
becomes the investment", and even "if the local company is unable or unwilling to
pursue the claim internationally, the foreign shareholder in the local company may
pursue the claim in his own name”.45
89. It is generally accepted that adverse action by the host state in violation of the treaty
guarantees affecting the company’s economic position gives rise to rights by the
shareholders.46
90. In this chapter, Iram introduced an 87 percent tax on all proceeds generated by Messieri
incorporated mobile phones companies in Iram, being the parent company of the
Bouman Inc. or the 100 percent shareholder has suffered significant loss.

42
UNCTAD Series on International Investment Agreement
43
The Law and Practice of International Courts and Tribunals 2005
44
Schreurer, C, Shareholder Protection in International Investment Law, in Transnational Dispute Management
Volume 2 - Issue No. 03, p. 6
45
Schreurer, C, op. cit, p. 6.
46
Continental casualty v argentina, decision on juris, 22 feb 2006
Therefore, In the present case the Bouman Inc. (Atacama), the parent company of the
Bouman Inc. (a wholly owned subsidiary) can claims for the adverse action by the host State.

3.2. THAT THE BOUMAN INC. HAVE SUFFERED LOSS BECAUSE OF THE VIOLATION OF THE
ATACAMA-IRAM TREATY BY IRAM.

In the present context Iram violated Article 2, 5 and should compensate under Article 4 of the
BIT.

3.2.1. That the Iram has violated Article 3 of the BIT.

91. It is submitted that Iram has violated the Most favoured nation clause of the BIT.
92. It is generally accepted that a most-favoured-nation clause is a treaty provision whereby
a State undertakes an obligation towards another State to accord most-favoured-nation
treatment in an agreed sphere of relations.47
93. Most-favoured-nation treatment is treatment accorded by the granting State to the
beneficiary State, or to persons or things in a determined relationship with that State,
not less favourable than treatment extended by the granting State to a third State or to
persons or things in the same relationship with that third State.48
94. Under a most-favoured-nation clause the beneficiary State acquires the right to most-
favoured-nation treatment only if the granting State extends to a third State treatment
within the limits of the subject matter of the clause.49
95. In Parkerings v. Lithuania, the tribunal established that, to constitute a violation of
international law, discrimination had to be unreasonable or lacking proportionality, and
that an objective reason may justify differentiated treatment in similar cases.50
96.
97. In application of the principle of expressiounius est exclusioalterius, which could
translate as “the express mention of one thing is to exclude all others,” “the purpose of
the MFN clause is to eliminate the effect of specially negotiated provisions unless they
have been excepted.”51

47
Article 4
48
Article 5 of the draft article on MFN
49
Article 10
50
51
Ambiatelos Claim (Greece v. United Kingdom), 2 March 1956 (1956 International Law Reports 306).
 98. MFN did not apply to the resolution of disputes, “unless of course the MFN clause in
the basic treaty clearly and unambiguously indicates that it should be so interpreted.”52
99. The MFN clause may only apply to issues belonging to the same subject matter or the
same category of subjects to which the clause relates.53
100. It is well settled principle of law that “in like circumstances” cannot be interpreted in
the narrow sense advanced by Ecuador as the purpose of national treatment is to protect
investors as compared to local producers, and this cannot be done by addressing
exclusively the sector in which that particular activity is undertaken.54
101. The MFN treatment clause requires that the host State does not discriminate – de jure or
de facto1– on the basis of nationality.55
102. In the present chapter the most-favoured-nation clause is mentioned in the Article 3 of
the BIT. Iram introduced an 87 percent tax to mobile companies incorpated in Messieri
in Iram, however the Bouman Inc. a wholly owned subsidiary of Bouman Inc.
(Atacama) suffered significant loss and under Atacama Iram BIT Iram is supposed to
treat the companies of Atacama not less favourably than any third state. The subject
matter here is investment which falls within the ambit of the BIT. Here, clearly Iram has
discriminated on the basis of nationality by introducing the un expectable high tax on
one nation which is unreasonable.
Therefore, Iram has violated the Most favoured nation clause of the BIT.

3.2.2. That the Iram has violated the Article 2 of the BIT.

103. It is submitted that Iram has violated Article 2 of the BIT.

104. Article 2 of the BIT says that the each contracting party shall create favourable
conditions, accord fair and equitable treatment, nor in any way impair discriminatory
measures.56
105. In MTD v Chile, the tribunal said, “fair and equitable treatment.…..the promotion of
foreign investment. Its terms are framed as a pro-active statement-‘to promote’, ‘to

52
Daimler v. Argentina
53
BayindirInsaatTurizmTicaretVe Sanayi AS v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision
on Jurisdiction, 14 November 2005, paras. 227–235.
54
Occidental Exploration and Production Company v. Republic of Ecuador, LCIA case No. UN3467, award of
July 1, 2004, para. 173
55
Unctad article
56
 create’, ‘to stimulate’- rather than …………avoidance of prejudicial conduct to the
investors.”57
106. One of the principles of FET which is legitimate expectations is violated in the present
scenario.
107. The investor’s legitimate expectations are based on the legal framework or any
undertakings and representations made explicitly or implicitly by the host state.58
108. In the present case Iram has introduced an 87 percent tax only to Messieri i incorporated
mobile companies, which is affecting one of the companies of Atacama, which clearly
go against the promotion and protection of investments mentioned in Article 2 of the
BIT. Mentioning about the fair and equitable treatment is representation by the host
state.

Thus, Iram has violated Article 2 of the BIT.

Therefore, Atacama can sought relief with respect to the Messieri tax announced by Iram
under the Atacama-Iram BIT.

57
Ibid or supra
58
PRAYER