In the matter of an arbitration under the UNCITRAL Arbitration Rules
between
OOO MANOLIUM-PROCESSING
Claimant
v.
THE REPUBLIC OF BELARUS
Respondent
ARBITRAL TRIBUNAL
Juan Fernández-Armesto (Presiding Arbitrator)
Stanimir A. Alexandrov
Brigitte Stern
ADMINISTRATIVE SECRETARY
Krystle M. Baptista Serna
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1. CLAIMANT
1. The Claimant is OOO MANOLIUM-PROCESSING [“Claimant” or “MP”], a Russian company with registered address at 11 Stanislavskogo Street, Ground floor, room VII, Moscow 109004, Russia and the following person of contact:
Aram Ekavyan (director)
2. Claimant is represented by:
| Grant Hanessian BAKER & MCKENZIE LLP 452 Fifth Avenue New York, NY 10018 United States |
[email protected] |
| Vladimir Khvalei Sergei Voitishkin Alexandra Shmarko BAKER & MCKENZIE CIS LTD. White Gardens 9 Lesnaya Street Moscow 125047 Russia |
[email protected] [email protected] [email protected] |
2. RESPONDENT
3. The Respondent is the REPUBLIC OF BELARUS [“Respondent” or “Belarus”].
4. Respondent is represented by:
| David Goldberg Julia Ogievetsky WHITE & CASE LLP 5 Old Broad Street London EC2N 1DW United Kingdom |
[email protected] [email protected] |
| Julia Zagonek Oleg Volodin William Grazebrook WHITE & CASE LLC 4 Romanov Pereulok Moscow 125009 Russia |
[email protected] [email protected] [email protected] |
5. Claimant and Respondent will collectively be referred to as the “Parties”.
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1. CONSTITUTION OF THE ARBITRAL TRIBUNAL
6. On November 15, 2017 Claimant appointed as arbitrator1:
Stanimir A. Alexandrov
1501 K Street, N.W.
Suite C-072
Washington D.C. 20005
United States of America
Tel.: +1 202 736 8186
Email: [email protected]
7. On December 15, 2017 Respondent appointed as arbitrator2:
Brigitte Stern
7, rue Pierre Nicole
Code A1672
Paris 75005
France
Tel.: +33 1 40 46 93 79
Email: [email protected]
8. On January 17, 2018 Mr. Alexandrov and Prof. Stern designated as Presiding Arbitrator:
Juan Fernández-Armesto
ARMESTO & ASOCIADOS
General Pardiñas, 102, 8º izda.
28006 Madrid
Spain
Tel.: +34 91 562 16 25
Email: [email protected]
9. By letter of February 1, 2018, Mr. Armesto accepted his appointment as Presiding Arbitrator.
10. Each arbitrator has provided a Statement of Independence and Availability.
11. The Parties confirm that they have no objection to the appointment of the arbitrators in respect of matters known to them, or that they should have known, at the date of signature of these Terms of Appointment.
12. All notifications arising in the course of the arbitration addressed to the Tribunal shall be made to the abovementioned addresses.
1 Notice of Arbitration, para. 568. ↩
2 Reply to Notice of Arbitration, p. 16. ↩
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2. ADMINISTRATIVE SERVICES
A. Registrar and Depositary
13. The Permanent Court of Arbitration [“PCA”] shall provide the following administrative services in support of the Parties and the Tribunal:
14. Registrar: the PCA shall maintain an archive of filings and correspondence. Upon request, the PCA shall carry out administrative tasks on behalf of the Tribunal, the primary purpose of which would be to reduce the costs that would otherwise be incurred by the Tribunal carrying out purely administrative tasks. Work carried out by the PCA shall be billed in accordance with the PCA’s schedule of fees. PCA fees and expenses shall be paid in the same manner as the Tribunal’s fees and expenses3.
15. Depositary of funds: the PCA shall manage the amounts deposited by the Parties to cover the Tribunal’s fees, expenses and any applicable VAT, at no charge4.
16. At the Tribunal’s request, the PCA shall invite the Parties to make an initial deposit pursuant to Article 43 UNCITRAL Arbitration Rules [“UNCITRAL Rules”]. The PCA will review the adequacy of the deposit regularly and, at the request of the Tribunal, may invite the Parties to make supplementary deposits in accordance with Article 43 UNCITRAL Rules. The unused balance held on deposit upon the termination of the arbitration shall be returned to the Parties as directed by the Tribunal.
17. In accordance with the PCA’s standard policies, any transfer fees or other bank charges incurred will be charged by the PCA to the deposit. No interest will be paid on the deposit.
18. The deposits shall be made by electronic transfer to the following (EURO case) account:
| Bank: | ABN Amro Bank N.V. Gustav Mahlerlaan 10 1082 PP Amsterdam The Netherlands |
| Bank Identifier Code (BIC) | ABNANL2A |
| IBAN: | NL56 ABNA 0480 4373 51 |
| Name of beneficiary: | Permanent Court of Arbitration |
| Reference: | 2018-06/[Manolium-Processing/Belarus] |
19. Additionally, the PCA will make its hearing and meeting rooms in the Peace Palace at The Hague or elsewhere available to the Parties and the Tribunal at no charge (costs relating to catering, court reporting, or other support associated with hearings or meetings at the Peace Palace or elsewhere shall be covered with the funds deposited by the Parties).
3 Joint communication of the Parties submitted on February 21, 2018, para. 3(c). ↩
4 Joint communication of the Parties submitted on February 21, 2018, para. 3(d). ↩
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20. The contact details of the PCA are as follows:
Permanent Court of Arbitration
Attn:
Ms. Evgeniya Goriatcheva
Ms. Erin Vaccaro (Case Manager)
Peace Palace
Carnegieplein 2
2517 KJ The Hague
The Netherlands
Tel.: +31 70 3024175
Fax: +31 70 3024167
Email: [email protected]
[email protected]
21. The PCA and its officials are bound by the same confidentiality duties applicable to the Parties and the Tribunal in this arbitration.
B. Administrative Secretary
22. With the consent of the Parties and his co-arbitrators, the President appoints the following Administrative Secretary (the “Secretary”):
Krystle M. Baptista
ARMESTO & ASOCIADOS
General Pardiñas, 102
28006 Madrid
Spain
Tel.: +34 91 562 16 25
Fax: +34 91 515 91 45
Email: [email protected]
23. The Secretary works for Armesto & Asociados, the same firm of arbitrators to which the President belongs. Armesto & Asociados’ professional activity is limited to acting as arbitrators. The Parties received the Secretary’s curriculum vitae and declaration of independence and impartiality on March 14, 2018.
24. The Members of the Tribunal will personally make all decisions required to adjudicate the merits of the present dispute and all procedural issues. To personally fulfill its decision-making functions, the President may draw on the help of the Secretary. The Secretary’s tasks will be performed upon the President’s specific instructions, under its direct supervision and responsibility, and will not release the Tribunal of any of its decision-making duties.
25. When instructed by the President, the Secretary may perform the following tasks:
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26. The Secretary shall be bound by the same duties of confidentiality, independence and impartiality as the members of the Tribunal.
27. The President may remove the Secretary at its discretion. The President will remove the Secretary if she ceases to work for Armesto & Asociados. The President may, subject to the Parties’ agreement, appoint a substitute, by submitting to the Parties the substitute’s curriculum vitae and declaration of independence and impartiality.
28. The Parties agree that their main submissions and all other notifications and communications between them or among the Tribunal and the Parties shall be transmitted by electronic mail to the email addresses indicated in Sections I and II supra.
29. The Parties agree that the periods of time agreed by them or fixed by the Tribunal shall start to run on the day following the date on which a notification or communication is made in accordance with this section and that, if the first or last day of the relevant period of time granted is an official holiday or a non-business day in the Republic of Belarus, the Russian Federation, the United Kingdom or the country where the notification or communication is deemed to have been made, the period of time shall begin to run at the beginning of the first following business day or expire at the end of the first following business day. For the purpose of these proceedings, Saturdays and Sundays should be considered non-business days.
30. Any Party shall immediately notify in writing the other Party and the members of the Tribunal of any change in its address. Failing such notification and confirmation of receipt by the Presiding Arbitrator of the Tribunal, all communications sent to the above addresses shall be deemed valid.
31. The Claimant instituted this arbitration in accordance with Articles 84 and 85(3) of Annex 16 to the Treaty on the Eurasian Economic Union dated May 29, 2014 [the “EEU Treaty”], which read as follows:
“84. All disputes between a recipient state and an investor of another Member State arising from or in connection with an investment of that investor on the territory of the recipient state, including disputes regarding the size, terms or order of payment of the amounts received as compensation of damages pursuant to paragraph 77 of this Protocol and the compensation provided for in paragraphs 79-81 of this Protocol, or the order of payment and transfer of funds provided for in paragraph 8 of this Protocol, shall be, where possible, resolved through negotiations.
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85. If a dispute may not be resolved through negotiations within 6 months from the date of a written notification of any of the parties to the dispute on negotiations, it may be referred to the following, at investor’s option:
1) a court of the recipient state duly competent to consider relevant disputes;
2) international commercial arbitration court at the Chamber of Commerce of any state as may be agreed by the parties to the dispute;
3) ad hoc arbitration court, which, unless the parties to the dispute agree otherwise, shall be established and act in accordance with the Rules of Arbitration of the United Nations Commission on International Trade Law (UNCITRAL);
4) the International Centre for Settlement of Investment Disputes established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of March 18, 1965, in order to resolve the dispute under the provisions of the Convention (provided that it has entered into force for both Member States that are parties to the dispute) or under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes (if the Convention has not entered into force for one or both the Member States that are parties to the dispute)”.
32. The purpose of the following summaries is to set out the general scope of the proceedings for the Arbitral Tribunal, without prejudice to any other or further allegations, arguments or contentions contained in the pleadings or submissions already filed, and in such submissions as will be made in the course of this arbitration.
33. No statement or omission in these summaries is to be interpreted as a waiver by the Parties of any issue of fact or law.
1. CLAIMANT’S CLAIMS AND RELIEF SOUGHT
1.1 CLAIMANT’S SUMMARY OF FACTUAL CIRCUMSTANCES
34. The dispute between the Claimant and Belarus arose from a sequence of international law breaches and violations of national legislation by Belarus in relation to the Claimant and its Investments.
35. In 2003, the Claimant on the one side and Belarus through the Minsk City Executive Committee and Communal Unitary Enterprise “Minsktrans” [the “Minsktrans”] on the other side concluded an Investment Contract for construction of an Investment Object (office and residential premises) in the lucrative part in the center of Minsk5.
5 CS-I. Notice of Arbitration, paras. 61 – 67. ↩
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36. Under the terms of the Investment Contract, the Claimant was obliged to construct various municipal facilities in order to obtain a right to develop an “Investment Object”6.
37. For the purposes of performing the Investment Contract, the Claimant incorporated in Belarus “Manolium-Engineering” Company [the “Manolium-Engineering”]7.
38. While Belarus undertook to assist the Claimant with implementing the Investment Contract, it not only failed to render any assistance, but, vice versa, created numerous obstacles to the Claimant in its performance of the Investment Contract.
39. In particular, during the period 2003–2013, Belarus failed to provide land plots for the construction of municipal facilities in a timely manner. This also resulted in delay in getting the necessary construction permits and approvals. Moreover, Belarus continuously extended the scope of the Claimant’s obligations under the Investment Contract8.
40. As a result, the Claimant was in technical delay to build the municipal facilities provided by the Investment Contract9. Belarus, relying on this technical delay, did not extend the temporal Claimant’s right to use land for construction purpose, as a result the construction permit was also not extended.
41. At that time, the Claimant managed to build 95% of the new transport facility and intended to transfer it to state ownership. However, Belarus refused to assume ownership of these facilities10.
42. Simultaneously, Belarus initiated proceedings in local state courts for termination of the Investment Contract, relying on alleged delays and other breaches committed by the Claimant11.
43. In September 2014, the state courts granted Belarus’ claim to terminate the Investment Contract. The proceedings in the trial court were conducted with numerous procedural violations, but the higher courts and the Supreme Court of Belarus upheld the decision in 201512.
44. As a result of the sequence of actions described above, the Claimant has been totally deprived of its right to construct an Investment Object and has lost any opportunity to obtain profit from its Investments13.
6 CS-I. Notice of Arbitration, paras. 76 – 83. ↩
7 CS-I. Notice of Arbitration, paras. 14 – 18. ↩
8 CS-I. Notice of Arbitration, paras. 115 – 122. ↩
9 CS-I. Notice of Arbitration, paras. 419 – 503. ↩
10 CS-I. Notice of Arbitration, paras. 204 – 206, 211-212, 257, 461, 520 – 522. ↩
11 CS-I. Notice of Arbitration, paras. 255 – 256. ↩
12 CS-I. Notice of Arbitration, paras. 256 – 266; 266 – 268; 269 – 270. ↩
13 CS-I. Notice of Arbitration, paras. 419 – 503. ↩
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45. Although the municipal facilities constructed by the Claimant were not formally transferred to the state ownership, Belarus used these facilities without any payments14.
46. In addition, in 2016, shortly after the termination of the Investment Contract, Belarus initiated extensive tax audits of Manolium-Engineering for alleged non-payment of land tax for the land where the municipal facilities were constructed15. Thus, from one side Belarus did not extend a right to use land plot for construction purposes, referring to a technical delay in construction, and refused to accept built facilities (although in fact using them without payment), and from the other side it imposed on Manolium-Engineering taxes penalties for alleged use of the same land plot.
47. In December 2016, the municipal facilities were transferred to the municipal ownership in accordance with a secret Decree of the President of Belarus as a penalty for non-payment of taxes16. Thus, Belarus received the municipal facilities and paid nothing for them.
48. In 2017, as a result of imposed fines and penalties, Manolium-Engineering went into bankruptcy17.
49. In September 2017, Belarus sold the land plot intended for construction of the Investment Object to another investor18.
1.2 CLAIMANT'S POSITION ON JURISDICTION
50. With regard to the jurisdictional objections raised by the Respondent, the MP’s position is as follows.
51. First, the Arbitral Tribunal has temporal jurisdiction to decide the dispute between the Claimant and Belarus:
14 CS-I. Notice of Arbitration, paras. 168, 199 –200, 464. ↩
15 CS-I. Notice of Arbitration, paras. 296 – 320. ↩
16 CS-I. Notice of Arbitration, paras. 407 – 409. ↩
17 CS-I. Notice of Arbitration, para. 316. ↩
18 CS-I. Notice of Arbitration, paras. 293 – 295. ↩
19 Exhibit CL-3. Annex 16 to the EEU Treaty, clause 65. ↩
20 Exhibit CL-3. Annex 16 to the EEU Treaty, clauses 84 – 87. ↩
21 RS-I. Response to the Notice of Arbitration, paras. 27 – 31. ↩
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Contrary to the Respondent’s position, it is established in international law that that the principle of non-retroactivity is not violated if any dispute is referred to the arbitration proceedings after the treaty entered into force irrespective of the time when the violation of international law occurred22.
52. Second, the present case should be resolved by the Arbitral Tribunal under the EEU Treaty, not by the courts of Belarus under the Investment Contract:
53. Third, the actions of Minsktrans should be attributable to Belarus because Minsktrans exercised elements of governmental authority in its relations with the Claimant.
54. For these reasons, the present Tribunal has jurisdiction to decide the present case.
1.3 CLAIMANT'S POSITION ON MERITS
55. By committing the actions described above, Belarus has violated Belarusian laws and the following provisions of the EEU Treaty:
22 Exhibit CL-33. Mavrommatis Palestine Concessions (PCIJ), 30 August 1924, Series A, no. 2, p 35. ↩
23 Exhibit CL-10. Law of Belarus of 12 July 2013 "On Investments", Art. 13. ↩
24 CS-I. Notice of Arbitration, paras. 383 – 509. ↩
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1.4 CLAIMANT'S PRAYERS FOR RELIEF
56. The Claimant respectfully requests the Arbitral Tribunal to issue an arbitral award on the dispute declaring that the Republic of Belarus violated its obligations in relation to the Claimant under the Belarusian laws and EEU Treaty, and ordering that the Republic of Belarus:
57. The Claimant respectfully reserves its right to amend its position and prayers for relief, including the quantification of damages, at any further stage of the arbitral proceedings27.
2. BELARUS’ CLAIMS AND RELIEF SOUGHT
58. The Respondent challenges the jurisdiction of the Tribunal and, alternatively, denies all of the Claimant’s claims. The Respondent respectfully requests that the Tribunal:
25 CS-I. Notice of Arbitration, paras. 512 – 526. ↩
26 CS-I. Notice of Arbitration, para. 576. ↩
27 CS-I. Notice of Arbitration, paras. 576 – 577. ↩
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1. APPLICABLE SUBSTANTIVE RULES
59. The Tribunal shall decide this dispute in accordance with the EEU Treaty, complemented by International Law, and in accordance with Belarusian Law when applicable.
2. APPLICABLE PROCEDURAL RULES
60. The Parties agree that the UNCITRAL Rules as revised in 2013, including the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration of April 2014 [“UNCITRAL Rules on Transparency”] shall be applicable to the dispute28.
61. The Parties also agree that the provisions of the International Bar Association [“IBA”] Rules on the Taking of Evidence in International Arbitration adopted by IBA Council on May 29, 2010, should apply to the dispute29. For the avoidance of doubt, by this the Parties agree that the Tribunal may seek guidance from, but will not be bound by, the IBA Rules on the Taking of Evidence in International Arbitration.
62. In order to ensure effective case management, the Arbitral Tribunal, after consulting with the Parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the Parties or any imperative rules applicable to the proceedings.
63. A failure by any Party to object promptly to any non-compliance with non-imperative Rules or with any requirement of the arbitration agreement shall be deemed to be a waiver of the right of such Party to make such an objection, unless such Party can show that, under the circumstances, its failure to object was justified.
64. The arbitration shall be conducted in accordance with the Procedural Timetable established by the Arbitral Tribunal in a procedural order.
65. The Tribunal may modify such Procedural Timetable at any time, after consultation with the Parties.
66. The Parties agree that the language of the proceedings shall be English30.
28 CS-I. Notice of Arbitration, para. 533-540; RS-I, Response to Notice of Arbitration, para. 72; Joint communication of the Parties submitted on February 21, 2018, para. 3(f). ↩
29 Joint communication of the Parties submitted on February 21, 2018, para. 3(g). ↩
30 Joint communication of the Parties submitted on February 21, 2018, para. 3(b). ↩
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67. The Parties agree that the legal place of this arbitration shall be The Hague (Netherlands)31.
68. The Parties agree that the UNCITRAL Rules on Transparency will apply to these proceedings32. The PCA will publish on its website information regarding the name of the disputing parties, the economic sector involved and the treaty under which the claim is being made, as well as a hyperlink to the UNCITRAL Case Repository, where further information about this matter will be published in accordance with Article 8 of the UNCITRAL Rules on Transparency.
69. A quorum shall be constituted by all three members of the Tribunal. Unless the Parties otherwise agree, a quorum shall be required for all hearings and all meetings of the Tribunal.
70. After consultation with the co-Arbitrators, the Presiding Arbitrator shall be empowered to execute procedural orders on behalf of the Arbitral Tribunal. The Presiding Arbitrator shall also be empowered to modify any time limit, especially in case of urgency.
71. Any award shall be signed by the Tribunal in the required number of counterparts.
72. The Tribunal and its members, as well as the Administrative Secretary, enjoy immunity from suit and from any liability to appear as party or witness in connection with any matter related to the arbitration, in accordance with the provisions of the Headquarters Agreement between the Kingdom of the Netherlands and the PCA.
73. The Parties and the Tribunal undertake to manage the proceedings in a cost-efficient way, avoiding unnecessary delay or expense.
74. The fees of the members of the Tribunal shall be calculated by reference to work done in connection with this arbitration and shall be charged at EUR 600.00 (six hundred Euros) per hour33.
31 Joint communication of the Parties submitted on February 21, 2018, para. 3(a). ↩
32 Joint communication of the Parties submitted on February 21, 2018, para. 3(f). ↩
33 Joint communication of the Parties submitted on February 21, 2018, para. 3(e)(i). ↩
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75. The Secretary shall receive an hourly fee of EUR 300.00 (three hundred Euros) for her participation in the Tribunal’s sessions and for other work performed in connection with this arbitration34.
76. Travel time of the Tribunal and of the Secretary should be charged at fifty percent (50%) of the regular rate35.
77. All secretariat and administrative expenses incurred in relation to the arbitration will be reimbursed at cost. The members of the Tribunal and the Secretary shall be entitled to recover such expenses as are reasonably incurred in connection with this arbitration, provided that claims for expenses (e.g. travel and accommodation costs) are supported by invoices or receipts36.
78. All fees and expenses should be disbursed from the deposited amount upon presentation of a quarterly invoice by the Arbitrators and the Secretary. The Tribunal may withhold any award or decision until such fees and expenses have been paid.
79. To the extent that Value Added Tax [“VAT”] (or any other indirect tax) may be due on the Arbitrators’ or the Secretary’s fees under the applicable tax rules, the Parties undertake to pay such VAT at the prevailing rate upon submission of an invoice addressed to them by the Arbitrators or the Secretary.
80. Upon an invitation by the Tribunal, the Parties shall, as soon as reasonably practicable, pay an advance on the VAT amount which is likely to be due.
81. By signing these Terms of Appointment, the Parties acknowledge that they agree to submit to this arbitration and expressly waive any objections they may have with respect to the constitution of the Tribunal.
82. The persons acting on behalf of Claimant and Respondent represent to the other Party and to the Tribunal that they are duly authorized to sign these Terms of Appointment on behalf of the entities which they represent, and that these Terms of Appointment are hereby validly adopted by such entities.
83. These Terms of Appointment are executed in five originals signed by the Presiding Arbitrator, the co-Arbitrators, the Claimant and the Respondent, on their corresponding signature pages.
34 Joint communication of the Parties submitted on February 21, 2018, para. 3(e)(ii). ↩
35 Joint communication of the Parties submitted on February 21, 2018, para. 3(e)(iii). ↩
36 Joint communication of the Parties submitted on February 21, 2018, para. 3(e)(iv). ↩
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84. This document may be signed in counterparts. A copy of the document, incorporating all signatures, and duly certified by the Presiding Arbitrator and/or the Tribunal’s Secretary, shall for all purposes represent a valid and enforceable original of this agreement.
Legal place of this arbitration: The Hague (Netherlands)
Signed as of May 10, 2018
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CLAIMANT
OOO MANOLIUM-PROCESSING
Signature
Name of representative: ____________________
Title: Baker & McKenzie CIS, Limited, partner
Date and description of power of attorney: power of attorney of 13 November 2017 signed by A. Ekavian on behalf of Manolium-Processing LLC (Exhibit C-9)
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RESPONDENT
THE REPUBLIC OF BELARUS
Signature
Name of representative: David Goldberg
Title: Partner
Date and description of power of attorney: Proof of Authority No. 22/57 dated 18 April 2018 signed by P. Utyupin on behalf of the Government of the Republic of Belarus
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THE ARBITRAL TRIBUNAL
Signature
______________________________
Juan Fernández-Armesto
Presiding Arbitrator
Date: May 10, 2018
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Signature
______________________________
Stanimir A. Alexandrov
Co-Arbitrator
Date: May 10, 2018.
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Signature
______________________________
Brigitte Stern
Co-Arbitrator
Date: 28 May 2018