INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
(ICSID Case No. ARB/17/22)
BIG SKY ENERGY CORPORATION
Claimant
- and -
THE REPUBLIC OF KAZAKHSTAN
Respondent
RESPONDENT'S MEMORIAL ON JURISDICTION AND
COUNTER-MEMORIAL ON THE MERITS AND
QUANTUM
29 March 2019
Professor Bernardo M. Cremades (President of the Tribunal)
Professor Stanimir A. Alexandrov (Arbitrator)
Judge Peter Tomka (Arbitrator)
| Reed Smith LLP Belinda Paisley Chloe Carswell Azhar Kuzutbayeva Dina Nazargalina Lucian Ilie Lucy Winnington-Ingram |
Samuel Wordsworth QC Essex Court Chambers Paul Choon Kiat Wee 3 Verulam Buildings |
Counsel for the Respondent
[Page 119]
307. Pursuant to the denial of benefits clause at Article 1(2) of the BIT, the Respondent is entitled to exercise, and has exercised, its right under that provision to deny the benefits of the BIT – including its dispute resolution provisions – to the Claimant.504 It follows that the Tribunal lacks jurisdiction in respect of this dispute.
308. The denial of benefits clause at Article 1(2) of the BIT provides as follows:
“Each Party reserves the right to deny to any company the advantages of this Treaty if nationals of any third country control such company and, in the case of a company of the other Party, that company has no substantial business activities in the territory of the other Party or is controlled by nationals of a third country with which the denying Party does not maintain normal economic relations.”
309. Article 1(2) is correctly interpreted as enabling the Respondent state to deny the benefits of BIT protection to the Claimant by invoking this provision in the arbitration, showing that the requirements have been satisfied on the facts. In this respect, the requirements of Article 1(2) will be satisfied (and the Claimant’s claims in this arbitration must be dismissed) if:
310. Under Article 1(2), the Respondent’s denial of benefits may encompass all of “the advantages of” the BIT, without limitation, and so includes both substantive and procedural protections under the BIT. [Redacted]
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329. [Redacted]
330. [Redacted]
331. [Redacted]
The Claimant was managed by a Board of Directors at the time of its investments in Kazakhstan. The Directors have changed over time. Mr Matthew Heysel, [Redacted] was Chairman of the Board of Directors from April 2000 until June 2009 and Chief Executive Officer of the Claimant from April 2000 to March 2005. At the date of the Request for Arbitration, Mr Scott Lawler was, and continues to be, the Claimant’s sole director.[Redacted]
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332. The Respondent therefore submitted its Article 43 Application, requesting an order from the Tribunal that the Claimant be required to produce documents [Redacted]
[Redacted]
333. [Redacted]
334. [Redacted]
335. [Redacted]
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336. Here, although Mr Lawler, a United States national, is (and was at date of the Request for Arbitration) registered as the Claimant’s sole director, [Redacted] that Mr Lawler is a nominee director, who takes his instructions from another entity or individual.536
337. Mr Lawler is a practicing lawyer at the firm Booth Udall Fuller in Tempe, Arizona,537 who previously served as the lawyer of BSEK and as the Claimant’s SEC securities counsel.538 Mr Lawler further serves (or has previously served) as the officer and/or director of some nine other companies registered in the United States, but which have offices and conduct their operations exclusively in other jurisdictions, such as Russia and Canada. In total, Mr Lawler is the signatory of 156 SEC filings for 56 various corporate entities.539
338. [Redacted] the circumstances of Mr Lawler’s appointment as its sole director as follows:
Between 22 and 25 March 2013, the Claimant’s Board of Directors resigned from their positions but before doing so, as their final act, they appointed Mr Lawler as the Claimant’s sole Director, President, Secretary and Treasurer. [Redacted]
537 Professional Biography of Mr Lawler (accessed on 3 October 2018): http://boothudall.com/attorneys/w-scott-lawler [Redacted] ↩
538 BSEK (then China Energy Ventures Corp.) Registration Statement dated 19 February 2004 [Redacted] ↩
539 W. Scott Lawler - ‘Registrant, Group Member and/or Signatory’ date of access (3 October 2018) [Redacted] ↩
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339. [Redacted]
340. [Redacted]
341. [Redacted]
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352. [Redacted]
353. Thereafter, the Tribunal issued Procedural Order No. 2 dated 23 October 2018, [Redacted]
354. [Redacted]
355. [Redacted]