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International Court of Arbitration of the
International Chamber of Commerce
Case No. 25830/AYZ/ELU

In the matter of an arbitration under

The Agreement for Promotion, Protection and Guarantee of Investments among
Member States of the Organisation of the Islamic Conference, 5 June 1981

and

The ICC Arbitration Rules in force as from 1 March 2017

-between-

QATAR PHARMA FOR PHARMACEUTICAL INDUSTRIES, W.L.L.
AND DR. AHMED BIN MOHAMMAD AL HAIE AL SULAITI

CLAIMANTS

-and-

THE KINGDOM OF SAUDI ARABIA

RESPONDENT

FINAL AWARD

THE ARBITRAL TRIBUNAL

Dr. Charles Poncet (Arbitrator)
Professor Nassib G. Ziadé (Arbitrator)
Professor Juan Fernández-Armesto (Presiding Arbitrator)

THE ADMINISTRATIVE SECRETARY

Ms. Sofia de Sampaio Jalles

23 October 2024

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LIST OF ACRONYMS AND ABBREVIATIONS

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I. PERSONS INVOLVED IN THE ARBITRATION

1. CLAIMANTS

1. Claimant Qatar Pharma for Pharmaceutical Industries, W.L.L. ["Qatar Pharma"] is a pharmaceutical company founded in 2006. It is a With Limited Liability company established under the laws of Qatar and registered with the Qatar Ministry of Economy and Commerce. Qatar Pharma's business address is:

Qatar Pharma for Pharmaceutical Industries, W.L.L.
P.O. Box 41119
Doha, Qatar

2. Claimant Dr. Ahmed Bin Mohammad Al Haie Al Sulaiti ["Dr. Al Sulaiti"], a natural person who is a citizen and resident of Qatar, is the chairman and majority owner of Qatar Pharma. His contact details are:

New Salata
Area No. 40, Street No. 970, Building No. 23
Doha, Qatar

3. Qatar Pharma and Dr. Al Sulaiti shall jointly be referred to as "Claimants".

4. Claimants are represented in these proceedings by:

Mr. Kevin Walsh
Ms. Kiera S. Gans
Ms. Elena Rizzo
Mr. Joshua Wan
Ms. Erin Collins
Ms. Alice Adu Gyamfi
DLA PIPER LLP (US)
1251 Avenue of the Americas
New York, New York 10020
United States of America

Mr. Ricardo Alarcón
DLA PIPER MEXICO, S.C.
Paseo de los Tamarindos No. 400 A, Piso 31
Col. Bosques de las Lomas
Mexico City 5120
Mexico
Email: [email protected]

Dr. Ioannis Konstantinidis
Qatar University
PO Box 2713, Building 109, Office B335
Doha, Qatar
Email: [email protected]

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2. RESPONDENT

5. The Respondent is the Kingdom of Saudi Arabia [the "Kingdom", "Saudi Arabia" or "Respondent"], a sovereign State, which has indicated the following contact details:

Director of Legal Department
Ministry of Foreign Affairs
P.O. Box 55937
55937, Riyadh
Kingdom of Saudi Arabia

6. Respondent is represented in these proceedings by:

Dr. Christopher Harris KC
Mr. Mark Wassouf
Mr. Matthew Watson
Mr. Cameron Miles
Mr. Calum Mulderrig
3 Verulam Buildings Gray's Inn,
London, WC1R 5NT
United Kingdom
Email: [email protected]

Mr. Khalid Al-Thebity
Ms. Lama Al Mogren
Greenberg Traurig Khalid Al-Thebity Law Firm
King Fahad Road
Sky Towers – 8^th Floor
11372, Riyadh
Saudi Arabia
Email: [email protected]

Ms. Lucinda Orr
Enyo Law LLP
1 Tudor St
London, EC4Y 0AH
United Kingdom
Email: [email protected]

7. Claimants and Respondent shall jointly be referred to as the "Parties".

3. THE ARBITRAL TRIBUNAL

8. On 28 March 2019 Claimants appointed Dr. Charles Poncet as arbitrator. Dr. Poncet's contact details are the following:

Dr. Charles Poncet, M.C.L.
Rue Bovy-Lysberg 2
Case postale 5824
1211 Geneva 11

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Switzerland
Email: [email protected]

9. On 27 May 2019 Respondent appointed Professor Nassib G. Ziadé as arbitrator. Professor Ziadé's contact details are the following:

Professor Nassib G. Ziadé
Suite 701, Park Plaza
Building 247 Road 1704 Diplomatic Area 317
Manama
Kingdom of Bahrain
Email: [email protected]

10. The Parties agreed on a procedure for the appointment of the presiding arbitrator, which in August 2020 resulted in the appointment of Professor Juan Fernández-Armesto, whose contact details are as follows:

Professor Juan Fernández-Armesto
Armesto & Asociados
General Pardiñas 102, 8º izda.
28006 Madrid
Spain
Email: [email protected]

4. ADMINISTRATION

11. The Parties agreed that the arbitration would be administered in accordance with the Arbitration Rules of the International Court of Arbitration of the International Chamber of Commerce in force as from 1 March 2017 [the "ICC Rules" of the "Court" of the "ICC"].

12. Ms. Stella Leptourgou headed the team in charge of the case management:

Ms. Stella Leptourgou (Counsel)
Mr. Avishai Azriel (Deputy Counsel)
33-43 avenue du Président Wilson,
75116 Paris
France
Email: [email protected]

5. ADMINISTRATIVE SECRETARY

13. With the consent of the Parties, the Arbitral Tribunal appointed Ms. Sofia de Sampaio Jalles as Administrative Secretary, whose contact details are as follows:

Ms. Sofia de Sampaio Jalles
Armesto & Asociados
General Pardiñas, 102, 8º izda.
28006 Madrid
Spain
Email: [email protected]

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II. PROCEDURAL HISTORY

14. By Notice of Arbitration dated 28 March 2019 ["Notice of Arbitration"], Claimants sought to initiate arbitration proceedings against the Kingdom of Saudi Arabia under the Agreement for Promotion, Protection and Guarantee of Investments among Member States of the Organisation of the Islamic Conference ["OIC"], of 5 June 1981 [the "OIC Agreement" or the "Treaty"].

1. THE TREATY

15. Art. 17 of the OIC Agreement provides that¹:

"1. Until an Organ for the settlement of disputes arising under the Agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules and procedures:

1. Conciliation

a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen. The parties concerned may request the Secretary General to choose the conciliator. The General Secretariat shall forward to the conciliator a copy of the conciliation agreement so that he may assume his duties.

b) The task of the conciliator shall be confined to bringing the different view points closer and making proposals which may lead to a solution that may be acceptable to the parties concerned. The conciliator shall, within the period assigned for the completion of his task, submit a report thereon to be communicated to the parties concerned. This report shall have no legal authority before a court should the dispute be referred to it.

2. Arbitration

a) If the two parties to the dispute do not reach an agreement as a result of their resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute.

b) The arbitration procedure begins with a notification by the party requesting the arbitration to the other party to the dispute, clearly explaining the nature of the dispute and the name of the arbitrator he has appointed. The other party must, within sixty days from the date on which such notification was given, inform the party requesting arbitration of the name of the arbitrator appointed by him. The two arbitrators are to choose, within sixty days from the date on which the last of them was appointed arbitrator, an umpire who shall have a casting vote in case of equality of votes. If the second party does not appoint an arbitrator, or if the two arbitrators do not agree on the appointment of an

¹ Doc. CLA-10.

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Umpire within the prescribed time, either party may request the Secretary General to complete the composition of the Arbitration Tribunal.

c) The Arbitration Tribunal shall hold its first meeting at the time and place specified by the Umpire. Thereafter the Tribunal will decide on the venue and time of its meetings as well as other matters pertaining to its functions.

d) The decisions of the Arbitration Tribunal shall be final and cannot be contested. They are binding on both parties who must respect and implement them. They shall have the force of judicial decisions. The contracting parties are under an obligation to implement them in their territory, no matter whether it be a party to the dispute or not and irrespective of whether the investor against whom the decision was passed is one of its nationals or residents or not, as if it were a final and enforceable decision of its national courts."

2. LANGUAGE, PLACE OF ARBITRATION AND APPLICABLE RULES

16. Pursuant to the Parties' agreement, the language of arbitration is English and the place of arbitration is London, United Kingdom².

17. The applicable procedural rules are the 2017 ICC Rules³.

18. The Tribunal shall decide the issues in dispute in accordance with the OIC Agreement and international law. For the purposes of Art. 9 of the OIC Agreement, the Tribunal shall apply the laws and regulations in force in the host State⁴.

3. CONSTITUTION OF THE ARBITRAL TRIBUNAL

19. On 5 April 2018 Dr. Al Sulaiti sent a letter to the Saudi Ministry of Foreign Affairs on his behalf and on behalf of Qatar Pharma, as a "formal notice of the existence of an investment dispute under the OIC Agreement and the KSA-Austria BIT"⁵. There is no evidence of a response by the Kingdom.

20. On 28 March 2019 Claimants filed a Notice of Arbitration pursuant to Art. 17 of the OIC Agreement⁶ against the Kingdom, appointing Dr. Poncet as arbitrator.

21. On 27 May 2019 the Kingdom appointed Professor Ziadé as arbitrator, pursuant to Art. 17 of the OIC Agreement, reserving its position and objections on all issues⁷.

22. In accordance with the OIC Agreement, the party-appointed arbitrators conferred and sought to agree on the identity of the presiding arbitrator.

23. On 6 November 2019 Claimants addressed the Secretary-General of the Permanent Court of Arbitration ["PCA"], explaining that the arbitrators had been unable to agree on the appointment of the presiding arbitrator within the term provided for in Art. 17(2)(b) of the OIC Agreement (as extended by the Parties) and requesting that the Secretary-General exercise his power under Art. 6(2) of the Arbitration Rules

² Terms of Appointment and Reference, paras. 62 and 63.
³ Terms of Appointment and Reference, para. 54.
⁴ Terms of Appointment and Reference, para. 53.
⁵ Communication C 1 (Notice of Dispute), p. 3.
⁶ Communication C 2 (Notice of Arbitration), para. 1.
⁷ Communication R 1.

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of the United Nations Commission on International Trade Law ["UNCITRAL"] to designate an appointing authority to appoint the presiding arbitrator⁸.

24. In turn, on 1 December 2019 Respondent asked the OIC Secretary-General to exercise his role under Art. 17(2)(b) of the OIC Agreement and appoint the presiding arbitrator⁹.

25. On 12 December 2019 the OIC confirmed that the OIC Secretary-General would exercise his powers to appoint the presiding arbitrator¹⁰. Accordingly, on 26 December 2019 the OIC Secretary-General sought the Parties' opinion regarding a list of potential candidates for presiding arbitrator. After the Parties failed to reach an agreement, he notified the Parties that if they failed to agree on a presiding arbitrator within a period of 30 days, he would "be obliged to proceed with the appointment of a presiding arbitrator as authorized"¹¹.

26. In light of the OIC Secretary-General's letter, the PCA invited Claimants to provide comments regarding the implications, if any, of such letter for Claimants' request that the PCA Secretary-General designate an appointing authority¹². Claimants requested that the PCA hold in abeyance their request for an appointing authority¹³.

27. The OIC Secretary-General's cabinet reached out to several potential candidates to serve as presiding arbitrator, asking them to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality and independence¹⁴; the responses were transmitted to the Parties¹⁵.

28. On 19 March 2020 the OIC Secretary-General took note that the Parties had been unable to reach an agreement regarding the presiding arbitrator¹⁶. The OIC Secretary-General opened a final period for the Parties to continue direct negotiations regarding a presiding arbitrator; otherwise, he would proceed with the appointment of the presiding arbitrator¹⁷. In May 2020 the Parties agreed to extend the negotiation period until 1 June 2020, due to the COVID-19 pandemic¹⁸.

29. On 10 June 2020 the Parties eventually agreed on a procedure for the selection of the presiding arbitrator, which they communicated to the co-arbitrators¹⁹, as follows:

⁸ Communication C 12a.
⁹ Communication R 15, p. 2.
¹⁰ Communication OIC 1.
¹¹ Communication OIC 2.
¹² Communication PCA 6.
¹³ Communication PCA 7.
¹⁴ Communications OIC 3, OIC 4, OIC 5, OIC 6 and OIC 7.
¹⁵ Communication OIC 7.
¹⁶ Communication OIC 9.
¹⁷ Communication OIC 9.
¹⁸ Communication OIC 10.
¹⁹ Communications C 34 and R 29.

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- Each Party should consult with the co-arbitrator whom it appointed about potential candidates for the presiding arbitrator and propose five candidates to the other Party, copying the co-arbitrators²⁰;

- The co-arbitrators would then jointly confirm the availability of the ten proposed individuals; if one or more of the individuals were not available, the Party proposing the said individual would be invited by the co-arbitrators to submit a further name or names, as the case may be; the co-arbitrators should endeavour to provide the completed list of ten arbitrator candidates simultaneously to the Parties by 19 June 2020;

- Each Party could consult with the co-arbitrator whom it appointed in relation to the names proposed and, within five calendar days, without the need for reasons, notify the co-arbitrators that it rejected up to a maximum of three candidates; each Party should communicate its rejections simultaneously to the two co-arbitrators at a pre-agreed time, without copying the other Party;

- The co-arbitrators should then inform the Parties of the remaining names and the Parties should rank them in order of preference from 1 to 4 (or whatever the number of remaining candidates) with 1 being the most preferred candidate; each Party should communicate its rankings simultaneously to the two co-arbitrators at a pre-agreed time within five calendar days of receiving the list from the co-arbitrators, without copying the other Party;

- The co-arbitrators should then select as presiding arbitrator the candidate with the lowest aggregate score and jointly contact that proposed arbitrator; if more than one candidate shared the lowest score, the co-arbitrators should endeavour to agree on one of those candidates, after having consulted their appointing party. If the co-arbitrators were not able to agree, they should revert to the Parties for a decision.

30. The Parties also agreed that neither of them would approach the OIC or the PCA for any action until 10 July 2020²¹.

31. On 13 June 2020 the co-arbitrators contacted Professor Fernández-Armesto to act as presiding arbitrator. On 13 August 2020, the co-arbitrators informed Professor Armesto that the list procedure had resulted in the Parties jointly selecting him as presiding arbitrator.

32. On 18 August 2020 Professor Fernández-Armesto accepted the appointment and the Tribunal was constituted.

4. TERMS OF APPOINTMENT AND REFERENCE

33. On 25 August 2020 the Tribunal issued communication A 1, asking the Parties for a complete copy of the case file, and informing that it would convene a first

²⁰ All such candidates had to have previously been appointed as presiding arbitrator in an investor-State arbitration in which the award is publicly available, and could not be a national of either Qatar or the Kingdom of Saudi Arabia. The Parties could not communicate directly with any of the proposed arbitrator candidates.
²¹ Communication OIC 11; Communication PCA 8.

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conference once it had had the opportunity to review such file. On 25 September 2020 the Parties submitted to the Tribunal all the relevant documents exchanged between them until then²².

34. On 18 October 2020 the Arbitral Tribunal sent the Parties a draft Terms of Appointment, convened them to a first conference call and asked them to exchange preliminary views on the applicable procedural rules and timetable²³.

35. On 2 November 2020 the Parties submitted their proposed edits to the draft Terms of Appointment and informed the Tribunal that they were still conferring regarding the procedural rules and timetable²⁴.

36. On 4 November 2020 the Parties and the Tribunal held a first conference call, during which they discussed the Terms of Appointment, the case administration, and the procedural timetable. On this occasion, the Parties agreed that the Tribunal should contact the Court to enquire whether it would be willing to administer the proceedings²⁵.

37. After confirmation by the ICC, on 12 November 2020 the Tribunal circulated a new version of the Terms of Appointment and Reference for the Parties' comments and decided that the rules applicable to the procedure would be the 2017 ICC Rules²⁶.

38. After hearing the Parties, on 19 November 2020 the Tribunal circulated the final version of the Terms of Appointment and Reference²⁷, which were signed by the Parties and the Tribunal and transmitted to the Secretariat of the Court, which deemed the arbitration to have commenced on that same day²⁸.

39. On 3 December 2020 the Court²⁹:

- Took note of the constitution of the Tribunal in accordance with the Parties' agreement;

- Took note of the Terms of Appointment and Reference signed by the Parties and the Tribunal (Art. 23(2) of the ICC Rules); and

- Fixed the advance on costs at USD 320,000, subject to later readjustments (Art. 37(2) of the ICC Rules).

5. CLAIMANTS' DOCUMENTS

40. At the 4 November 2020 conference call Claimants explained that to prepare their Statement of Claim they would need access to certain documents allegedly placed under seal in their facilities in Saudi Arabia [the "Documents"]. Therefore, the

²² Communication C 37.
²³ Communication A 3.
²⁴ Communications C 39 and R 39.
²⁵ Communication A 6.
²⁶ Communication A 8.
²⁷ Communication A 9.
²⁸ Communication of the Secretariat dated 25 November 2020.
²⁹ Communication of the Secretariat dated 3 December 2020.

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discussion of a procedural timetable was postponed until after the Parties had had the opportunity to make submissions on this issue.

41. On that same day, the Tribunal encouraged the Parties to solve the issue amicably; in case no agreement was reached, Claimants should prepare a submission with the details of the Documents needed by 18 November 2020, to which Respondent would have the opportunity to respond by 2 December 2020. Ad cautelam, the Tribunal reserved a date to discuss this issue in further detail with the Parties³⁰.

42. On 18 November 2020 and 2 December 2020 Claimants³¹ and Respondent³², respectively, submitted their positions on the issue of the access to Claimants' Documents. On 9 December 2020 Claimants submitted a reply on this issue³³ and on 16 December 2020 the Respondent presented a rebuttal³⁴.

43. On 17 December 2020 the Parties and the Tribunal held a conference call to discuss Claimants' access to the Documents. The Parties and the Tribunal agreed that Claimants should present a full-fledged request for the preservation of and access to the Documents³⁵, to which Respondent would have the opportunity to respond. The Tribunal established that Claimants should present their Statement of Claim by 5 April 2021, subject to the Tribunal and the Parties conferring and adopting appropriate measures in case Claimants had not been able to access their Documents by then. Lastly, the Tribunal invited the Parties to reinstate their discussions regarding the procedural timetable³⁶.

6. REQUEST FOR INTERIM MEASURES AND PO NO. 1

44. On 20 January 2021 Claimants filed a "Request for Interim Measures"³⁷, requesting, inter alia, an order of the Tribunal granting Claimants' vendor of choice immediate access to the Documents³⁸. The Tribunal granted Respondent the opportunity to comment on Claimants' Request for Interim Measures and convened the Parties for a conference call³⁹.

45. On 1 February 2021 Claimants sent two proposals of procedural timetable:

- Timetable I, submitted jointly on behalf of both Parties, contemplating a scenario with no request for bifurcation;

³⁰ Communication A 6.
³¹ Communication C 42.
³² Communication R 45.
³³ Communication C 47.
³⁴ Communication R 48.
³⁵ Specifying the applicable legal standards on which Claimants' request was based; marshalling evidence regarding their title over the premises where the Documents are allegedly located and the Documents themselves; identifying the lawyers who would be designated to travel to the Kingdom and access the Documents and describing the tasks to be performed; and specifying the constraints faced in accessing their banking accounts in Saudi Arabia and the specific measures requested.
³⁶ Communication A 11.
³⁷ Together with factual exhibits C-4 through C-16; legal authorities CLA-1 through CLA-18; the first witness statement of Mr. Mohamed Antar, Finance Manager of Qatar Pharma ["CWS-1"] and the first witness statement of Mr. Yasser Kotb, Country Marketing Manager of Qatar Pharma ["CWS-2"].
³⁸ Communication C 49.
³⁹ Communication A 12.

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- Timetable II, submitted by Claimants, contemplating a scenario with a request for bifurcation.

46. Furthermore, Claimants stated that the Parties had agreed to extend the deadline for the filing of the Statement of Claim until 17 June 2021⁴⁰.

47. On 3 February 2021 Respondent submitted its proposal regarding Timetable II⁴¹ and on 8 February 2021 it filed its opposition to Claimants' Request for Interim Measures⁴².

48. On 10 February 2021 the Parties and the Tribunal held a conference call during which they discussed the Request for Interim Measures and the procedural timetable. The Parties and the Tribunal agreed on a calendar until the Tribunal's decision on bifurcation⁴³.

49. On 3 March 2021 the Tribunal sent a draft Procedural Order ["PO"] No. 1 to the Parties, inviting them to submit their comments⁴⁴, which they did jointly on 10 March 2021⁴⁵.

50. On 12 March 2021 the Tribunal issued PO No. 1, setting out the procedural timetable and the rules governing the conduct of the arbitration⁴⁶.

51. On 12 April 2021 Claimants submitted an update concerning their efforts to obtain access to the Documents and their bank accounts⁴⁷. Claimants, however, did not seek any specific relief from the Tribunal⁴⁸.

7. MAIN SUBMISSIONS

A. Statement of Claim

52. On 17 June 2021 Claimants filed their Statement of Claim ["C I"], supported by:

- Factual exhibits C-17 through C-305;

- Legal authorities CLA-19 through CLA-187;

- The first witness statements of Dr. Al Sulaiti ["CWS-3"] and of Mr. Abdul Haliem Jaffar ["CWS-4"], and the second witness statements of Dr. Yasser Kotb ["CWS-5"] and of Mr. Mohamed Antar ["CWS-6"]; and

⁴⁰ Communication C 51.
⁴¹ Communication R 50.
⁴² Communication R 51.
⁴³ Communication A 15.
⁴⁴ Communication A 17.
⁴⁵ Communication C 54; Communication A 18.
⁴⁶ Communication A 19.
⁴⁷ Communication C 55.
⁴⁸ Communication A 20.

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- The first expert report of Mr. Kiran Sequeira and Mr. Bryan d'Aguiar⁴⁹ ["CER-1"]⁵⁰.

B. PO No. 2 - Decision on bifurcation

53. On 17 August 2021 Respondent submitted its Statement of Preliminary Objections and Request for Bifurcation ["RPO"] supported by exhibits R-1 to R-8.

54. On 20 September 2021 Claimants filed their Observations to the RPO, accompanied by legal authorities CLA-188 through CLA-222.

55. On 15 October 2021 the Tribunal issued PO No. 2, deciding, by majority, to dismiss the Kingdom's request for bifurcation and to join the jurisdictional objections to the merits and quantum.

C. PO No. 3 - Procedural Timetable

56. On 20 October 2021 the Parties and the Tribunal held a conference call to discuss the procedural timetable applicable to the continuation of the proceedings. The Tribunal encouraged the Parties to confer and attempt to agree on a shorter procedural timetable.

57. On 27 October 2021 Claimants sent a new timetable proposal on behalf of both Parties. This proposal reflected only two areas of disagreement between the Parties. On that same day, Claimants explained the rationale behind their proposal⁵¹; Respondent did the same on 1 November 2021⁵².

58. On 16 November 2021 the Tribunal issued communication A 22, deciding on the Parties' disagreements regarding the procedural timetable and transmitting a draft PO No. 3 for the Parties' comments. On 24 November 2021 each Party sent its comments to draft PO No. 3⁵³. Thereafter, the Tribunal invited the Parties to confer and reach agreements regarding their respective proposals, and to inform the Tribunal of their agreements or lack thereof by 3 December 2021⁵⁴. The Parties agreed to extend this deadline⁵⁵.

59. On 6 December 2021 Respondent informed that it was no longer represented by Squire Patton Boggs in the arbitration⁵⁶.

60. On 8 December 2021 Claimants filed a communication with the Parties' agreements and Claimants' own position regarding the points of contention⁵⁷. On 9 December

⁴⁹ Together with exhibits VP-1 to VP-116 and Appendixes A to G.
⁵⁰ Mr. Sequeira and Mr. d'Aguiar initially published their report as part of Versant Partners, which was acquired by the firm Secretariat in August 2021.
⁵¹ Communication C 60.
⁵² Communication R 59.
⁵³ Communications C 61 and R 60.
⁵⁴ Communication A 23.
⁵⁵ Communications R 61 and C 62.
⁵⁶ Communication R 62.
⁵⁷ Communication C 63.

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2021 the Kingdom confirmed the Parties' agreements and provided its comments on the issues in dispute⁵⁸.

61. On 3 January 2022 the Tribunal solved the Parties' disagreements and issued PO No. 3⁵⁹.

D. Statement of Defence and Objections on Jurisdiction

62. On 15 February 2022 Saudi Arabia informed that it had instructed Enyo Law and several members of 3 Verulam Buildings as its new counsel in the arbitration. Considering these new instructions, the Kingdom argued that it required a reasonable extension of time to prepare its Statement of Defence and Objections on Jurisdiction, and that it would seek Claimants' agreement⁶⁰.

63. After several exchanges, the Parties were unable to reach an agreement⁶¹. The Tribunal found that the Kingdom had de facto accepted the Tribunal's offer to transfer one month of preparation of the Statement of Rejoinder to the preparation of the Statement of Defence. The Tribunal decided to deduct this month from the preparation time for filing the Statement of Rejoinder and ordered Respondent to file its Statement of Defence by 18 April 2022⁶².

64. Accordingly, on 18 April 2022 Respondent filed its Statement of Defence and Objections to Jurisdiction ["R I"], together with:

- Factual exhibits R-9 through R-179;

- Legal authorities RLA-48 through RLA-216;

- The witness statements of Dr. Mohammed Dahhas ["RWS-1"], Mr. Ali Bin Saad Al Qahtani ["RWS-2"], Mr. Abdul Karim Al-Amari ["RWS-3"], Mr. Abdulla Al-Zahrani ["RWS-4"], Dr. Abdulla Al-Ahmari ["RWS-5"], Mr. Munif Al-Otaibi ["RWS-6"] and Mr. Abdalla Al-Asfor ["RWS-7"]; and

- The first expert report of Dr. Richard Hern ["RER-1"].

E. Document Production

65. Between May and June 2022, the Parties exchanged their document production schedules, which they submitted to the Tribunal on 30 June 2022 for a decision on document production.

66. On 14 July 2022 the Tribunal issued its communication A 28 and decided on the Parties' requests for document production.

⁵⁸ Communication R 63.
⁵⁹ Communication A 25.
⁶⁰ Communication R 63.
⁶¹ Communications R 64, C 64, C 65 and A 26.
⁶² Communication A 27.

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Access to Claimants' Documents

67. On this occasion, the Tribunal encouraged Claimants to try to gain access to the Riyadh warehouse [the "Riyadh Warehouse"] where the Documents were allegedly stored and to inform the Tribunal of the outcome of this attempt by 1 August 2022⁶³. The Tribunal noted that its decisions regarding the Parties' document production requests had been made on the assumption that Claimants would be able to access their Documents. Should this prove impossible, the Tribunal reserved the right to revisit some of its decisions⁶⁴.

68. On 1 August 2022 Claimants informed that their vendor, Deloitte Professional Services (DIFC) Limited ["Deloitte"], had finally been able to enter the Riyadh Warehouse on 26 July 2022 with the assistance of a locksmith⁶⁵. Claimants submitted into the record the report of this visit prepared by Deloitte on 31 July 2022, video footage recorded by Deloitte⁶⁶ and a third witness statement by Mr. Yasser Kotb ["CWS-7"]. Claimants informed that many of their business records, including eight of the nine computers previously stored at the Warehouse, had been removed. Therefore, Claimants requested that⁶⁷:

- The Tribunal reconsider its decision on Claimants' document production requests, specifically that Respondent be ordered to produce documents responsive to Requests No. 23 (regarding proof of delivery of Qatar Pharma products) and No. 31 (regarding contracts entered into between Qatar Pharma and Respondent); and

- The Tribunal use all available means to address the highly irregular disappearance of targeted evidence and to fashion further relief as necessary.

69. Respondent asked for an extension of the deadline to respond to these requests⁶⁸, which was granted by the Tribunal after hearing Claimants⁶⁹ on 8 August 2022⁷⁰. Accordingly, on 16 August 2022, Respondent filed its response to Claimants' application, asking the Tribunal to dismiss it⁷¹.

70. On 18 August 2022 the Tribunal issued communication A 33, by which it decided Claimants' requests. On account of the Tribunal's decision, Saudi Arabia filed on the record an affidavit by Mr. Mohammed Ibrahim al-Subeehy, Executive Director of Legal Affairs of the Saudi Food and Drug Authority ["RWS-8"].

Parties' applications

71. Thereafter, each of the Parties filed an application with the Tribunal related to document production:

⁶³ Communication A 28, para. 22.
⁶⁴ Communication A 28, para. 24.
⁶⁵ Communication C 66.
⁶⁶ Doc. C-317 (Report); Docs. C-306 and C-307 (Video footage).
⁶⁷ Communication C 66.
⁶⁸ Communication R 68.
⁶⁹ Communication C 67.
⁷⁰ Communication A 31.
⁷¹ Communication R 69.

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- On 17 August 2022 Respondent filed an application for an order from the Tribunal directing Claimants to provide consent to the Saudi Arabian British Bank ["SABB"], or, in the alternative, ordering the Saudi Central Bank to authorize SABB, to produce all of Claimants' banking records to both Parties simultaneously⁷²; and

- On 26 August 2022 Claimants submitted a new application for an order from the Tribunal directing Respondent to produce all documents responsive to Claimants' requests for document production which Respondent was ordered by the Tribunal or voluntarily agreed to produce, and any previously redacted documents in unredacted form, or otherwise provide information explaining the basis of each redaction⁷³.

72. After giving each Party the opportunity to respond to the counterparty's application⁷⁴, on 16 September 2022 the Tribunal issued communication A 36, by which it decided on both applications.

F. Reply and Statement of Defence on Jurisdiction

73. On 7 November 2022 Claimants filed their Reply and Statement of Defence on Jurisdiction ["C II"], together with:

- Factual exhibits C-324 through C-478;

- Legal authorities CLA-230 through CLA-301;

- The second witness statements of Dr. Al Sulaiti ["CWS-8"] and Dr. Abdul Haliem Jaffar ["CWS-9"], and the third witness statement of Mr. Mohammed Antar ["CWS-10"]; and

- The expert report of Dr. Kristian Coates Ulrichsen⁷⁵ ["CER-2"] and the second expert report of Mr. Sequeira and Mr. d'Aguiar⁷⁶ ["CER-3"].

G. Rejoinder and Reply on Jurisdiction

74. On 7 March 2023 Respondent filed its Rejoinder and Reply on Jurisdiction ["R II"] accompanied by:

- Factual exhibits R-187 through R-257;

- Legal authorities RLA-220 through RLA-308;

- The witness statements of Mr. Ali Bin Saad Al Qahtani ["RWS-9"], Mr. Munif Al-Otaibi ["RWS-10"], Mr. Abdul Karim Al-Amari ["RWS-11"], Dr. Abdullah Al-Ahmari ["RWS-12"], Dr. Mohammed Dahhas ["RWS-13"] and Mr. Sufian Banaja ["RWS-14"]; and

⁷² Communication R 70.
⁷³ Communication C 68.
⁷⁴ Communications R 72, R 73, C 69 and C 70.
⁷⁵ Together with exhibits KU-1 to KU-106.
⁷⁶ Together with exhibits VP-117 to VP-145 and Appendixes H to S.

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- The second expert report of Dr. Richard Hern ["RER-2"] and the expert report of Ambassador Simon Paul Collis CMG⁷⁷ ["RER-3"].

H. Rejoinder on Jurisdiction

75. On 6 April 2023 Claimants filed their Rejoinder on Jurisdiction ["C III"] together with:

- Factual exhibits C-479 through C-494; and

- Legal authorities CLA-302 through CLA-312.

8. HEARING

76. On 6 February 2023 the Parties informed the Tribunal that they had agreed to conduct an in-person evidentiary hearing [the "Hearing"] at the International Dispute Resolution Centre in London⁷⁸.

77. On 10 March 2023 the Tribunal asked the Parties to confer and try to reach agreements on the procedural aspects of the Hearing⁷⁹. On 10 April 2023 the Parties notified the Tribunal of the witnesses that they wished to cross-examine at the Hearing⁸⁰. On 13 April 2023 the Parties submitted a joint communication regarding Hearing logistics⁸¹.

78. On 14 April 2023 Claimants requested leave from the Tribunal to submit a "limited number of supplemental materials into the record" that were available in the public domain (factual exhibits C-495 to C-518)⁸². The Kingdom consented to the introduction of the additional exhibits into the record⁸³. The Parties, however, disagreed on whether Dr. Kristian Ulrichsen – Claimants' geopolitical expert – should be allowed to address these additional exhibits at the Hearing⁸⁴.

79. On 17 April 2023 the Parties and the Tribunal held a pre-Hearing conference call, in which they discussed the organization of the Hearing.

80. On 21 April 2023 the Tribunal circulated a draft PO No. 4 and invited the Parties to provide their comments by 2 May 2023, which they did.

81. On 11 May 2023 the Tribunal issued PO No. 4, regarding Hearing arrangements. The Tribunal also decided on various points of disagreement between the Parties, including the possibility for the geopolitical experts to address the additional exhibits introduced by Claimants on the record⁸⁵.

⁷⁷ Together with exhibits SC-1 to SC-68.
⁷⁸ Communication R 73.
⁷⁹ Communication A 38.
⁸⁰ Communications C 75 and R 77.
⁸¹ Communication C 77.
⁸² Communication C 78.
⁸³ Communication R 81.
⁸⁴ Communications C 79 and R 81.
⁸⁵ Communication A 43.

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82. The Hearing took place from 22 May to 2 June 2023 at the International Dispute Resolution Centre in London. The following individuals attended the Hearing:

For Claimants

- Mr. Kevin Walsh (DLA Piper)
- Ms. Kiera S. Gans (DLA Piper)
- Ms. Elena Rizzo (DLA Piper)
- Mr. Joshua S. Wan (DLA Piper)
- Ms. Erin Collins (DLA Piper)
- Ms. Alice A. Gyamfi (DLA Piper)
- Mr. Matthew Matystik (DLA Piper)
- Ms. Gayle Zwerling (DLA Piper)
- Dr. Ioannis Konstantinidis (Qatar University)
- Dr. Al Sulaiti (Claimant, Client Representative)

For Respondent

- Dr. Christopher Harris KC (3 Verulam Buildings)
- Mr. Khalid Al-Thebity (Khalid Al-Thebity Law Firm)
- Mr. Matthew Watson (3 Verulam Buildings)
- Mr. Mark Wassouf (3 Verulam Buildings)
- Dr. Cameron Miles (3 Verulam Buildings)
- Mr. Calum Mulderrig (3 Verulam Buildings)
- Ms. Chinmayi Sharma (3 Verulam Buildings)
- Ms. Lucinda Orr (Enyo Law LLP)
- Ms. Victoria McIntosh (Enyo Law LLP)

The Arbitral Tribunal

- Dr. Charles Poncet (Arbitrator)
- Professor Nassib G. Ziadé (Arbitrator)
- Professor Juan Fernández-Armesto (Presiding Arbitrator)

The Administrative Secretary

- Ms. Sofia de Sampaio Jalles

83. The Hearing was transcribed and the transcripts ["HT"] were made available to the Parties and the Tribunal.

84. At the end of the Hearing the Tribunal asked the Parties if there were any issues of due process that the Parties would like to raise at that stage so the Tribunal could take remedial action. The Parties confirmed that there were none⁸⁶.

9. POST-HEARING SUBMISSIONS

85. On 6 June 2023 the Tribunal issued communication A 46 setting out the rules for the next stage of the arbitration. The Tribunal reserved 6 November 2023 for the oral rebuttals to the post-Hearing briefs and answers to the Tribunal's questions (if

⁸⁶ HT, Day 10, p. 2298, l. 16 to p. 2299, l. 2.

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any). The Tribunal established that these oral rebuttals would take place virtually, by Zoom [the "Closing Hearing"]. The Parties agreed to file their post-Hearing briefs by 29 September 2023⁸⁷.

A. New documents

86. Between 16 June and 20 July 2023, the Parties discussed the admission into the record of five documents related to Claimants' request for an exemption to cross the Saudi-Qatari land border in October 2017⁸⁸.

87. On 31 July 2023 the Tribunal decided to admit the five documents into the record, as well as the statement of the Director of Legal Affairs at the Kingdom's Ministry of Health, Mr. Talal Mohammed Albazie, and two other letters identified by Claimants⁸⁹. Accordingly, on 3 and 5 August 2023 Respondent and Claimants, respectively, filed on the record⁹⁰:

- Exhibits R-259 to R-261;

- Exhibits C-519 to C-522.

B. Post-Hearing briefs and Closing Hearing

88. On 29 September 2023:

- Claimants submitted their post-Hearing brief ["CPHB"] together with legal authorities CLA-315 through CLA-346⁹¹;

- Respondent filed its post-Hearing brief ["RPHB"] accompanied by Annex A, Tables 1 to 3, and legal authorities RLA-313 to RLA-444⁹².

89. On 19 October 2023 the Tribunal decided the Parties' disagreements on the Closing Hearing and established its final schedule⁹³.

90. The Closing Hearing took place virtually on 6 November 2023. The Parties and the Tribunal received the transcript of the Closing Hearing ["CHT"].

C. Statements of Costs

91. On 1 December 2023 the Parties filed their Statements of Costs⁹⁴. On 15 December 2023 Respondent filed comments to Claimants' Statement of Costs, together with legal authorities RLA-445 and RLA-446⁹⁵. On the following day, Claimants

⁸⁷ Communication C 93.
⁸⁸ Communications C 92, C 94, R 88, R 89 and R 91.
⁸⁹ Communication A 51.
⁹⁰ Communications R 92 and C 95.
⁹¹ Communication C 96.
⁹² Communication R 93.
⁹³ Communication A 53.
⁹⁴ Communications C 100 and R 96.
⁹⁵ Communication R 97.

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confirmed that they would not be submitting a further statement regarding costs and rested on their prior pleadings⁹⁶.

10. EVIDENCE

92. Claimants have marshalled the following evidence in the proceedings:

93. Respondent has submitted the following evidence during the arbitration:

94. The Tribunal has reviewed and examined all the evidence marshalled by the Parties and discussed it at length throughout this Award.

11. ADVANCE ON COSTS

95. On 3 December 2020 the Court fixed the advance on costs at USD 320,000, subject to later readjustments, pursuant to Art. 37(2) of the ICC Rules¹⁰³. The Parties paid the advance on costs in equal parts¹⁰⁴. On 30 June 2022 the Court readjusted the advance on costs and increased it to USD 1,090,000. The Court also granted the members of the Tribunal a first advance on fees¹⁰⁵. The Parties paid the increased advance in equal parts.

96. On 11 September 2024 the Court fixed the costs of the arbitration at USD 1,090,000¹⁰⁶.

⁹⁶ Communication C 101.
⁹⁷ Together with exhibits VP-1 to VP-116.
⁹⁸ Together with exhibits KU-1 to KU-106.
⁹⁹ Together with exhibits VP-117 to VP-145.
¹⁰⁰ Respectively, Claimants' Opening Presentation at the Hearing; Presentation of Dr. Ulrichsen; Presentation of Mr. Sequeira and Mr. d'Aguiar; Claimants' Rebuttal Presentation at the Closing Hearing.
¹⁰¹ Together with exhibits SC-1 to SC-68.
¹⁰² Respectively, Respondent's Opening Presentation at the Hearing; Presentation of Ambassador Collis CMG; Presentation of Dr. Hern; Respondent's Rebuttal Presentation at the Closing Hearing.
¹⁰³ Communication of the Secretariat to the Parties and co-arbitrators of 3 December 2020.
¹⁰⁴ Financial Table of 11 January 2021.
¹⁰⁵ Communication of the Secretariat to the Parties and co-arbitrators of 1 July 2022 and Financial Table of 1 July 2022.
¹⁰⁶ Financial Table of 13 September 2024.

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12. TIME LIMIT TO RENDER THE AWARD AND CLOSING OF THE PROCEEDINGS

97. In the Terms of Appointment and Reference, the Parties acknowledged that this is a complex arbitration and that the Tribunal would require sufficient time to prepare the award after the last substantive hearing on matters to be decided in the award or the filing of the last written submissions concerning such matters (excluding cost submissions), whichever is later¹⁰⁷.

98. Furthermore, the Parties agreed that paras. 121-122 of the ICC Note to the Parties and Arbitral Tribunals on the Conduct of the Arbitration of 1 January 2019 should not apply and the Tribunal would not be subject to a reduction of fees based on the timeliness of the submission of the draft award to the Court¹⁰⁸.

99. On 30 May 2024 the Court extended the time limit for rendering the final award until 30 September 2024¹⁰⁹. On 26 September 2024 the Court extended the time limit for rendering the final award until 31 October 2024¹¹⁰.

100. On 12 August 2024 the Tribunal closed the proceedings.

13. SIGNATURE OF AWARDS

101. Subject to any requirements of mandatory law that may be applicable, the Parties agreed that any award would be signed by the members of the Arbitral Tribunal in counterparts, and that all such counterparts would be assembled in a single electronic file and notified to the Parties by the Secretariat by email or any other means of telecommunication that provides a record of the sending thereof, pursuant to Art. 35 of the ICC Rules¹¹¹.

¹⁰⁷ Terms of Appointment and Reference, para. 78.
¹⁰⁸ Terms of Appointment and Reference, para. 79.
¹⁰⁹ Communication of the Secretariat of 5 June 2024.
¹¹⁰ Communication of the Secretariat of 1 September 2024.
¹¹¹ Terms of Appointment and Reference, para. 80.

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III. FACTS

102. Qatar Pharma is a developer, manufacturer and distributor of pharmaceutical products founded in 2006 in Doha, Qatar, by Dr. Al Sulaiti¹¹². Dr. Al Sulaiti, a citizen and resident of Qatar¹¹³, is the majority owner of Qatar Pharma¹¹⁴ and of the Al Sulaiti Holding Company ["Al Sulaiti Holding"], a family business¹¹⁵.

103. Qatar Pharma distributed and sold its pharmaceutical products in Saudi Arabia – one of Qatar's neighbouring countries. On 5 June 2017, however, Saudi Arabia announced a decision to "sever diplomatic and consular relations with the State of Qatar"¹¹⁶, which led to the closure of Saudi Arabia's land, air and sea borders with Qatar, and an order that all Qatari citizens abandon the country [the "Measures"]. Claimants submit that the Measures had a devastating impact on their investments in Saudi Arabia¹¹⁷.

104. In the following sections, the Tribunal will describe Qatar Pharma's operations and presence in Saudi territory (1.). It will then turn to Saudi Arabia's decision to sever diplomatic and consular relations with the State of Qatar (2.) and how these Measures affected Qatar Pharma's dealings with the Kingdom (3.), eventually leading to the start of this arbitration (4.). Finally, the Tribunal will dedicate a section to the signature of the Al-Ula Declaration, which restored ties between Qatar and Saudi Arabia (5.).

1. QATAR PHARMA'S BUSINESS

A. Founding of Qatar Pharma

105. Dr. Al Sulaiti founded and registered Qatar Pharma in Qatar in March 2006¹¹⁸, with the goal of becoming one of the few producers of pharmaceutical products in the Gulf region¹¹⁹. The construction of Qatar Pharma's factory, the first intravenous solutions manufacturing facility in Doha, was completed in 2009¹²⁰. That same year, the Qatari Supreme Council of Health authorised the commencement of production and registered the first products¹²¹. At the time, the factory had two production lines: one for manufacturing 50-2,000 mL sterile intravenous solution

¹¹² CWS-3, paras. 12-13. See also C I, para. 13; R I, para. 47.
¹¹³ Doc. C-3.
¹¹⁴ Doc. C-18/VP-23, p. 1; CER-1, para. 69 and Figure 5, p. 36. Until 2017, Dr. Al Sulaiti was the majority shareholder of Qatar Pharma's shares, with a direct 70% share. Al-Sulaiti Holding owned 10% of Qatar Pharma's shares. The remaining 20% were owned by related entities (including entities where Dr. Al Sulaiti has an interest) and family members of Dr. Al Sulaiti.
¹¹⁵ Doc. C-20; Doc. C-64, p. 46; CWS-3, para. 8; CER-1, para. 69 and Figure 5, p. 36. In 2017, Dr. Al Sulaiti was the majority shareholder of Al Sulaiti Holding, with a direct 70% share.
¹¹⁶ Doc. C-71/R-122.
¹¹⁷ C I, paras. 74-85, 131-138.
¹¹⁸ The company's original commercial name was Qatar Pharmaceutical Solutions Factory, and its trademark name was Qatar Pharma (Doc. C-17). In 2017 it became known simply as Qatar Pharma (Doc. C-18).
¹¹⁹ CWS-3, paras. 10-12.
¹²⁰ CWS-3, para. 17.
¹²¹ Doc. C-28; CWS-3, para. 18; CWS-8, para. 10. See also Doc. C-24, with the certificate of "good manufacturing practice" issued by the Qatar Supreme Council of Health in August 2009.

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bags and one for manufacturing 500 mL sterile intravenous solution bottles¹²². Progressively, Qatar Pharma increased its production lines to include irrigation solutions, haemodialysis solutions and topical medication¹²³. By 2016 it was operating 14 production lines¹²⁴.

106. The factory complied with various international standards, such as the Good Manufacturing Practices of the World Health Organization and the Conformité Européenne Medical Device Directive¹²⁵.

B. Expansion into Saudi Arabia

107. In 2010 Qatar Pharma decided to expand sales to Saudi Arabia, given its geographic proximity (Qatar's only land border is with Saudi Arabia)¹²⁶, large population¹²⁷, and growing pharmaceutical market¹²⁸. Moreover, both Qatar and Saudi Arabia are member States of the Gulf Cooperation Council¹²⁹ ["GCC"] and the Gulf Health Council ["GHC"]¹³⁰. The timing also seemed favourable: at the time, most pharmaceutical products consumed in the GCC region were imported, and GCC governments were eager to reduce reliance on imports and to increase local drug manufacturing¹³¹.

Agency contract with Banaja

108. Under Saudi law, as it stood in 2010, any non-Saudi enterprise seeking to sell pharmaceutical products in Saudi Arabia was required to employ a licensed Saudi agent¹³². To enter the Saudi market, Qatar Pharma executed a commercial agency contract with Banaja & Partners ["Banaja"], a Saudi import company¹³³. Pursuant to this contract (valid for three years¹³⁴), Banaja would act as the sole distributor and exclusive agent of Qatar Pharma in the Kingdom¹³⁵.

¹²² CWS-3, para. 16. See also C I, para. 23.
¹²³ See Doc. C-64, pp. 6 and 45.
¹²⁴ Doc. C-59.
¹²⁵ Doc. C-23; Doc. C-24; Doc. C-25; Doc. C-26; Doc. C-28; CWS-3, paras. 15-18; CWS-4, para. 10.
¹²⁶ CER-1, para. 72; Doc. H-5, slide 10.
¹²⁷ Doc. C-29, p. 11; Doc. H-5, slide 10.
¹²⁸ Doc. C-56/VP-9, p. 16; Doc. C-57; Doc. C-64, p. 33; CER-1, paras. 54, 57, Figure 2; RWS-1, para. 7; RWS-4, paras. 10-12; RWS-5, paras. 10-11.
¹²⁹ In 2010 Qatar Pharma was approved by the GCC Central Drug Registration Program, a unified procurement program for medicines, medical equipment and pricing of products aimed at ensuring that registered pharmaceutical companies provide safe, effective and high-quality medicine (Doc. C-215; CWS-3, paras. 19-21; CWS-4, para. 10).
¹³⁰ Doc. C-27.
¹³¹ Doc. C-64, pp. 38-39. See also Doc. H-5, slide 10.
¹³² C II, para. 85; R I, para. 341; CWS-3, para. 37; CWS-4, para. 18; RWS-1, para. 11; RWS-4, para. 14; RWS-14, para. 6.
¹³³ Doc. C-39; CWS-3, para. 37; RWS-14, para. 7.
¹³⁴ Doc. C-39, Art. 5, p. 2.
¹³⁵ Doc. C-39, Art. 2, p. 2.

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109. Despite some initial difficulties¹³⁶, in 2011 Qatar Pharma's facilities were eventually approved by the Saudi Food and Drug Authority¹³⁷ ["SFDA"] and its products were authorised to be distributed in Saudi Arabia¹³⁸ using its own facilities in Doha as distribution hub¹³⁹. The initial term of these authorisations was five years¹⁴⁰, and in 2016 and early 2017 the SFDA renewed these registrations for another five-year term¹⁴¹.

110. For nearly three years, Qatar Pharma's products were distributed in Saudi Arabia both to public and private sector customers via Banaja. In early 2013, however, Banaja and Qatar Pharma decided to terminate their contract¹⁴². The witnesses disagree on the causes that led to the breakdown of the relationship but agree that after 2013 Qatar Pharma and Banaja were no longer bound by an agency agreement¹⁴³.

Qatar Pharma's enterprise in Saudi Arabia

111. Accordingly, Claimants started to make plans to set up their own distribution system in the Kingdom. The first step was the creation of a branch known as Qatar Establishment for Medical Solution¹⁴⁴ ["QEMS"], which was registered at the Saudi Commercial Register¹⁴⁵.

112. This endeavour further required the creation of a scientific office plus a warehouse located in Saudi Arabia¹⁴⁶. Qatar Pharma established a scientific office in Riyadh [the "Scientific Office"] and on 30 June 2013, the SFDA issued a "Scientific Office Licence" for a term of five years (valid until May 2018)¹⁴⁷. Furthermore, in November 2013 Qatar Pharma signed a lease agreement for a warehouse in Riyadh¹⁴⁸ [previously defined as the "Riyadh Warehouse"].

113. In March 2014 Saudi Arabia adopted the Foreign Investment Law, which permitted GCC residents to own 100% of a local Saudi company¹⁴⁹; taking advantage of this legislative change, Claimants decided to convert their branch, QEMS¹⁵⁰, into an

¹³⁶ Doc. R-14. In 2010 the GHC postponed the registration of 14 products of Qatar Pharma after several stability study assessments concluded that there were discrepancies in the data presented at the time of registration.
¹³⁷ Doc. C-222; CWS-4, paras. 12-16. See also Doc. C-32; Doc. C-33; Doc. C-34; Doc. C-35; Doc. C-36; Doc. C-37.
¹³⁸ Doc. C-32; Doc. C-33; Doc. C-34; Doc. C-35; Doc. C-36; Doc. C-37; Doc. C-219; Doc. C-246; Doc. C-247; Doc. C-259; Doc. C-260; Doc. C-261; Doc. C-262; Doc. C-262; Doc. C-263; Doc. C-264; Doc. C-296; Doc. C-297; Doc. C-298; Doc. C-299; Doc. C-300; Doc. C-301; Doc. VP-20; Doc. VP-36; CWS-4, paras. 10-17, 39. See also Doc. H-5, slide 12.
¹³⁹ CWS-3, para. 37.
¹⁴⁰ Doc. VP-20; Doc. VP-36; Doc. H-5, slide 12; CWS-4, paras. 17.
¹⁴¹ Doc. C-214; Doc. C-256; Doc. C-257; Doc. C-258; CWS-4, paras. 17, 37-38.
¹⁴² Doc. C-404; Doc. C-405; CWS-3, para. 41; RWS-14, para. 9.
¹⁴³ CWS-3, para. 41; RWS-14, paras. 8-11; HT, Day 3, p. 610, ll. 10-25 (Dr. Al Sulaiti).
¹⁴⁴ QEMS was first incorporated in Qatar in 2007 (Doc. C-38; Doc. VP-26; CER-1, Figure 5, p. 36). QEMS is also sometimes referred to as Qatar Pharma Solutions Establishment.
¹⁴⁵ Doc. VP-24; Doc. VP-25; CER-1, para. 69(ii)(1).
¹⁴⁶ Doc. C-404.
¹⁴⁷ Doc. C-217; Doc. R-70; Doc. R-171; RWS-1, para. 29. See also CWS-3, para. 39.
¹⁴⁸ Doc. C-4/R-50; Doc. R-165; Doc. R-172; CWS-3, para. 38.
¹⁴⁹ Doc. CLA-23.
¹⁵⁰ At the time under the name of "Qatar Pharmaceutical Solutions Establishment" (Doc. C-51).

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independent "local establishment" in Saudi Arabia, registered with the Ministry of Commerce and Industry¹⁵¹.

114. Thereafter, Qatar Pharma concluded a "Licensing and Commercial Representation Contract" with QEMS¹⁵², pursuant to which QEMS was appointed as "sole representative and distributor" of Qatar Pharma in Saudi Arabia¹⁵³. QEMS imported, sold and distributed the pharmaceutical solutions produced by Qatar Pharma in Saudi Arabia¹⁵⁴.

115. Furthermore, in 2014 Dr. Al Sulaiti, via Al Sulaiti Holding, established a transport company in Qatar, Al Qima Transport, Shipping and Storage ["Al Qima"]¹⁵⁵. In March 2016 Al Qima and QEMS concluded a transportation agreement, pursuant to which Al Qima leased ten trucks to QEMS to transport products from Qatar to Saudi Arabia and vice-versa¹⁵⁶.

116. Qatar Pharma further expanded its operations in Saudi Arabia, by leasing two additional warehouses:

- In May 2016 QEMS leased Warehouse No. 29 in Dammam for a term of one year¹⁵⁷ ["Dammam Warehouse"]; and

- In February 2017 QEMS leased Warehouse No. 53 in Jeddah, also for the term of one year¹⁵⁸ ["Jeddah Warehouse"];

[together with the Riyadh Warehouse, the "Warehouses"].

117. Qatar Pharma carried out works in the three Warehouses and started procedures to obtain the required operating licences and authorizations¹⁵⁹. The Parties disagree on whether the Warehouses were properly licensed by the Saudi authorities¹⁶⁰.

C. Participation in tender processes

118. Most Qatar Pharma's revenues were generated outside of Qatar, in particular, in Saudi Arabia. Qatar Pharma's products were distributed both to public and private sector customers, but the largest portion of revenue came from the participation in public tenders for the sale of products to governmental entities¹⁶¹.

119. Saudi Arabia has a centralized system for the procurement of pharmaceutical products for the public sector¹⁶²:

¹⁵¹ Doc. C-51; Doc. C-413, p. 17 of PDF; CER-1, para. 69(ii)(2). See also CWS-8, para. 15.
¹⁵² Doc. VP-86.
¹⁵³ Doc. VP-86, Art. 2.
¹⁵⁴ Doc. VP-86, Preface.
¹⁵⁵ Doc. C-48/VP-28; CER-1, paras. 69(ii)(3), 69(iii), 89. See also C I, Appendix 1.
¹⁵⁶ Doc. C-49/VP-27. QEMS was at the time operating as "Qatar Pharmaceutical Solutions Establishment".
¹⁵⁷ Doc. C-41. See also CWS-3, para. 47; Doc. H-5, slide 15.
¹⁵⁸ Doc. C-40. See also CWS-3, para. 46; Doc. H-5, slide 15.
¹⁵⁹ Doc. C-45; Doc. C-46; Doc. C-47; Doc. VP-93; Doc. C-390; Doc. C-403; Doc. C-465; Doc. C-464; Doc. C-479.
¹⁶⁰ See section V.2 infra.
¹⁶¹ Doc. C-64, pp. 49-50; Doc. H-5, slide 14. See also CWS-4, para. 28; CWS-5, para. 18; Doc. VP-145.
¹⁶² Doc. C-64, p. 39. See also CWS-4, para. 33.

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- On the one hand, the Saudi National Company for the Unified Purchase of Medicines, Devices and Medical Supplies ["NUPCO"] organizes public tenders, negotiates with international manufacturers, and unifies prices and product specifications for the Saudi public sector¹⁶³;

- On the other hand, Saudi Arabia also acquires pharmaceutical products by means of the tender processes organized by the GHC¹⁶⁴, which allow GCC countries to purchase in bulk and benefit from costs savings through large order quantity discounts.

120. Both the NUPCO and the GHC organize annual tenders, for procuring different types of products¹⁶⁵.

121. Between 2011 and 2015 Qatar Pharma (initially via its agent Banaja, and then through QEMS) participated in tender processes organized by the NUPCO and the GHC¹⁶⁶. Qatar Pharma won several tenders and entered into annual contracts for the supply of pharmaceutical products to the Saudi Ministry of Health¹⁶⁷, which quickly became Qatar Pharma's largest customer¹⁶⁸.

Delays in delivery

122. However, during the execution of these contracts, Qatar Pharma incurred several delays or incomplete delivery of goods¹⁶⁹. Qatar Pharma requested Saudi Arabia

¹⁶³ Doc. C-64, p. 39. See also CWS-5, para. 18. NUPCO's clients include, inter alia, the Ministry of Health, the Ministry of Finance, King Faisal Specialist Hospital, and the National Guard Health Affairs.
¹⁶⁴ Also referred to by Claimants as the Secretariat General of Health or "SGH".
¹⁶⁵ CWS-5, para. 18.
¹⁶⁶ Doc. C-60; Doc. C-61; Doc. R-19; CWS-3, para. 49; CWS-4, para. 34; CWS-5, para. 19; R I, para. 7, Table A (p. 34), Table B (p. 35), Table E (p. 39), Table F (p. 40).
¹⁶⁷ Doc. R-18, Procurement and Supply Contract, SGH-33 Tender 2011, between the Ministry of Health and Qatar Pharma (via its agent Banaja), valid for one year (15 August 2011 to 14 August 2012); Doc. C-254, Procurement and Supply Contract, SGH-34 Tender 2012, between the Ministry of Health and QEMS, valid for one year (15 July 2012 to 14 July 2013); Doc. C-213/R-41, Procurement and Supply Contract, NUPCO Tender 2013, between the Ministry of Health and QEMS, valid for one year (15 July 2013 to 14 July 2014); Doc. C-255/R-39, Procurement and Supply Contract, SGH-35 Tender 2013, between the Ministry of Health and QEMS, valid for one year (7 July 2013 to 6 July 2014); Doc. R-40, Procurement and Supply Contract, Tender for Artificial Kidney Solutions (8), between the Ministry of Health and QEMS, valid for one year (7 July 2013 to 6 July 2014); Doc. C-62/R-65, Procurement and Supply Contract, NUPCO Tender 2014, between the Ministry of Health and QEMS, valid for one year (25 June 2014 to 24 June 2015); Doc. C-290, Procurement and Supply Contract, SGH-9 Tender 2014, between the Ministry of Health and QEMS, valid for one year (6 July 2014 to 5 July 2015); Doc. R-63, Procurement and Supply Contract, SGH-36 Tender 2014, between the Ministry of Health and QEMS, valid for one year (6 July 2014 to 5 July 2015); Doc. R-64, Procurement and Supply Contract, Tender for Artificial Kidney Solutions (9), between the Ministry of Health and QEMS, valid for one year (6 July 2014 to 5 July 2015); Doc. R-91, Procurement and Supply Contract, SGH-37 Tender 2015, between the Ministry of Health and QEMS, valid for one year (17 June 2015 to 16 June 2016); Doc. R-92, Procurement and Supply Contract, Tender for Artificial Kidney Solutions (10), between the Ministry of Health and QEMS, valid for one year (17 June 2015 to 16 June 2016); Doc. R-93, Procurement and Supply Contract, NUPCO Tender 2015, between the Ministry of Health and QEMS, valid for one year (17 June 2015 to 16 June 2016). See also CWS-5, para. 15; CWS-9, paras. 45, 48; Doc. H-5, slide 15.
¹⁶⁸ Doc. C-64, pp. 9, 49.
¹⁶⁹ Doc. R-43; Doc. R-44; Doc. R-45; Doc. R-46; Doc. R-47; Doc. R-48; Doc. R-51; Doc. R-52; Doc. R-76; Doc. R-86; Doc. R-87; RLA-49; RLA-50. See also HT, Day 5, pp. 1098-1099 (Mr. Al Ahmari).

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additional time to supply various of the delayed or incomplete shipments, which the Kingdom granted, while imposing delay penalties¹⁷⁰.

123. Between 2012 and 2014 Qatar Pharma signed several compromises with the Saudi Ministry of Health undertaking to¹⁷¹:

- Adhere to delivery dates;

- Comply with the batches included in the supply invoices;

- Ensure products were properly packed; and

- Complete the required paperwork following each delivery.

Suspension from 2016 GHC tender

124. Nonetheless, due to Qatar Pharma's delays, the GHC eventually decided to suspend Qatar Pharma from participating in the 2016 GHC's public tender¹⁷², Qatar Pharma also did not participate in the 2016 NUPCO tender¹⁷³.

The 2017 tenders

125. In 2017 Qatar Pharma was permitted to bid both in the GHC and the NUPCO tenders. Qatar Pharma participated in the GHC tender No. 39 for 2017¹⁷⁴, in the GHC Artificial Kidney Solution Tender No. 12 for 2017¹⁷⁵ and in the 2017 NUPCO tender¹⁷⁶.

126. The Parties have discussed at length whether Qatar Pharma was awarded these tenders and, if so, what was the size of such awards¹⁷⁷. They agree, nevertheless, that Qatar Pharma did obtain final awards in the GHC tender No. 39¹⁷⁸ and in the 2017 NUPCO tender¹⁷⁹ – although the matter of the size of these awards remains

¹⁷⁰ Doc. R-33; Doc. R-54; Doc. R-55; Doc. R-56; Doc. R-57; Doc. R-58; Doc. R-59; Doc. R-60; Doc. R-61; Doc. R-72; Doc. R-82; Doc. R-100.
¹⁷¹ Doc. R-22; Doc. R-31; Doc. R-32; Doc. R-83; Doc. R-88.
¹⁷² Doc. R-108, paras. 6(A)(1)-6(A)(2); Doc. R-71, para. F. See also R I, paras. 64-65; R II, para. 101; C II, para. 63.
¹⁷³ Doc. H-5, slide 15; R II, para. 101; C II, para. 65.
¹⁷⁴ Doc. C-60; Doc. VP-40. See also R I, para. 68; CPHB, para. 63.
¹⁷⁵ Doc. C-61. See also R I, para. 68; CPHB, para. 63.
¹⁷⁶ CPHB, para. 63; RPHB, para. 159.
¹⁷⁷ Claimants argue that Qatar Pharma obtained large orders under the three tenders (see, e.g., C II, para. 75; CPHB, paras. 62 et seq.; CER-3, Table 7; Doc. H-5, slide 17; CWS-9, paras. 45-49). Respondent disagrees (R I, paras. 68 and 76; R II, paras. 113-115; RPHB, paras. 158 et seq.).
¹⁷⁸ Doc. R-127; R II, paras. 91-92; RPHB, para. 159. See also Doc. C-384.
¹⁷⁹ Doc. R-173; R II, paras. 91-92; RPHB, para. 159. See also Doc. C-288/C-429, whereby the Ministry of Health acknowledged that products were awarded to Claimants under the 2017 NUPCO tender.

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disputed¹⁸⁰. It is unclear, however, whether Qatar Pharma was awarded any products under the 2017 GHC Artificial Kidney Solution Tender No. 12¹⁸¹.

D. Qatar Pharma's prospective IPO

127. Sometime around 2016, Qatar Pharma began contemplating the possibility of issuing an initial public offering ["IPO"] on the Qatar Stock Exchange¹⁸². It hired Qatar National Bank Capital to conduct a readiness assessment, who in turn engaged the consulting firm, Frost & Sullivan, to provide independent research and market data¹⁸³.

128. In May 2016, Frost & Sullivan issued a Market Report with an in-depth review of Saudi Arabia's healthcare market. It concluded that the Saudi market offered great potential and presented very attractive growth opportunities for Qatar Pharma¹⁸⁴. The Frost & Sullivan Market Report also contemplated the possibility that Qatar Pharma would add new production lines in its factory¹⁸⁵.

129. However, in June 2016, the Qatar National Bank concluded that Qatar Pharma was not yet ready to issue an IPO¹⁸⁶. Instead, it provided certain recommendations regarding corporate governance, financial reporting, business growth and international expansion¹⁸⁷, which would permit an IPO in 2017 or ideally in 2018¹⁸⁸.

130. Qatar Pharma argues that as a consequence of the Measures it was forced to suspend its planned IPO¹⁸⁹, while Respondent contests the possibility of Qatar Pharma ever going public, irrespective of the Measures¹⁹⁰.

¹⁸⁰ The Parties discuss whether Doc. C-373 represents the award granted to Qatar Pharma in GHC tender No. 39 or whether it is part of the quotation submitted by Qatar Pharma as Doc. C-61 (C II, para. 68; RPHB, paras. 159, 161). Likewise, it is unclear whether Doc. C-386, named "Awarded Items for Pharmaceuticals Tender No. 39/2017" represents indeed an award or not, since it does not permit to ascertain how many units were awarded and destined to Saudi Arabia. The Parties also discuss whether Doc. C-376 represents the award granted to Qatar Pharma in the 2017 NUPCO tender (C II, para. 72; RPHB, paras. 159, 161).
¹⁸¹ Claimants have marshalled Doc. C-374 on the record, which they purport represents the final award (C II, para. 70, fn. 128). Respondent disputes this (RPHB, paras. 159 et seq.). The document is a single page named "Awarded Items for Renal Dialysis Solutions Tender No. 12/2017", which does not permit to ascertain if the listed products were indeed awarded by the GHC to Qatar Pharma and if so, how many units were destined for Saudi Arabia. Indeed, the document has no information about quantity, price or proposed buyers. Furthermore, Claimants have also presented Doc. C-385, which is the "Objections Result for Renal Dialysis Solutions Tender No. 12/2017", which seems to show that Qatar Pharma was indeed awarded one product for renal dialysis.
¹⁸² Doc. VP-38, p. 4. See also CWS-3, paras. 57-64; CER-1, para. 96(a).
¹⁸³ Doc. C-64, p. 4.
¹⁸⁴ Doc. C-56/VP-9, pp. 3-4, 16-17, 29. See also Doc. C-57, p. 1; CER-1, para. 62, Figure 3; CWS-3, para. 42; CWS-5, paras. 9, 11.
¹⁸⁵ Doc. C-56/VP-9, p. 23.
¹⁸⁶ Doc. C-64, pp. 25-26, 103, 122-123.
¹⁸⁷ Doc. C-64, pp. 27-28, 104-116, 124-134.
¹⁸⁸ Doc. C-64, p. 133.
¹⁸⁹ C I, paras. 59-65; C II, paras. 93 et seq.; CWS-3, paras. 119-120.
¹⁹⁰ R I, para. 135; R II, paras. 148 et seq.

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2. SAUDI ARABIA SEVERS RELATIONS WITH QATAR

131. Qatar and Saudi Arabia are two neighbouring countries in the Gulf region; Qatar in fact has a single land border, which it shares with Saudi Arabia¹⁹¹. They both belong to several intergovernmental organizations, including, inter alia, the OIC, the GCC and the Arab League.

[Map of the Persian Gulf region, showing Kuwait, Bahrain, Qatar, Saudi Arabia, United Arab Emirates, and Oman.]

A. The Riyadh Agreements

132. The GCC was founded in 1981 and is composed of six member States: Saudi Arabia, Qatar, Bahrain, Kuwait, Oman and the United Arab Emirates ["UAE"]¹⁹². Due to the instability and security threats faced by the Gulf region, starting in 2013 the GCC States signed a series of treaties, with the aim of "abolish[ing] whatever muddies the[ir] relations", particularly with regard to security challenges [jointly the "Riyadh Agreements"]¹⁹³.

133. The first "Riyadh Agreement" was signed on 23 and 24 November 2013. The GCC States undertook a series of obligations, including¹⁹⁴:

- Not to interfere in their respective internal affairs, whether directly or indirectly;

- Not to give harbour or naturalize "any citizen of the [GCC] States that has any activity which opposes his country's regimes, except with the approval of his country";

- Not to support the Muslim Brotherhood or any other organization or group aimed at destabilizing the GCC States; and

- Not to support any faction in Yemen that could pose a threat to Yemen's neighbouring countries.

¹⁹¹ Doc. H-3, slide 6. See also CER-1, para. 72.
¹⁹² Doc. SC-24; RER-3, Collis, para. 73.
¹⁹³ See also CER-2, Ulrichsen, pp. 22-23; RER-3, Collis, paras. 85-87; Doc. H-4, slide 4.
¹⁹⁴ Doc. R-53.

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134. However, less than four months later, Saudi Arabia, the UAE and Bahrain recalled their ambassadors in Qatar due to the country's alleged refusal to abide by the terms of the Riyadh Agreement and to agree on a monitoring mechanism¹⁹⁵.

135. Despite this diplomatic incident, on 17 April 2014 the GCC States (including Qatar) signed the "Mechanism Implementing the Riyadh Agreement", which reiterated the commitments and provided, among other things, that if any GCC member failed to comply with the Mechanism, then¹⁹⁶:

"[...] the other GCC Countries shall have the right to take any appropriate action to protect their security and stability."

136. Then, on 16 November 2014, the GCC States signed the "Supplementary Riyadh Agreement"¹⁹⁷, a treaty labelled "Top Secret", with a particular focus on security, whereby the GCC States committed¹⁹⁸:

- To fully implement the Riyadh Agreement within one month;

- To deny support and actively prosecute "any person or media apparatus that harbours inclinations harmful to any [GCC State]"; and

- To provide support to Egypt, "ceasing all media activity directed against the Arab Republic of Egypt in all media platforms, whether directly or indirectly, including all the offenses broadcasted on Al-Jazeera".

137. The Supplementary Riyadh Agreement ordered "intelligence chiefs to follow up on the implementation [...] and to report regularly to the leaders, in order to take the measures they deem necessary to protect the security and stability of their countries"¹⁹⁹.

138. On that same day, Saudi Arabia's ambassador returned to Doha²⁰⁰.

B. The Measures

139. Notwithstanding the execution of the successive Riyadh Agreements, and the reestablishment of diplomatic relations, the friction between Saudi Arabia and Qatar did not abate²⁰¹.

140. The situation worsened in 2017: after recalling once again the Saudi ambassador to Qatar, on 5 June 2017 the Saudi Ministry of Foreign Affairs published a press release announcing that Qatar had²⁰²:

"[...] repeatedly violated their international obligations and the agreements they signed under the umbrella of the Gulf Cooperation Council (GCC) for

¹⁹⁵ Doc. KU-59, p. 1.; Doc. SC-44; CER-2, Ulrichsen, para. 4.55; RER-3, Collis, para. 88.
¹⁹⁶ Doc. R-73.
¹⁹⁷ CER-2, Ulrichsen, para. 4.55.
¹⁹⁸ Doc. R-90, p. 1.
¹⁹⁹ Doc. R-90, p. 2.
²⁰⁰ Doc. SC-44.
²⁰¹ Doc. RLA-212, paras. 2.33-2.46; RER-3, Collis, para. 55.
²⁰² Doc. R-122. See also Doc. C-71.

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Arab States to cease the hostilities against the Kingdom and stand against terrorist groups and activities of which the latest one was their failure to implement the Riyadh Agreement." [Emphasis added]

141. The press release added that²⁰³:

"An official source stated that the Government of Saudi Arabia, in exercising its sovereign rights guaranteed by the international law and protecting its national security from the dangers of terrorism and extremism has decided to sever diplomatic and consular relations with the State of Qatar, close all land, sea and airports, prevent crossing into Saudi territories, airspace and territorial waters [...] for reasons relating to Saudi national security. [...] Saudi citizens are prohibited from traveling to Qatar, residing in or passing through it, while Saudi residents and visitors have to hurry leaving Qatari territories within 14 days. The decision, for security reasons, unfortunately prevents Qatari citizens' entry to or transit through the Kingdom of Saudi Arabia and those Qatari residents and visitors have to leave Saudi territories within 14 days." [Emphasis added]

142. In sum, Saudi Arabia (and several other States, including Egypt, the UAE and Bahrain) adopted the following measures [previously defined as the "Measures"]²⁰⁴:

- Sever diplomatic and consular relations with Qatar;

- Close all land, sea and air communications to and from Qatar;

- Prevent crossings from Qatar into its territory, airspace and waters;

- Prohibit Saudi citizens from traveling to or through Qatar;

- Require Saudi citizens resident in Qatar to leave within 14 days; and

- Order Qatari citizens visiting or residing in Saudi territory to leave within 14 days.

143. Following this announcement:

- The Saudi authorities closed Qatar's only land border crossing at Abu Samra [the "Salwa Crossing"]²⁰⁵;

- The Saudi Ports Authority issued a circular instructing the directors of ports in Saudi Arabia "not to receive any ship flying the Qatari flag, or owned by Qatari persons or companies, and not to unload any goods of Qatari origin in Saudi ports"²⁰⁶; and

²⁰³ Doc. R-122. See also Doc. C-70.
²⁰⁴ Doc. R-122; CER-2, Ulrichsen, paras. 4.1-4.4; RER-3, Collis, para. 24. See also HT, Day 6, p. 1387 (Dr. Harris); RPHB, para. 93.
²⁰⁵ Doc. KU-5; Doc. C-81; Doc. C-82; CER-2, Ulrichsen, para. 4.5; RER-3, Collis, fn. 2. The border closed on 18 June 2017 and was temporarily reopened to permit pilgrims to travel to the holy city of Mecca during the Hajj in August 2017; it was subsequently closed again.
²⁰⁶ Doc. C-80; CER-2, Ulrichsen, para. 4.2; RER-3, Collis, para. 24.

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- The General Authority of Civil Aviation in Saudi Arabia revoked Qatar Airways' licence to operate in the Kingdom and issued a notice that all flights registered in Qatar were no longer authorized to land at Saudi airports or to overfly Saudi Arabian airspace²⁰⁷.

C. The practical demands

144. After the adoption of the Measures, a period of diplomatic mediation and negotiations, spearheaded by Kuwait, the United States and the European Union, ensued²⁰⁸.

145. On 23 June 2017 Saudi Arabia (together with Bahrain, the UAE and Egypt) delivered a list of 13 practical demands to Qatar, which included, inter alia, curbing diplomatic ties with Iran, severing all ties to "terrorist organizations", shutting down the Qatari news site Al-Jazeera and other news outlets, and terminating all Turkish military presence in Qatar. Qatar was required to agree to all demands within 10 days and thereafter to submit itself to monthly and annual monitoring²⁰⁹. Qatar, however, rejected this list of demands, arguing that they would amount to a violation of its sovereignty²¹⁰.

146. On 19 July 2017 Saudi Arabia transformed the 13 demands into six "principles", which required Qatar, inter alia, to commit fully to the Riyadh Agreements, to combat extremism and terrorism, to refrain from inciting hatred and violence and to refrain from interfering in the internal affairs of States – Qatar, however, once again declined to submit to the Kingdom's demands²¹¹.

3. INTERRUPTION OF QATAR PHARMA'S OPERATIONS IN SAUDI ARABIA

147. By 2017, although Qatar Pharma was registered across the GCC countries, and also in Iraq, Sudan, Jordan, Libya, Syria and Yemen²¹², approximately 70% of its revenues were generated in Saudi Arabia, particularly through sales to the Saudi Ministry of Health²¹³. The Parties disagree on the scale and success of Qatar Pharma's venture in Saudi Arabia²¹⁴, but it is undeniable that the Measures affected its business operation.

Disruption of business

148. The most immediate impact was the closure of borders. The Al Qima trucks, which used to transport products between Qatar and Saudi Arabia, were not authorized to pass the Salwa Crossing and the supply of medical products stopped²¹⁵.

²⁰⁷ Doc. C-78; Doc. C-79; Doc. R-179; CER-2, Ulrichsen, para. 4.3; RER-3, Collis, para. 24.
²⁰⁸ Doc. KU-100, p. 1; Doc. KU-96; RER-3, Collis, paras. 58, 111.
²⁰⁹ Doc. KU-72; Doc. KU-96; Doc. SC-13; Doc. C-159; CER-2, Ulrichsen, para. 4.81; RER-3, Collis, para. 57.
²¹⁰ Doc. KU-100, p. 2; CER-2, Ulrichsen, paras. 4.84, 4.86.
²¹¹ Doc. C-160; Doc. KU-100; CER-2, Ulrichsen, para. 4.84; RER-3, Collis, para. 58.
²¹² Doc. C-64, p. 6.
²¹³ Doc. C-64, pp. 8-9, 49, 53-54. See also CER-1, para. 19; Doc. H-5, slide 8; CWS-6, para. 26.
²¹⁴ R I, paras. 4-6, 55-56, 78; C II, paras. 56-61.
²¹⁵ CWS-3, paras. 69, 80, 83.

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149. There were additional, indirect effects: Saudi customers stopped placing orders, accepting deliveries²¹⁶, and paying invoices²¹⁷. Claimants submit that Qatar Pharma accumulated²¹⁸:

- SAR 89.1 million in unpaid receivables due by the Saudi Ministry of Health; and

- SAR 10.6 million in unpaid receivables due by Saudi private clients²¹⁹.

150. All employees of Qatari nationality who were working for QEMS in Saudi Arabia were forced to leave the country within 14 days²²⁰. The effect on QEMS's workforce was reinforced, because most of its Saudi employees decided to leave their employment with a Qatari company²²¹. Dr. Al Sulaiti instructed his remaining employees to consolidate all products, documents, records and materials from the Warehouses and the Scientific Office at the Riyadh Warehouse²²².

151. Furthermore, after the enactment of the Measures, the SFDA conducted an inspection at the Riyadh Warehouse and eventually decided to seal it²²³. The Parties have discussed at length whether Claimants were or not capable of accessing the Riyadh Warehouse while the Measures were in force and after the sealing by the SFDA²²⁴. In July 2022, once this arbitration was ongoing, Claimants engaged Deloitte's forensic team to access the Riyadh Warehouse²²⁵. Images of the visit performed by Deloitte show that the Warehouse apparently had been looted, but that certain documents and products remained²²⁶.

152. Finally, Qatar Pharma's access to its Alawwal Bank [today the Saudi Arabian British Bank, already defined as "SABB"] account became disrupted²²⁷. The extent to which Dr. Al Sulaiti was able to access the bank accounts of Qatar Pharma and Respondent's interference in the access to the SABB account are disputed facts²²⁸.

Request for exemption

153. On 3 October 2017 QEMS sent a letter to the Director General of the General Directorate of Medical Supply at the Kingdom's Ministry of Health, informing that it was²²⁹:

²¹⁶ CER-3, Figure 7; CWS-3, para. 93; CWS-8, paras. 30-31.
²¹⁷ Doc. C-156; Doc. C-220; CER-1, paras. 26, 100.
²¹⁸ CER-1, Tables 1 and 6; Doc. H-5, slides 21 and 31.
²¹⁹ CPHB, para. 189 (QAR 11.4 M minus QAR 800,000 already paid). See also CER-1, Secretariat I, para. 133, Table 6; Doc. H-5, slide 21.
²²⁰ CWS-2, para. 2; CWS-3, paras. 71, 80-83; CWS-5, paras. 42-45.
²²¹ CWS-3, para. 87; CWS-5, para. 37; HT, Day 4, pp. 982-983 (Mr. Kotb).
²²² CWS-2, paras. 5-10; CWS-3, paras. 87-92; CWS-5, paras. 37-41.
²²³ Doc. C-6; Doc. R-6; Doc. R-7; CWS-2, paras. 5, 11; CWS-3, paras. 90-91; CWS-4, para. 49; CWS-5, paras. 46-50; RWS-1, paras. 34-36. See also Communication C 49, para. 6.
²²⁴ See, e.g., R I, para. 554.1; C II, paras. 477-478, fns. 888-889.
²²⁵ Communication C 66; Doc. C-317.
²²⁶ Doc. C-317; Doc. C-306; Doc. C-307.
²²⁷ Doc. C-16; Doc. C-180; Doc. C-181; Doc. C-231; Doc. C-232; CWS-3, paras. 97-106; CPHB, paras. 17, 21.
²²⁸ Doc. C-99, pp. 3-4; Doc. C-100; Doc. R-154; Doc. R-156; Doc. R-157; RWS-6, paras. 10-16.
²²⁹ Doc. C-94. See also Doc. C-520, with minor differences in the translation.

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"[...] fully and completely prepared to supply [the items awarded under SGH (39,12) and NUPCO 2017 Tenders] as [] requested. Please note that all quantities awarded to us were manufactured and that the Ministry of Health's logo was affixed thereto prior to the decision to close the land borders. Accordingly, we cannot sell them to any other entity."

154. Therefore, QEMS asked that²³⁰:

"In light of closure of the Saudi-Qatari land border, which is considered an exceptional emergency situation and a force majeure beyond our control, and given that we are fully prepared to supply all quantities of the aforementioned tenders, we ask Your Excellency to instruct the parties concerned to exempt these medicines and allow these shipments to cross the Saudi-Qatari land border."

155. The Ministry of Health received this letter²³¹. The Kingdom has produced on the record a letter dated 11 October 2017, which allegedly demonstrates that the Ministry of Health responded to QEMS's request, asking that QEMS provide it²³²:

"[...] with the notification letters of award (Awarded Sheet) for the items of these tenders, which were provided to [QEMS] by the Executive Office for Unified Procurement in the Gulf Cooperation Council [GHC] and the National Unified Company Procurement (NUPCO) so that we can take necessary action."

156. Claimants question the authenticity and relevance of the Ministry's response²³³; the Tribunal will discuss this issue in further detail in section VI infra.

VAT and income tax payments

157. Saudi taxpayers are required to file income tax declarations to the Zakat, Tax and Customs Authority ["ZATCA"]²³⁴, within 120 days of the end of the tax year²³⁵. When a corporation ceases its economic activity, it must notify ZATCA²³⁶ and apply for deregistration from value added tax ["VAT"]²³⁷. Because QEMS was registered as a local entity in Saudi Arabia, it was required to file tax declarations and VAT returns. After the Measures Qatar Pharma failed to deregister from ZATCA and did not file its tax returns. Since December 2019 ZATCA has sent Qatar Pharma over 15 letters regarding unpaid tax invoices, failures to submit VAT returns, and late penalties²³⁸.

²³⁰ Doc. C-94. See also Doc. C-520, with minor differences in the translation.
²³¹ Doc. C-519; Communication R 89.
²³² Doc. R-259.
²³³ CPHB, paras. 137-140. See also Communication C 92.
²³⁴ Previously called the General Authority of Zakat and Tax (or GAZT).
²³⁵ Doc. RLA-54; Doc. R-148, p. 36; Doc. R-149, p. 13; RLA-55, Arts. 58(1) and (2).
²³⁶ Doc. RLA-54, Art. 60(D).
²³⁷ Doc. RLA-55, Art. 13.
²³⁸ Doc. C-182; Doc. C-183; Doc. C-184; Doc. C-185; Doc. C-186; Doc. C-187; Doc. C-188; Doc. C-189; Doc. C-190; Doc. C-191; Doc. C-192; Doc. C-193; Doc. C-194; Doc. C-195; Doc. C-196; Doc. C-197; Doc. C-198; Doc. C-199; Doc. C-200; Doc. C-201; Doc. C-202; Doc. C-203; Doc. C-204; Doc. 205; Doc. R-148, p. 44; CWS-3, paras. 97-106. See also C I, paras. 151-159; R I, para. 260

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4. START OF THE ARBITRATION PROCEEDINGS

158. On 5 April 2018 – less than a year after the adoption of the Measures – Dr. Al Sulaiti sent a letter to the Saudi Ministry of Foreign Affairs on his behalf and on behalf of Qatar Pharma, as a "formal notice of the existence of an investment dispute under the OIC Agreement and the KSA-Austria BIT" and seeking to solve the matter amicably²³⁹. There is no evidence of a response by the Kingdom.

159. Consequently, on 28 March 2019 Claimants filed the Notice of Arbitration against Saudi Arabia²⁴⁰, leading to the start of the present arbitration.

5. THE AL-ULA DECLARATION

160. On 5 January 2021, the GCC States held a summit in the Saudi heritage site of Al-Ula, in which they signed an agreement to put an end to the Measures and restore their ties [the "Al-Ula Declaration"]²⁴¹.

161. Pursuant to the Al-Ula Declaration, the signatory States undertook to "stand firm against any confrontation that could undermine the national or regional security of any of [them]" and to be "united against any direct or indirect interference in the internal affairs of any of [them]"²⁴². Furthermore, the Al-Ula Declaration provides that the parties²⁴³:

"[...] to the present Declaration [are] committed to bringing an end to any claims, complaints, measures, protests, objections or disputes of any sort against any other State party to the Declaration, including by dropping, withdrawing or rescinding them, and to stopping implementation of the measures announced on 10 Ramadan A.H. 1438 (5 June 2017) [i.e., the Measures]." [Emphasis added]

162. As a consequence, as of early 2021 the Qatar-Saudi land, air and sea borders reopened and trade and commercial relations between both States were restored²⁴⁴.

163. The Parties agree that the Al-Ula Declaration has put an end to any claims and complaints regarding the Measures at a State-to-State level²⁴⁵. However, the Declaration does not deal with private businesses or individuals.

Impact on Qatar Pharma

164. By 2021, the approval of Qatar Pharma's factory and the registration of its products by the SFDA had expired²⁴⁶. Shortly after the Al-Ula Declaration, Qatar Pharma wrote to the SFDA, asking for an extension of its factory's registration certificate

²³⁹ Communication C 1 (Notice of Dispute), p. 3.
²⁴⁰ Communication C 2 (Notice of Arbitration).
²⁴¹ Doc. RLA-79/KU-101, p. 7. See also Doc. C-206; CER-2, Ulrichsen, para. 4.87; RER-3, Collis, paras. 110-112. The Al-Ula Declaration was also signed by Egypt.
²⁴² Doc. RLA-79/KU-101, p. 7.
²⁴³ Doc. RLA-79/KU-101, p. 7.
²⁴⁴ Doc. RLA-79/KU-101, p. 7; CER-2, Ulrichsen, para. 4.90; RER-3, Collis, paras. 117-130. See also RPHB, para. 81.
²⁴⁵ CER-2, Ulrichsen, paras. 4.88-4.89; CPHB, paras. 82-84; RPHB, paras. 82-84.
²⁴⁶ CER-1, para. 107; CWS-4, paras. 57-58. See also HT, Day 1, p. 300, l. 7 to p. 301, l. 11 (Dr. Harris).

[Page 40]

(which had been issued in November 2016 for a period of five years) for a period equivalent to the embargo²⁴⁷. However, in February 2021 the SFDA denied the requested extension and noted that Qatar Pharma had to pay the inspection service fee, after which the SFDA would conduct a new inspection, which could eventually result in a new registration²⁴⁸. This, however, has not occurred.

165. Furthermore, there is evidence that in 2022 Dr. Al Sulaiti held discussions with officials of Saudi health institutions, regarding the possibility for Qatar Pharma to participate in the project of a centre for establishing a production line for pharmaceutical products, particularly parenteral solutions²⁴⁹. However, Qatar Pharma never received a formal invitation to re-enter the Saudi market²⁵⁰.

166. According to Claimants, Qatar Pharma would have to undertake significant investments to be able to re-enter the Saudi market²⁵¹. In any case, Dr. Al Sulaiti has declared under oath that he would not be willing to go back to Saudi Arabia, either in a personal capacity or with his business, for fear of alleged reprisals as a result of his pursuit of legal claims against the Kingdom²⁵².

²⁴⁷ Doc. C-209; Doc. C-210. See also Doc. C-211; CWS-3, para. 138; CWS-4, para. 58.
²⁴⁸ Doc. C-208; Doc. C-209. See also CWS-3, para. 138; CWS-4, paras. 59-60.
²⁴⁹ Doc. C-342. See also CWS-8, para. 48.
²⁵⁰ CWS-8, paras. 50-51.
²⁵¹ CWS-3, para. 138; CWS-4, para. 58. See also CER-1, para. 107; C I, paras. 165-166; CPHB, paras. 77-78; CHT, p. 2443, l. 12 to p. 2444, l. 4 (Mr. Walsh).
²⁵² HT, Day 10, p. 2277, l. 1 to p. 2284, l. 8 (Dr. Al Sulaiti). See also CWS-3, para. 140; CWS-8, para. 52.

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IV. REQUEST FOR RELIEF

1. CLAIMANTS' REQUEST FOR RELIEF

167. Claimants seek the following relief from the Tribunal²⁵³:

"244.1. DISMISS Respondent's jurisdictional and admissibility objections;

244.2. DECLARE that Respondent is in breach of its obligations under Articles 2, 5, 8 and 10 of the OIC Agreement;

244.3. ORDER Respondent to pay to Claimants damages constituting full reparation in connection with Saudi Arabia's breaches of Articles 2, 5, 8 and 10 of the OIC Agreement, as set forth in Paragraphs 239 and 240 above, or in the alternative at Paragraphs 241 and 243 above, or in the further alternative at 242 and 243 above;

244.4. AWARD such other relief as the Tribunal considers appropriate; and

244.5. ORDER Saudi Arabia to pay all of Claimants' costs and expenses associated with this arbitration, including all attorneys' and experts' fees and costs, with compound interest on this amount from the date of the Award until the date of payment."

2. RESPONDENT'S REQUEST FOR RELIEF

168. The Kingdom, on the other hand, requests that the Tribunal²⁵⁴:

"562.1. Dismiss these proceedings on the ground that the Tribunal lacks jurisdiction ratione voluntatis;

562.2. Alternatively, declare the Claimants' claims inadmissible and decline to hear these proceedings;

562.3. Alternatively, dismiss these proceedings on the merits; and in each case

562.4. Order the Claimants to pay all the Kingdom's costs and expenses associated with these proceedings, including all legal and expert fees and expenses, from the date of the award until the date of payment."

²⁵³ CPHB, para. 244. See also C I, para. 461; C II, para. 575; C III, paras. 114-115. ↩
²⁵⁴ R II, para. 562. See also R I, para. 654. ↩

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V. JURISDICTIONAL AND ADMISSIBILITY OBJECTIONS

169. Claimants argue that they have met all the relevant jurisdictional requirements under the OIC Agreement to bring this arbitration against Saudi Arabia²⁵⁵.

The Tribunal has jurisdiction ratione personae: Qatar Pharma and Dr. Al Sulaiti are both protected investors under the OIC Agreement, since the former is a limited liability company established under the laws of Qatar and the latter is a Qatari citizen²⁵⁶;

The Tribunal has jurisdiction ratione materiae: Claimants own and hold significant investments²⁵⁷ covered by the OIC Agreement's definition of "investment"²⁵⁸;

The Tribunal has jurisdiction ratione voluntatis: as a Contracting Party to the OIC Agreement, Saudi Arabia expressly and unequivocally consented to resolve disputes with investors who are nationals of other Contracting Parties by way of arbitration²⁵⁹; and

The Tribunal has jurisdiction ratione temporis: Claimants made their investments in Saudi Arabia starting in 2010 and the dispute between the Parties arose in 2017, well after the OIC Agreement entered into force as between the Kingdom and Qatar in 2003²⁶⁰.

170. The Kingdom does not dispute that Claimants are protected investors, which own and hold protected investments made between 2010 and 2017 in Saudi Arabia; the Kingdom, however, voices two objections²⁶¹:

First, Saudi Arabia argues that the Tribunal does not have jurisdiction ratione voluntatis over this dispute, because under Art. 17(2)(a) of the OIC Agreement recourse to arbitration is only permitted after conciliation has been resorted to and has failed - something which has not happened in this case;

Second, the Kingdom avers that Claimants' claims are inadmissible, because Claimants do not have "clean hands" and are therefore in breach of Art. 9 of the OIC Agreement.

171. Claimants counter that the requirements of Art. 17 of the OIC Agreement have been met, and that conciliation is not a precondition to arbitration. Furthermore,

²⁵⁵ C. I, paras. 171 et seq. ↩
²⁵⁶ C I, paras. 173-175. ↩
²⁵⁷ Which, according to Claimants, includes, but is not limited to, shares in QEMS; contractual rights to payment and performance relating to public and private contracts; contractual rights to payment and performance relating to public and private contracts through Dr. Al Sulaiti's interest in Al Qima with QEMS; licences and registrations obtained from relevant Saudi government agencies to establish and operate Claimants' business in Saudi Arabia; and rights in rem over real estate properties and other tangible assets, including pharmaceutical products present in the territory of Saudi Arabia. ↩
²⁵⁸ C I, paras. 176-183. ↩
²⁵⁹ C I, paras. 184 et seq. ↩
²⁶⁰ C I, paras. 235-237. ↩
²⁶¹ R II, para. 218. ↩

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Claimants deny that the "clean hands" doctrine applies to this case, but even if it did, Claimants made and operated their investment in compliance with Saudi law, and therefore have clean hands to bring the dispute²⁶².

172. The Tribunal will first determine whether or not Claimants have met the requirements of Art. 17 of the OIC Agreement (V.1) and then whether or not there is any issue of admissibility on the basis of the so-called "clean hands" doctrine (V.2). For each of these objections, the Tribunal will briefly summarise the position of the Kingdom and Claimants, before making its decision.

²⁶² C III, paras. 1 and 4-5. ↩

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V.1. JURISDICTIONAL OBJECTION: ART. 17 OF THE OIC AGREEMENT

173. The Agreement for Promotion, Protection and Guarantee of Investments among Member States of the Organisation of the Islamic Conference - otherwise referred to as the OIC Agreement -- is an agreement between the member States of the OIC [the "Member States"], who in the preamble declared, inter alia, that²⁶³:

"Convinced that relations among the Islamic States in the field of investment are one of the major areas of economic cooperation among these States through which economic and social development therein can be fostered on the basis of common interest and mutual benefit,

Anxious to provide and develop a favourable climate for investments, in which the economic resources of the Islamic countries could circulate between them so that optimum utilization could be made of these resources in a way that will serve their development and raise the standard of living of their peoples,

Have approved this Agreement [...]" [Emphasis in the original]

174. The OIC Agreement is divided into four chapters²⁶⁴:

"Definitions",

"General provisions regarding promotion, protection and guarantee of the capitals and investments and the rules governing them in the territories of the Contracting Parties",

"Investment guarantees", and

"General and final provisions".

175. The Parties' discussion revolves around two provisions²⁶⁵ that fall under chapter 3, "Investment guarantees". The first of these provisions is Art. 16, which reads as follows²⁶⁶:

"Article - 16

The host state undertakes to allow the investor the right to resort to its national judicial system to complain against a measure adopted by its authorities against him, or to contest the extent of its conformity with the provisions of the regulations and laws in force in its territory, or to complain against the non-adoption by the host state of a certain measure which is in the interest of the investor, and which the state should have adopted, irrespective of whether the complaint is related, or otherwise, to the implementation of the provisions of the Agreement to the relationship between the investor and the host state.

²⁶³ Doc. CLA-10, pp. 1-2. ↩
²⁶⁴ Doc. CLA-10, pp. 2, 6, 10, 19. ↩
²⁶⁵ C II, paras. 212-213; CPHB, para. 151; Doc. H-2, slide 1. ↩
²⁶⁶ Doc. CLA-10, p. 15. ↩

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Provided that if the investor chooses to raise the complaint before the national courts or before an arbitral tribunal then having done so before one of the two quarters he loses the right of recourse to the other." [Emphasis added]

176. Both Parties agree that Art. 16, second paragraph, contains a fork-in-the-road provision, which offers a binary option between litigation and arbitration²⁶⁷.

177. Art. 17 is the other relevant provision. There is a basic rule [the "Basic Rule"] which establishes that²⁶⁸:

"Article - 17

1. Until an Organ for the settlement of disputes arising under the Agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules and procedures." [Emphasis added]

178. To date, no organ for the settlement of disputes has been created, so that the second part of the sentence applies.

179. This provision then has two procedural subsections:

One entitled "1. Conciliation", and

The other entitled "2. Arbitration".

180. Art. 17(1)(a), relating to conciliation, establishes that²⁶⁹:

"1. Conciliation

a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen. The parties concerned may request the Secretary General to choose the conciliator. The General Secretariat shall forward to the conciliator a copy of the conciliation agreement so that he may assume his duties."

181. Art. 17(1)(b) goes on to state that the task of the conciliator shall be "confined to bringing the different view points closer and making proposals which may lead to a solution that may be acceptable to the parties concerned". The conciliator must submit a report "within the period assigned for the completion of his task", but this report has no legal authority²⁷⁰.

182. Art. 17(2)(a), in turn, provides that²⁷¹:

"2. Arbitration

²⁶⁷ C II, para. 212; C III, para. 13; R. I, para. 309; R II, para. 232. ↩
²⁶⁸ Doc. CLA-10, pp. 15-16. ↩
²⁶⁹ Doc. CLA-10, p. 16. ↩
²⁷⁰ Doc. CLA-10, p. 16. ↩
²⁷¹ Doc. CLA-10, p. 17. ↩

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a) If the two parties to the dispute do not reach an agreement as a result of their resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute."

183. Art. 17(2)(b) goes on to explain how the arbitration proceeding unfolds: it begins with a notification by one the parties to the dispute requesting arbitration from the other party²⁷²:

"b) The arbitration procedure begins with a notification by the party requesting the arbitration to the other party to the dispute, clearly explaining the nature of the dispute and the name of the arbitrator he has appointed. The other party must, within sixty days from the date on which such notification was given, inform the party requesting arbitration of the name of the arbitrator appointed by him. The two arbitrators are to choose, within sixty days from the date on which the last of them was appointed arbitrator, an umpire who shall have a casting vote in case of equality of votes. If the second party does not appoint an arbitrator, or if the two arbitrators do not agree on the appointment of an Umpire within the prescribed time, either party may request the Secretary General to complete the composition of the Arbitration Tribunal."

184. Finally, Art. 17(2)(c) establishes that the arbitral tribunal must hold a first meeting with the parties, while Art. 17(2)(d) deals with the binding nature of the arbitral tribunal's decisions.

1. RESPONDENT'S POSITION

185. The Kingdom objects to the Tribunal's jurisdiction ratione voluntatis on a single ground: Claimants' non-compliance with the requirements of Art. 17(2)(a) of the OIC Agreement²⁷³.

186. The Kingdom submits that Art. 17 of the OIC Agreement provides for a tiered dispute settlement mechanism, that does not include ex ante consent by the State, either to conciliation or arbitration. Even if the disputing parties agree on having conciliation, arbitration is available only if the conciliation attempt fails in one of the specific ways listed in Art. 17(2)(a) (1.1).

187. Furthermore, the Kingdom argues that conciliation is a jurisdictional prerequisite to arbitration; since there was not even an attempt at conciliation in this case, the Tribunal lacks jurisdiction (1.2).

1.1 ART. 17 PROVIDES A TIERED DISPUTE RESOLUTION MECHANISM

188. The Kingdom's primary argument is that Art. 17 of the OIC Agreement does not include an ex ante consent by the State to conciliation or arbitration. Instead, it provides for the possibility for the disputing parties to agree to arbitration ex post, but only if they first agreed to conciliation and the attempt to conciliate failed²⁷⁴.

²⁷² Doc. CLA-10, pp. 17-18. ↩
²⁷³ R I, para. 286. ↩
²⁷⁴ R II, paras. 220.4-220.5; RPHB, para. 21.2. ↩

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The Kingdom says that its interpretation of Art. 17 is confirmed by an analysis of the ordinary meaning of the text, pursuant to Art. 31 of the Vienna Convention on the Law of Treaties ["VCLT"] (A.), by the OIC Member States' practice, in light of Art. 32 of the VCLT (B.), and by the relevant OIC case law (C.).

A. The ordinary meaning of Art. 17

189. According to the Kingdom, the ordinary meaning of Art. 17 shows that it envisions a tiered dispute settlement mechanism, in which conciliation is a precondition to arbitration²⁷⁵. This mechanism works as follows²⁷⁶:

The OIC Agreement provides for three forms of investor-State dispute settlement: local litigation (Art. 16(1)), conciliation (Art. 17(1)) and arbitration (Art. 17(2));

When a dispute arises, the investor can always resort to local litigation under Art. 16 - unless the dispute has been referred to arbitration, in which case the fork-in-the-road provision is triggered;

The alternative to local litigation is Art. 17, where conciliation is a precondition to arbitration; both the host State and the investor must agree to submit the dispute to conciliation, as provided by Art. 17(1)(a); if either party does not give its consent to conciliation, the only forum available to the investor is litigation in the national courts, pursuant to the first paragraph of Art. 16;

If the disputing parties agree to conciliate, the parties try to find a mutually acceptable solution and the conciliator must provide a report in the timeframe assigned for the task, as per Art. 17(1)(b);

Before accessing the following tier, the conciliation attempt must fail in one of three ways listed in Art. 17(2)(a):

o The parties fail to reach an agreement in the conciliation,

o The conciliator does not issue its report in the mandated timeframe, or

o The parties do not accept the solutions proposed in the conciliator report.

If one of these scenarios were to crystallize, the parties may then agree to arbitrate their dispute pursuant to Art. 17(2)(b); if they do not, the investor is once more left with the option to litigate in national courts, as per Art. 16²⁷⁷.

190. To support its arguments, the Kingdom focuses on three sections of Art. 17:

191. First, on the Basic Rule of Art. 17, which provides that potential disputes shall be resolved through conciliation or arbitration "in accordance with the [...] rules and procedures" of Art. 17 itself. According to the Kingdom, this wording implies that

²⁷⁵ R I, para. 311; R II, para. 220.6. ↩
²⁷⁶ R I, paras. 310-310.5; R II, paras. 220.1-220.7. ↩
²⁷⁷ R I, para. 309; R II, para. 232. ↩

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the right to conciliation and arbitration under the OIC is not an unconditional one: rather, it is subject to a tiered mechanism of preconditions and express consent, as provided for in the rest of Art. 17²⁷⁸.

192. The Kingdom finds that, contrary to Claimants' allegation, the fact that the Basic Rule of Art. 17 provides that disputes "shall be [settled] through conciliation or arbitration" cannot mean that it is mandatory for the parties to resort to conciliation or arbitration - otherwise other forms of dispute settlement, such as negotiation or local litigation would be excluded²⁷⁹. Furthermore, the conjunction "or" simply reflects that if conciliation fails, the dispute can then go to arbitration - it does not imply that a host State must arbitrate irrespective of conciliation²⁸⁰.

193. Second, on Art. 17(1)(a), which provides that parties can resort to conciliation only "[i]n case the parties to the dispute agree" to it. The ordinary meaning of the text is that an ex post consent is necessary: only after a dispute has arisen can the parties give their consent to conciliate it²⁸¹.

194. Third, on the "if/then" wording of Art. 17(2)(a)²⁸²:

"If the parties to the dispute do not reach an agreement as a result of their resort to conciliation [...] then each party has the right to resort to the Arbitration Tribunal [...]" [Emphasis added]

195. The Kingdom avers that the ordinary meaning of this provision entails that parties cannot resort to arbitration unless their conciliation attempt has failed in one of the manners specified therein²⁸³. The "if/then" language clearly sets out a sequence of preconditions that must be met before the right to resort to arbitration crystallizes and can be accessed by the investor -- proving that conciliation and arbitration must be pursued consecutively²⁸⁴.

B. The OIC Member States' practice

196. The Kingdom submits that treaty practice is relevant to the proper interpretation of Art. 17, and admissible as a supplementary means of interpretation under Art. 32 of the VCLT²⁸⁵. Indeed, supplementary means of interpretation encompass "agreements and practice among a subgroup of parties to a treaty"²⁸⁶. In the present case, agreements can be divided into four main categories:

Multilateral treaties between OIC Member States (including Saudi Arabia and Qatar),

²⁷⁸ R I, para. 306; R II, paras. 225-228. ↩
²⁷⁹ R II, paras. 222-224. ↩
²⁸⁰ R II, para. 227. ↩
²⁸¹ R II, para. 220.4. ↩
²⁸² RPO, para. 43; R I, paras. 303-304; R II, paras. 220.6, 227. ↩
²⁸³ R II, paras. 225-227. ↩
²⁸⁴ R II, paras. 220.6, 227, 231. ↩
²⁸⁵ RPHB, paras. 21.1, 23. ↩
²⁸⁶ RPHB, para. 25. ↩

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Multilateral treaties between OIC Member States (excluding Saudi Arabia and Qatar),

Bilateral treaties among OIC Member States, and

Bilateral treaties between OIC Member States and third States.

197. The Kingdom submits that treaty practice confirms its interpretation of Art. 17: virtually all relevant treaties confirm the common position between Member States that, as between themselves, investor-State arbitration was²⁸⁷:

Either not offered, or

If it was offered, then only on condition of ex post consent by the host State.

Multilateral treaties between OIC Member States

198. According to the Kingdom, the most relevant multilateral treaty for interpreting the OIC Agreement is the 1980 Unified Agreement for the Investment of Arab Capital in Arab States prepared by the League of Arab States [the "Unified Agreement"], whose twenty-two signatories are also signatories of the OIC Agreement including Saudi Arabia and Qatar²⁸⁸. The Unified Agreement contains a dispute resolution clause similar to Art. 17 of the OIC. Art. 2 of its Annex provides that parties "may agree" to arbitration, but only if they²⁸⁹:

"[...] fail to agree to conciliation or the conciliator is unable to render its decision within the period specified or where the parties do not agree to accept the solutions proposed."

199. Other relevant examples include two multilateral treaties concluded by Saudi Arabia and Qatar:

The Agreement on Investment and Free Movement of Arab Capital among Arab Countries, predecessor of the Unified Agreement (concluded between the same parties)²⁹⁰, and

The Unified Economic Agreement between the Countries of the Gulf Cooperation Council, concluded by certain parties of the Unified Agreement²⁹¹.

200. According to the Kingdom, the fact that neither of these treaties contains an investor-State dispute settlement provision is a clear indication that no ex ante consent could have been included in the OIC Agreement²⁹².

²⁸⁷ RPHB, paras. 21.2 and 28. ↩
²⁸⁸ RPHB, para. 29. ↩
²⁸⁹ RPHB, para. 30, citing to Doc. RLA-337, Annex, Art. 2(1). ↩
²⁹⁰ Doc. RLA-331. ↩
²⁹¹ Doc. RLA-338. ↩
²⁹² RPHB, paras. 34-35. ↩

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Multilateral treaties between OIC Member States that do not include Saudi Arabia and Qatar

201. The same conclusion is reached when analysing the multilateral agreements concluded among other Member States -- not involving Saudi Arabia or Qatar -- at the relevant time. Six of them were signed around the time the OIC Agreement was concluded, and none of them contains an investor-State dispute settlement provision -- thus confirming that at the time the OIC Agreement was entered into, the practice was not to give ex ante consent to arbitration brought by foreign investors²⁹³.

Bilateral treaties between OIC Member States

202. Bilateral practice of OIC Member States confirms and further bolsters the same argument: while eleven BITs were signed at the relevant time, none of the six that are publicly available contains investor-State arbitration provisions (even though some contain inter-State arbitration agreements for disputes concerning the interpretation or application of these treaties)²⁹⁴. Such practice demonstrates a clear aversion towards ex ante consent for investor-State arbitration²⁹⁵.

Bilateral treaties between OIC Member States and third States

203. The bilateral agreements concluded by OIC Member States with third States also support the same view: of the 96 that are publicly available, 61 do not provide for investor-State dispute settlement at all. Only 29 bilateral treaties provided for general ex ante consent to investor-State dispute settlement, none of which includes Saudi Arabia or Qatar²⁹⁶. But even in those limited cases in which the OIC Member States entered into BITs with third States that gave ex ante consent to arbitration, they did so in clear terms that left no doubt²⁹⁷.

204. More importantly, the Kingdom and Qatar maintained their practice of avoiding all forms of ex ante consent to arbitration until the mid-1990s²⁹⁸.

***

205. In sum, the Kingdom submits that the ordinary meaning of the OIC Agreement is plain, and that an interpretation under Art. 32 of the VCLT further supports the conclusion that consent must be given ex post²⁹⁹. Treaty practice at the time of execution of the OIC Agreement shows that Member States could not have agreed to an ex ante, unconditional consent to arbitration - most of the relevant treaties do not provide for investor-State arbitration at all, demonstrating a clear aversion towards the concept³⁰⁰. It would be unreasonable to assume that this consistent

²⁹³ RPHB, paras. 37-41. ↩
²⁹⁴ RPHB, paras. 42-44. ↩
²⁹⁵ RPHB, para. 45. ↩
²⁹⁶ RPHB, paras. 46-47. ↩
²⁹⁷ RPHB, para. 47.4. ↩
²⁹⁸ RPHB, para. 47.1. ↩
²⁹⁹ RPHB, para. 52. ↩
³⁰⁰ RPHB, paras. 48-50. ↩

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treaty practice had been abandoned without plain and explicit language in Art. 17 of the OIC Agreement³⁰¹.

C. The relevant case law

206. Finally, the Kingdom argues that the relevant case law confirms its interpretation of Art. 17. The Kingdom relies first and foremost on the Itisaluna award³⁰², where the tribunal, by majority, found that, given the conditional "if/then" language of Art. 17(2)(a)³⁰³:

"[...] the intended gateway to arbitration under this provision is prior resort to conciliation and, thereafter, the failure of the conciliation process. While the chapeau of Article 17 addresses 'conciliation or arbitration', and the terms of Article 17(1) suggest that resort to conciliation requires agreement between the parties, there is no avoiding the "if ... then' language of Article 17(2). It necessarily follows from this language that resort to arbitration is conditional on the prior resort to conciliation."

207. The Al-Warraq case³⁰⁴, cited by Claimants in support of their position, was discussed in Itisaluna: the tribunal, by majority, found that the Al-Warraq tribunal had not duly considered the "if/then" language of Art. 17, and thus its analysis was of limited relevance³⁰⁵. The Kingdom also avers that the Al-Warraq tribunal erred in its analysis since it only referred to the Basic Rule of Art. 17, instead of considering Art. 17 in its entirety³⁰⁶.

1.2 THE CONCILIATION PRECONDITION IS JURISDICTIONAL IN NATURE AND IS ABSENT

208. The Kingdom submits that the conciliation precondition, as provided by Art. 17(2)(a), is jurisdictional in nature³⁰⁷ - and not, as Claimants suggest, a mere procedural requirement. Conciliation in the text of the OIC Agreement is set out as a formal dispute resolution mechanism, based necessarily on the consent of both the investor and the State. It is deeply intertwined with the subsequent arbitration mechanism, so much so that arbitral proceedings cannot exist without a prior - failed - conciliation attempt³⁰⁸.

209. Even if the conciliation precondition was an informal dispute resolution method, akin, for instance, to negotiation (quod non), this would not alter its jurisdictional nature³⁰⁹. Negotiations and cooling-off periods are still jurisdictional prerequisites to arbitral proceedings, as held in multiple ICJ and investment arbitration cases³¹⁰.

³⁰¹ RPHB, para. 51. ↩
³⁰² Doc. CLA-52, Itisaluna Iraq LLC and others v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, 3 April 2020 ["Itisaluna"]. ↩
³⁰³ R I, para. 290; R II, para. 220.7 citing to Doc. CLA-52, Itisaluna, para. 183 (see also para. 177). ↩
³⁰⁴ Doc. CLA-50, Hesham Talaat M Al-Warraq v. Republic of Indonesia, UNCITRAL, Award on Respondent's Preliminary Objections to Jurisdiction and Admissibility of the Claims, 21 June 2012 ["Al-Warraq"]. ↩
³⁰⁵ R II, para. 236. ↩
³⁰⁶ RPO. para. 46. ↩
³⁰⁷ R II, para. 250. ↩
³⁰⁸ R I, para. 317. ↩
³⁰⁹ R II, para. 250.2. ↩
³¹⁰ R II, paras. 256-263. ↩

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210. The Kingdom argues that Claimants have not met such precondition. Art. 17(2)(a) requires the State's ex post consent for a conciliation to be attempted. In this case, the Kingdom has never given such consent. In fact, Claimants have never even made a "genuine attempt" at conciliation: their Notice of Dispute - allegedly containing certain conciliatory attempts - does not make any reference to conciliation under Art. 17, or to arbitration under this provision. It merely refers to arbitration under the Treaty's most-favoured nation ["MFN"] provision, Art. 8(1)³¹¹.

211. According to the Kingdom, Claimants' suggestion that the "futility doctrine" should apply to their - inexistent -- attempt at conciliation is devoid of any legal basis. The doctrine of futility only applies to procedural requirements, and, in any event, it requires "substantial and credible evidence" of a clear unwillingness by one of the parties to participate in a dispute settlement attempt, so that it would make it futile to engage in conciliation --- which did not occur in the present case³¹².

212. In sum, the Kingdom avers that the Tribunal does not have jurisdiction over the present dispute because the conciliation precondition has a jurisdictional nature, the Kingdom never gave its consent to conciliation and Claimants never made a genuine attempt to conciliate³¹³.

2. CLAIMANTS' POSITION

213. Claimants' primary argument is that the Kingdom already gave its ex ante consent to arbitrate disputes with investors under Art. 17³¹⁴, which does not provide that conciliation is a precondition to arbitration³¹⁵ (2.1).

214. Even if conciliation could be considered as a precondition to arbitration under Art. 17, (i) it is not jurisdictional in nature, and thus does not bar the Tribunal's jurisdiction over the case, and (ii) it was satisfied by Claimants³¹⁶ (2.2).

2.1 ART. 17 INCLUDES THE STATE'S UNCONDITIONAL CONSENT TO ARBITRATION

215. Claimants submit that Art. 17 of the OIC Agreement provides for conciliation as a mere alternative to arbitration, not as a precondition to it. A reading of the ordinary meaning of the terms, in their context and in light of the object and purpose of the Treaty - in application of Art. 31 of the VCLT - supports this conclusion³¹⁷ (A.).

216. This remains true even when considering treaty practice under Art. 32 of the VCLT - which is in any case unnecessary, because there is no ambiguity, obscurity, or manifestly absurd and unreasonable results stemming from an interpretation under

³¹¹ R II, paras. 274-277. ↩
³¹² R II, paras. 284-288. ↩
³¹³ R II, paras. 289.2-289.4. ↩
³¹⁴ C II, para. 228. ↩
³¹⁵ C I, paras. 217-221; C II, para. 208. ↩
³¹⁶ C II, paras. 222, 229. ↩
³¹⁷ CPHB, para. 156. ↩

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Art. 31³¹⁸ (B.). Finally, the relevant OIC case law further confirms Claimants' interpretation of Art. 17 (C.).

A. The interpretation of Art. 17 under Art. 31 VCLT

217. It is Claimants' position that the conditional, tiered interpretation of Art. 17 given by the Kingdom is flawed, as is its application of the VCLT³¹⁹. Pursuant to Art. 31 of the VCLT, the tribunal must interpret the ordinary meaning of the text, in its context - under the light of the object and purpose of the treaty itself. This implies that Art. 17 of the OIC Agreement must be considered as a whole and in the context of the entire Treaty, instead of focusing solely on the "if/then" wording suggested by the Kingdom³²⁰.

218. First, a correct interpretation of the Basic Rule of Art. 17 confirms Claimants' position: by stating that eventual disputes "shall" be resolved either "through conciliation or arbitration in accordance with the following rules and procedures", the provision's ordinary meaning is that disputants can resort to any of the two dispute settlement mechanisms - none of which is a precondition of the other³²¹. Moreover, the word "shall" is mandatory in nature: considered in the context of dispute resolution clauses similar to Art. 17 of the OIC Agreement, "shall" implies an express, ex ante consent by the State to arbitration³²².

219. While the Basic Rule does provide that a dispute must be resolved according to the "rules and procedures" of Art. 17, this cannot be interpreted as a restriction in the choice between conciliation and arbitration³²³; rather, such wording is aimed at regulating any of the two dispute settlement mechanisms, once chosen. The signatories of the OIC Agreement offered their ex ante consent before the mention of specific "rules and procedures".

220. Second, Art. 17(1)(a) provides that a dispute can be solved through conciliation "[i]n case the parties to the dispute agree" to it. The Kingdom's reading of the provision as stating a necessary ex post consent is incorrect: rather, the norm confirms that conciliation is one of the alternatives available to the disputing parties under the OIC Agreement³²⁴.

221. Third, the Kingdom's reliance on the "if/then" wording of Art. 17(2)(a) is also misleading: such language cannot mean that arbitration can be accessed only in case a conciliation attempt fails. The "if/then" sequence applies only when disputing parties agree to conciliation: if that is the case, Art. 17(2)(a) clarifies that, if conciliation fails, the investor can nonetheless resort to arbitration. This is the only interpretation that gives an effet utile to the provision³²⁵.

³¹⁸ CPHB, paras. 157-159. ↩
³¹⁹ C III, para. 11. ↩
³²⁰ C III. para. 11. ↩
³²¹ C II, para. 209. ↩
³²² C II, para. 210. ↩
³²³ C II, para. 211; C III, paras. 19-20. ↩
³²⁴ C I, paras. 218-219; C II, para. 212. ↩
³²⁵ C II, para. 217; C III, para. 21. ↩

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222. If Art. 17 were read as the Kingdom suggests, OIC Member States could effectively deny investors their right to arbitrate a dispute, simply by ignoring or not accepting an invitation to conciliate after a dispute had arisen³²⁶. This would contravene the object and purpose of the OIC: in the Preamble of the text, the Member States expressed a clear intent to create an environment favourable to investors³²⁷. Many tribunals have referred to the Preamble: they concluded that the intention of the Member States was to grant investors the possibility to protect their substantial rights through an effective dispute resolution mechanism - i.e., arbitration³²⁸.

223. Fourth, the Tribunal must interpret Art. 17 by considering its context. Art. 16 of the OIC Agreement, which appears before Art. 17's reference to conciliation, expressly grants investors the "right of recourse" to arbitration. The only logical conclusion is that investors have the right of recourse to arbitration regardless of whether any prior conciliation proceedings took place³²⁹.

B. The interpretation of Art. 17 under Art. 32 VCLT

224. Art. 32 of the VCLT provides for certain supplementary means of treaty interpretation, that may be relied upon only in case of ambiguity, obscurity, or manifestly absurd and unreasonable results stemming from an interpretation pursuant to Art. 31 of the VCLT. Any treaty practice falling under this characterization should be given only minimal consideration, if at all³³⁰.

225. Moreover, the available instruments are completely unrelated to the OIC Agreement. The Unified Agreement, cited by the Kingdom, does not share all the contracting parties to the OIC Agreement. Moreover, it does not require States to give an ex post consent, as argued by the Kingdom: instead, it provides an express ex ante consent, thus further confirming Claimants' interpretation of the OIC³³¹.

226. Finally, the BIT practices invoked by the Kingdom should be disregarded completely because they are unrelated to the OIC. The Treaty should carry the same meaning for all the contracting parties: by referring to different BITs signed by different Member States, the interpretation would be damaged by the fracturing of its multilateral character, as pointed out by the Itisaluna award³³². Certain BITs discussed by the Kingdom were also misinterpreted³³³.

227. Even if treaty practices were to be considered, it would still confirm Claimants' interpretation of the OIC Agreement as providing an ex ante consent of the Member States. In fact, both the Qatar-Marocco BIT and the Saudi Arabia-Malaysia BIT clearly set out that no ex post consent is required for arbitration proceedings to take place³³⁴.

³²⁶ C II, para. 218; CPHB, para. 154. ↩
³²⁷ C III, para. 34. ↩
³²⁸ C III, para. 34. See also section C infra. ↩
³²⁹ CPHB, para. 152. ↩
³³⁰ CPHB, para. 159. ↩
³³¹ CPHB, para. 161. ↩
³³² CPHB, paras. 159 and 162. ↩
³³³ C III, para. 31. ↩
³³⁴ C II, para. 215. ↩

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C. The relevant case law

228. Claimants rely on several cases in support of their arguments. First and foremost, on the Al Warraq case, which explicitly denied that Art. 17 implies that conciliation is a precondition to arbitration³³⁵; in that case, the tribunal held that under Arts. 16 and 17 investors are entitled to an "immediate right to arbitration"³³⁶. The tribunal in the 2020 Navodaya Trading v. Gabon award took a similar approach³³⁷.

229. Claimants submit that the case on which the Kingdom mainly relies - Itisaluna - did not make a conclusive finding regarding conciliation as a precondition to arbitration. In fact, the tribunal expressly refrained from doing so³³⁸.

230. In support of the argument that the arbitration provision in Art. 17 would be deprived of its effet utile if interpreted as suggested by the Kingdom, Claimants refer to the Millicom v. Senegal case³³⁹. Albeit not directly connected to the OIC Agreement, it is relevant because it dealt with very similar arguments from Senegal, in relation to a treaty provision closely resembling Art. 17: the applicable treaty also had a contentious arbitral provision, interpreted by Senegal as requiring ex post consent for the parties to resort to arbitration. The tribunal disagreed, noting how such an interpretation would be contrary to the purpose of the treaty and negate an effective protection to investors³⁴⁰.

231. Therefore, considering the relevant case law directly related to the OIC Agreement, the Millicom case and the Preamble of the OIC - including its aim of providing investors with a favourable environment-, Art. 17 must be interpreted as containing ex ante consent to arbitration.

2.2 THE CONCILIATION PRECONDITION IS NOT JURISDICTIONAL IN NATURE AND, IN ANY EVENT, WAS SATISFIED BY CLAIMANTS

232. Claimants submit that, even if Art. 17 were to be interpreted as requiring conciliation as a precondition to arbitration (quod non), such precondition is not jurisdictional in nature: at best, it is a procedural requirement, which does not deprive the Tribunal of jurisdiction if it is not complied with by the parties³⁴¹.

233. Claimants aver that conciliation and negotiation can be considered akin to one another in this respect. In both instances, consent from the State and the investor is required and both represent instruments of amicable, non-binding dispute settlement; the only difference is the presence of the conciliator³⁴².

³³⁵ C III, paras. 25-26. ↩
³³⁶ C III, para. 26; CPHB, para. 153. ↩
³³⁷ C III, para. 27; CPHB, para. 153, citing to Navodaya Trading DMCC v. Gabonese Republic, PCA Case No. 2018-23, Award, 2 December 2020 (award not public: see Doc. CLA-54, D. Charlotin, "Uncovered: Kaufmann-Kohler chaired tribunal confirms that OIC Agreement contains consent to arbitration, but ultimately dismisses mining claims on the merits", IA Reporter, 17 February 2021) ["Navodaya Trading"]. ↩
³³⁸ C III, para. 23. See also CPHB, para. 153. ↩
³³⁹ Doc. CLA-232, Millicom International Operations B.V. and Sentel GSM SA v. Republic of Senegal, ICSID Case No. ARB/08/20, Decision on Jurisdiction of the Arbitral Tribunal, 16 July 2010. ↩
³⁴⁰ C III, para. 35. ↩
³⁴¹ C I, paras. 222, 226; C II, para. 222; C III, para. 36. ↩
³⁴² C II, para. 225. ↩

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234. Case law regarding negotiation as a prerequisite before arbitration should be considered when analysing the case at hand. For example, in Abaclat v. Argentina³⁴³ the applicable BIT contained a requirement of negotiation and 18-month litigation before arbitration proceedings. The tribunal considered that these were procedural requirements, which did not impact Argentina's consent to arbitration; the arbitrators considered the negotiation as a good faith dispute settlement instrument that should not be forced on the parties³⁴⁴. Therefore, the absence of negotiation could not impair the tribunal's jurisdiction over the dispute³⁴⁵.

235. In any event, Claimants have satisfied the alleged precondition, whether it is procedural or jurisdictional in nature. In their Notice of Dispute, Claimants expressly asked the Kingdom to "engage in a good faith attempt to amicably resolve this dispute", inviting the Kingdom to suggest when it would be possible for the Parties to meet³⁴⁶. The Kingdom does not recognize this as an actual invitation to conciliate as required by Art. 17, since it lacks certain formal references to said provision. Nevertheless, these formalities are not necessary for a conciliation precondition to be validly satisfied³⁴⁷.

236. Claimants also argue that the Kingdom never had any intention to conciliate the present dispute. Any effort by the Claimants would have been futile³⁴⁸. Contrary to the Kingdom's argument that the futility doctrine should not apply to conciliation, there is case law that clearly demonstrates the contrary³⁴⁹.

3. DECISION OF THE ARBITRAL TRIBUNAL

237. The Parties discuss whether the Tribunal has jurisdiction ratione voluntatis:

While Claimants argue that the Kingdom gave its express and unequivocal consent to arbitrate investor-State disputes by way of arbitration when it executed the OIC Agreement³⁵⁰;

The Kingdom says that conciliation is a precondition to arbitration, for which the State's consent is needed, and that in this case Claimants have failed to satisfy this precondition³⁵¹.

238. The Tribunal will start by recalling some relevant facts (3.1). It will then turn to the interpretation of Art. 17, which is the relevant provision to determine jurisdiction ratione voluntatis (3.2). After addressing certain arguments by the Kingdom (3.3), the Tribunal will finally draw its conclusion (3.4).

³⁴³ Doc. CLA-78, Abaclat and Others (Case Formerly Known as Giovanna A Becerra and Others) v. Argentine Republic, ICSID Case No. ARB/07/05, Decision on Jurisdiction and Admissibility, 4 August 2011. ↩
³⁴⁴ C II, paras. 226-227. ↩
³⁴⁵ C III, paras. 41-45. ↩
³⁴⁶ C I, paras. 228-229; C II, para. 229; C III, para. 47. ↩
³⁴⁷ C III, para. 48. ↩
³⁴⁸ C I, paras. 230-231; C III, paras. 51-52 and 58. ↩
³⁴⁹ C III, paras. 55-56. ↩
³⁵⁰ C I, para. 184. ↩
³⁵¹ R I, paras. 286-287; R II, para. 7. ↩

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3.1 RELEVANT FACTS

239. On 5 June 1981 the Member States of the OIC signed the OIC Agreement, which entered into force almost seven years later, in February 1988. It entered into force as between Saudi Arabia and Qatar in February 2003³⁵².

240. Almost 15 years later, on 5 June 2017, the Kingdom adopted the Measures.

241. A year thereafter, on 5 April 2018, Dr. Al Sulaiti sent a letter to the Saudi Ministry of Foreign Affairs on his behalf and on behalf of Qatar Pharma, arguing that the Measures were in violation of the OIC Agreement and the protections to which Claimants were entitled. Claimants noted that³⁵³:

"[...] by virtue of Article 8(1) of the OIC Agreement providing for treatment 'not less favourable than the treatment accorded to investors belonging to another State not party to this Agreement... in the context of that [economic] activity and in respect of the rights and privileges accorded to those investors,' Qatar Pharma is fully entitled to the rights and privileges-both substantive and procedural-under the Agreement between the Kingdom of Saudi Arabia and the Republic of Austria concerning the Encouragement and Reciprocal Protection of Investments (the 'KSA-Austria BIT') and other treaties to which KSA is party. This includes, but is not limited to, the right to arbitrate disputes in a neutral forum pursuant to the Arbitration Rules of the United Nations Commission on International Trade Law (the 'UNCITRAL Rules') as provided for in Article 11(2)(b) of the KSA-Austria BIT."

242. The letter stated that it should be considered a "formal notice of the existence of an investment dispute under the OIC Agreement and the KSA-Austria BIT". It further noted that³⁵⁴:

"[...] in accordance with Article 11(1) of the KSA-Austria BIT, and despite the futility of prior conciliation and diplomatic efforts, we hereby request that KSA engage in a good faith attempt to amicably resolve this dispute with Qatar Pharma. In order to further discuss this alternative, we propose your and our representatives meet for consultations in the next few weeks. We would be grateful if KSA could inform us of a date and time at which its representatives would be available to meet."

243. There is no evidence of a response by the Kingdom.

244. On 28 March 2019, Claimants filed a Notice of Arbitration pursuant to Art. 17 of the OIC Agreement³⁵⁵ against the Kingdom. Claimants appointed Dr. Poncet as arbitrator and noted that³⁵⁶:

"Claimants have attempted to reach an amicable resolution of the dispute with Saudi Arabia.

³⁵² C I, fn. 578. See also Doc. CLA-29, p. 28. ↩
³⁵³ Communication C 1 (Notice of Dispute), p. 2. ↩
³⁵⁴ Communication C 1 (Notice of Dispute), p. 3. ↩
³⁵⁵ Communication C 2 (Notice of Arbitration), para. 1. ↩
³⁵⁶ Communication C 2 (Notice of Arbitration), paras. 55-56. ↩

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Specifically, Claimants sent a Notice of Dispute to Saudi Arabia in April 2018. Saudi Arabia did not respond to the Notice, nor did it accede to Claimants' request to resolve the dispute. Qatar Pharma also sent an invoice to the Saudi Arabian Ministry of Health seeking settlement of the outstanding payment amounts after the Coercive Measures were implemented, but no response was received. Saudi Arabia's failure to respond confirms that it is unwilling to resolve the matter amicably, and that any other efforts on the part of Claimants would be futile."

245. On 27 May 2019, Saudi Arabia appointed Professor Ziadé as arbitrator pursuant to Art. 17 of the OIC Agreement, reserving its position and objections on all issues³⁵⁷.

3.2 INTERPRETATION OF THE OIC AGREEMENT

246. The Parties agree that the Tribunal must interpret Art. 17 of the OIC Agreement pursuant to Art. 31 of the VCLT³⁵⁸, guided "in good faith" by the "ordinary meaning" of the terms (A.), "in their context" (B.) and "in light of [the Treaty's] object and purpose" (C.)³⁵⁹. In doing so, the Tribunal must start by elucidating the meaning of the text, which is the best expression of the intention of the signatory parties.

247. If the interpretation according to Art. 31 leaves the meaning of Art. 17 ambiguous, obscure or leads to a result which is manifestly absurd or unreasonable, then the Tribunal may also resort to "supplementary means of interpretation" (D.), which include the Treaty's travaux préparatoires and other circumstances regarding the conclusion of the Treaty, pursuant to Art. 32 of the VCLT³⁶⁰.

A. Ordinary meaning of the text

248. As recalled in paras. 177-184 supra, Art. 17 is made up of a Basic Rule and two procedural subsections, one headed "Conciliation" and the other "Arbitration".

a. The Basic Rule

249. Art. 17's Basic Rule reads as follows:

"Article - 17

1. Until an Organ for the settlement of disputes arising under the Agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules and procedures." [Emphasis added]

³⁵⁷ Communication R 1. ↩
³⁵⁸ C I, paras. 199-200; C II, para. 208; R I, para. 300.1. ↩
³⁵⁹ Doc. CLA-73, Art. 31(1): "A treaty shall be interpreted 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 purpose." ↩
³⁶⁰ Doc. CLA-73, Art. 32: "Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31: (a) Leaves the meaning ambiguous or obscure; or (b) Leads to a result which is manifestly absurd or unreasonable." ↩

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250. Although the Parties discuss many aspects of Art. 17, they agree that the provision refers to the settlement of investor-State disputes³⁶¹. The intention of the State parties to the OIC Agreement was to eventually create an "Organ for the settlement of disputes arising under the [OIC] Agreement", which would adjudicate this type of disagreements between protected investors and States, and which would make Art. 17 redundant. It is undisputed that such organ has not been created, so that the transitory rule provided for in Art. 17 continues to apply.

251. What does Art. 17 establish?

252. The Basic Rule is that the investment disputes that may arise in the interim period:

"[...] shall be entitled through conciliation or arbitration in accordance with the following rules and procedures."

253. What does the expression "be entitled" mean?

254. Black's law dictionary defines to entitle as "to grant a legal right to or qualify for"³⁶² but this meaning does not seem to give a coherent sense to the sentence (disputes cannot be given a legal right through conciliation or arbitration). The OIC Agreement was drawn up in three versions, Arabic, English and French, "each version being equally authentic" (in the words of Art. 25). The Arabic version uses the word "تسوى" and the French version the word "réglés", which both express the idea that the disputes are settled. The correct meaning of "be entitled" is thus "be settled" - as both Parties acknowledge³⁶³.

255. The Basic Rule in Art. 17 is that disputes "shall" be settled through conciliation or arbitration. The Merriam Webster Dictionary explains that "shall" is a modal verb, used to express what is inevitable, a determination, or a command or exhortation. The use of "shall" implies that Member States envisioned that investor-State disputes would necessarily be settled "through conciliation or arbitration".

256. The Parties have discussed at length the meaning of the disjunctive "or" (in French "ou" and in Arabic "أو"), placed between the words "conciliation" and "arbitration". They, nevertheless, both agree (and the Tribunal, by majority, confirms) that it provides an alternative to the claimant³⁶⁴: the dispute can be settled either by conciliation or by arbitration, at the claimant's option.

257. Finally, the Basic Rule says that when exercising its option, the claimant must do so "in accordance with the following rules and procedures". This plain wording raises no interpretative doubts. Once the claimant has opted for conciliation or arbitration, such procedure will be subject to the rules established in that same Art. 17 - not to some other set of rules or any instrument external to the OIC Agreement, such as could be, for instance, the Conciliation and Arbitration Rules of the International Centre for Settlement of Investment Disputes ["ICSID"]. In the

³⁶¹ C I, para. 195; R I, para. 299. ↩
³⁶² Black Law's Dictionary, Ninth Edition, p. 612. ↩
³⁶³ As recognized by both Parties (see C III, para. 27; R I, para. 310.3). ↩
³⁶⁴ C II, para. 212; R II, para. 231: "The Kingdom does not dispute that conciliation and arbitration are alternatives, nor does the Kingdom contend that either process must be pursued: its only point is that if they are pursued, they must be pursued consecutively, consistently with the plain words of Article 17(2)(a)." ↩

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interim period until the creation of an "Organ for the settlement of disputes", the Member States preferred to create an ad hoc procedure, organized in accordance with the rules and procedures set forth in Art. 17, rather than to import the provisions on the settlement of disputes of another source³⁶⁵.

258. In sum, the Tribunal, by majority, finds that a literal interpretation of the Basic Rule of Art. 17 leads to the conclusion that to settle an investor-State dispute which arises from a breach of the OIC Agreement, during the interim period until the creation of a specific organ, the OIC Member States decided that:

Claimants would have the choice to resort either to conciliation or to arbitration, at each claimant's option, and

The procedural aspects of the conciliation or arbitration would be those established in the subsequent subsections of Art. 17.

259. Thus, the State's consent to arbitration is unequivocally contained in the Basic Rule.

b. The Arbitration procedure

260. If a claimant opts to resort to arbitration to settle the dispute, Art. 17(2)(b) of the OIC Agreement is the relevant rule as regards the initiation of the procedure:

"b) The arbitration procedure begins with a notification by the party requesting the arbitration to the other party to the dispute, clearly explaining the nature of the dispute and the name of the arbitrator he has appointed."

261. Once the claimant has submitted the "notification [...] clearly explaining the nature of the dispute and the name of the arbitrator he has appointed", the same provision grants the counterparty a term of 60 days "to inform the party requesting arbitration of the name of the arbitrator appointed".

262. A plain reading of this provision shows that the arbitration is put in motion by the claimant sending a notification of arbitration, without any requirement of additional consent by the counterparty. This is because consent to arbitration is already contained in the Basic Rule. Art. 17(2)(b) et seq. merely develop the rules and procedures that will govern the arbitration, as anticipated in the Basic Rule.

263. Art. 17(2)(b) then goes on to establish that the two arbitrators "are to choose, within sixty days from the date on which the last of them was appointed arbitrator, an umpire who shall have a casting vote in case of equality of votes", while Art. 17(2)(c) determines that the tribunal must hold a first meeting with the parties. These various procedural rules culminate in Art. 17(2)(d), which contains the principle that the tribunal's award shall be binding on the parties.

c. The Conciliation procedure

264. Alternatively, the claimant may opt to attempt a conciliation procedure prior to starting an arbitration. However, contrary to arbitration, for there to be conciliation

³⁶⁵ Doc. CLA-55, Libye v. D.S. Construction (Cour d'appel de Paris), para. 98. ↩

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the other party must consent to it, as established in Art. 17(1)(a), which provides, in its relevant part, that:

"a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen. [...]" [Emphasis added]

265. A plain reading of this provision shows that both parties to the dispute must "agree" to conciliate (i.e., the investor and the host State). Conciliation is, by its very nature, an amicable procedure and, in this case, it requires the parties to agree on:

The description of the dispute;

Their respective claims; and

The name of a conciliator.

Absent such agreement, the conciliation cannot proceed.

266. Art. 17(1)(a) and (b) go on to establish the tasks and powers of the conciliator, finalizing with the rule that - contrary to the arbitration procedure -- the decision adopted by the conciliator will not be binding on the parties.

267. The regulation of consent in conciliation is different from that in arbitration, (where, as has been explained above, the Basic Rule already incorporates the States' ex ante consent - see section 3.2.a supra). The different treatment of consent in arbitration and conciliation is reasonable and logic, because it reflects the different nature of both institutions: conciliation leads to the adoption by the conciliator of a non-binding decision, and consequently the procedure, without the agreement by and participation of both parties, is doomed from the outset.

d. Evolution of conciliation into arbitration

268. The Treaty devotes a rule - Art. 17(2)(a) - to the evolution of a conciliation into an arbitration - and inserts this rule in the arbitration subsection. The rule provides that if (notwithstanding the initial agreement to conciliate) the conciliation eventually is unsuccessful, then neither party loses the right to resort to arbitration and has the right to start arbitration proceedings to obtain a binding award (rather than the non-binding report prepared by the conciliator):

"(a) If the two parties to the dispute do not reach an agreement as a result of their resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute."

269. If the claimant and the respondent initially agree to attempt a (potentially unsuccessful) conciliation procedure, such agreement does not forfeit both parties' right to eventually resort to arbitration, if the conciliation has proved a failure. Moving from conciliation to arbitration does not require any additional consent by the respondent State, for the simple reason that the State has already given its express consent to arbitration in the Basic Rule under Art. 17.

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***

270. In sum, the Tribunal, by majority, finds that reading Art. 17 in accordance with the ordinary meaning of its terms leads to the conclusion that Member States established a Basic Rule: a claimant in an investor-State dispute could choose between starting a conciliation or an arbitration procedure against the respondent State. These procedures are governed by the two procedural subsections of Art. 17 - and not by some other external set of rules - as follows:

If the claimant decides to start an arbitration, it must notify the respondent State, and no additional consent is required from such State;

Alternatively, if the claimant decides to opt for conciliation, it must obtain the agreement of its counterparty; and

If conciliation fails, both parties retain the right to start an arbitration, by notifying the counterparty in accordance with the rules established in Art. 17(2)(b) and without the need of further consent by the State.

B. The context confirms the ordinary meaning of the text

271. The ordinary meaning of the text of Art. 17 is confirmed by the context in which this provision is inserted. Indeed, Art. 16, which is the previous provision, supports the Tribunal's (by majority) analysis. Under Art. 16 the host State undertakes to allow the investor the right to resort to its national judicial system to complain regarding an investment dispute adding that:

"[...] if the investor chooses to raise the complaint before the national courts or before an arbitral tribunal then having done so before one of the two quarters he loses the right of recourse to the other."

272. The fork-in-the-road provision confirms that the claimant always has the right to choose to resort to arbitration, as an alternative to conciliation. Indeed, if the claimant chooses to go to arbitration, it loses the right to recourse to the national courts, and vice-versa. The wording of Art. 16 leaves no margin to doubt that the claimant is free to select the option that better suits it, and that no additional consent by the State is required.

273. The Tribunal's (by majority) reading of Art. 17 is the only capable of giving an effet utile to the fork-in-the-road provision. If the Tribunal were to follow the Kingdom's interpretation, the words "if the investor chooses" and "the right of recourse" would be deprived of their meaning, because under the Kingdom's interpretation the investor does not have a right to resort to arbitration and is always reliant on the State's prior acceptance.

C. The object and purpose of the OIC Agreement

274. Furthermore, the Treaty's "object and purpose" also support the interpretation of the Tribunal (by majority). The Preamble of the Treaty shows that Member States were eager to foment foreign investment between the various States, as a means of

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fostering economic and social development. For this, they understood that they had to "provide and develop a favourable climate for investment", to ensure that³⁶⁶:

"[...] the economic resources of the Islamic countries could circulate between them so that optimum utilization could be made of these resources in a way that will serve their development and raise the standard of living of their peoples [...]"

275. Thus, the Member States had the clear intention of providing and developing favourable conditions for investments. This includes ensuring the promotion, protection and guarantee of investments, as the title of the OIC Agreement itself indicates ("Agreement for Promotion, Protection and Guarantee of Investments among Member States of the Organisation of the Islamic Conference").

276. Granting investors the right to resort to arbitration in case of dispute with a host State related to an investment is undoubtedly an effective means of protection. The alternative only leaves the investor access to the local courts -- something which was, in any case, already permitted under Art. 16. Arbitration offers investors an additional means of protection, as investors generally prefer to solve their disputes in a neutral forum.

D. No need for supplementary means of interpretation

277. Art. 32 of the VCLT provides that³⁶⁷:

"Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31: (a) Leaves the meaning ambiguous or obscure; or (b) Leads to a result which is manifestly absurd or unreasonable."

278. An interpretation of Art. 17 pursuant to Art. 31 of the VCLT, guided "in good faith" by the "ordinary meaning" of the terms, "in their context" and "in light of [the Treaty's] object and purpose" leads to a meaning that is neither "ambiguous" nor "obscure"; it also does not lead to a result "which is manifestly absurd or unreasonable". On the contrary: the Member States gave investors the choice of referring their investor-State disputes either to arbitration or to conciliation; if they opted for arbitration, the State's consent was already consigned in the Basic Rule, whereas if they opted for conciliation, the specific consent of the State would be required - a reasonable demand for conciliation is an amicable procedure, which hinges on the goodwill of both parties; and if the conciliation procedure was unsuccessful, claimants would not forfeit their right to access arbitration, without the need for any additional consent by the State.

279. Considering the above, the Tribunal, by majority, finds that there is no need to resort to supplementary means of interpretation under Art. 32 of the VCLT.

³⁶⁶ Doc. CLA-10, p. 2. ↩
³⁶⁷ Doc. CLA-73, Art. 32. ↩

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280. In any case, the Tribunal, by majority, observes that no evidence regarding the travaux préparatoires has been marshalled and that the Parties have not pointed to other relevant "circumstances" regarding the "conclusion" of this particular Treaty.

3.3 COUNTERARGUMENTS BY RESPONDENT

281. The Kingdom has three counterarguments:

That conciliation is a necessary prerequisite for arbitration (A.);

That contemporary treaty practice shows that there was no ex ante consent to arbitration (B.); and

That other investment awards support its argumentation (C.).

A. Conciliation cannot be a prerequisite for arbitration

282. The Kingdom recognizes that arbitration is available, but only if the parties first agree and engage in a conciliation³⁶⁸:

"The Kingdom does not dispute that conciliation and arbitration are alternatives, nor does the Kingdom contend that either process must be pursued: its only point is that if they are pursued, they must be pursued consecutively, consistently with the plain words of Article 17(2)(a)." [Emphasis in the original]

283. The quaestio vexata is whether or not conciliation constitutes a prerequisite for arbitration?

284. The Tribunal, by majority, finds that the answer is negative, for several reasons.

285. First, the literal text of the Basic Rule does not say so. Indeed, the text does not say that the dispute shall be settled "through conciliation and if conciliation fails through arbitration". The Basic Rule clearly states that the dispute shall be settled "through conciliation or arbitration", without any requirement that conciliation must precede arbitration. The exceptional solution proposed by the Kingdom cannot be based on an implied choice.

286. Second, and as previously explained, such an interpretation would deprive the fork-in-the-road provision of its effet utile.

287. Finally, the Tribunal (by majority) has already provided its interpretation of Art. 17(2)(a): it regulates the evolution of a failed conciliation into an arbitration -- but it does not mean that conciliation must take place before arbitration.

³⁶⁸ R II, para. 231. ↩

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B. Other treaty practice is inapposite

288. The Kingdom submits that treaty practice is relevant to the proper interpretation of Art. 17 and admissible as a supplementary means of interpretation under Art. 32 of the VCLT³⁶⁹.

289. The Tribunal, by majority, is unpersuaded: treaty practice is not a recognized means of interpretation under Arts. 31 and 32 of the VCLT, except if it concerns the "subsequent practice in the application of the treaty" by the contracting parties to said treaty³⁷⁰. And none of the practice to which the Kingdom has drawn the Tribunal's attention concerns the application of this particular Treaty. It only concerns other treaties, which were signed by Saudi Arabia and Qatar with other countries, but not in their capacity as Member States of the OIC - a specific intergovernmental organization, with its own set of members and rules. As noted by the Itisaluna tribunal³⁷¹:

"[...] it is incumbent on the Tribunal to exercise considerable caution when it comes to a (proposed) interpretation of the [OIC] Agreement that neither follows clearly and necessarily from the plain and ordinary meaning of its terms nor derives from the clear and dispositive practice of all of its Contracting Parties, resting rather on the contested practice of one of its Contracting Parties alone. The reason for such caution is that any interpretation of the OIC Agreement that the Tribunal may adopt by reference to the non-OIC bilateral treaty obligations of Iraq would inevitably colour the appreciation of the legal obligations of other OIC Agreement Contracting Parties under the OIC Agreement. In the Tribunal's view, the bilateral treaty practice of one party to a multilateral agreement, bilateral practice that is unrelated to the multilateral agreement, cannot be safely relied upon as a yardstick for the interpretation and application of that multilateral agreement. The OIC Agreement, interpreted in the present case, must carry the same meaning for all its Contracting Parties. This meaning cannot be shaped by the unrelated treaty practice of one Contracting Party only." [Emphasis added]

290. The same reasoning applies to multilateral treaty practice, between certain (and not other) Member States to the OIC Agreement.

The Unified Agreement

291. Be that as it may, the Unified Agreement -- which according to the Kingdom should be "[o]f greatest assistance to the Tribunal in its interpretation" of Art. 17³⁷² - in fact seems to support the Tribunal's analysis, and not that of the Kingdom.

292. The Unified Agreement was signed in 1980 by the member States of the League of Arab States - a regional organization that encompasses Saudi Arabia and Qatar, but whose scope and members³⁷³ are ultimately different from the OIC. Contrary to the

³⁶⁹ RPHB, paras. 21.1 and 23. ↩
³⁷⁰ Doc. CLA-73, Art. 31(3)(b). ↩
³⁷¹ Doc. CLA-52, Itisaluna, para. 153. ↩
³⁷² RPHB, para. 29. ↩
³⁷³ The League of Arab States has fewer members than the OIC, even though all members of the League of Arab States are also members of the OIC. ↩

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OIC Agreement, the Unified Agreement contains an entire chapter entitled "The Settlement of Disputes"³⁷⁴.

293. Art. 25 of the Unified Agreement provides that disputes arising out of said agreement "shall be settled by way of conciliation or arbitration or by recourse to the Arab Investment Court". Art. 26 establishes that conciliation and arbitration³⁷⁵:

"[...] shall be conducted in accordance with the regulations and procedures contained in the annex to the Agreement which is regarded as an integral part thereof."

294. The annex in question, entitled "Conciliation and Arbitration", contains two articles: Art. 1 on "Conciliation" and Art. 2 on "Arbitration"³⁷⁶. Art. 1(1) of the annex indicates, in its relevant part, that:

"Where two disputing parties agree to conciliation, the agreement must comprise a description of the dispute, the demands of the parties concerned, the name of the conciliator they have selected and the remuneration which they have decided he should receive." [Emphasis added]

295. Here too conciliation requires the agreement of both disputing parties, particularly on the scope of the dispute, the claims in questions and the name and remuneration of the conciliator. Art. 1(2) of the annex goes on to explain that the conciliator's task is to achieve a "rapprochement" between the different points of view.

296. Contrarily to Art. 17(2)(a) of the OIC Agreement, Art. 2(1) of the annex establishes that:

"Where the two parties fail to agree to conciliation or where the conciliator proves unable to render his decision within the period specified or where the parties do not agree to accept the solutions proposed, they may agree to resort to arbitration." [Emphasis added]

297. This Tribunal is not called upon to interpret the Unified Agreement. But it bears noticing that Art. 2(1) requires the disputing parties to "agree to resort to arbitration" -- a provision which is absent from the OIC Agreement; on the contrary, the OIC Agreement makes it clear that "each party has the right to resort to arbitration" even if conciliation fails.

298. Therefore, the Tribunal, by majority, finds that the Unified Agreement does not support the Kingdom's position.

C. Prior awards

299. Both Parties have relied on prior awards that interpreted the OIC Agreement to further their positions.

300. The Tribunal is not bound by preceding awards. There is no system of stare decisis in investment arbitration, and the Tribunal is free to reach conclusions different

³⁷⁴ Doc. RLA-337, Chapter VI, internal pp. 220 et seq. ↩
³⁷⁵ Doc. RLA-337, internal p. 220. ↩
³⁷⁶ Doc. RLA-337, internal p. 225. ↩

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from those of other tribunals. That said, legal certainty is enhanced when subsequent tribunals, applying the same treaty, strive to reach the same interpretation as their predecessors. Contradictory interpretations only cause confusion, increase the risk for investors and thus operate contrary to the very purpose of investment treaties.

301. In this case the available prior decisions are split. The Parties have drawn the Tribunal's attention to three cases³⁷⁷ that have discussed and decided on the proper interpretation of Art. 17 of the OIC Agreement:

The case of Al-Warraq, whose award on the State's preliminary objections to jurisdiction and admissibility of the claims was published on 21 June 2012³⁷⁸;

The case of Itisaluna, whose award was published on 3 April 2020³⁷⁹; and

The case of Navodaya Trading, whose award was issued on 2 December 2020 but has not been made public³⁸⁰.

302. Out of these three awards, two have recognized jurisdiction under Art. 17 (Al-Warraq³⁸¹ and Navodaya Trading³⁸²) and one has denied jurisdiction (Itisaluna³⁸³, subject to the dissenting opinion of arbitrator Dr. Wolfgang Peter).

303. In Itisaluna, the tribunal remarked that³⁸⁴:

"[...] the critical question that requires decision by the Tribunal in these proceedings is whether the Claimants are able to incorporate into the OIC Agreement, by operation of its MFN clause, the ICSID arbitration clause in the Iraq-Japan BIT. If the Claimants do not succeed on this point, their jurisdictional case fails, notwithstanding any other points on which they may otherwise prevail along the way." [Emphasis added]

304. On this question, the tribunal, by majority, concluded that Art. 8 of the OIC Agreement could not be relied upon by the investors to incorporate into the OIC Agreement the consent in writing to submit the dispute to ICSID arbitration derived

³⁷⁷ In fact, two other cases have upheld jurisdiction under Art. 17: in one, the State did not make an objection to the tribunal's ratione voluntatis jurisdiction (Doc. CLA-51, Kontinental Conseil Ingénierie S.A.R.L. v. Gabon Republic, PCA Case No. 2015-25, Final Award, 23 December 2016, para. 158); in the other, the decision on jurisdiction is not public (Doc. CLA-53, L.E. Peterson, OIC Round-Up: An Update on Pending Arbitration Cases Lodged under the OIC Investment Agreement, IA Reporter, 11 August 2020, regarding Omar Bin Sulaiman Abdul Aziz Al Rajhi v. Oman, PCA Case No. 2017-32). ↩
³⁷⁸ Doc. CLA-50. Arbitral Tribunal: Mr. Bernardo Cremades (Chair); Mr. Michael Hwang S.C.; Mr. Fali S. Nariman S.C. ↩
³⁷⁹ Doc. CLA-52. Arbitral Tribunal: Sir Daniel Bethlehem, K.C. (Chair); Dr. Wolfgang Peter; Professor Brigitte Stern. ↩
³⁸⁰ Doc. CLA-54. Arbitral Tribunal: Professor Gabrielle Kaufmann-Kohler (Chair); Dr. Stanimir A. Alexandrov; Professor Laurent Aynès. ↩
³⁸¹ Doc. CLA-50, Al-Warraq, paras. 79-83, 93. ↩
³⁸² Doc. CLA-54. ↩
³⁸³ Doc. CLA-52, paras. 223-225. ↩
³⁸⁴ Doc. CLA-52, Itisaluna, para. 146. ↩

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from the Iraq-Japan BIT. This is why the tribunal upheld the respondent's ratione voluntatis objection³⁸⁵; but this is not the question put before this Tribunal.

305. The Itisaluna tribunal did interpret Art. 17 of the OIC Agreement, but this was not the main focus of its decision. In conducting its analysis, the tribunal paid little attention to the Basic Rule of Art. 17 and rather concentrated on the "if/then" language contained in Art. 17(2)(a), reaching a conclusion similar to that supported by the Kingdom in this arbitration³⁸⁶ - and this Tribunal has already given its interpretation of this provision.

306. Overall, the Tribunal, by majority, finds its own interpretation (which is line with the awards in Al-Warraq and Navodaya Trading) more convincing.

3.4 CONCLUSION

307. The Tribunal, by majority³⁸⁷, finds that a proper interpretation of Art. 17 of the OIC Agreement, in accordance with the VCLT, supports the conclusion that the

³⁸⁵ Doc. CLA-52, Itisaluna, para. 148. ↩
³⁸⁶ Doc. CLA-52, Itisaluna, paras. 175-184. ↩
³⁸⁷ Having carefully reviewed the record before the Tribunal and the arguments of both Parties in this case, Professor Ziadé disagrees with the interpretation by the majority of the Tribunal of Article 17 of the OIC Agreement for the following reasons: ↩
"The OIC Agreement of 1981, which entered into force in 1986, was dormant for decades. However, since 2010, it has been the basis for many ad hoc arbitration claims. Article 17 of the OIC Agreement is not a model of clarity, and its interpretation has led to disagreements among arbitration tribunals, as well as within the same tribunals, as to whether conciliation is a mandatory precondition to arbitration.
The Tribunal's majority reaches the conclusion that if an investor opts for conciliation, the investor must obtain the host State's ex post consent for the conciliation to be attempted. However, no such State's ex post consent would be needed should the investor opt for arbitration because the host State is presumed to have given its advance consent to arbitration by the mere fact of ratifying the OIC Agreement. In other words, the Tribunal's majority posits that the investor needs the specific consent of the host State for a procedure that will end at best with a non-binding recommendation but does not need the specific consent of the State for a procedure that will end with a binding award. Such interpretation 'leads to a result that is manifestly absurd or unreasonable,' which, pursuant to Article 32(b) of the Vienna Convention on the Law of Treaties, allows for recourse to supplementary means of interpretation. Moreover, the latter would help resolving the ambiguity of the text.
In this respect, the tribunal in the AAPL v. Sri Lanka case has held as early as in 1990 that:

When there is need of interpretation of a treaty it is proper to consider stipulations of earlier or later treaties in relation to subjects similar to those treated in the treaty under consideration. [AAPL v. Sri Lanka Award, para. 40 Rule F]

The Respondent has demonstrated convincingly in its Post-Hearing Brief that '[t]reaty practice at the time of execution of the OIC Agreement shows that Member States could not have agreed to an ex ante, unconditional consent to arbitration.' [RPHB pp. 24-35]. One may add that such ex ante standing offers on the part of State parties to treaties to submit to arbitration were little known in 1981 at the time of the execution of the OIC Agreement, as the first award recognizing this possibility, the ICSID AAPL v. Sri Lanka award, came a decade later in 1990.
It is my view, for the reasons explained below, that Article 17 of the OIC Agreement provides for conciliation as a precondition to arbitration and conditions resort to arbitration on the prior resort to, and failure of, conciliation. This is consistent with Arab and Islamic traditions where conciliation is highly valued. A relevant example is the 1974 Convention on the Settlement of Investment Disputes between Host States of Arab Investments and Nationals of Other Arab States (the 1974 Arab Convention) [a French translation of which is published in Revue de l'arbitrage 1981.348], which, as its name implies, was based closely on the ICSID Convention. The 1974 Arab Convention included seven Arab contracting parties, all of them parties to the OIC Agreement. Like the ICSID Convention, the 1974 Arab Convention established a system for the conciliation and arbitration of investment disputes between States parties to the Convention and nationals of other parties. Though very similar to the ICSID Convention, the 1974 Arab Convention

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Kingdom made a standing offer to arbitrate investment disputes, which Claimants were entitled to accept by submitting a notification of arbitration; once Claimants had expressed their acceptance, arbitration was not subject to a further ex post consent by the State. The Tribunal, by majority, also finds that arbitration is not subject to the prerequisite of a previous attempt at conciliation.

308. Under the OIC Agreement, investors in Saudi Arabia faced with an investment dispute have the right to choose whether:

To resort to the Kingdom's national courts (under Art. 16),

To attempt to agree with the Kingdom on a conciliation procedure (in accordance with the provisions of Art. 17(1)(a) and (b) and 17(2)(a)), or

differed from the ICSID Convention in that it made recourse to conciliation a prerequisite to recourse to arbitration. Only if the conciliation effort failed could the parties submit the dispute to arbitration.
Under Article 17 of the OIC Agreement, conciliation and arbitration must be pursued in sequence, with the host State giving its ex-post consent at the time of the conciliation without having to repeat its consent at the time of arbitration when conciliation efforts would have failed.
The Itisaluna v. Iraq award also reached the conclusion that Article 17 provides for conciliation as a precondition to arbitration by relying mainly on the 'if ... then' language included in the provision:

Having regard to the conditional "if ... then" language of Article 17(2)(a), language that is not disputed, the Tribunal considers that the intended gateway to arbitration under this provision is prior resort to conciliation and, thereafter, the failure of the conciliation process. [...] It necessarily follows from this language that resort to arbitration is conditional on the prior resort to conciliation. The Tribunal observes, as well, that such an interpretation is not per se inconsistent with the rest of the Article and is not at odds with any settled approach to dispute settlement provisions in international investment treaties. [Itisaluna v. Iraq Award, para. 183]

It may be noted that the 'if ... then' language of the English version of Article 17(2)(a) is reflected in the Arabic version of Article 17(2)(a) "إذا ... ف". The French version includes the equivalent of the word 'if' ('si') but does not require the word 'then,' as its use in the French text would have created a tautology. The word 'alors' is assumed in the French version of Article 17 before the word 'chaque.'
The above interpretation of Article 17(2)(a) is supported by the same provision giving the right to 'each party' (i.e., not only the investor but also the host State) to resort to arbitration in case conciliation fails. This can only make sense if it is presumed that the investor would have already given its consent at the preceding stage of conciliation.
As to the interpretation of the second sentence of Article 16 of the OIC Agreement and its relationship with Article 17, there is general agreement between the parties to this case and among arbitration tribunals generally [for example, Al-Warraq v. Indonesia Award, para. 75.3; Itisaluna v. Iraq Award, para. 164] that Article 16 is a fork-in-the-road provision. An investor who raises a claim before a national court is precluded from raising the same claim before an arbitration tribunal, and vice versa. However, the investor is not precluded from raising the same claim before a conciliator. In the case of arbitration, conciliation is a prerequisite. In the case of the investor's resort to national courts, conciliation is still an option either before, during or after, provided that the parties to the dispute agree to conciliation. Article 16 of the OIC Agreement cannot be interpreted in a way that would deprive Article 17(2)(a) of its effet utile.
As to the relationship between the chapeau of Article 17 and the rest of the provision, more particularly Article 17(2)(a), while the chapeau refers to 'conciliation or arbitration,' it is believed that the phrase is to be 'read simply as an expression of the available modalities of settlement, i.e., neutral on the issue of association.' [Itisaluna v. Iraq Award, para. 173]. This interpretation is supported by the chapeau's next phrase 'in accordance with the following rules and procedures,' which leaves little doubt that Article 17(2)(a) is controlling.
It would be of great assistance to parties and arbitration tribunals alike if the Contracting States to the OIC Agreement were to clarify the unclear provisions of the Agreement, the more so since Article 22 of the Agreement provides for the possibility of the Agreement being amended at the request of at least five States and with the approval of four-fifths of the Contracting Parties. This would put an end to an unsettling situation."

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To directly file an arbitration against the State (in accordance with the provisions of Art. 17(2)(b), (c) and (d)).

309. Therefore, the Tribunal, by majority, dismisses the Kingdom's objection ratione voluntatis.

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V.2. ADMISSIBILITY OBJECTION: ART. 9 OF THE OIC AGREEMENT AND THE CLEAN HANDS DOCTRINE

310. Art. 9 of the OIC Agreement provides that³⁸⁸:

"The investor shall be bound by the laws and regulations in force in the host state and shall refrain from all acts that may disturb public order or morals or that may be prejudicial to the public interest. He is also to refrain from exercising restrictive practices and from trying to achieve gains through unlawful means."

311. The Kingdom states that this provision embodies the general principle of international law of "clean hands", and that Claimants have breached this principle through various illegalities related to their investments in the Kingdom (1.).

312. Conversely, Claimants assert that Art. 9 does not reflect the "clean hands" doctrine, which, in any event, does not constitute a general principle of international law, and is not applicable in the present case. Regardless, Claimants submit that their investments were carried out and performed in conformity with applicable laws and regulations (2.).

313. The Tribunal will summarise the Parties' positions and make its decision (3.).

1. RESPONDENT'S POSITION

314. The Kingdom submits that both Art. 9 of the OIC Agreement and international law recognize the "clean hands" principle (1.1). Claimants have breached such principle, since they acted fraudulently when procuring the Scientific Office Licence and failing to license properly their Warehouses, which Claimants used to generate their profit-making business activities³⁸⁹ (1.2).

1.1 ART. 9 EMBODIES THE "CLEAN HANDS" PRINCIPLE

315. The Kingdom argues that Art. 9 of the OIC embodies the "clean hands" principle, which is, in and of itself, a general principle of international law within the meaning of Art. 38(1)(c) Statute of the International Court of Justice³⁹⁰.

316. This has been recognized by the Al Warraq tribunal, who has interpreted Art. 9 as a provision that binds the investor to certain standards of conduct: if an investor's claim is based on actions that would be deemed illicit under the host State's law, said claim becomes inadmissible³⁹¹.

317. The Kingdom argues that the "clean hands" principle was first recognized in the Permanent Court of International Justice's Eastern Greenland case of 1933, which established the proposition that "an unlawful act cannot serve as the basis of an

³⁸⁸ Doc. CLA-10, p. 9. ↩
³⁸⁹ R II, para. 218.2. ↩
³⁹⁰ R II, para. 290. ↩
³⁹¹ R I, paras. 337-339; R II, paras. 291 and 301-302, citing to Doc. CLA-32, Al-Warraq, paras. 631-648. ↩

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action at law"³⁹². Since then, many investment tribunals have regularly applied it to exclude treaty claims based on illegal acts³⁹³ (e.g., Rusoro³⁹⁴, Flughafen³⁹⁵, Spentex³⁹⁶, Churchill Mining³⁹⁷, Littop³⁹⁸, among others³⁹⁹). Furthermore, "clean hands" has been recognized as a general principle of international law and "an implicit and inherent feature of all investment treaties"⁴⁰⁰.

Claimants' arguments should be dismissed

318. Claimants disagree with the Kingdom's position, as will be explained in section 2.1 infra. The Kingdom avers that Claimants' arguments should be dismissed for five reasons.

319. First, Claimants cite two dated (or questionable) cases: unlike the OIC Agreement, the treaties applicable in Yukos⁴⁰¹ and South American Silver⁴⁰² did not contain a provision that embodied the "clean hands" principle. Moreover, the reasoning in these awards is an outlier and has not been followed by other tribunals⁴⁰³.

320. Second, the Kingdom disagrees with Claimants' argument that the only purpose of Art. 9 is to allow States to bring a counterclaim against an investor for breach of law. This reasoning is absurd, considering that the host State has its entire criminal justice system to bring claims against an investor who acts illegally⁴⁰⁴.

321. Third, the Kingdom notes that case law does not support Claimants' suggestion that the "clean hands" doctrine should apply only to the making of an investment and not to its operation. Art. 9 is not drafted like a regular legality clause and contains no temporal limitation. In any case, the making of an investment can be continuous in time and does not occur only when the investor acquires its first property right⁴⁰⁵.

³⁹² R II, para. 290, citing to Doc. RLA-83, Legal Status of Eastern Greenland (Denmark v Norway) (1933) PCIJ Ser A/B No 54. ↩
³⁹³ R II, paras. 290-292. ↩
³⁹⁴ Doc. RLA-256, Rusoro Mining Ltd v Bolivarian Republic of Venezuela, ICSID Case No ARB(AF)/12/5, Award, 22 August 2016. ↩
³⁹⁵ Doc. RLA-257, Flughafen Zürich AG & Gestión e Ingenería IDC SA v Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/19, Award, 18 November 2014. ↩
³⁹⁶ Spentex Netherlands BV v Republic of Uzbekistan, ICSID Case No ARB/13/26, Award, 27 December 2016. ↩
³⁹⁷ Doc. RLA-85, Churchill Mining & Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/40 &12/14, Award, 6 December 2016, para. 508. ↩
³⁹⁸ Doc. RLA-87, Littop Enterprises Limited, Bridgemont Ventures Limited & Bordo Management Limited v. Ukraine, SCC Case No V 2015/092, Final Award, 4 February 2021, para. 442. ↩
³⁹⁹ R II, fn. 599, citing to eleven other cases. ↩
⁴⁰⁰ R II, para. 294, citing to Doc. RLA-255, P. Dumberry, "The Clean Hands Doctrine as a General Principle of International Law" (2020) 21 JWIT 489 ["Dumberry"], p. 518. ↩
⁴⁰¹ Doc. CLA-238, Yukos Universal Limited v. Russian Federation, PCA Case No AA 227, Final Award, 18 July 2014. ↩
⁴⁰² Doc. CLA-37, South American Silver Ltd. (Bermuda) v. Plurinational State of Bolivia, PCA Case No. 2013-15, Award, 22 November 2018. ↩
⁴⁰³ R II, paras. 296-298. ↩
⁴⁰⁴ R II, para. 304. ↩
⁴⁰⁵ R II, para. 305. ↩

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322. Fourth, even though the Kingdom agrees with Claimants that not all incidences of unlawful conduct connected with an investment can trigger the application of the "clean hands" doctrine, a fraud on the regulatory bodies of the State certainly can⁴⁰⁶.

323. Finally, it is true that the principle of estoppel would block the State from invoking the "clean hands" doctrine if, being aware of the illegality, the Kingdom had chosen to disregard or even endorse it. However, this is not the case in the present dispute, as the estoppel requirements have not been met⁴⁰⁷.

1.2 CLAIMANTS HAVE BREACHED THE "CLEAN HANDS" PRINCIPLE

324. The Kingdom's position is that Claimants come to this Tribunal with unclean hands. The Kingdom does not make any allegation of corruption⁴⁰⁸; rather, it argues that Claimants' investment was procured through fraud⁴⁰⁹. According to the Kingdom, the available evidence shows that Claimants⁴¹⁰:

Acted fraudulently to obtain and maintain a Scientific Office Licence (A.);

Operated their Warehouses unlawfully (B.); and

Committed unlawful acts in relation to their distributors in Saudi Arabia⁴¹¹ (C.).

A. The Scientific Office Licence fraud

325. Under the Saudi pharmaceutical law, to obtain a pharmaceutical licence - a sine qua non condition for establishing and running a pharmaceutical import and distribution business in the Kingdom⁴¹² - Claimants had to⁴¹³:

Employ a full-time pharmacist from Saudi Arabia with a valid licence;

Have a scientific office which satisfied the conditions set forth in said law.

326. The Kingdom submits that Claimants breached both legal requirements but fraudulently represented to the SFDA that they were in compliance for the purposes of obtaining the Scientific Office Licence⁴¹⁴.

327. First, at least since 2014 Qatar Pharma did not employ a full-time Saudi pharmacist to manage the Scientific Office⁴¹⁵. The two Saudi pharmacists allegedly employed by Qatar Pharma - Mr. Al Qahtani and Mr. Al-Amari [the "Pharmacists"] - did not carry out any tangible activity for the company; instead, their arrangement with

⁴⁰⁶ R II, paras. 306-307, citing to Doc. RLA-88, Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award, 27 August 2008, para. 135. ↩
⁴⁰⁷ R II, paras. 308-309. ↩
⁴⁰⁸ RPHB, para. 54. ↩
⁴⁰⁹ R II, para. 310; RPHB, para. 55. ↩
⁴¹⁰ RPHB, para. 55. ↩
⁴¹¹ R II, para. 315. ↩
⁴¹² R II, para. 316; RPHB, para. 57.1. ↩
⁴¹³ R I, para. 341; R II, para. 316. ↩
⁴¹⁴ R I, para. 342; R II, para. 310. ↩
⁴¹⁵ R I, para. 342.1. ↩

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Qatar Pharma was a sham⁴¹⁶. They have both denied carrying out any work for Qatar Pharma⁴¹⁷ and they both had employment contracts elsewhere⁴¹⁸. Despite this, Qatar Pharma represented to the SFDA that the Pharmacists were full-time employees in order to obtain the Scientific Office Licence⁴¹⁹. Mr. Al Qahtani was even misled into signing Qatar Pharma's application for the Scientific Office Licence⁴²⁰.

328. Second, Claimants' representative, Mr. Antar, corresponded with the Kingdom's authorities under the Pharmacists' names without their knowledge or permission, and forged their signatures on various documents submitted to the Kingdom⁴²¹.

329. Third, if it is true that Claimants employed the Pharmacists, then Claimants failed on several aspects related to labour law and social insurance⁴²².

330. Finally, the office space supposedly dedicated to the Scientific Office was just an empty room with one computer, lacking any appropriate medical storage and laboratory equipment⁴²³.

331. In sum, the Scientific Office Licence was granted based on a clear fraud⁴²⁴.

B. The unlawful operation of the Warehouses

332. The Kingdom additionally submits that the Warehouses operated by Claimants in Saudi Arabia lacked the mandatory SFDA licences that permitted the storage of pharmaceutical products, in violation of the Kingdom's law⁴²⁵:

Claimants never obtained an SFDA licence to operate the Dammam Warehouse, which was therefore operating illegally in December 2016⁴²⁶;

Claimants never obtained an SFDA licence to operate the Jeddah Warehouse either, only an initial approval - with the consequence that this Warehouse too was being operated unlawfully⁴²⁷; and

Claimants only obtained a licence to operate the Riyadh Warehouse in April 2017, when in fact they had been operating it since 4 November 2013 – with the consequence that they operated the Warehouse illegally for years⁴²⁸.

⁴¹⁶ R II, para. 310.1; RPHB, para. 56.1; CHT, p. 2390, 11. 10-15. ↩
⁴¹⁷ R II, paras. 310.1-310.2; RPHB, para. 56.1(2). ↩
⁴¹⁸ RPHB, paras. 56-57.3. ↩
⁴¹⁹ R I, para. 342.2. ↩
⁴²⁰ RPHB, para. 56.2; CHT, p. 2391, 1. 6 to p. 2392, 1. 15. ↩
⁴²¹ R II, paras. 310.2 and 313; RPHB, para. 56.3; CHT, p. 2392, 11. 21-25. ↩
⁴²² R II, para. 312. ↩
⁴²³ R I, para. 341.3; R II, para. 310.3. ↩
⁴²⁴ R I, paras. 342-343; R II, paras. 310-310.2; RPHB, para. 56.2. ↩
⁴²⁵ R I, para. 345; R II, para. 311; RPHB, paras. 58-60. ↩
⁴²⁶ R I, para. 345; RPHB, para. 58.1; CHT, p. 2393, 11. 18-21. ↩
⁴²⁷ R I, para. 345; RPHB, para. 58.2; CHT, p. 2393, 11. 18-21. ↩
⁴²⁸ RPHB, paras. 58.3 and 60; CHT, p. 2393, 1. 24 to p. 2394, 1. 4. ↩

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333. The Kingdom argues that the receipt of planning permissions to build a warehouse - which Claimants apparently received - does not equate to a SFDA licence permitting the storage of pharmaceutical products⁴²⁹.

C. The unlawful acts related to distributors

334. Finally, the Kingdom argues that Claimants committed two unlawful acts in relation to their distributors in Saudi Arabia⁴³⁰:

First, they failed to register their agency and distributorship arrangements with Banaja, and subsequently with QEMS, in contravention of the Law of Commercial Agencies and its Implementing Regulations; and

Second, they misrepresented to the authorities that QEMS was a Saudi company, when in fact it was wholly owned by a foreign national - Dr. Al Sulaiti; under the Law of Commercial Agencies, a distributor must be a Saudi national, or an entity wholly Saudi-owned (i.e., the share capital of the entity must be wholly Saudi-owned); had the authorities known that QEMS was not a Saudi-owned company, QEMS would likely have been prohibited from continuing to operate in Saudi Arabia.

2. CLAIMANTS' POSITION

335. Claimants deny that the "clean hands" doctrine finds application in the present case: it is neither embodied in Art. 9 of the OIC Agreement nor a general principle of international law (2.1). Even if it were applicable, Claimants have not committed any fraudulent activity when establishing or operating their investments in Saudi Arabia (2.2)⁴³¹.

2.1 THE "CLEAN HANDS" DOCTRINE IS NEITHER EMBODIED IN ART. 9, NOR A GENERAL PRINCIPLE OF INTERNATIONAL LAW

336. Claimants submit that, contrary to the Kingdom's arguments, the "clean hands" doctrine does not fall within the scope of Art. 9 of the OIC Agreement. The Al-Warraq case - on which the Kingdom relies - only mentioned that the claimant's actions in that case violated Art. 9 and the "clean hands" doctrine. However, it did not connect explicitly these two elements⁴³². As noted by the same tribunal, Art. 9 only elevates a violation of national law provisions to the international sphere, similarly to what an umbrella clause does for contractual obligations⁴³³.

337. In any event, Claimants aver that the text of Art. 9 cannot be interpreted as an admissibility barrier to investor claims. Rather, it should be considered as a basis for counterclaims by OIC Member States in cases where their laws or regulations have been broken, as found by the Al-Warraq tribunal⁴³⁴.

⁴²⁹ RPHB, para. 59.1. ↩
⁴³⁰ R II, para. 315. ↩
⁴³¹ C II, para. 243; C III, para. 59. ↩
⁴³² C II, para. 247; C III, para. 65. ↩
⁴³³ C III, para. 68. ↩
⁴³⁴ C II, para. 249; C III, para. 66. ↩

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338. Claimants also deny that "clean hands" is a general principle of international law or a rule of customary international law. Many authorities confirm this view:

Professor Crawford, as Special Rapporteur of the International Law Commission on State Responsibility, clearly rejected the idea that "clean hands" exists either as a principle of international law or as a rule of customary international law⁴³⁵;

Various investment tribunals have reiterated this same finding, such as in the Yukos⁴³⁶ and the South American Silver⁴³⁷ cases.

339. As to the cases cited by the Kingdom, a correct analysis of the relevant jurisprudence confirms that there is significant doubt as to whether a clean hands "principle" exists⁴³⁸. In any event, to constitute a bar to admissibility such doctrine should only be applied to the establishment of the investment - certainly not to its operation⁴³⁹.

340. Finally, Claimants argue that the Kingdom was aware of the alleged misconducts on which it bases its arguments. The Kingdom has conceded that the "clean hands" doctrine cannot be invoked if a State was aware and chose to disregard - or even encourage - the illicit conduct of the investor⁴⁴⁰. The only elements that tribunals consider are the gravity of the violations and the good faith of the investor⁴⁴¹.

341. In any event, the facts alleged by the Kingdom (if proven, quod non) do not qualify as grave violations of the host State's law; at most, they could be considered as minor infractions, which would fall outside the scope of an alleged "clean hands" principle⁴⁴².

2.2 CLAIMANTS HAVE NOT ENGAGED IN ANY FRAUDULENT CONDUCT

342. In any event, Claimants deny that they have breached the "clean hands" doctrine. Qatar Pharma has established and operated its investment in the Kingdom in compliance with the applicable law and in good faith. In fact, the allegations of illegalities have no basis: both the Scientific Office (A.) and the Warehouses (B.) were properly licensed, the Kingdom was always aware of Claimants' activities, and Claimants properly registered their distributors (C.)⁴⁴³.

⁴³⁵ C II, para. 246, citing to Doc. CLA-237, para. 336; C III, para. 63. ↩
⁴³⁶ Doc. CLA-238, Yukos Universal Limited (Isle of Man) v. Russian Federation, PCA Case No. AA 227, Final Award. ↩
⁴³⁷ C II, para. 246; Doc. CLA-37, South American Silver Ltd. (Bermuda) v. Plurinational State of Bolivia, PCA Case No. 2013-15, Award. ↩
⁴³⁸ C III, paras. 60-62. ↩
⁴³⁹ C III, paras. 70-73. ↩
⁴⁴⁰ C III, paras. 77-78. ↩
⁴⁴¹ C III, paras. 79-80. ↩
⁴⁴² C III, paras. 76, 79. ↩
⁴⁴³ C III, paras. 82-84; CPHB, para. 164; CHT, p. 2317, 11. 9-14. ↩

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A. The Scientific Office Licence was properly obtained

343. Claimants argue that the SFDA issued a Licence for the Scientific Office on 30 June 2013, and for good reason⁴⁴⁴.

344. First, both Saudi Pharmacists employed in the Scientific Office were duly registered with the SFDA, and their names appeared on the request for the Scientific Office Licence⁴⁴⁵. Both Pharmacists had a full-time employment contract and received a regular salary from Qatar Pharma - salary that they never returned⁴⁴⁶. Mr. Al Qahtani admitted to signing the application and the form sent to the SFDA to obtain the Licence⁴⁴⁷, and this is also why the SFDA was provided with his phone number⁴⁴⁸.

345. Second, Claimants had no knowledge of the Pharmacists' other work contracts with the Boots pharmacy and the Saudi Ministry of Health. On the contrary, the SFDA was the only authority who could know about the existence of these other contracts. The Kingdom cannot rely on these contracts to argue that Claimants' claims are inadmissible, since the Kingdom was aware of them and chose to disregard them until the present proceedings⁴⁴⁹.

346. Third, as to the Kingdom's allegation that Mr. Antar forged the signatures of the Pharmacists on various letters addressed to the Kingdom, the fact is that the only letter on which Mr. Antar was questioned is a letter dated 13 March 2018 and addressed to the Saudi Ministry of Health. Such correspondence only contains the signature of Mr. Antar "on behalf of" Mr. Al-Amari - not a forged signature. This practice was required because the Kingdom's Ministry of Health simply did not respond to anyone who was not a Saudi national -- and, in fact, it never responded to such letter. As to the product registrations, they all indicate that they were being signed "on behalf of" Mr. Al-Amari, so there can be no doubt that the Kingdom knew that it was not Mr. Al-Amari who had signed them⁴⁵⁰.

B. The Warehouses were properly licensed

347. Claimants also reject the alleged lack of final licences for the Warehouses:

Qatar Pharma first operated a Riyadh Warehouse in 2013, for which it obtained a licence; when the Warehouse was relocated to another district of Riyadh, Qatar Pharma obtained a new licence in April 2017⁴⁵¹;

As to the Dammam and Jeddah Warehouses, the SFDA expressly approved and encouraged their operation (even if only with an initial licence for the

⁴⁴⁴ CPHB, para. 166; CHT, p. 2318, 11. 14-16. ↩
⁴⁴⁵ C III, para. 92; CPHB, para. 177. ↩
⁴⁴⁶ C III, paras. 82 and 85; CPHB, paras. 173-174. ↩
⁴⁴⁷ CHT, p. 2320, 1. 22 to p. 2321, 1. 24. ↩
⁴⁴⁸ CPHB, para. 173; CHT, p. 2322, 11. 2-8. ↩
⁴⁴⁹ CPHB, para. 177; CHT, p. 2322, 11. 9-18. ↩
⁴⁵⁰ CPHB, para. 178; CHT, p. 2322, 1. 24 to p. 2323, 1. 15. ↩
⁴⁵¹ CPHB, para. 180. ↩

[Page 78]

Dammam Warehouse), given the benefits that derived from them to the Kingdom, as clearly declared by Dr. Dahhas⁴⁵².

348. It follows that the competent regulator was fully aware of Qatar Pharma's activities and the Kingdom cannot invoke the clean hands doctrine when it approved the very conduct that it now seeks to challenge⁴⁵³.

C. The distributors were properly registered

349. Claimants note that for the first time in its second written submission the Kingdom decided to come up with two additional "unlawful acts": that Claimants failed to register their agency/distributorship agreements with Banaja, and later QEMS, and misrepresented to Saudi authorities that QEMS was a Saudi company⁴⁵⁴. Claimants note that the Kingdom failed to explain why it did not raise these issues whether in the normal course of Qatar Pharma's operations or in its Statement of Defence. In any case, the Kingdom's allegations are false⁴⁵⁵:

Qatar Pharma's Agency Contract with Banaja bears a stamp evidencing the fact that the document had been registered with the Council of Saudi Chamber;

Qatar Pharma's Agency Contract with QEMS was registered with the Saudi authorities, as evidenced by the official stamp from the Riyadh Chamber of Commerce and Industry;

Qatar Pharma disclosed to Saudi authorities that QEMS was wholly owned by a Qatari national, as demonstrated by its registration certificate; in fact, following a change in Saudi law that permitted GCC residents to own a local Saudi company, Claimants converted QEMS into a local establishment.

350. In view of the above, Claimants submit that the Tribunal should dismiss the Kingdom's admissibility objection⁴⁵⁶.

3. DECISION OF THE ARBITRAL TRIBUNAL

351. The Kingdom objects to the admissibility of Claimants' claims on the grounds that they acted in contravention of Saudi laws and regulations when conducting their affairs in the Kingdom. The Kingdom says that Claimants acted dishonestly and that they come before this Tribunal without clean hands. Claimants deny any impropriety and put in doubt the relevance of the principle of clean hands in investment arbitration.

352. The Tribunal will first establish the scope of the legality requirement under Art. 9 of the OIC Agreement (3.1). Thereafter, it will look into the alleged sources of illegality as pointed out by the Kingdom and contrast them with the available

⁴⁵² CPHB, paras. 181-183. ↩
⁴⁵³ CPHB, para. 183. ↩
⁴⁵⁴ C III, para. 106. ↩
⁴⁵⁵ C III, paras. 106-110. ↩
⁴⁵⁶ C III, para. 114.1. ↩

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evidence (3.2) in order to determine whether Claimants have committed a breach of Saudi laws and regulations (3.3).

3.1 THE LEGALITY REQUIREMENT UNDER ART. 9 OF THE OIC AGREEMENT

353. Under Art. 9 of the OIC Agreement⁴⁵⁷:

"The investor shall be bound by the laws and regulations in force in the host state and shall refrain from all acts that may disturb public order or morals or that may be prejudicial to the public interest. [...]"

354. Art. 9 of the OIC Agreement creates a legality requirement; to comply with this rule the investor must respect the host State's laws and regulations and must abstain from acts that disturb public order or morals or are prejudicial to the public interest.

355. There are two types of investment treaties:

Some treaties contain explicit clauses that require investors to comply with certain legality requirements (like the OIC Agreement; other BITs typically require that investments be made "in accordance with" the laws of the host State⁴⁵⁸);

While others do not include such clauses; however, even in such cases, tribunals, invoking the clean hands doctrine or similar principles of international law, have concluded that investors must respect municipal law⁴⁵⁹.

356. Investors must conform with the host State's laws both during the establishment of the investment and in the post-establishment phase⁴⁶⁰. This conclusion is reinforced in the present case because Art. 9 of the OIC Agreement (unlike many other investment treaties) does not simply ask that the investment be "made in accordance with the host State's law", but binds the investor to respect municipal law, public order, morals and public interest without any temporal limitation - therefore actively requiring the investor to comply with the law. The wording leaves little doubt that, in this case, the legality requirement covers not only the investment, but also the post-investment phase -- as the Al-Warraq tribunal acknowledged applying this same provision⁴⁶¹.

⁴⁵⁷ Doc. CLA-10, p. 9. ↩
⁴⁵⁸ Doc. CLA-135, R. Dolzer and C. Schreuer, "Admission and Establishment" in Principles of International Investment Law, p. 5 of the PDF. ↩
⁴⁵⁹ Doc. RLA-258, SAUR International. v. Argentine Republic, ICSID Case No. ARB/04/4, Decision on Jurisdiction and Liability, para. 308; Doc. RLA-262, Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award; Doc. RLA-88, Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award. See also Doc. CLA-135, pp. 5-6 of the PDF. ↩
⁴⁶⁰ Doc. RLA-262, Phoenix Action Ltd v. Czech Republic, ICSID Case No ARB/06/5, Award, para. 101; Doc. RLA-101, Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, paras. 123-124; Doc. RLA-263, Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (II), ICSID Case No. ARB/11/12, Award, para. 328; Doc. RLA-258, SAUR International v. Argentine Republic, ICSID Case No. ARB/04/4, Decision on Jurisdiction and Liability, para. 306. ↩
⁴⁶¹ Doc. CLA-50, Al-Warraq, para. 645. ↩

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Consequences of a breach of Art. 9

357. Does a breach of Art. 9 of the OIC Agreement imply that the investor's claims become inadmissible?

358. In the Tribunal's opinion, the answer to this question depends on the seriousness of the breach. If an investor seriously breaches municipal law (e.g., when the investor engages in corruption or fraud), tribunals have found that the investor forfeits its right to access investment protection under international law and that its claims become inadmissible. In the words of the SAUR tribunal, which this Tribunal shares⁴⁶²:

"[...] le Tribunal [...] entend que la finalité du système d'arbitrage d'investissement consiste à protéger uniquement les investissements licites et bona fide. Le fait que l'APRI entre la France et l'Argentine mentionne ou non l'exigence que l'investisseur agisse conformément à la législation interne ne constitue pas un facteur pertinent. La condition de ne pas commettre de violation grave de l'ordre juridique est une condition tacite, propre à tout APRI, car en tout état de cause, il est incompréhensible qu'un État offre le bénéfice de la protection par un arbitrage d'investissement si l'investisseur, pour obtenir cette protection, a agi à l'encontre du droit." [Emphasis added]

359. But minor breaches will not provoke this severe consequence.

360. The loss of investment protection is a grave sanction: the investor is deprived of the possibility of accessing international justice, even if the State has committed an international delict and impaired the investment. There must be proportionality between offence and sanction: not any minor breach of the municipal legal order (say a ticket for speeding or a delay in the payment of a tax) can result in the inadmissibility of the investor's claims; what is required is that the investor has committed a serious violation of municipal law⁴⁶³.

361. Bribery, corruption, money laundering and violations of international human rights obligations most certainly fall into this serious category⁴⁶⁴. The commitment of other criminal offenses, such as forgery, fraud, serious misrepresentations, serious breaches of administrative, tax or environmental laws, may also, depending on the circumstances, surpass the threshold.

362. Minor breaches of municipal law, however, should not lead to the ex ante dismissal of claims, but should be considered together with the merits, and be taken into consideration when assessing damages and costs⁴⁶⁵.

⁴⁶² Doc. RLA-258, SAUR International v. Argentine Republic, ICSID Case No. ARB/04/4, Decision on Jurisdiction and Liability, para. 308. Free translation: "the Tribunal [...] understands that the purpose of the investment arbitration system is to protect only lawful and bona fide investments. The fact that the BIT between France and Argentina does or does not mention the requirement that the investor act in accordance with domestic law is not a relevant factor. The condition of not committing a serious breach of the legal order is a tacit condition, underlying any BIT, because in any event, it is incomprehensible for a State to offer the benefit of protection through investment arbitration if the investor, in order to obtain this protection, has acted contrary to the law." ↩
⁴⁶³ Doc. RLA-255, Dumberry, p. 243. ↩
⁴⁶⁴ Doc. RLA-255, Dumberry, p. 245. ↩
⁴⁶⁵ Doc. RLA-255, Dumberry, p. 243. ↩

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Other awards

363. Other awards support this conclusion. When investment tribunals have declared claims inadmissible, the investor had committed a serious breach of municipal law:

In Al-Warraq, the tribunal declared the inadmissibility of claimants’ claims, after finding that the investors had perpetrated serious criminal offences, for which they had been convicted by a municipal court⁴⁶⁶;

In World Duty Free, the tribunal declared the inadmissibility of claimant’s claims based on a finding that the investor had concealed a payment in exchange for doing business in Kenya, constituting a bribe⁴⁶⁷;

In Plama, the tribunal declared the inadmissibility of claimant’s claim on the grounds of fraudulent misrepresentations to the Bulgarian Government⁴⁶⁸;

In Churchill Mining, the tribunal declared the inadmissibility of claimants’ claims on the grounds that the mining licences, upon which the claims were based, had been forged⁴⁶⁹;

In Álvarez y Marín Corporación, the tribunal declared the inadmissibility of claimants’ claims on the grounds that the investment had been illegally purchased⁴⁷⁰.

364. In other cases, tribunals have determined not that the claims were inadmissible, but rather that the tribunal lacked jurisdiction to adjudicate the case on the basis of the investors’ serious breaches of municipal law:

In Littop, the tribunal declined jurisdiction, among others, on the grounds that the alleged investment had been tainted by bribery and corruption⁴⁷¹;

In Cortec Mining, the tribunal declined jurisdiction over claimants’ claims on the grounds that the investment failed to comply with Kenya’s environmental regulations by obtaining a mining licence to operate in a protected area without meeting all the necessary requirements for its approval⁴⁷²;

In Inceysa, the tribunal declined jurisdiction over a contract obtained on misrepresentations and forgeries as claimant’s bid contained false

⁴⁶⁶ Doc. CLA-50, Al-Warraq, para. 645. ↩

⁴⁶⁷ Doc. RLA-260, World Duty Free Company v. Republic of Kenya, ICSID Case No. ARB/00/7, Award, paras. 161, 167-169, 179. ↩

⁴⁶⁸ Doc. RLA-88, Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award, para. 321. ↩

⁴⁶⁹ Doc. RLA-85, Churchill Mining & Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/40 & 12/14, Award, paras. 508, 510-511, 516, 528-531. ↩

⁴⁷⁰ Doc. RLA-266, Cornelis Willem van Noordenne, Mr. Bartus van Noordenne, Stichting Administratiekantoor Anbadi, Estudios Tributarios AP SA & Álvarez y Marín Corporación SA v. Republic of Panama, ICSID Case No. ARB/15/14, Award, paras. 132-137, 151-154, 156. ↩

⁴⁷¹ Doc. RLA-87, Littop Enterprises Limited, Bridgemont Ventures Limited & Bordo Management Limited v. Ukraine, SCC Case No. V 2015/092, Final Award, paras. 455, 485, 654(b). ↩

⁴⁷² Doc. RLA-265, Cortec Mining Kenya Limited, Cortec (Pty) Limited and Stirling Capital Limited v. Republic of Kenya, ICSID Case No. ARB/15/29, Final Award, paras. 333, 343, 347, 349, 351, 365. ↩

[Page 82]

information regarding its real financial condition, claimant’s auditor was not an accredited auditor, and claimant lied about its experience⁴⁷³;

In Fraport, the tribunal declined jurisdiction over claimant’s claims on the ground that claimant knowingly structured its investment in violation to municipal law⁴⁷⁴.

365. Whether it is treated as an issue of lack of admissibility of claims or of lack of jurisdiction of the Tribunal, the outcome is the same: what is clear is that to forfeit its claims the conduct of the investor must reach a certain threshold of impropriety. Several tribunals have explicitly declared that the alleged conduct must be serious or grave:

In Navodaya Trading, a case under the OIC Agreement, the tribunal determined that claimant’s conduct should meet a certain threshold of gravity for the tribunal to conclude that the claims were inadmissible, which was not present in that case⁴⁷⁵;

In Hamester, the tribunal found that there was not sufficient evidence to conclude that the investment had been made fraudulently; the tribunal further noted that, even though claimant’s practices might not be in line with what could be called “l’éthique des affaires”, they did not amount to a fraud that would affect the tribunal’s jurisdiction⁴⁷⁶.

3.2 HAVE CLAIMANTS COMMITTED A SERIOUS BREACH OF SAUDI LAW?

366. Having established that under Art. 9 of the OIC Agreement Claimants’ claims would be inadmissible if they had committed a serious breach of Saudi laws and regulations, either during the establishment of the investment or in the post-investment phase, the next question that the Tribunal must address is whether or not this has actually happened.

The alleged illegalities committed by Claimants

367. The facts surrounding the creation and establishment of Qatar Pharma are summarised in section III.1 supra. In the present section, the Tribunal will simply elaborate on those that are relevant for the Kingdom’s admissibility objection.

368. Qatar Pharma manufactured its pharmaceutical products at its factory in Doha, and then exported them to Saudi Arabia for distribution to public and private sector customers, in Riyadh and in other locations⁴⁷⁷. When in 2010 Qatar Pharma first decided to enter the Saudi market⁴⁷⁸, it executed a commercial agency contract with

⁴⁷³ Doc. RLA-261, Inceysa Vallisoletana SL v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, paras. 224-227, 240-244, 252. ↩

⁴⁷⁴ Doc. RLA-263, Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (II), ICSID Case No ARB/11/12, Award, paras. paras. 328, 332-333, 467. ↩

⁴⁷⁵ Doc. CLA-54, Navodaya Trading, p. 4. ↩

⁴⁷⁶ Doc. RLA-101, Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, paras. 123-124, 137-138. ↩

⁴⁷⁷ See also Doc. H-5, slide 8. ↩

⁴⁷⁸ CWS-3, para. 25. ↩

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the Saudi import company, Banaja⁴⁷⁹, which distributed Qatar Pharma’s products for three years. However, in early 2013 Banaja and Qatar Pharma put an end to their contract⁴⁸⁰.

369. Thereafter Qatar Pharma decided to set up its own distribution operation in Saudi Arabia⁴⁸¹. The first step was to register QEMS at the Saudi Commercial Register as a local branch⁴⁸², which was later converted into a permanent establishment in March 2014. QEMS thereafter opened a Scientific Office and three Warehouses in the Kingdom⁴⁸³.

370. It is the Kingdom’s position that when setting up their operations in the Kingdom Claimants committed a number of illegalities:

They failed to register their agency and distributorship arrangements with Banaja, and they misrepresented to the Saudi authorities that QEMS was a Saudi company, when it was in fact owned by a Qatari national (Dr. Al Sulaiti) (A.);

They acted fraudulently to obtain and maintain a Scientific Office Licence (B.); and

They operated their Warehouses unlawfully, without the necessary SFDA licences (C.).

371. These are the alleged illegalities, as submitted by the Kingdom. The Tribunal will contrast these allegations with the available evidence and draw its conclusions (D.).

372. The Tribunal notes that, answering a direct question from the Tribunal to dispel any doubts, the Kingdom stated in its PHB that “it does not advance” an allegation that Claimants incurred in corruption, by bribing Kingdom officials⁴⁸⁴.

A. Banaja and QEMS

373. When presenting its first written submission, the Kingdom did not draw the Tribunal’s attention to alleged improprieties regarding the registration of Qatar Pharma’s agency agreements with Banaja or the fact that QEMS was owned by a Qatari national. The Kingdom raised these allegedly “unlawful acts” for the first – and only – time in its second written submission⁴⁸⁵, and did not address them again at the Hearing or in posterior submissions. The Tribunal will nevertheless deal with the Kingdom’s arguments:

Claimants’ alleged failure to register the Banaja agency agreement (a.);

Claimants’ alleged failure to register the QEMS licensing agreement (b.); and

⁴⁷⁹ Doc. C-39; CWS-3, para. 37; RWS-14, para. 7. ↩

⁴⁸⁰ Doc. C-404; Doc. C-405; CWS-3, para. 41; RWS-14, para. 9. ↩

⁴⁸¹ Doc. C-404. See also CWS-1, paras. 2-3. ↩

⁴⁸² Doc. VP-24; Doc. VP-25. See also CWS-1, para. 3. ↩

⁴⁸³ CWS-1, para. 3. ↩

⁴⁸⁴ RPHB, para. 54. ↩

⁴⁸⁵ R II, para. 315. ↩

[Page 84]

Claimants’ alleged misrepresentation that QEMS was a Saudi company (c.).

a. The Banaja agency contract

374. Art. 1 of the Saudi “Law of Commercial Agencies” provides that⁴⁸⁶:

“A non-Saudi person, whether natural or legal, may not operate as a commercial agent in the Kingdom. Saudi companies operating as commercial agents must have a 100% Saudi capital, and the members of their boards of directors and authorized signatories shall be Saudis.”

375. Art. 3 of the said Law establishes that⁴⁸⁷:

“A person may not operate as a commercial agent unless his name is registered with the Ministry of Commerce and Industry in a register designated for this purpose; said register shall be established pursuant to a decision by the Minister of Commerce and Industry. The register shall include the name of merchant or company, type of goods, name of the authorizing company or establishment, date of authorization, and, if definite, term of authorization. Registration applications shall be submitted together with supporting documents to the Deputy Minister of Commerce and Industry. Such applications may not be rejected except for non-Saudis or for Saudis who are unqualified or barred from engaging in business. Rejected applicants may appeal before the Minister of Commerce and Industry.”

376. Claimants have produced on the record a “Commercial Agency Contract” dated 17 May 2010 between:

On the one hand, “Qatar Medical Solutions Factory (Qatar Pharma)”, having its address “in Doha, State of Qatar” and represented by Dr. Al Sulaiti, and

On the other hand, “Saudi Import Company – Abdul Lateef Banaja and Partners”, having its address in “Jeddah – Kingdom of Saudi Arabia” and represented by Mr. Banaja⁴⁸⁸.

377. Pursuant to this agency contract, Qatar Pharma appointed Banaja “as its sole distributor in KSA”, who shall “register [Qatar Pharma] and the products of the Factory in the [SFDA] and other competent Government entities”⁴⁸⁹. Furthermore, Qatar Pharma designated Banaja as its “sole and exclusive agent and distributor in KSA of all products”⁴⁹⁰.

378. The Kingdom does not question that Banaja is a Saudi company; rather, it argues that Claimants “failed to register their agency and distributorship arrangements with Banaja, [...] in contravention [of Art. 6] of the Law of Commercial Agencies and its Implementing Regulations”⁴⁹¹.

⁴⁸⁶ Doc. RLA-293. ↩

⁴⁸⁷ Doc. RLA-293. ↩

⁴⁸⁸ Doc. C-39. ↩

⁴⁸⁹ Doc. C-39, Art. 2. ↩

⁴⁹⁰ Doc. C-39, Art. 2. ↩

⁴⁹¹ R II, para. 315.1. ↩

[Page 85]

379. It is unclear, however, to what part of Art. 6 of the Law of Commercial Agencies the Kingdom is referring to, since none of the translated provisions of said law refer to an obligation to register an agency contract. The Kingdom has also not clarified with whom Qatar Pharma should have registered the contract. As to the registration obligation set forth in Art. 3 of the Law of Commercial Agencies, it bears on the agent and not on the principal that hires the agent.

380. Be that as it may, the Banaja agency contract has several seals⁴⁹²:

That of a “Chamber of Commerce and Industry” in each of the contract pages;

That of the Qatar Chamber of Commerce and Industry, which certifies the signature of Dr. Al Sulaiti in page 7;

That of the Saudi Embassy (Consulate Section) in Doha, which ratifies the seal and the signature, without assuming responsibility for the contents, on page 7; and

That of the Council of Saudi Chambers, which certifies that Banaja is the agent of Qatar Pharma, on page 8.

381. It follows that the Council of Saudi Chambers had access to the agency contract and certified Banaja as the agent of Qatar Pharma.

b. The QEMS licensing and commercial representation contract

382. In March 2014 Saudi Arabia adopted the Foreign Investment Law, which permitted GCC residents to own 100% of a local Saudi company⁴⁹³.

383. Taking advantage of this legislative change, Qatar Pharma decided to convert its branch, QEMS⁴⁹⁴, into a local establishment in Saudi Arabia. Therefore, on 4 March 2014, it registered QEMS with the Saudi Ministry of Commerce and Industry⁴⁹⁵.

384. On 5 March 2014, Qatar Pharma concluded a “Licensing and Commercial Representation Contract” with QEMS, which at the time was already registered as a local Saudi establishment⁴⁹⁶. Under this agreement, QEMS was appointed as “sole representative and distributor” of Qatar Pharma in Saudi Arabia⁴⁹⁷.

385. This contract also bears several seals⁴⁹⁸:

That of the Qatar Chamber of Commerce & Industry in each page;

That of the Riyadh Chamber of Commerce & Industry in page 5.

⁴⁹² Doc. C-39. ↩

⁴⁹³ Doc. CLA-23. ↩

⁴⁹⁴ At the time under the name of “Qatar Pharmaceutical Solutions Establishment” (Doc. C-51). ↩

⁴⁹⁵ Doc. C-51; Doc. C-413, p. 17 of PDF; CER-1, para. 69(ii)(2). See also CWS-8, para. 15. ↩

⁴⁹⁶ Doc. VP-86. ↩

⁴⁹⁷ Doc. VP-86, Art. 2. ↩

⁴⁹⁸ Doc. VP-86. ↩

[Page 86]

c. The nationality of QEMS

386. Qatar Pharma first registered QEMS as a local branch in Saudi Arabia on 26 August 2012⁴⁹⁹. The certificate issued by the Saudi Ministry of Commerce and Industry identified Dr. Al Sulaiti, a “Qatari” national, both as the “merchant” and as the “manager or authorized agent” of QEMS⁵⁰⁰.

387. In March 2014 Qatar Pharma converted QEMS into a local establishment. The “Commercial Register Modification Certificate” issued by the Director of the Ministry of Commerce and Investment Office clearly reflects that QEMS is owned by Dr. Al-Sulaiti, “a Qatari citizen”⁵⁰¹. It follows that at all relevant times Saudi Arabia knew that QEMS was not a Saudi-owned company.

388. Furthermore, the Kingdom has failed to direct the Tribunal to any evidence that there was a misrepresentation regarding the ownership of QEMS⁵⁰²; and in any case, the argument is belied by the following facts:

The company was called “Qatar Pharmaceutical Solutions Establishment”; any Qatari investor, wishing to hide its Qatari origin or ownership, would have avoided a business name with the word “Qatar” in it, which proclaimed its origin urbi et orbe;

No witness in this arbitration has declared that they thought Dr. Al Sulaiti was a Saudi citizen; Dr. Dahhas, who was part of the Executive Directorate of Inspection and Law Enforcement at the SFDA at the time⁵⁰³, declared under oath at the Hearing that he knew that QEMS was owned by Dr. Al Sulaiti⁵⁰⁴.

B. The Scientific Office Licence

389. The Kingdom avers that Claimants acted fraudulently to obtain and maintain a Scientific Office Licence, for the following reasons⁵⁰⁵:

Qatar Pharma obtained the Licence by identifying two Pharmacists as its “Scientific Office Managers” who, in fact, were not properly employed; if they were properly employed, then Claimants failed on several aspects related to labour law and social insurance;

Qatar Pharma forged the signatures of the Pharmacists on various documents submitted to the Kingdom; and

The office space supposedly dedicated to the Scientific Office was just an empty room with one computer, lacking any appropriate medical storage and laboratory equipment.

⁴⁹⁹ Doc. C-50. ↩

⁵⁰⁰ Doc. C-50. ↩

⁵⁰¹ Doc. C-51. ↩

⁵⁰² R II, para. 315.2. ↩

⁵⁰³ RWS-1, para. 8. ↩

⁵⁰⁴ HT, Day 7, p. 1586, ll. 4-16 (Dr. Dahhas). ↩

⁵⁰⁵ See section V.2.1.2A supra. ↩

[Page 87]

The Saudi Pharmaceutical Law

390. In July 2004, Saudi Arabia passed Royal Decree No. M/31, establishing the Law of Pharmaceutical Institutions and Products [“Pharmaceutical Law”]⁵⁰⁶. Art. 2 of this Law provides that⁵⁰⁷:

“No pharmaceutical institution may be opened without having obtained the necessary licence from the Ministry in the name of the owner of the institution.”

391. Such licence has a term of five years and may be renewed⁵⁰⁸.

392. Art. 3, in turn, establishes that only Saudi Arabian citizens may own pharmacies or institutions for the sale of herbal products or centres for medical consultation and the analysis of pharmaceutical products⁵⁰⁹. The term Saudis includes establishments like QEMS, owned by GCC nationals incorporated in the Kingdom. To obtain a licence the owner (or one of its partners) must be a pharmacist licensed to practice, and the manager of the pharmacy, institution or centre must be a Saudi national who is a full-time pharmacist licensed to practice⁵¹⁰.

393. Pursuant to Art. 6 of the Pharmaceutical Law, a company engaged in the manufacturing of pharmaceutical products must have a factory which is registered in the Kingdom and a scientific office⁵¹¹. In its “Guidelines” a scientific office is defined by the SFDA as⁵¹²:

“[...] a pharmaceutical facility, which provides scientific and technical information and marketing of pharmaceuticals in the Kingdom.”

394. The Guidelines provide that the licence for a new scientific office must be obtained through a two-step procedure:

The first step is the so-called “Initial Approval”, which is granted upon presentation by the applicant of a series of documents (commercial register, a copy of the deed of the site, a precise location of the facility, a copy of the person responsible for follow-up calls with the SFDA, and a copy of a power of attorney)⁵¹³;

The second step is the “Licence”; the applicant must request the Licence before the expiry of the Initial Approval and prove that it has⁵¹⁴:

⁵⁰⁶ Doc. RLA-51. ↩

⁵⁰⁷ Doc. RLA-51, Art. 2. ↩

⁵⁰⁸ Doc. RLA-51, Art. 7. ↩

⁵⁰⁹ This is defined as: “[...] a pharmaceutical institution which provides medical consultation services, and the analysis of pharmaceutical and herbal products, and the study of bioavailability and equivalence availability, and quality control of medicines; and determining the levels of medicines in biological solutions.” (Doc. RLA-51, p. 2). ↩

⁵¹⁰ Doc. RLA-51, Art. 3. ↩

⁵¹¹ Doc. RLA-51, Art. 6. ↩

⁵¹² Doc. C-249, p. 3. ↩

⁵¹³ Doc. C-249, p. 4. ↩

⁵¹⁴ Doc. C-249, pp. 4-5. ↩

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o An office capable “to perform its assigned tasks”,

o Office equipment needed “to perform its assigned tasks”,

o A “convenient place to save the free samples of products”, and

o A scientific director who is a “full-time pharmacist” of Saudi nationality licensed to practice.

395. The granting of a Licence for a scientific office is thus conditional on the applicant employing a scientific office manager who is a Saudi national and a full-time pharmacist⁵¹⁵.

Qatar Pharma’s obtainment of a Scientific Office Licence

396. The available evidence shows that in 2013 Qatar Pharma (through its local branch, QEMS) leased an office space in Riyadh⁵¹⁶ and filed an application to obtain a Scientific Office Licence. While considering Qatar Pharma’s application, the SFDA conducted at least two visits to the Scientific Office, one on 9 June 2013⁵¹⁷ and the other on 16 June 2013⁵¹⁸:

In the first of these visits, the SFDA identified a few issues with the office and decided to postpone the approval of the Licence application until these issues had been rectified⁵¹⁹;

In the second visit, all but two issues had been rectified; thus, the SFDA recommended the approval of the Licence, subject to confirmation that such issues had been resolved⁵²⁰.

397. Qatar Pharma must have provided such confirmation, since the record shows that on 30 June 2013 the SFDA issued a final Scientific Office Licence, valid until 8 May 2018⁵²¹. Dr. Dahhas, who was part of the Executive Directorate of Inspection and Law Enforcement at the SFDA at the time⁵²², declared under oath that the Scientific Office Licence had been issued “following a sound procedure” from the SFDA⁵²³.

398. The original Licence does not seem to be available on the record, but there are three amended copies; each copy was issued to reflect a change in the Scientific Office manager⁵²⁴:

⁵¹⁵ Doc. RLA-51, Art. 6. ↩

⁵¹⁶ Doc. C-5. See also CWS-1, para. 4; Doc. R-70; Doc. R-169; Doc. R-170; Doc. R-171; Doc. C-217. ↩

⁵¹⁷ Doc. R-169. See also RWS-1, para. 29. ↩

⁵¹⁸ Doc. R-170. See also RWS-1, para. 29. ↩

⁵¹⁹ Doc. R-169, p. 2. ↩

⁵²⁰ Doc. R-170, p. 2. See also HT, Day 7, p. 1502, ll. 5-20 (Dr. Dahhas). ↩

⁵²¹ Doc. C-217; Doc. R-70; Doc. R-171; RWS-1, para. 29. See also CWS-3, para. 39. ↩

⁵²² RWS-1, para. 8. ↩

⁵²³ HT, Day 7, p. 1503, ll. 7-16 (Dr. Dahhas). ↩

⁵²⁴ See also RWS-1, para. 30. ↩

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In the first copy, dated 3 November 2013⁵²⁵, the Office manager is identified as Mr. Saleh Abdulrahman Ibrahim Alnabhan (a Saudi national);

In the second copy, dated 4 March 2014⁵²⁶, the Office manager is identified as the Saudi pharmacist Mr. Ali bin Saad bin Saad Al Qahtani [“Mr. Al Qahtani”]; and

In the third copy, dated 10 December 2014⁵²⁷, the Office manager is identified as the Saudi pharmacist Mr. Abdul Karim bin Abdul Rahman bin Saeed Al- Amari [“Mr. Al-Amari”].

399. The Kingdom submits that Mr. Al Qahtani (a.) and Mr. Al-Amari (b.) were not employed by Qatar Pharma and never conducted any meaningful work, with the implication that the Scientific Office Licence was fraudulently obtained⁵²⁸. Alternatively, if it is true that Claimants employed the Pharmacists, then it follows that they committed a number of other unlawful acts as a matter of Saudi labour law (c.). Finally, the Kingdom says that the Scientific Office was not properly conditioned (d.).

a. The Pharmacist Mr. Al Qahtani

400. Mr. Al Qahtani, a Saudi national⁵²⁹, has been called as a witness by Saudi Arabia, has submitted two witness statements⁵³⁰, and has also been interrogated at the Hearing by the Parties and the Tribunal⁵³¹.

401. In his witness statements, Mr. Al Qahtani has declared that he had recently graduated as a pharmacist, when he was first contacted in early 2014 by Mr. Mohamed Antar (Qatar Pharma’s Finance Manager⁵³²) about a job opportunity at Qatar Pharma⁵³³. Mr. Antar explained to him that Qatar Pharma was looking to employ a Saudi qualified pharmacist as the manager of the Scientific Office⁵³⁴. According to Mr. Al Qahtani, at the time the Scientific Office was a simple office space, with no laboratory equipment or obvious space for storing samples of products⁵³⁵.

⁵²⁵ Doc. R-171. ↩

⁵²⁶ Doc. R-70. ↩

⁵²⁷ Doc. C-217. ↩

⁵²⁸ See Respondent’s position in section V.2.1.2A supra. ↩

⁵²⁹ RWS-2, para. 5. ↩

⁵³⁰ RWS-2 (First Witness Statement) and RWS-9 (Second Witness Statement). ↩

⁵³¹ HT, Day 6, pp. 1231-1284. ↩

⁵³² CWS-1, paras. 1-2. ↩

⁵³³ RWS-2, para. 5. ↩

⁵³⁴ RWS-2, para. 6. ↩

⁵³⁵ RWS-2, para. 6. ↩

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402. Mr. Al Qahtani has admitted that:

He accepted Qatar Pharma’s offer⁵³⁶, signed an employment contract with Qatar Pharma on 26 February 2014⁵³⁷, was paid throughout his employment⁵³⁸, and left the job after six or seven months⁵³⁹;

He signed an application on behalf of QEMS to permit the renewal of its Scientific Office Licence on 6 February 2014⁵⁴⁰; the application, which is available on the record, shows that Dr. Al Sulaiti clearly informed the SFDA that⁵⁴¹:

“Pharmacist Ali Bin Saad Bin Saad Al Qahtani has been appointed as the Scientific Office Manager of Qatar Establishment for Medical Solutions’ Branch – Qatar Pharma with ID No. 1073446294, Professional Registration Card No. 13-R-P-0046620.”

He was “not surprised” that his name appeared in the amended Scientific Office Licence dated 4 March 2014, since he⁵⁴²:

“[...] knew that Qatar Pharma intended to use [his] credentials as a qualified pharmacist in Saudi Arabia, and as a Saudi national, in order to help them to get the licence.”

403. However, Mr. Al Qahtani:

Denies that he performed any meaningful work for Qatar Pharma⁵⁴³; and

Notes that he was shown two letters addressed to the Director General of the General Directorate of Medical Supplies at the Mecca Health Department dated 10 November 2014 which feature his name, but a signature which is not his⁵⁴⁴; and that he never authorized other Qatar Pharma’s employees to sign these letters on his behalf⁵⁴⁵.

404. As to the first argument, Mr. Al Qahtani has not been able to identify which precise functions he was supposed to be performing and was not performing⁵⁴⁶. In any case, Mr. Al Qahtani admitted under oath at the Hearing that he in fact had dealings with the SFDA on behalf of Qatar Pharma because he had been designated as the person in charge of the relationship⁵⁴⁷. And in tempore insuspecto the SFDA never complained to Qatar Pharma that any work which should have been performed by a Saudi-licensed pharmacist was not being properly performed.

⁵³⁶ RWS-2, paras. 7-8. ↩

⁵³⁷ RWS-9, para. 5. See Doc. C-367. ↩

⁵³⁸ HT, Day 6, p. 1248, ll. 13-20 (Mr. Al Qahtani). ↩

⁵³⁹ RWS-2, para. 8. ↩

⁵⁴⁰ RWS-9, para. 6; HT, Day 6, p. 1248, l. 21 to p. 1249, l. 3 (Mr. Al Qahtani). See Doc. C-418. ↩

⁵⁴¹ Doc. C-418. ↩

⁵⁴² RWS-2, para. 9. ↩

⁵⁴³ RWS-2, paras. 7-8. ↩

⁵⁴⁴ Doc. C-421; Doc. C-422. ↩

⁵⁴⁵ RWS-9, paras. 7-8. ↩

⁵⁴⁶ HT, Day 6, p. 1265, l. 22 to p. 1270, l. 19 (Mr. Al Qahtani). ↩

⁵⁴⁷ HT, Day 6, p. 1249, l. 4 to p. 1250, l. 7 and p. 1261, l. 1 to p. 1262, l. 13 (Mr. Al Qahtani). ↩

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405. As to the second argument, the Tribunal notes that the two 2014 letters are purely formal: in both Qatar Pharma simply requests a meeting with the Director General of the Mecca and the Jeddah Medical Supplies Department, in which Dr. Al-Sulaiti was to lead the Qatar Pharma team, which would also comprise Mr. Al Qahtani⁵⁴⁸.

b. The Pharmacist Mr. Al-Amari

406. Mr. Al-Amari (sometimes spelled Al-Emari), a Saudi national⁵⁴⁹, has also been called as a witness in these proceedings by Saudi Arabia, has submitted two witness statements⁵⁵⁰, and has also been interrogated at the Hearing by the Parties and the Tribunal⁵⁵¹.

407. Mr. Al-Amari, a qualified and licensed pharmacist⁵⁵², has testified that his relationship with Qatar Pharma began “in late 2014”, when he was told that Qatar Pharma was looking to employ “a Saudi licensed pharmacist”⁵⁵³.

The employment contract

408. Mr. Al-Amari has repeatedly testified that he had an “informal arrangement”⁵⁵⁴ and he never signed an employment contract with Qatar Pharma⁵⁵⁵.

409. Claimants, however, have produced on the record an employment contract dated 27 November 2014, pursuant to which Qatar Pharma employed Mr. Al-Amari as “Pharmacist (Director of the Scientific Office)”, in exchange for a monthly salary of SAR 6,000⁵⁵⁶.

410. Mr. Al-Amari denies that it is his signature that appears at the bottom of this employment contract⁵⁵⁷. Several other contemporaneous documents seem to call this statement into question:

411. First, the evidence shows that Qatar Pharma paid Mr. Al-Amari a monthly sum of SAR 6,000 (i.e., the amount defined in the employment contract) from 3 February 2015 to 3 October 2017⁵⁵⁸; the Kingdom and Mr. Al-Amari have failed to point to any evidence that these sums were ever returned.

⁵⁴⁸ Doc. C-421. ↩

⁵⁴⁹ RWS-3, para. 5. ↩

⁵⁵⁰ RWS-3 (First Witness Statement) and RWS-11 (Second Witness Statement). ↩

⁵⁵¹ HT, Day 6, pp. 1285-1341. ↩

⁵⁵² RWS-3, para. 5. ↩

⁵⁵³ RWS-3, para. 6. See also HT, Day 6, p. 1292, l. 24 to p. 1293, l. 7 (Mr. Al-Amari). ↩

⁵⁵⁴ RWS-3, paras. 7, 9. See also HT, Day 6, p. 1289, l. 23 to p. 1290, l. 10 and p. 1293, l. 21 to p. 1294, l. 4 (Mr. Al-Amari). ↩

⁵⁵⁵ RWS-3, para. 9: “I was never an employee of Qatar Pharma” and para. 14: “It became clear to me that Qatar Pharma had no intention of offering me a formal, permanent role. I cannot recall exactly when I stopped my informal arrangement with them but I think it was in around mid-2016. I stopped accepting calls from Qatar Pharma in around the beginning of 2017, and I have not been in contact with them since”. See also RWS-11, paras. 5-7. ↩

⁵⁵⁶ Doc. C-368, Clauses First and Fourth. ↩

⁵⁵⁷ RWS-11, para. 5: “The signature which is at the bottom of the employment contract looks to me like an attempt at imitating my real signature. I confirm that this is not my handwriting and I did not sign it.” ↩

⁵⁵⁸ Doc. C-415; Doc. R-191, pp. 33 et seq. (Bank account ending in 2219940). See also HT, Day 6, p. 1297, l. 24 to p. 1315, l. 3 (Mr. Al-Amari). ↩

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412. Mr. Al-Amari, while confirming that he had received payments from Qatar Pharma between 2015 and 2017, argues that these were payments for work performed on an “ad hoc basis”, upon the provision of services⁵⁵⁹. But the evidence does not support Mr. Al-Amari’s averment: the recurrency and the dates of the payments are consistent with the payment of a monthly salary – not with “ad hoc” payments; Mr. Al-Amari has also not been able to specify the precise services that he was allegedly performing on an ad hoc basis.

413. Second, there is a document from Qatar Pharma’s human resources and administration department that shows that Mr. Al-Amari started working effective as of 20 December 2014⁵⁶⁰. The Tribunal notes that the first payment made to Mr. Al-Amari on 3 February 2015 was for SAR 8,710, which would roughly correspond to the pro-rata of his salary for ten days in December 2014 plus the month of January 2015⁵⁶¹.

414. Third, there is an authorization sent by Dr. Al Sulaiti on behalf of Qatar Pharma to the SFDA on 25 October 2016 in which he authorises Mr. Al-Amari to act as “an agent for the company before the SFDA”⁵⁶².

415. Fourth, in November 2016 Mr. Al-Amari sent several emails related to a visit of the SFDA to the Scientific Office, which he signed as “Manager of the Scientific Office”⁵⁶³.

416. Finally, there is a document which shows that from 5 to 8 December 2016 Mr. Al-Amari participated in a one-week training programme at Qatar Pharma’s facilities in Doha⁵⁶⁴. Mr. Al-Amari himself has produced a hotel reservation that shows that he was indeed in Doha on those same dates⁵⁶⁵ – although he has denied that the purpose of his visit was to attend a course at Qatar Pharma⁵⁶⁶. His testimony is contradicted by that of Dr. Jaffar (General Manager of Qatar Pharma in Doha), who claims that he organized the training, and that Mr. Al-Amari did attend it⁵⁶⁷.

The designation as Scientific Office Manager

417. Mr. Al-Amari has also denied that he was aware that Qatar Pharma’s Scientific Office Licence designated him formally as manager⁵⁶⁸. However:

The copy of the Scientific Office Licence dated 10 December 2014⁵⁶⁹ was issued by the SFDA, after Mr. Al-Amari had already formally signed his

⁵⁵⁹ RWS-11, para. 8. ↩

⁵⁶⁰ Doc. C-414. ↩

⁵⁶¹ Doc. R-191, p. 33 (Bank account ending in 2219940). ↩

⁵⁶² Doc. C-419. ↩

⁵⁶³ Doc. C-369. ↩

⁵⁶⁴ Doc. C-370. ↩

⁵⁶⁵ Doc. R-210. ↩

⁵⁶⁶ RWS-11, para. 10. ↩

⁵⁶⁷ CWS-9, para. 34. ↩

⁵⁶⁸ RWS-3, para. 12. ↩

⁵⁶⁹ As Mr. Al-Amari himself acknowledges (RWS-3, para. 15(a)). ↩

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employment contract with Qatar Pharma, in which he is expressly designated as “Director of the Scientific Office”⁵⁷⁰;

Mr. Al-Amari signed emails in which he identified himself as “Manager of the Scientific Office”⁵⁷¹.

Mr. Al-Amari’s employment with the Ministry of Health

418. From the evidence given at the Hearing, it has also transpired that while employed by Qatar Pharma, Mr. Al-Amari was simultaneously working for the Saudi Minister of Health – a post where he remained until 2022 (once this arbitration was already ongoing)⁵⁷². This fact, which he apparently failed to disclose to Claimants⁵⁷³ (there is no evidence that he did), further undermines the reliability of his testimony.

The Disputed Letters

419. The Kingdom has identified 24 letters [the “Disputed Letters”], sent by QEMS, which state that they were signed by Mr. Al-Amari, as Director of the Scientific Office, on behalf of QEMS, but which, in the Kingdom’s submission, were actually signed by Mr. Mohamed Antar, Qatar Pharma’s Financial Manager, by appending his own signature (not by forging that of Mr. Al-Amari)⁵⁷⁴.

420. In Annex A to its PHB the Kingdom has reproduced Mr. Antar’s admitted signature, as shown in his first witness statement, and the signatures appearing on the Disputed Letters. During the Hearing Mr. Antar was explicitly asked regarding the authorship of the signature on one of the Letters⁵⁷⁵ and he confirmed that it was indeed his signature⁵⁷⁶; Mr. Al-Amari denied that the signature on several of these Letters was his⁵⁷⁷. Although none of the Parties has submitted a calligraphic expert report, a cursory review by the non-expert eyes of the Tribunal seems to show that the signatures which appear on the Disputed Letters are those of Mr. Antar – while the name of the signatory is identified as that of Mr. Al-Amari.

421. The Kingdom says that Claimants corresponded with the Kingdom’s authorities under Mr. Al-Amari’s name, but without his knowledge or permission, and that Mr. Antar⁵⁷⁸:

“[...] was responsible for forging a large number of letters purporting to come from QEMS’s ‘pharmacists’ for the purpose of deceiving the Kingdom’s authorities.”

⁵⁷⁰ Doc. C-368. ↩

⁵⁷¹ Doc. C-369. ↩

⁵⁷² HT, Day 6, p. 1290, l. 24 to p. 1292, l. 3 (Mr. Al-Amari). ↩

⁵⁷³ CPHB, para. 178. ↩

⁵⁷⁴ See Annex A to RPHB and Doc. R-5. ↩

⁵⁷⁵ Dated 18 March 2018 (Doc. C-155). ↩

⁵⁷⁶ HT, Day 4, p. 938, ll. 5-21 (Mr. Antar). See also CWS-6, para. 141. ↩

⁵⁷⁷ RWS-11, paras. 9-11. ↩

⁵⁷⁸ RPHB, para. 56.3(2). ↩

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No forgery, no deceit

422. The Tribunal, by majority, finds that a careful analysis of the Disputed Letters and the surrounding circumstances disavows the Kingdom’s allegation: there was no forgery, and the Kingdom’s authorities were not deceived.

423. First, the Disputed Letters, which span a period from August 2016 through March 2018, and which were all (except four) voluntarily submitted by Claimants, can be divided into three categories:

Four letters sent by QEMS to the Ministry of Health in August, September and October 2017 and in March 2018⁵⁷⁹, in which Mr. Antar (assuming the signature to be his) signs “for” Mr. Al-Amari⁵⁸⁰;

Two sets of requests for registration of products, one dated 10 August 2016⁵⁸¹ and the other 1 January 2017⁵⁸², in which Mr. Antar (assuming the signature to be his) signs on behalf of Mr. Al-Amari; but the expression “for” seems to have been omitted; and

Four letters from QEMS to the SFDA⁵⁸³, in August and September 2017, again signed by Mr. Antar (assuming the signature to be his) on behalf of Mr. Al-Amari, apparently without the expression “for”.

424. During this period, QEMS must have sent hundreds of letters and requests to the Saudi authorities. The Kingdom, who has access to the totality of documents submitted by QEMS to the Saudi Authorities, has failed to present any further documents in which Mr. Antar (or any other officer of QEMS) purportedly signed on behalf of Mr. Al-Amari. The assumption must consequently be that no further documents with these characteristics exist.

425. Second, Mr. Antar has explained that he signed the documents “on behalf” of Mr. Al-Amari⁵⁸⁴.

426. Third, it was the practice of the Ministry of Health and the SFDA to refuse correspondence signed by foreigners, even if issued on behalf of a Saudi company as QEMS (a practice consistent with the authorities’ refusal to receive visiting foreign suppliers unless accompanied by a Saudi national)⁵⁸⁵. To comply with this customary requirement, all Disputed Letters state that the signatory on behalf of QEMS was Mr. Al-Amari, the Saudi national who acted as Manager of the Scientific Office.

427. Fourth, contrary to the Kingdom’s arguments, the Disputed Letters were not “forged”. These were genuine documents issued on behalf of QEMS, which QEMS

⁵⁷⁹ Docs. C-94, C-95, C-289, C-155. ↩

⁵⁸⁰ Doc. C-155: the English translation does not have the word “for” but Mr. Antar testified that in the original the expression used is “an ‘hu” which means “on behalf of” (HT, Day 4, p. 928, ll. 16-18); the statement has not been contradicted by Respondent. See also CWS-4, para. 53. ↩

⁵⁸¹ Docs. C-266, C-267, C-268, C-269, C-270, C-271, C-272, C-273, C-274, C-275. ↩

⁵⁸² Docs. C-265, C-276, C-277, C-278, C-279, C-280. ↩

⁵⁸³ Doc. R-5. ↩

⁵⁸⁴ HT, Day 4, p. 928, l. 5 to p. 941, l. 15 (Mr. Antar). ↩

⁵⁸⁵ CPHB, para. 178; HT, Day 4, p. 939, ll. 2-18 and p. 941, ll. 2-15 (Mr. Antar). ↩

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has never disavowed. The Kingdom does not allege that there is in any falsehood or inaccuracy in the content of the Letters, thus accepting that these were proper and legitimate communications sent by QEMS to the Saudi authorities.

428. Fifth, as regards the Letter to the Ministry of Health issued in March 2018⁵⁸⁶ (i.e., well after the enactment of the Measures) Mr. Antar has explained that at that time QEMS had no Saudi employees, because all of them had left. This is why he signed the letter, which were simple cover letters attaching a statement of account, and he did so on behalf of Mr. Al-Amari, without Mr. Al-Amari (who at that time was no longer employed by QEMS) having seen the document or given his authorization⁵⁸⁷.

c. Other allegedly unlawful acts

429. The Kingdom argues that if it is true that Claimants employed the two Pharmacists, then it follows that Claimants committed “a number of other unlawful acts as a matter of Saudi law”⁵⁸⁸.

430. First, the Kingdom says that Claimants failed to register their alleged employees and their alleged employment contracts with the Saudi Ministry of Human Resources and Social Development, as they were required to do by law. Further, under Arts. 51 and 52 of the Saudi Labour Law all employment contracts must be documented in writing, must follow an approved template, must include certain information⁵⁸⁹ and must be registered electronically⁵⁹⁰.

431. Arts. 51 and 52 of the Saudi Labour Law do indeed prescribe that a work contract must be signed in duplicates and “either party may at any time demand that the contract be in writing”⁵⁹¹. Furthermore⁵⁹²:

“The work contract shall primarily include the name of the employer, venue, the name of the worker, nationality, identification, wage agreed upon, type and location of work, date of employment, duration of the contract if fixed, subject to the provisions of Article 37 of this Law.”

432. Both employment contracts signed between the Pharmacists and Qatar Pharma comply with the Labour Law requirements: they are in writing, they were made in two original copies, and they include all the mandatory provisions described in the Labour Law⁵⁹³.

433. As to the other requirements pointed out by the Kingdom, the Kingdom has failed to show that they were in effect at the time that the contracts with the Pharmacists were signed; and, in fact, it seems that the obligation to register employment

⁵⁸⁶ Doc. C-155. ↩

⁵⁸⁷ HT, Day 4, p. 939, l. 25 to p. 940, l. 6 (Mr. Antar). ↩

⁵⁸⁸ R II, para. 312. ↩

⁵⁸⁹ R II, para. 312.1, referring to Docs. RLA-290 and RLA-292. ↩

⁵⁹⁰ R II, para. 312.2, referring to Doc. RLA-291. ↩

⁵⁹¹ Doc. RLA-292, p. 22. ↩

⁵⁹² Doc. RLA-292, p. 22. ↩

⁵⁹³ Doc. C-367 (Mr. Al Qahtani); Doc. C-368 (Mr. Al-Amari). ↩

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contracts electronically was only enacted in 2019⁵⁹⁴ – two years after the Kingdom had already adopted the Measures.

434. Second, Saudi Arabia argues that Claimants failed to register the Pharmacists with the General Organization for Social Insurance⁵⁹⁵. Claimants, however, have produced on the record several certificates issued in 2016, in which the General Organization for Social Insurance⁵⁹⁶:

“[...] certifies that the aforementioned establishment [QEMS] has fulfilled its obligations towards the General Organization for Social Insurance, according to the information it had submitted as of the date of issuance of this certificate [...]”

435. Finally, the Kingdom submits that Claimants also failed to submit to the competent labour office certain information, including the number of employees, and details of their respective employment relationship, as required under Arts. 15 and 25 of the Saudi Labour Law⁵⁹⁷.

436. Here again, the available evidence seems to contradict the Kingdom’s averment. Claimants have produced a certificate issued by the Saudi Ministry of Labour, which attests that QEMS had achieved the required “Saudization percentages”⁵⁹⁸. Likewise, the certificates issued by the General Organization for Social Insurance indicate how many Saudis and non-Saudis are employed by QEMS⁵⁹⁹.

d. The conditions of the Scientific Office

437. Finally, the Kingdom argues that, as part of the alleged fraud to obtain a Scientific Office Licence, Qatar Pharma hired a bare office space, without appropriate medical storage and laboratory equipment⁶⁰⁰.

438. The evidence on which the Kingdom relies to make this assertion is the witness statement of Mr. Al Qahtani, who says that⁶⁰¹:

“I recall that the office just looked like an ordinary, bare office with a laptop. There was no laboratory equipment or obvious place for storing samples of products.”

439. The Kingdom’s position is unconvincing for two reasons.

440. First, a scientific office is defined by the SFDA as⁶⁰²:

⁵⁹⁴ Doc. RLA-291. ↩

⁵⁹⁵ R II, para. 312.3. ↩

⁵⁹⁶ Doc. C-413, p. 21; Doc. C-484; Doc. C-485. ↩

⁵⁹⁷ R II, para. 312.4. ↩

⁵⁹⁸ Doc. C-413, p. 15. ↩

⁵⁹⁹ Doc. C-413, p. 21; Doc. C-484; Doc. C-485. ↩

⁶⁰⁰ R I, para. 342.3; R II, para. 310.3. ↩

⁶⁰¹ RWS-2, para. 6, cited in R I, para. 113.2. ↩

⁶⁰² Doc. C-249, p. 3. ↩

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“[...] a pharmaceutical facility, which provides scientific and technical information and marketing of pharmaceuticals in the Kingdom.” [Emphasis added]

441. A facility focused on providing “information and marketing” does not require any particular laboratory or technical equipment. The Kingdom points the Tribunal to Chapter 4 of the SFDA’s Investor Guide to the Scientific Office Licensing Regime – a document which was only issued in 2018, after the adoption of the Measures. But this Guide only states that to obtain a Scientific Office Licence⁶⁰³:

“1. The scientific office shall contain mechanical offices to do the assigned tasks.

2. The scientific office shall contain preparation and necessary references to do the assigned tasks.

3. There shall be specified and appropriate place to store the free samples of the registered products according to the technical principals of storage.

4. The office manager shall be Saudi and free pharmacist who is licensed to do the job.”

442. There is no mention of laboratory equipment or large medical storage (only storage necessary to store “free samples”). In fact, contrary to a warehouse, the purpose of a scientific office is not to store pharmaceutical products, and for this reason the SFDA only conducts inspections when there is a specific need⁶⁰⁴.

443. Second, and in any case, the SFDA conducted several inspections of the Scientific Office, signalled several issues and eventually granted a final Scientific Office Licence to Qatar Pharma. Dr. Dahhas has testified under oath that the Licence had been issued “following a sound procedure” from the SFDA⁶⁰⁵. It follows that the SFDA must have been satisfied that the Scientific Office’s facilities complied with the necessary requirements – otherwise, it would not have granted a Licence.

C. The Warehouses

444. The Kingdom argues that Claimants operated their Warehouses unlawfully because they lacked the necessary SFDA Licences⁶⁰⁶.

The Saudi Pharmaceutical Law

445. To obtain a Licence to open and operate a warehouse for pharmaceutical products, Art. 4 of the Pharmaceutical Law establishes that⁶⁰⁷:

“a) The applicant must be a Saudi national, and if the applicant is an individual, he must be at least 21 years of age.

⁶⁰³ Doc. R-144, Chapter 4, p. 6. ↩

⁶⁰⁴ HT, Day 7, p. 1543, l. 3 to 1544, l. 25 and p. 1545, l. 18 to p. 1546, l. 21 (Dr. Dahhas); HT, Day 8, p. 1630, l. 22 to p. 1631, l. 10 (Dr. Dahhas). ↩

⁶⁰⁵ HT, Day 7, p. 1503, ll. 7-16 (Dr. Dahhas). ↩

⁶⁰⁶ R I, para. 345; R II, para. 311; RPHB, paras. 58-60. ↩

⁶⁰⁷ Doc. RLA-51, Art. 4. ↩

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b) [The applicant] must not have any prior convictions for a crime impugning honour or integrity, unless he has been rehabilitated.

c) The manager of the warehouse must be a Saudi national who is a full-time pharmacist or a pharmacy technician licensed to practice.

d) The conditions and specifications which are set out in the regulation must be satisfied in the warehouse.” [Emphasis added]

446. There are again two steps to obtain a Warehouse Licence: first the applicant must obtain an Initial Approval, and before the end date of expiry of such Initial Approval the applicant must request a License, proving that a number of requirements have been fulfilled, including⁶⁰⁸:

The appointment of a full-time Saudi manager for the warehouse, who must be a pharmacist or a pharmacy technician,

The obtainment of a municipal licence and a civil defence licence, and

The compliance with certain technical requirements (air conditioning, humidity, electronic measurement system...).

447. It is undisputed that Qatar Pharma first operated from its Riyadh Warehouse, and that in 2016 it decided to lease a new Warehouse in Dammam (a city geographically remote from Riyadh and close to the Bahraini border) and another one in Jeddah (a city close to Mecca, where Hajj pilgrims flow every year)⁶⁰⁹. According to Dr. Al Sulaiti, Saudi officials incited him to open these two Warehouses to cater to local populations⁶¹⁰.

448. It is also a fact that Qatar Pharma openly disclosed to the SFDA and to the other Saudi authorities that it was operating out of three Warehouses in Riyadh, Dammam and Jeddah – for example when in October 2016 Qatar Pharma registered as a vendor with the Kingdom’s National Guard Health Affairs, it identified precisely these Warehouses⁶¹¹. The SFDA not only was aware of this situation, but it regularly inspected the Warehouses and Dr. Dahhas, Executive Director of Inspection and Law Enforcement at the SFDA at the time of the relevant facts⁶¹², has declared under oath in the Hearing that there was never any SFDA investigation regarding irregularities committed by Qatar Pharma⁶¹³.

449. That said, the documentary evidence in the arbitration file regarding the specific Initial Approvals and Warehouse Licences issued to each of the premises is limited:

The corporate documentation was consolidated at the Riyadh Warehouse after the issuance of the Measures;

⁶⁰⁸ Doc. C-248, p. 1. ↩

⁶⁰⁹ CPHB, para. 58. ↩

⁶¹⁰ CWS-3, paras. 46-47. ↩

⁶¹¹ Doc. C-413, p. 2. ↩

⁶¹² RWS-1, para. 8. ↩

⁶¹³ HT, Day 7, p. 1503, ll. 7-16 (Dr. Dahhas). ↩

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The Riyadh Warehouse seems to have been looted between the Measures and the moment Deloitte accessed it in the course of this arbitration; and

The Kingdom, which must have a complete documentary record, has also not marshalled any evidence.

a. The Riyadh Warehouse

450. As regards the Riyadh Warehouse, the Initial Approval granted by the SFDA is not in the case file. What Claimants have been able to present are the following authorizations:

A 2013 Business Activity Licence for a “shop location” granted by the Riyadh Region Municipality, on Prince Abdul-Aziz bin Musaed bin Jalawi Street in the Al Murabba District, with an area of 235 square meters⁶¹⁴;

A 2016 Civil Defence Certificate issued by the Saudi Ministry of Interior⁶¹⁵; and

An April 2017 SFDA Licence⁶¹⁶.

451. The file also shows that in December 2016 the SFDA conducted an inspection to a QEMS warehouse located on the Al Dar Al Baida District, on Al-Kharj Road, concluding that there was the need for some improvements, including for monitoring the temperature of products⁶¹⁷. After several exchanges of information with Qatar Pharma, in April 2017 the SFDA considered that the Warehouse had fixed most of the issues and was satisfied that a Licence could be issued⁶¹⁸.

452. Summing up, the available documents show that the SFDA was aware that QEMS was using its Riyadh Warehouse, inspected the premises and in due course issued its Licence. There is no evidence that Qatar Pharma incurred in any illegality as regards the Riyadh Warehouse.

b. The Dammam Warehouse

453. On 24 May 2016 QEMS signed a lease agreement for the Dammam Warehouse, valid for a term of one year, until May 2017⁶¹⁹, fitted the Warehouse with storage racks, cooling units, electricity and forklifts⁶²⁰, and started the process to obtain an SFDA Licence.

454. At some point in time (although it is unclear when), the Dammam Warehouse obtained an Initial Approval from the SFDA, set to expire by 29 June 2017⁶²¹.

⁶¹⁴ Doc. C-403. ↩

⁶¹⁵ Doc. C-44. ↩

⁶¹⁶ Doc. C-216. ↩

⁶¹⁷ Doc. R-1. See also RWS-1, para. 31. ↩

⁶¹⁸ Doc. R-114; Doc. R-115; Doc. R-117. See also RWS-1, para. 32. ↩

⁶¹⁹ Doc. C-41. See also CWS-3, para. 47; Doc. H-5, slide 15. ↩

⁶²⁰ Doc. C-464, photograph of the Dammam Warehouse dated 21 November 2016. See also CWS-3, paras. 46-47. ↩

⁶²¹ Doc. C-479. ↩

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Claimants have submitted a 2016 Civil Defence Certificate issued by the Saudi Ministry of the Interior⁶²².

455. In December 2016 the SFDA undertook an inspection of the Dammam Warehouse, noting that the Warehouse was in use⁶²³ and thereafter issued a “Violation Control Report” for “practicing activity without licence”⁶²⁴. The “Violation Control Report” did not give rise to any sanction – the Warehouse was in possession of an Initial Approval, which was valid until 2017, and which authorised its provisional activity.

456. At the Hearing, Dr. Dahhas (Executive Director of Inspection and Law Enforcement at the SFDA) was interrogated about this “Violation Control Report”. He declared that he personally took the decision not to seize products from the Dammam Warehouse, because the Report had not identified any failures regarding the quality or storage of the products⁶²⁵. Although Dr. Dahhas was not responsible for granting Licences, he noted that the Licence Department did not revoke the Dammam Warehouse’s Initial Approval⁶²⁶:

“[...] because we made the request to encourage the company to make the necessary steps to get the final licence. [...] The letter that was issued by the inspection directorate addressing the licensing department said that to encourage the company to get all the necessary licensing so that the products are not impacted by the lack of the [final] licence.”

c. The Jeddah Warehouse

457. Around the same time, Qatar Pharma opened its Jeddah Warehouse. Claimants have submitted the following authorizations:

A 2016 “Shop Opening Licence” for a “Warehouse for human drugs and herbal and health products” issued by the Secretariat of the Province of Jeddah⁶²⁷;

A 2016 Registration Certificate for a Warehouse No. 53, located on “Haraj Al-Sawarikh”, for the “Wholesale and retail trade in medical products and equipment and medical supplies” issued by the Saudi Ministry of Commerce and Industry⁶²⁸;

A January 2017 SFDA Initial Approval to operate a Warehouse in Jeddah, valid until 23 June 2017⁶²⁹.

458. There is no irregularity with regard to the Jeddah Warehouse.

⁶²² Doc. C-45. ↩

⁶²³ Doc. R-109. ↩

⁶²⁴ Doc. R-110. ↩

⁶²⁵ HT, Day 7, p. 1568, l. 23 to p. 1570, l. 23 (Dr. Dahhas). ↩

⁶²⁶ HT, Day 7, p. 1571, ll. 11-22 (Dr. Dahhas). ↩

⁶²⁷ Doc. C-47. ↩

⁶²⁸ Doc. C-46. ↩

⁶²⁹ Doc. C-409. ↩

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D. Discussion

459. After carefully analysing the arguments submitted and the evidence marshalled by the Kingdom, the Tribunal, by majority, finds that the Kingdom has failed to prove that Claimants have committed a breach of municipal law. Further, the Tribunal unanimously finds that there was no breach of municipal law of such seriousness as to deserve to be sanctioned with the inadmissibility of their claims. The Tribunal finds the following reasons compelling:

a. Lack of claims in tempore insuspecto

460. First, Dr. Al Sulaiti performed his investment activities in the Saudi health sector in open daylight and under full scrutiny, inviting Saudi authorities to participate in the inauguration of his premises and factories in Qatar⁶³⁰, and he repeatedly travelled to the Kingdom, to meet authorities and introduce his products⁶³¹. It is telling that in tempore insuspecto none of the multiple Saudi authorities involved in the health sector, which repeatedly granted authorizations to QEMS and performed inspections of its premises⁶³², raised any of the complaints which the Kingdom is now submitting.

461. The fact that the Kingdom has brought up these allegations for the first time in this arbitration, and for the purpose of supporting a defence that Claimants’ claims are inadmissible, undermines the persuasiveness of the Kingdom’s claims.

b. Banaja and QEMS

462. Second, the Kingdom’s allegation that Claimants failed to register the Banaja agency agreement or the QEMS licensing agreement and Claimants’ alleged misrepresentation that QEMS was a Saudi company, remain unproven. Indeed, the Kingdom’s allegations on this point were scarce (Respondent only referred to this issue in one paragraph in its second written submission⁶³³) and not supported by documentary evidence.

c. The Scientific Office and the two Pharmacists

463. Third, as regards the two Pharmacists employed by QEMS at its Scientific Office, they were engaged precisely to comply with Saudi law, which specifically requires the creation of such an Office and the hiring of a Saudi pharmacist to lead it. The evidence shows that QEMS properly engaged the two Pharmacists, that it signed employment contracts with them and that they performed the two activities which Saudi practice requires them to perform: to sign documents addressed to the Saudi authorities, and to accompany non-Saudi persons, like Dr. Al Sulaiti, when visiting Saudi authorities. The designation of Mr. Al Qahtani and Mr. Al-Amari was duly communicated to the SFDA, and the SFDA did not raise any issue. Mr. Al-Amari was simultaneously employed by the Ministry of Health – a fact which the authorities must have known, and about which they did not complain.

⁶³⁰ CWS-3, paras. 18-22, 29, 31-33; CWS-8, para. 8; Doc. C-325. ↩

⁶³¹ CWS-3, paras. 23, 26-28, 34-35. ↩

⁶³² Doc. C-45; Doc. C-47; Doc. C-409; CWS-4, para. 16. ↩

⁶³³ R II, para. 315. ↩

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464. The Kingdom also avers that Claimants, when employing the two Pharmacists, breached Saudi labour and social security law, and that the Scientific Office lacked appropriate medical storage and laboratory equipment. The Tribunal has carefully studied these claims and has dismissed them as unsubstantiated⁶³⁴.

465. That said, even if these accusations had been proven (quod non), the alleged minor irregularities of labour, social security and administrative law would not in any case have constituted a breach of such seriousness as to deserve the sanction that the Tribunal declare Claimants’ claims inadmissible⁶³⁵.

The Disputed Letters

466. The Kingdom has drawn the Tribunal’s attention to the so-called Disputed Letters (four Letters addressed to the Ministry of Health, four to the SFDA, and two sets of requests for registration, in a span of 17 months), averring that Mr. Antar (Qatar Pharma’s Finance Manager) “was responsible for forging a large number of letters purporting to come from QEMS’s ‘pharmacists’ for the purpose of deceiving the Kingdom’s authorities”⁶³⁶.

467. In the view of the Tribunal, by majority, a careful review of the available evidence does not support Respondent’s allegation that QEMS forged the Disputed Letters for the purpose of deceiving the Kingdom’s authorities. The preparation and issuance of the Disputed Letters did not involve any kind of forgery – Mr. Al- Amari’s signature was never forged. And the Kingdom’s authorities were most certainly not deceived by the Letters – the Kingdom is not claiming that the content of the Disputed Letter was in any way untrue or dishonest, nor does QEMS allege not to be bound by these Letters.

468. What in fact happened is much simpler: to comply with Saudi administrative practice, which required that a Saudi national sign any official communication, the Letters stated the name of Mr. Al-Amari as the officer who was signing on behalf of QEMS, while who actually signed appears to have been Mr. Antar (a non-Saudi), acting on behalf of Mr. Al-Amari. Mr. Al-Amari denies that he gave his consent for Mr. Antar to sign on his behalf; that said, in the view of the Tribunal, by majority, Mr. Al-Amari is not a very credible witness, since he repeatedly contradicted himself during his examination.

469. Does this practice constitute a serious breach of Saudi laws and regulations, which deserves that Claimants’ claims be declared inadmissible ab initio?

470. The Kingdom has not drawn the Tribunal’s attention to any specific provision in Saudi law that would have been breached by Claimants’ practice; the Kingdom has simply referred to forgery and deceit – and the Tribunal has already found that Claimants’ practice did not amount to forgery (since Mr. Al-Amari’s signature was not forged by Mr. Antar) or deceit of the Saudi authorities (since the content of the Letters was accurate). In the Tribunal’s opinion, what the practice shows is a certain administrative sloppiness by Claimants: if Mr. Al-Amari was indeed authorizing

⁶³⁴ See paras. 429-436 supra. ↩

⁶³⁵ See paras. 362-365 supra. ↩

⁶³⁶ RPHB, para. 56.3(2). ↩

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Mr. Antar to sign on his behalf, the power of attorney should have been formalized in writing – and there is no indication that Qatar Pharma adopted this practice.

471. The Kingdom, however, has put much emphasis on a letter signed by Mr. Antar on behalf of Mr. Al-Amari in March 2018⁶³⁷ – i.e., after the adoption of the Measures by the Kingdom – which could not have been authorized by Mr. Al-Amari, who had ceased to work for QEMS months before; and Mr. Antar has indeed acknowledged that he signed without the Pharmacist’s knowledge or authorization⁶³⁸.

472. Mr. Antar was cross-examined at the Hearing on this point and gave his explanation for what had occurred⁶³⁹. Mr. Antar was in a predicament akin to force majeure: by March 2018, and because of the Measures, all Saudi employees of QEMS had left (including Mr. Al-Amari) and the Saudi authorities had stopped payment of all invoices. Mr. Antar, as Financial Manager, legitimately wished to draw the Ministry of Health’s attention to the outstanding statement of account. Any letter not signed by a Saudi national would have been disregarded – yet no Saudi was working for QEMS. In this quandary, Mr. Antar opted to sign on behalf of Mr. Al-Amari, although he lacked an authorization to do so. That said, his efforts were in vain: the Ministry of Health did not pay the outstanding amounts, and these will have to be adjudicated in this Award.

473. In sum, the Tribunal finds that the Kingdom has failed to prove that Mr. Antar’s conduct as regards the Disputed Letters amounts to a breach of Saudi law of such seriousness that it would merit that the totality of Claimants’ claims become inadmissible.

d. The Warehouses

474. Fourth, the Kingdom says that Claimants operated their Warehouses unlawfully, because they lacked the necessary SFDA Licenses.

475. The Tribunal dismisses the Kingdom’s allegation.

476. Qatar Pharma openly disclosed to the SFDA and to the other Saudi authorities that it was operating out of three Warehouses, in Riyadh, Dammam and Jeddah. Although the documentary evidence in the arbitration file regarding the specific Initial Approvals and Warehouse Licences issued to each of the premises is sketchy (after the adoption of the Measures, the corporate documentation was consolidated at the Riyadh Warehouse, that appears to have been looted in the meantime, and the Kingdom, who must have a full documentary record, has chosen not to submit any evidence on the topic), the Tribunal is satisfied that the three Warehouses were duly disclosed to and inspected by the SFDA, and that they obtained Initial Approvals or Licenses which permitted their operation.

⁶³⁷ Doc. C-155. ↩

⁶³⁸ HT, Day 4, p. 939, l. 21 to p. 940, l. 6 (Mr. Antar). ↩

⁶³⁹ HT, Day 4, p. 938, l. 5 to p. 942, l. 25 (Mr. Antar). ↩

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3.3 CONCLUSION

477. Art. 9 of the OIC Agreement creates an explicit “legality requirement”: the rule does not simply ask that the investment be “made in accordance with the host State’s law”, but actively requires the investor to respect municipal law, public order, morals and public interest. The legality requirement covers not only the establishment of the investment, but also the post-investment phase and implies that serious violations of municipal law committed by an investor (like bribery, corruption, money laundering, violations of international human rights, criminal offenses, forgery, fraud, serious misrepresentations, serious breaches of administrative, tax or environmental laws) will result in the investor’s claims being declared inadmissible.

478. Minor breaches of municipal law, however, should not lead to the ex ante dismissal of claims, but should be considered together with the merits, and be taken into consideration when assessing damages and costs⁶⁴⁰.

479. In casu, the Tribunal finds that the Kingdom has failed to direct it to evidence that Claimants have committed a serious breach of municipal law that deserves to be sanctioned with the inadmissibility of their claims⁶⁴¹. Therefore, the Kingdom’s objection is dismissed.

⁶⁴⁰ Doc. RLA-255, Dumberry, p. 243. ↩

⁶⁴¹ Professor Ziadé disagrees with the view expressed by the majority of the Tribunal that the Claimants’ breaches of Saudi laws and regulations were insignificant. Though he agrees with his colleagues that the breaches do not reach the threshold that would lead to the inadmissibility of the Claimants’ claims, he believes that their seriousness should result in the moderation of the quantum: ↩

“Pursuant to Article 3(b) of the Saudi Law of Pharmaceutical Institutions and Products of 2004, the manager of a pharmacy ‘must be a Saudi national who is a full-time pharmacist licensed to practice.’ The two Saudi pharmacists sequentially employed in the Scientific Office, Mr. Al Qahtani and Mr. Al Amari, stated that they did not do any work for Qatar Pharma, and the Claimants did not disprove their statements by producing e-mails and other communications showing that they undertook substantive work. As a matter of fact, Mr. Al Amari, while employed by Qatar Pharma, was simultaneously working for the Saudi Ministry of Health.
Mr. Al Qahtani claimed that the signatures accompanying his name in two letters of 10 November 2014 were not his, and that he had never seen the two letters at the time nor given his permission for any Qatar Pharma employee to sign any documents on his behalf. His version is credible. As Mr. Al Qahtani started working for Qatar Pharma ‘in around February 2014’ and ‘left after about six or seven months,’ [RWS-2, para.8], it is very unlikely that he was still working with Qatar Pharma in November 2014. In addition, Mr. Al Qahtani’s signatures of his First Written Statement [RWS-2, p.3] and his Second Written Statement [RWS-9, p.4], as well as in his employment contract of 26 February 2014 with QEMS [Doc. C-367, p.5] and the application by QEMS to renew its Scientific Office dated 6 February 2014 [Doc. C-418, p. 20], are identical. By contrast, the signatures accompanying Mr. Al Qahtani’s name in the two contested letters of 10 November 2014 differ significantly. He obviously did not personally sign the two letters, and the Claimants have not provided evidence to the effect that Mr. Al Qahtani had authorized his former colleagues in Qatar Pharma to sign letters on his behalf after he left his job.
The most serious allegations are those made by the Respondent that Mr. Antar, Qatar Pharma’s Finance Manager, signed twenty-four letters with Mr. Al Amari’s name, and without his authorization. (Mr. Al Antar admitted having signed one such letter in March 2018 well after Mr. Al Amari had left Qatar Pharma.) Sixteen such letters were signed before the adoption of the Measures, and eight letters after their adoption, which shows that there was a pattern of using Mr. Al Amari’s name unrelated to the adoption of the Measures. Mr. Al Amari having severed his links with Qatar Pharma in early 2017 [Doc. RWS-3, para. 14], many of the letters signed on his behalf were sent after his departure. There is no evidence that he authorized Mr. Al Antar to sign letters on his behalf, especially after he left his job. Some of the letters sent to the SFDA concerned the registration of pharmaceutical products and the quality of several Qatar Pharma

[Page 105]

products, with the implication that Mr. Al Amari was absent most of the time and Qatar Pharma was operating its business in total disregard of the requirement of having a full-time Saudi pharmacist. Further, out of the twenty-four letters, only three contain a clear indication, in their Arabic version, that Mr. Antar was signing ‘for’ Mr. Al Amari. In the remaining twenty-one letters, the indication that Mr. Antar was signing ‘for’ Mr. Al Amari is barely visible or readable; in some instances, both ‘for’ and the signature are obscured by Qatar Pharma’s stamp. In the English translations provided by counsel for the Claimants for these letters, there is no mention of the word ‘for,’ which seems to indicate that even the Claimants’ own counsel did not notice that the letters were sent on behalf of Mr. Al Amari. It is doubtful that the Respondent’s officials and government employees would have realized at the time that the letters were not signed by Mr. Al Amari.
Nor did the Claimants comply with the Respondent’s Agency Law, though the provisions of the Law are mandatory. Article 3 of the Agency Law provides in relevant part that ‘[a] person may not operate as a commercial agent unless his name is registered with the Ministry of Commerce and Industry in a register designated for this purpose.’ Article 3 further provides that, in addition to registering themselves, the commercial agent must include the name of the authorizing company, the type of goods to be distributed, and the duration of the agency agreement. Article 23 of the 2014 contract of commercial agency, which was entered into between the Claimants and QEMS rightly imposed on QEMS an obligation to register the contract with the Ministry of Commerce and Industry. This did not take place. While QEMS was registered in the commercial register of the Ministry of Commerce and Industry [Doc. C-51], its contract of agency with the Claimants has not been registered in the agency register of the Ministry. It is not clear whether the provision of Article 1 of the Agency Law that ‘Saudi companies operating as commercial agents must have a 100% Saudi capital, and the members of their boards of directors and authorized signatories shall be Saudis’ [emphasis added] had any bearing on the decision of QEMS not to seek registration of its contract of agency.
The Tribunal’s majority downplays the seriousness of each of the Claimants’ irregularities, looking at each separately and ultimately concluding that the Claimants did not commit a serious breach of Saudi law. However, the Claimants conducted their business in a non-transparent manner. They violated the Saudi Agency Law. They also engaged in fraudulent misrepresentations. Each of the Claimants’ breach of Saudi municipal law was a serious breach according to Saudi law, the more so if they were to be taken cumulatively.
A foreign investor that makes an investment must comply with the laws and regulations of the host State, even those the investor finds meaningless. It is paradoxical for an investor to commit a series of serious irregularities and then to bring a claim based on the OIC Agreement, which provides, in its very Article 9, that ‘[t]he investor shall be bound by the laws and regulations in force in the host state and shall refrain from all acts ... that may be prejudicial to the public interest.’ These serious irregularities should be taken into consideration when assessing damages.”

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VI. MERITS

480. Having dismissed the Kingdom’s jurisdictional and admissibility objections, the Tribunal must now turn to the merits of Claimants’ claims.

481. Claimants argue that the Kingdom first encouraged them to invest in Saudi Arabia⁶⁴² and then approved their investment⁶⁴³, and that they succeeded in developing a successful business⁶⁴⁴ with expectations of exponential growth⁶⁴⁵. However, on 5 June 2017 Saudi Arabia instituted the Measures, a blockade against Qatar, which was publicized merely through a press release of the Ministry of Foreign Affairs⁶⁴⁶. Suddenly, Qatari companies and citizens were refused access to the Kingdom and all borders with Qatar were closed⁶⁴⁷. The Kingdom then created and promoted a climate of fear against Qataris⁶⁴⁸.

482. Claimants submit that the Measures had a lasting and devastating impact on their investments⁶⁴⁹ and that the Kingdom’s conduct constituted a violation of four provisions of the OIC Agreement⁶⁵⁰:

Art. 10, which prohibits expropriation of Claimants’ investments without compensation;

Art. 8, which requires the Kingdom to treat Claimants not less favourably than investors belonging to States not party to the OIC Agreement; by operation of this most favoured nation [“MFN”] clause Claimants propose to import certain “rights and privileges” from the Agreement between the Republic of Austria and the Kingdom of Saudi Arabia concerning the Encouragement and Reciprocal Protection of Investments [the “Saudi Arabia-Austria BIT”]⁶⁵¹, namely, the Kingdom’s obligation under that BIT:

o to afford fair and equitable treatment [“FET”],

o to abstain from arbitrary or discriminatory measures, and

o to observe its own undertakings;

Art. 2, which obliges the Kingdom to provide adequate protection and security; and

Art. 5, under which the Kingdom promised to provide the necessary facilities and grant required permits for entry, exit, and residence.

⁶⁴² CPHB, para. 6; Doc. H-1, slides 8-11, 19. ↩

⁶⁴³ Doc. H-1, slides 27-28. ↩

⁶⁴⁴ CPHB, para. 6; Doc. H-1, slides 36-64. ↩

⁶⁴⁵ CPHB, para. 6; Doc. H-1, slide 66. ↩

⁶⁴⁶ Doc. H-1, slide 68. ↩

⁶⁴⁷ CPHB, para. 8; Doc. H-1, slides 68-73. ↩

⁶⁴⁸ Doc. H-1, slides 75 et seq. ↩

⁶⁴⁹ CPHB, para. 5. ↩

⁶⁵⁰ C I, para. 239; Doc. H-1, slides 94-96; CPHB, para. 244(2). ↩

⁶⁵¹ Doc. CLA-133. ↩

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483. The Kingdom, in turn, avers that if the Tribunal assumes jurisdiction over this dispute and finds the claims admissible, then it must determine whether the acts that are allegedly constitutive of the Kingdom’s liability under the OIC Agreement are attributable to Saudi Arabia under the law of State responsibility – quod non⁶⁵².

484. In any case, the Kingdom avers that the Measures were a legitimate response to a long-standing national security concern by the Kingdom, which as permissible preventive measures adopted by a Saudi competent authority, cannot give rise to an expropriation, as provided for in Art. 10(2)(b) of the OIC Agreement. The Kingdom also denies the possibility of applying the MFN clause to import standards from other BITs and rejects having breached any undertaking assumed either under the OIC Agreement or the Saudi Arabia-Austria BIT⁶⁵³.

485. The Tribunal will start by defining the law applicable to Claimants’ claims and dealing with the matter of attribution (VI.1). It will then address Claimants’ main claim that the Kingdom expropriated their investment in breach of Art. 10 of the OIC Agreement and the Kingdom’s main defence: that the Measures were permissible under Art. 10(2)(b) of the OIC Agreement, because they were adopted to protect the Kingdom’s national security interests (VI.2). Thereafter, the Tribunal will turn to Claimants’ claims under Arts. 8, 2 and 5 of the OIC Agreement (VI.3). Lastly, the Tribunal will deal with Claimants’ ancillary claims (VI.4).

⁶⁵² R I, para. 348. ↩

⁶⁵³ R I, para. 348. ↩

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VI.1. INTRODUCTION

1. APPLICABLE LAW

486. The OIC Agreement does not contain an express provision on the law applicable to an investment dispute under Art. 17.

487. Nevertheless, in the Terms of Appointment and Reference, the Parties agreed that the Tribunal would decide the substantive issues in dispute in accordance with the provisions of the OIC Agreement and international law⁶⁵⁴.

488. Therefore, the OIC Agreement will be the primary source of law which the Tribunal will apply when deciding the Parties’ claims and defences. Subsidiarily, the Tribunal will consider international law to confirm the meaning of the provisions of the OIC Agreement.

489. As noted by Claimants⁶⁵⁵, the laws of Qatar and Saudi Arabia may also be relevant, to the extent that the applicable provisions of the OIC Agreement refer to them.

2. ATTRIBUTION

A. Respondent’s position

490. The Kingdom avers that a significant part of the conduct on which Claimants rely is not attributable to the Kingdom under Arts. 4 and 8 of the International Law Commission’s [“ILC”] Articles on Responsibility of States for Internationally Wrongful Acts [“ARSIWA”]⁶⁵⁶.

491. Under Art. 4 of ARSIWA, the following can be considered State organs⁶⁵⁷:

Entities considered to be an integral part of the State under its internal law (de jure organs);

Entities possessing separate legal personality, but which due to their lack of factual independence from the State are deemed to be organs regardless; and

Natural persons can also be considered organ of the State, but not when their actions are conducted in a private capacity.

492. The Kingdom submits that under Art. 8 of ARSIWA, for the conduct of an entity separate from the State to be attributed to the State, what must be established is either that⁶⁵⁸:

The non-State actor acted on the “instructions” of the State, or

⁶⁵⁴ Terms of Appointment and Reference, para. 53. ↩

⁶⁵⁵ C I, para. 169. ↩

⁶⁵⁶ R II, paras. 317-319. ↩

⁶⁵⁷ R I, para. 354. ↩

⁶⁵⁸ R I, para. 358; R II, para. 322. ↩

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The State exercised “direction or control” over that actor in “carrying out the conduct”.

493. The Kingdom notes that Claimants complain about alleged acts and omissions by⁶⁵⁹:

The landlord of the Riyadh Warehouse;

The Alawwal Bank (and its successor, SABB); and

Individuals and independent media who are said to have created a “climate of fear” for Qataris.

494. The Kingdom submits that Claimants have failed to discharge their burden of proving that the alleged international wrongs are attributable to Saudi Arabia⁶⁶⁰.

495. First, the acts of the landlord of the Riyadh Warehouse – a privately owned entity over which the Kingdom exercises no control, who allegedly refused to let Claimants access the Warehouse – are not attributable to the Kingdom. There is no evidence that the landlord acted on the instructions of the Kingdom⁶⁶¹.

496. Second, as to Claimants’ allegation that they have been prevented by Alawwal Bank (and its successor, SABB) from accessing QEMS’s bank account in Saudi Arabia, this cannot be attributed to the Kingdom either. This is a publicly traded bank, in which the Kingdom has but a minority stake, and over which the State does not exercise control⁶⁶². There is no evidence that the Kingdom ever instructed SABB not to deal with Qataris, including Claimants. In fact, Dr. Al Sulaiti remained able to access his accounts long after the Measures were implemented⁶⁶³.

497. Third, the statements allegedly made by private Saudi individuals and media outlets can also not be attributed to the State. Claimants have failed to demonstrate that the Kingdom controlled such media outlets or that it had control over any of the statements made by such outlets⁶⁶⁴.

498. Furthermore, the Kingdom rejects that there was a “climate of fear” for Qataris in Saudi Arabia at any point in time. Any anger expressed by individuals towards Qatar or Qataris was not at the direction of the State⁶⁶⁵. For the rest, Claimants have failed to identify any specific act or any Saudi State organ who allegedly perpetrated a “campaign of widespread and systematic arbitrary arrests and detentions that began in September 2017”⁶⁶⁶.

499. As to Mr. Saoud Al Qahtani’s posting of certain tweets in August 2017, such conduct cannot be attributed to the State because Mr. Al Qahtani was not acting in

⁶⁵⁹ R I, para. 362. See also R II, para. 329. ↩

⁶⁶⁰ R I, para. 362; R II, para. 328. ↩

⁶⁶¹ R I, paras. 363-367; RPHB, para. 16.5. ↩

⁶⁶² R I, para. 368; R II, para. 340. ↩

⁶⁶³ R I, para. 369; RPHB, para. 16.4. ↩

⁶⁶⁴ R II, para. 336. ↩

⁶⁶⁵ R I, paras. 371 et seq. ↩

⁶⁶⁶ R II, para. 330. ↩

[Page 110]

an official capacity⁶⁶⁷. If Claimants’ arguments were accepted, all statements made by State officials in their personal social media accounts would automatically be treated as statements made by the State – an unreasonable proposition⁶⁶⁸.

500. In sum, the Kingdom argues that Claimants have failed to show that the Saudi State either instructed or exercised effective control in relation to the conduct they allege is wrongful⁶⁶⁹. If Claimants suffered harm as a consequence of the actions of these non-State actors, their claim lies against those private entities and individuals – not against the Kingdom⁶⁷⁰.

B. Claimants’ position

501. Claimants, on the contrary, aver that most acts invoked by them are clearly attributable to the Kingdom; in the few instances where there could be doubts, the correct application of the law of attribution shows that the acts can also be attributed to the Kingdom⁶⁷¹.

502. First, Claimants note that the Kingdom has conceded that the closure of the Qatari-Saudi border and the expulsion of Qataris from Saudi territory were undertaken by organs of the Saudi State – this is the consequence of asserting that the Measures were implemented for reasons of State national security, upon the exercise of Saudi Arabia’s sovereign rights⁶⁷². By Respondent’s own admission, these Measures were undertaken by the Saudi Ports Authority and the Saudi Customs Directorate, and other government authorities⁶⁷³. It follows that, by application of Art. 4 of the ARSIWA, such Measures are attributable to the Kingdom.

503. Second, Claimants argue that additional harm flowed from these Measures: the Kingdom engendered a “climate of fear”, placed restrictions on Claimants’ access to their bank accounts and sealed their Warehouse; this conduct is also attributable to Saudi Arabia pursuant to Arts. 4 and 8 of ARSIWA⁶⁷⁴. According to Claimants, Art. 8 does not establish a particular degree of control necessary for an act to be attributed to the State and does not require the application of an “effective control” test, as confirmed by the ILC in its commentaries; thus, a finding of attribution will be warranted if the circumstances of a particular case call for such a finding⁶⁷⁵.

504. In this case, the measures adopted by the Kingdom went beyond the expulsion of Qataris and the closure of the Qatari-Saudi borders: the Kingdom compelled the entire Saudi population to ostracize and denounce Qataris and their sympathisers, through mass arrests, show trials and prosecutions, and “blacklists”⁶⁷⁶. Saudi authorities undertook a campaign of “widespread and systematic arbitrary arrests

⁶⁶⁷ R II, para. 331. ↩

⁶⁶⁸ R II, para. 333. ↩

⁶⁶⁹ R II, para. 337. ↩

⁶⁷⁰ R I, para. 382. ↩

⁶⁷¹ C II, para. 256. ↩

⁶⁷² C II, para. 257; CPHB, paras. 8-10. ↩

⁶⁷³ C II, para. 258. ↩

⁶⁷⁴ C II, para. 260; CPHB, paras. 8 et seq. ↩

⁶⁷⁵ C II, paras. 263-267. ↩

⁶⁷⁶ C II, para. 270. ↩

[Page 111]

and detention”⁶⁷⁷. Mr. Saoud Al Qahtani, a senior adviser to the Saudi royal court, by his own admissions, was acting on behalf of the Saudi State when he tweeted a “blacklist”, inviting Saudis to denounce fellow citizens who showed sympathy to Qataris⁶⁷⁸. Saudi media outlets also acted under the control of the Kingdom in disseminating hatred against Qatar and its nationals⁶⁷⁹.

505. According to Claimants, the “climate of fear” engendered by the Kingdom had the effect of terrorizing the Saudi population and business community into shunning Qatari nationals. Those effects were felt by Claimants: they became unable to maintain relationships with key customers, third-parties (such as their bank and landlord) and employees⁶⁸⁰. The Alawwal bank, in which the Saudi government held an ownership stake, readily bowed to the pressure exerted by the State and cut-off its dealings with Qatari customers – and this is precisely what it did with Claimants’ accounts⁶⁸¹.

506. In sum, Claimants argue that the Measures imposed on them were undertaken by organs of the Saudi State or by people acting under the instructions or control of Saudi Arabia and are therefore attributable to it under Arts. 4 and 8 of ARSIWA⁶⁸².

C. Decision of the Arbitral Tribunal

507. To establish the existence of an internationally wrongful act, the conduct in question must be attributable to the State under international law and must constitute a breach of an international legal obligation in force for that State at that time⁶⁸³ – e.g., an obligation under the OIC Agreement. A precondition for determining whether Saudi Arabia breached its obligations under the OIC Agreement is to determine whether the conduct in question is attributable to the Kingdom.

508. The Parties agree that the issue of attribution in this case must be decided on the basis of Arts. 4 and 8 of the ARSIWA⁶⁸⁴.

509. Art. 4 of the ARSIWA provides that⁶⁸⁵:

“Article 4. Conduct of organs of a State

1. The conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the

⁶⁷⁷ C II, para. 272. ↩

⁶⁷⁸ C II, paras. 273-274. ↩

⁶⁷⁹ C II, paras. 275-277. ↩

⁶⁸⁰ C II, para. 278; CPHB, para. 8. ↩

⁶⁸¹ C II, para. 278. ↩

⁶⁸² C II, para. 278. ↩

⁶⁸³ Doc. CLA-171, Art. 2 – Elements of an internationally wrongful act of a State: “There is an internationally wrongful act of a State when conduct consisting of an action or omission: (a) is attributable to the State under international law; and (b) constitutes a breach of an international obligation of the State.”. See also Doc. CLA-229, C. Kovács, “Chapter 5: The Attribution of Internationally Wrongful Conduct,” in Dispute Attribution in International Investment Law, Vol. 45, p. 55. ↩

⁶⁸⁴ Doc. CLA-171. See also Doc. RLA-214. ↩

⁶⁸⁵ Doc. CLA-171, pp. 2-3. ↩

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State, and whatever its character as an organ of the central Government or of a territorial unit of the State.

2. An organ includes any person or entity which has that status in accordance with the internal law of the State.”

510. Art. 8, in turn, establishes that⁶⁸⁶:

“Article 8. Conduct directed or controlled by a State

The conduct of a person or group of persons shall be considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct.”

511. It follows that the ARSIWA distinguish between two types of conduct that will be attributable to the State:

The conduct of “any” organ of a State, whether it exercises legislative, executive, judicial “or any other functions”, and whatever its position in the organization of the State and character (Art. 4); and

The conduct of “a person or group of persons” who are “in fact” acting on the instructions of, or under the direction or control of, the State (Art. 8).

512. In the present case, Claimants complain of two types of allegedly illegal conduct⁶⁸⁷:

Measures which, they argue, are directly attributable to the Saudi State by virtue of Art. 4, including the complete closure of Saudi borders and the expulsion of Qatari nationals from Saudi territory⁶⁸⁸; and

Measures which, they argue, are a consequence of the former and were adopted by entities that were either acting under the instructions, or under the direction or control, of the Saudi State⁶⁸⁹.

513. The Tribunal agrees that the former are indeed attributable to the Kingdom (a.), but Claimants have failed to prove that the latter were in fact adopted upon the instructions or at the direction or control of the Saudi State (b.).

⁶⁸⁶ Doc. CLA-171, p. 3. ↩

⁶⁸⁷ CPHB, paras. 8-34. ↩

⁶⁸⁸ C II, paras. 257-259; CPHB, paras. 8, 10, 12-15. ↩

⁶⁸⁹ CPHB, paras. 8, 16-32. ↩

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a. Conduct attributable to the State under Art. 4 of the ARSIWA

514. Claimants argue that their investments in Saudi Arabia were destroyed by the closure of borders and the expulsion and ban of Qatari citizens and goods from Saudi territory⁶⁹⁰.

515. Saudi Arabia recognises that on 5 June 2017 it adopted the following Measures⁶⁹¹:

It severed diplomatic and consular relations with Qatar;

It closed all land, sea and air communications to and from Qatar;

It prevented crossings from Qatar into its territory, airspace and waters;

It prohibited Saudi citizens from traveling to or through Qatar;

It required Saudi citizens resident in Qatar to leave within 14 days; and

It ordered Qatari citizens visiting or residing in Saudi territory to leave within 14 days.

516. This was announced by means of a statement [the “Official Statement”]⁶⁹² distributed through the press service of the Saudi Ministry of Foreign Affairs, acknowledging the fact that the Measures had been adopted, explaining the underlying reasons and giving an outline of what they entailed⁶⁹³.

517. The Kingdom has explained that the legal means by which the Measures were adopted was a Royal Decree issued by His Majesty the King [the “Royal Decree”], setting forth the directions which must be taken by each Ministry and government body in execution of His Majesty’s decision⁶⁹⁴.

518. And, in compliance with the Royal Decree:

The Saudi Customs Directorate closed the Salwa Crossing⁶⁹⁵;

The Saudi Ports Authority issued a circular instructing the directors of ports in Saudi Arabia “not to receive any ship flying the Qatari flag, or owned by Qatari persons or companies, and not to unload any goods of Qatari origin in Saudi ports”⁶⁹⁶;

The General Authority of Civil Aviation in Saudi Arabia revoked Qatar Airways’ licence to operate in the Kingdom and issued a notice that all flights

⁶⁹⁰ CPHB, paras. 8-15. ↩

⁶⁹¹ Doc. R-122; R I, para. 413; R II, para. 152; RPHB, para. 93; RER-3, Collis, para. 24; HT, Day 6, p. 1387 (Dr. Harris). ↩

⁶⁹² Doc. R-122. See also Doc. C-71. ↩

⁶⁹³ See also RPHB, para. 93. ↩

⁶⁹⁴ RPHB, para. 117. ↩

⁶⁹⁵ Doc. KU-5; Doc. C-81; Doc. C-82; CER-2, Ulrichsen, para. 4.5; RER-3, Collis, fn. 2; R I, para. 415.4. ↩

⁶⁹⁶ Doc. C-80; CER-2, Ulrichsen, para. 4.2; RER-3, Collis, para. 24. ↩

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registered in Qatar were no longer authorized to land at Saudi airports or to overfly Saudi Arabian airspace⁶⁹⁷.

519. The Tribunal has no doubt that the above Measures are attributable to the Saudi State pursuant to Art. 4 of the ARSIWA. Indeed:

The Royal Decree was issued by His Majesty the King, who, as Head of State, has both executive and legislative powers within Saudi Arabia⁶⁹⁸;

The Measures were publicized by an Official Statement of the Saudi Ministry of Foreign Affairs, one of the organs of the Saudi government;

The Measures were then implemented by several other organs of the State, including land, air and sea border authorities – border control being one of the main exercises of sovereign power by a State.

520. This conclusion is confirmed by Saudi Arabia’s averment that the Measures “were each adopted by competent authorities and in accordance with domestic Saudi law”⁶⁹⁹.

The conduct of tax authorities

521. Claimants further complain about the conduct of the Zakat, Tax and Customs Authority [previously defined as “ZATCA”], which, since December 2019, has sent Qatar Pharma multiple letters regarding unpaid tax invoices, failures to submit VAT returns, and late penalties⁷⁰⁰. Claimants argue that the imposition of massive VAT assessments and penalties for the period after Qatar Pharma ceased to do business in Saudi Arabia constitutes an illegitimate and retaliatory harassment⁷⁰¹.

522. The Kingdom denies that it instructed its tax authorities to harass Claimants and argues that it was Qatar Pharma who failed to comply with Saudi tax law; in any case, the ambit of the Measures was well defined and did not have any implications for the Kingdom’s tax authorities⁷⁰².

523. The Tribunal notes that the Measures, as adopted on 5 June 2017, do not refer to any aspects of tax law; and, in fact, Claimants only complain about measures adopted by the Saudi tax authorities after 2019, as an alleged retaliation to the start of the present arbitration⁷⁰³.

524. That said, the Tribunal finds that, to the extent that Claimants can prove that the ZATCA illegitimately imposed any tax assessments or penalties, such conduct is attributable to the Saudi State pursuant to Art. 4 of the ARSIWA: the ZATCA is

⁶⁹⁷ Doc. C-78; Doc. C-79; Doc. R-179; CER-2, Ulrichsen, para. 4.3; RER-3, Collis, para. 24. ↩

⁶⁹⁸ HT, Day 8, p. 1814, l. 17 to p. 1815, l. 3 (Amb. Collis). ↩

⁶⁹⁹ R I, para. 416. See also paras. 413-416. ↩

⁷⁰⁰ Doc. C-182; Doc. C-183; Doc. C-184; Doc. C-185; Doc. C-186; Doc. C-187; Doc. C-188; Doc. C-189; Doc. C-190; Doc. C-191; Doc. C-192; Doc. C-193; Doc. C-194; Doc. C-195; Doc. C-196; Doc. C-197; Doc. C-198; Doc. C-199; Doc. C-200; Doc. C-201; Doc. C-202; Doc. C-203; Doc. C-204; Doc. 205; Doc. R-148, p. 44; CWS-3, paras. 97-106. See also C I, paras. 151-159; R I, para. 260. ↩

⁷⁰¹ C I, paras. 10, 151-159; CPHB, paras. 33-34. ↩

⁷⁰² R I, paras. 259 et seq.; RPHB, paras. 78-80. ↩

⁷⁰³ C I, paras. 151-159, 362, 366, 370. ↩

[Page 115]

the Saudi tax authority, the organ of the State responsible for supervising that taxpayers are filing their returns, collecting tax payments, and imposing penalties on behalf of the Saudi State⁷⁰⁴.

The conduct of the SFDA

525. Claimants further complain about the conduct of the SFDA, which, after the imposition of the Measures, sealed the Riyadh Warehouse. According to Claimants, by sealing the Warehouse, the SFDA failed to protect what little remained of Claimants’ investment⁷⁰⁵.

526. The Kingdom, once again, denies this and argues that the evidence shows that the Riyadh Warehouse remained operational after the Measures were adopted, and that the SFDA only acted due to serious regulatory violations on Claimants’ part⁷⁰⁶.

527. Once again, the Tribunal notes that the Measures adopted on 5 June 2017 make no express reference to the sealing of the Warehouse. That said, to the extent that Claimants can prove that the SFDA acted illegitimately when sealing or inspecting the Riyadh Warehouse, the Tribunal finds that this conduct is attributable to the Saudi State under Art. 4 of the ARSIWA: the SFDA is the organ of the State in charge of regulating and monitoring food, pharmaceutical products and medical devices, and for overseeing businesses such as that of Qatar Pharma⁷⁰⁷.

***

528. In sum, the Tribunal finds that the closing of the Qatari-Saudi borders and the expulsion and ban of Qataris nationals and products from Saudi territory, are all attributable to the Saudi State. Likewise, the conduct of the ZATCA, the Saudi tax authority, and of the SFDA, the food and pharmaceutical authority, is also attributable to the State.

b. Conduct that is not attributable to the Saudi State under Art. 8 of the ARSIWA

529. Claimants also complain of a series of actions that took place in the aftermath of the Measures, and which, in their opinion, are attributable to the State pursuant to Art. 8 of the ARSIWA⁷⁰⁸:

A “climate of fear” that was widespread throughout the country, which made Claimants unable to maintain relationships with key customers, third-parties (such as their bank and landlord) and employees;

The blocking of access to the Riyadh Warehouse by the landlord; and

The denial of banking services by the Alawwal (now SABB) bank.

⁷⁰⁴ See R I, paras. 260-265. ↩

⁷⁰⁵ CPHB, paras. 22 et seq. ↩

⁷⁰⁶ RPHB, para. 3.5. ↩

⁷⁰⁷ R I, para. 3.1; RWS-1, paras. 9-10. ↩

⁷⁰⁸ C I, paras. 86-119, 139-159; C II, paras. 270-278; CPHB, paras. 16-34. ↩

[Page 116]

530. The Kingdom denies that this conduct can be attributed to the Saudi State, since it was undertaken by private persons or entities⁷⁰⁹.

531. In the commentaries to Art. 8 of the ARSIWA, the ILC explains that⁷¹⁰:

“As a general principle, the conduct of private persons or entities is not attributable to the State under international law. Circumstances may arise, however, where such conduct is nevertheless attributable to the State because there exists a specific factual relationship between the person or entity engaging in the conduct and the State. Article 8 deals with two such circumstances. The first involves private persons acting on the instructions of the State in carrying out the wrongful conduct. The second deals with a more general situation where private persons act under the State’s direction or control. Bearing in mind the important role played by the principle of effectiveness in international law, it is necessary to take into account in both cases the existence of a real link between the person or group performing the act and the State machinery.”

532. Therefore, the general principle is that the conduct of private persons or entities is not attributable to the State, unless it can be established that:

There is a specific factual relationship between the person or entity engaging in the conduct and the State; and

There is a real link between the person or entity and the State machinery when performing the action in question.

533. Furthermore, the actions in question must have been taken upon instructions given by the State or under the State’s direction or control. The terms “instructions”, “directions” and “control” are disjunctive, and it suffices to establish one of them⁷¹¹. As noted in the ILC commentary⁷¹²:

“Most commonly, cases of this kind will arise where State organs supplement their own action by recruiting or instigating private persons or groups who act as ‘auxiliaries’ while remaining outside the official structure of the State.” [Emphasis added]

534. The Tribunal will examine the conduct of the actors whose conduct Claimants seek to attribute to the Saudi State to determine whether they effectively had any relationship or link with the State apparatus, and whether there is evidence that their conduct was undertaken at the instructions of the State or under the State’s direction or control.

(i) Climate of fear

535. Claimants aver that the Kingdom orchestrated a “climate of fear” in the aftermath of 5 June 2017, which led, inter alia, to the resignation of Qatar Pharma’s local employees, to the difficulty in finding customers willing to buy from Qatar Pharma

⁷⁰⁹ R I, paras. 362 et seq.; R II, paras. 328 et seq. ↩

⁷¹⁰ Doc. RLA-214, p. 47, Commentary (1) to Art. 8. ↩

⁷¹¹ Doc. RLA-214, p. 48, Commentary (7) to Art. 8. ↩

⁷¹² Doc. RLA-214, p. 47, Commentary (2) to Art. 8. ↩

[Page 117]

and to the general fear of third-parties to interact with Claimants⁷¹³. According to Claimants, this “climate of fear” was promoted by Saudi authority figures, by daily media coverage, by an aggressive and coordinated social media campaign aimed at sowing hatred towards Qataris, and by the violent punishment of all forms of dissent⁷¹⁴. Claimants rely on the opinion of their policy expert, Dr. Kristian Coates Ulrichsen, to support their position⁷¹⁵.

536. The Kingdom denies that there was a “climate of fear” and submits that, even if one existed, there is no evidence of State involvement⁷¹⁶.

537. The Tribunal agrees that there is no evidence that the Saudi State was promoting a “climate of fear” against Qataris.

538. There is no doubt that the Measures created a strained relationship between Saudi Arabia and Qatar, and that there were tensions between nationals of both countries – as recognised by both Parties’ policy experts⁷¹⁷. The Tribunal is also fully convinced that media coverage and social media commentary were not particularly favourable towards Qataris⁷¹⁸, and that Saudi citizens may have felt discouraged from engaging with Qataris. This, however, is the logical consequence of the cut in the relationship between both countries, which was widely publicized.

539. Claimants have failed to prove that the concrete conduct of which they complain was undertaken by private people or entities acting on the instructions of or at the direction or control of the Saudi State.

Social media

540. In general, social media platforms lie outside the control of governments and act as a stage in which private individuals share their thoughts and express their opinions. According to statistics released in 2022, more than 82% of the Saudi population used social networks as part of their daily lives, particularly Twitter and Facebook⁷¹⁹. It follows that social media in Saudi Arabia is bound to reflect a wide range of opinions, including some that voice support and others that voice dissent against the government.

541. Claimants take issue with two statements made on social media⁷²⁰.

542. First, Claimants point to a Tweet published by an account called “SaudiNews50”, with the following message⁷²¹:

⁷¹³ C I, para. 86; CPHB, para. 16. ↩

⁷¹⁴ C I, para. 86; C II, paras. 114-115; Doc. H-1, slides 75-87. ↩

⁷¹⁵ CER-2, Ulrichsen, paras. 4.14-4.31. ↩

⁷¹⁶ R I, para. 372; R II, paras. 152-159; RPHB, paras. 3.5, 103-106. ↩

⁷¹⁷ CER-2, Ulrichsen, para. 4.16; RER-3, Collis, para. 34.a. ↩

⁷¹⁸ CER-2, Ulrichsen, para. 4.8; RER-3, Collis, para. 36. ↩

⁷¹⁹ Doc. SC-2. ↩

⁷²⁰ C I, paras. 87-90; C II, paras. 273-275. ↩

⁷²¹ Doc. C-105. ↩

[Page 118]

Sandi News Sandi News
@SaudiNews50

Follow

Attention

Any sympathizer with Doha on social networking sites after severing relations with Qatar shall be subject to 5 years in prison and a fine of up to 3 million riyals.

[Image of the Saudi Arabian flag]

RETWEETS LIKES
15,652 4,873

2:51 PM - 6 Jun 2017

543. Claimants argue that SaudiNews50 was “acting as a megaphone” for the Saudi State, because it is a social media marketing company that also manages accounts for Saudi government departments, acts for the Saudi royal family, and enjoys ties to several high-profile Saudi figures⁷²².

544. However, the evidence adduced by Claimants is flimsy, at best; SaudiNews50 is a private company and there is no evidence that it was acting on the instructions, or at the direction or control of the Saudi State when it made this statement. The fact that a government hires a private company in unrelated matters does not render the actions of that company attributable to the State.

545. Furthermore, it is unclear where the information vehiculated by SaudiNews50 is coming from; the statement is not attributed to any organ of the State and Claimants have not pointed out to any laws enacted by Saudi Arabia that sought to imprison or to fine people for expressing sympathy towards Qatar⁷²³.

546. Claimants argue⁷²⁴ that this same news was then reprinted in other Saudi news outlets, including Saudi Al-Marsd⁷²⁵ and Okaz⁷²⁶. But the source of these alleged news is “Attorney Musharraf Al-Khashrami”, a private attorney, who is said to be basing his opinion on a review of the Saudi Anti-Cyber Crime Law (which predates the enactment of the Measures by ten years⁷²⁷). Any attorney is entitled to make his own interpretation of the law, without this being attributable to the State; in any case, Claimants have not even sought to prove that this gentleman had ties to the Saudi government.

547. Second, Claimants argue that Mr. Saoud Al Qahtani – who, according to Claimants, was an agent of the Saudi State and one of the main architects of the “climate of

⁷²² C I, para. 87. ↩

⁷²³ Contrary, it seems, to the UAE, who banned all expression of sympathy towards Qatar, making it a criminal offence punishable with up to 15 years in prison (Doc. C-121, p. 3). ↩

⁷²⁴ C I, paras. 88-89. ↩

⁷²⁵ Doc. C-110. ↩

⁷²⁶ Doc. C-111; Doc. C-114; Doc. C-115. ↩

⁷²⁷ CER-2, Ulrichsen, para. 4.27. ↩

[Page 119]

fear” – created a hashtag on Twitter named “#TheBlacklist”, with the intention of compiling accusations against anyone who conspired against Saudi Arabia. Saudi citizens responded enthusiastically to Mr. Al Qahtani’s message by tweeting the names of those who had “expressed solidarity with Qatar”⁷²⁸.

548. The Tweet in question was publicized by two media outlets: Al-Jazeera⁷²⁹ and Middle East Eye⁷³⁰, who described Mr. Al Qahtani as a “Saudi official” and a “Saudi royal adviser”, respectively. The Tweet, dated 17 August 2017, reads as follows⁷³¹:

سعود القحطاني
@saudq1978

السعودية وأشقائها إذا قالوا فعلوا. وهذا وعد.
ضعوا كل اسم ترون وجوب ضمه لل
قائمة السوداء بالهاشتاق. وسيتم فرزها، وسيتم
متابعتهم من الآن.

5,766 Retweets 2,535 Likes

1:44 PM - 17 Aug 2017

سعود القحطاني
@saudq1978

الديوان الملكي هو المرجع الأول والأخير لملك البلاد وولي عهده، ومع ذلك لا يمنع أن نستنير
من غيرهم، ونحن وضعنا جوال وواتساب لعمل الأمانة العامة، ونستقبل أي اقتراح من أي مواطن.

Translation⁷³²: “Saudi Arabia and its allies, when they say they will do something they do it. And that is a promise. Put any names you think should be added to #TheBlacklist on the hashtag. And it will be sorted. And they will be followed from now.”

549. Can the conduct of Mr. Al Qahtani be attributed to the Saudi State?

550. For this to happen, there would need to be a specific factual relationship between Mr. Al Qahtani and the State, and there would need to be proof that he was acting upon the instructions of, or at the direction or control of, the State.

551. Claimants point to a tweet where an individual called Saad Abedine quotes Mr. Al Qahtani as saying that he would not make decisions without guidance or without following the orders of the Saudi King and the Crown Prince⁷³³:

⁷²⁸ C I, para. 90; C II, paras. 273-273; Doc. H-1, slides 80-83; CER-2, Ulrichsen, paras. 4.22-4.23. ↩

⁷²⁹ Doc. C-121. ↩

⁷³⁰ Doc. C-122. ↩

⁷³¹ See Doc. C-121, p. 1. ↩

⁷³² As translated in Doc. C-122. See also Doc. H-1, slide 82. ↩

⁷³³ Doc. KU-23. ↩

[Page 120]

Saad Abedine
@SaadAbedine

Saud Qahtani always tweeted about his “unwavering loyalty to #MBS, that he would never do anything w/o his approval: “Do you think I make decisions without guidance? I am an employee & a faithful executor of the orders of my lord the king & my lord the faithful crown prince”

سعود القحطاني
@saudq1978

Replying to @tms400

وتعتقد اني اقدح من راسي دون توجيه؟ أنا موظف ومنفذ أمين لأوامر سيدي الملك وسمو سيدي ولي العهد الأمين.

Translate Tweet

6/17/17, 11:01 PM

552. However, the actual Tweet by Mr. Al Qahtani was made from his personal account, not from an official channel, and there is no indication that he was acting in an official capacity or under the instructions of the Saudi royal family when he made the Tweet.

553. Claimants have not pointed to any official channels of the State that divulged a so-called “Blacklist” or to other contemporaneous evidence that this was being promoted by the State. In the absence of further evidence, the Tribunal cannot attribute Mr. Al Qahtani’s Tweet to the Saudi State.

Media outlets

554. Claimants also argue that Saudi media outlets were involved in spreading the “climate of fear” and that they were acting under the control of the Kingdom, because the Saudi State wields significant power and control over its media⁷³⁴.

555. However, Claimants have failed to demonstrate that any of the news outlets in question was acting under instructions of, or at the direction or control of, the Saudi State. To establish attribution based on Art. 8, it is not sufficient to say that because Saudi Arabia is a monarchy, the State necessarily controls media outlets. There must be evidence of concrete instructions or directions given by the State to the media outlets in question to divulge certain information – and such evidence is absent in the present case. Furthermore, Claimants have not established that the State controlled any of the media outlets in question, which, for the most part, were entirely privately-owned. It is possible – as recognised by Claimants’ own policy expert, Dr. Ulrichsen⁷³⁵ – that some of these media outlets were simply more critical of the Qatari State and more favourable to Saudi State policies.

⁷³⁴ C I, paras. 99-102; C II, para. 275; Doc. H-1, slides 75-78. ↩

⁷³⁵ HT, Day 8, p. 1780, ll. 5-17 (Dr. Ulrichsen). ↩

[Page 121]

Alleged punishment of dissent

556. Finally, Claimants have pointed out to press releases by Human Rights Watch⁷³⁶, Amnesty International⁷³⁷ and the Office of the High Commissioner for the United Nations Human Rights Council⁷³⁸ to argue that there was a⁷³⁹:

"[...] campaign of 'widespread and systematic arbitrary arrests and detention' that began in September 2017 with capturing persons that expressed sympathy towards Qatar [...]."

557. It is true that these three organisations denounced a wave of arrests in Saudi Arabia throughout late 2017 and early 2018, which, according to them, targeted dissenters who expressed their own opinion⁷⁴⁰. However, they also acknowledge that the exact reasons for the arrests remain unclear, and that it is possibly linked to counter-terrorism and to State security matters. No direct link is made between the Measures and the arrests; in fact, Qatar does not appear mentioned in these press releases. Without further evidence, the Tribunal cannot attribute these arrests to an attempt by the State to create a so-called "climate of fear".

(ii) Access to the Riyadh Warehouse

558. Claimants have argued that they were repeatedly blocked from accessing the Riyadh Warehouse by the landlord for fear of reprisals from the State -- fear that the landlord would allegedly have confirmed in a conversation with Dr. Al Sulaiti⁷⁴¹.

559. The Kingdom denies that the State exerted any pressure on the landlord of the Riyadh Warehouse to prevent Claimants from accessing their Warehouse; in fact, there was nothing preventing Claimants' access⁷⁴².

560. In this arbitration, the Kingdom has produced the witness statement of Mr. Abdalla Al-Asfor, an employee of the landlord⁷⁴³.

561. Mr. Al-Asfor has declared that the Riyadh Warehouse is owned by Abdulaziz Abdullah Al Mosa & Sons Real Estate Co. Limited, a private family company that has been operating in the Saudi real estate sector for more than 25 years⁷⁴⁴. He further explained that the only set of keys to the Riyadh Warehouse was delivered to Dr. Al Sulaiti and that the landlord did not have a spare⁷⁴⁵. In his testimony, Mr. Al-Asfor has made clear that⁷⁴⁶:

"10 [...] The SFDA has never told me or, as far as I am aware, anyone connected to the Riyadh Landlord to deny anyone access to the Riyadh

⁷³⁶ Doc. C-126. ↩
⁷³⁷ Doc. C-127. ↩
⁷³⁸ Doc. C-128. ↩
⁷³⁹ C II, para. 272. See also C I, paras. 91-92. ↩
⁷⁴⁰ Docs. C-126, C-127 and C-128. ↩
⁷⁴¹ C I, paras. 115, 140-146; CWS-3, paras. 125-133; C II, para. 278; CPHB. paras. 29-30; Doc. C-179. ↩
⁷⁴² R I, paras. 3.6, 28, 237-243. ↩
⁷⁴³ RWS-7. ↩
⁷⁴⁴ RWS-7, para. 5. ↩
⁷⁴⁵ RWS-7, paras. 8-9; HT, Day 7, p. 1418, ll. 6-23 (Mr. Al-Asfor). ↩
⁷⁴⁶ RWS-7, paras. 10, 14 and 16. ↩

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Warehouse. My colleague, Mr Al Ansari has also told me that he has never been told to deny anyone access to the Riyadh Warehouse. [...]

14. Whilst I also cannot recall whether I said that I did not have authority to allow the representatives to enter the Riyadh Warehouse, as far as I understand, that is true. Whilst QEMS is the tenant, neither the Riyadh Landlord nor its agents are permitted to force entry by having a locksmith change the locks. It is for the tenant to gain access through a locksmith, if that is what is required. That is my understanding of Saudi law, although I am not a lawyer. I would not have been referring to anything to do with SFDA, or any other Saudi government agency. No Saudi government agency has said that the Riyadh Landlord must deny access to the Riyadh Warehouse. [...]

16. The Claimants allege that, after the visit on 4 April 2021, Dr Al Sulaiti contacted the Riyadh Landlord, who said that he would not permit access to the Riyadh Warehouse because it would expose 'him' to harm. I do not know who Dr Al Sulaiti claims to have spoken to because Dr Al Sulaiti does not say. He refers to the landlord as a person, but the landlord is not a person. I keep in regular contact with the Al Mosa family and I have spoken to my colleague Mr Al Ansari. None of us is aware of any such communication with Dr Al Sulaiti. Nobody would have said that they feared harm from the Saudi government, because the Saudi government has never threatened any harm. As far as the Riyadh Landlord, Mr Al Ansari and I are concerned, Dr Sulaiti, Qatar Pharma and QEMS (or their representatives) are, and always have been, free to enter the Riyadh Warehouse at any time they want." [Emphasis added]

562. Mr. Al-Asfor's unequivocal statements that there were never any instructions by any organs of the Saudi State (including the SFDA) to block access to the Riyadh Warehouse, which are not contradicted by other evidence on the record, are sufficient to put to rest Claimants' attempt to attribute the conduct of the landlord to the Saudi State.

563. This is further supported by a letter addressed by the SFDA to Respondent's lawyers in March 2021, in which it expressly confirmed that⁷⁴⁷:

"[...] it is not restricting access to [the Riyadh Warehouse] or any documents and/or computers stored at that location. Insofar as the SFDA is concerned, the relevant entity with an ownership interest in the premises may access the premises for the purpose of collecting any documents and/or computers without prior approval of, and without being accompanied by representatives of, the SFDA. [...] This letter does not concern any regulatory violations committed by Qatar Pharma, which would have to be remediated in accordance with SFDA regulations before business operations are permitted."

(iii) Access to banking services

564. Finally, Claimants say that they were restricted from accessing QEMS's Saudi bank account at the Alawwal bank after June 2017, at the instruction of the Kingdom (who owns a stake in this bank) and also for fear of reprisals⁷⁴⁸. This denial of banking services disrupted their ability to pay employee salaries, rents, and general

⁷⁴⁷ Doc. C-173. ↩
⁷⁴⁸ C I, paras. 85, 150; C II, paras. 192, 287; CWS-3, paras. 97-99. ↩

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expenses, and to collect funds from Saudi customers⁷⁴⁹. Claimants say that since 2018 and to this day they cannot access their Saudi bank account remotely, nor transfer funds to Qatar⁷⁵⁰.

565. The Kingdom argues that Claimants' allegation that they have been unable to access QEMS's account and that the Saudi government instructed the Alawwal bank not to deal with Qataris or Claimants is undermined by all available evidence⁷⁵¹.

566. Before determining whether Claimants were indeed blocked from accessing QEMS's account at the Alawwal (now SABB) bank, the Tribunal must establish whether the conduct of this entity can be attributed to the State pursuant to Art. 8 of the ARSIWA. If not, it becomes irrelevant to establish if Claimants were able to access their bank accounts for the purposes of this investment arbitration.

567. The Kingdom has acknowledged that it holds a minority stake in the SABB bank, but that this is a "publicly traded bank [...] over which the state does not exercise control"⁷⁵². The Kingdom submits, in any case, that the ownership of shares in an entity by the State is insufficient to establish attribution⁷⁵³.

568. The Tribunal agrees with the Kingdom on this point.

569. As the ILC's commentaries to Art. 8 make clear, the State's control over a person or entity must be established case by case; the mere fact that the State holds a participation in a corporate entity is not sufficient for the attribution to the State of the conduct of that entity⁷⁵⁴.

570. In the present case, Claimants have failed to establish that the Kingdom owns a controlling stake in the Alawwal (now SABB) bank that permits the State to shape the conduct of the bank towards its customers. They have also not proven that the State issued instructions or directions on how the bank should deal with Qataris (or with Claimants) after the enactment of the Measures.

571. The Kingdom has produced two witness statements signed by Mr. Munif Al-Otaibi, Head of Business Banking & SME at the SABB⁷⁵⁵ (and an employee of Alawwal prior to the merger between the two entities⁷⁵⁶). Mr. Al-Otaibi was also called to testify at the Hearing⁷⁵⁷. He has declared that⁷⁵⁸:

"11. I am not aware of the Saudi Central Bank giving any such guidance (whether formally or informally). If the Saudi Central Bank had given guidance like that in June 2017 or at any time afterwards, it would have been passed to the compliance departments of Saudi banks. Both Alawwal Bank and SABB (prior to their merger) would have received it. If Alawwal Bank's

⁷⁴⁹ C I, para. 85; CPHB, para. 17; CWS-3, para. 100. ↩
⁷⁵⁰ C I, para. 85; CPHB, para. 21; CWS-3, paras. 101-105. ↩
⁷⁵¹ R I, para. 369; R II, para. 340; RPHB, paras. 97-102. ↩
⁷⁵² R I, para. 368; RWS-6, para. 7. ↩
⁷⁵³ R I, para. 340. ↩
⁷⁵⁴ Doc. RLA-214, p. 48, Commentaries (5) and (6) to Art. 8. ↩
⁷⁵⁵ RWS-6 and RWS-10. ↩
⁷⁵⁶ RWS-6, para. 7. ↩
⁷⁵⁷ HT, Day 6, pp. 1342-1378. ↩
⁷⁵⁸ RWS-6, paras. 11-12. ↩

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compliance department had received guidance in June 2017 or afterwards, that department would have passed such a communication to me in my capacity as Deputy Head of Corporate Risk Management and Head of SME Risk. I did not receive anything.

12. I have made enquiries of SABB's (post-merger) compliance department, and there is no record of any guidance from the Saudi Central Bank about dealing with Qataris nor is there any record of any instruction being given to Alawwal Bank (or SABB) about transactions with Qataris or entities connected to Qataris. Again, if there had been such an instruction given to Alawwal Bank, I would have been informed at the time." [Emphasis added]

572. This is corroborated by other contemporaneous evidence. On 19 August 2017, the Saudi Central Bank issued the following statement⁷⁵⁹:

"Referring to what was recently circulated on some social media that the Kingdom has stopped dealing in Qatari riyals, the Saudi Arabian Monetary Authority confirms that it has not issued any instructions to financial institutions and exchange institutions operating in the Kingdom that include stopping dealing in Qatari riyals since the severance of relations with the State of Qatar.

And brotherly Qatari citizens can exchange the Qatari riyal naturally through banks and licensed money exchange shops, as well as use automatic withdrawal machines."

573. The main evidence on which Claimants rely when arguing that their access to the QEMS's bank account was suspended "upon instruction of the Saudi government" is the statement of Dr. Al Sulaiti⁷⁶⁰. According to him, it was the Alawwal Bank branch manager, Mr. Bandr Al-Otaibi, who informed him that the Saudi government had given such instructions⁷⁶¹.

574. In their post-Hearing brief, Claimants argue that the Kingdom failed to call Mr. Bandr Al-Otaibi as a witness and instead chose to proffer Mr. Munif Al-Otaibi as a witness, who was not familiar with Dr. Al Sulaiti's situation⁷⁶². The Tribunal notes, however, that Claimants are the ones who bear the burden of proving that the State instructed or directed the Alawwal bank to act in a certain way. If they wished, they should have called Mr. Bandr Al-Otaibi or asked the Tribunal to do so on their behalf.

575. After weighing the available evidence, the Tribunal finds that it is not possible to establish that the conduct of the Alawwal bank is attributable to the Saudi State.

***

576. In view of the above, the Tribunal concludes that the actions of the landlord of the Riyadh Warehouse, of the Alawwal (now SABB) bank, and of other private individuals and entities, are not attributable to the Saudi State, with the consequence

⁷⁵⁹ Doc. R-134. ↩
⁷⁶⁰ C I, para. 272, referring to CWS-3, para. 99; CPHB, paras. 17 et seq., referring to CWS-3, paras. 97-106. ↩
⁷⁶¹ CWS-3, para. 99. ↩
⁷⁶² CPHB, paras. 18-19. ↩

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that the Tribunal will exclude such conduct from the scope of its analysis in the following sections.

577. Ultimately, the conduct of certain Saudi private individuals, such as Qatar Pharma's employees, customers or even its landlord, who were unwilling to continue their dealings with Qatar Pharma, may have been exacerbated as a consequence of the Measures, but the conduct is not attributable to the State. Claimants have failed to produce evidence that the people in question were acting on the instructions, at the direction or under the control of the Saudi State. The fact that individuals wrote articles or tweets expressing lack of sympathy towards Qatar or became less inclined to do business with Qataris does not mean that they were receiving instructions or directions from the State, nor that they were submitting to pressure from the State; they could simply be supportive of the Measures adopted by the Saudi State and critical of Qatar.

578. In the absence of concrete factual evidence demonstrating the existence of instructions, directions or control of the State over the private persons or entities in question, the Tribunal finds that the international responsibility of Saudi Arabia cannot be engaged.

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VI.2. THE EXPROPRIATION CLAIM

1. CLAIMANTS' POSITION

1.1 RESPONDENT BREACHED ART. 10 OF THE OIC AGREEMENT

579. Claimants argue that the Kingdom's actions have deprived them of the use, enjoyment, control, and economic value of their investment, in violation of the prohibition on expropriation in Art. 10 of the OIC Agreement⁷⁶³. They explain that by 2017 they had successfully invested in Saudi Arabia, at considerable cost: they had established a business that had a strong track record of revenue and profit growth and was well-positioned for further growth in the years to come. This was possible through the investment of know-how, time, and monetary resources and the obtainment of numerous licences and authorizations - all with the approval and encouragement of Saudi officials⁷⁶⁴.

580. Claimants argue that the Measures - which implied the expulsion and ban of Qatari nationals and companies from Saudi territory destroyed their investments: Claimants were effectively shut out from Saudi Arabia, leading to the demise of their Saudi business operations⁷⁶⁵.

581. Claimants submit that the Measures totally deprived them of the rights protected by Art. 10, including their "basic rights or the exercise of [their] authority on the ownership, possession or utilization of [their] capital," and "[their] actual control over the investment, its management, making use out of it, enjoying its utilities, the realization of its benefits or guaranteeing its development and growth"⁷⁶⁶. Indeed, Claimants and their staff were⁷⁶⁷:

Expelled from Saudi Arabia, which prevented them from overseeing or managing Qatar Pharma's ordinary and day-to-day operations;

Barred from selling their products to Saudi customers and performing their contracts;

Foreclosed from accessing their property (including their facilities and the inventory and business records located therein); and

Deprived of the ability to manage their business and realize the benefit of their contracts, or other licenses, and authorizations.

582. Qatar Pharma's licenses and registrations expired, its facilities had to be forcibly abandoned and left to deteriorate, and its trained workforce evaporated. After years

⁷⁶³ C II, para. 319. ↩
⁷⁶⁴ C I, paras. 260-263. ↩
⁷⁶⁵ C I, paras. 264-265; C II, para. 303. ↩
⁷⁶⁶ C I, para. 259; C II, para. 311. ↩
⁷⁶⁷ C I, paras. 259, 264-265, 269; C II, para. 317. ↩

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of being shut out of the Saudi market, Claimants have completely lost their market share and the good will they had developed⁷⁶⁸.

583. Finally, Claimants argue that the Measures were implemented with no specificity and in a totally opaque manner, particularly as to their intended duration⁷⁶⁹. The Measures have had the effect of far more than a "transitory" deprivation of Claimants' investments⁷⁷⁰. The Kingdom itself has conceded that Claimants would have to reestablish their entire business operation if they wished to go back to Saudi Arabia⁷⁷¹. Accordingly, Claimants can never realize the benefit of their historical investments, which have been destroyed⁷⁷².

1.2 NO VALID DEFENCE FOR THE MEASURES

584. Claimants say that the OIC Agreement contains neither an express exception for national security, nor what is known as a "self-judging" clause⁷⁷³. In the absence of both, it is wrong for the Kingdom to suggest that its actions were undertaken for "national security" concerns and that this should be the end of the Tribunal's inquiry⁷⁷⁴.

585. Multiple cases have confirmed that States must not be afforded absolute deference⁷⁷⁵. On the contrary: the case law makes it clear that a tribunal must evaluate the legitimacy of the public policy allegedly being pursued and independently test the State's justifications and assess whether they are bona fide⁷⁷⁶.

586. Claimants argue that the Kingdom cannot rely on Art. 10(2)(b) of the OIC Agreement to justify its conduct either: the Kingdom has neither established that the Measures were "issued in accordance with an order from a competent legal authority" nor that they were "executed" through a "decision given by a competent judicial authority", as required by Art. 10(2)(b)⁷⁷⁷. Furthermore, for measures to qualify as "preventive" under Art. 10(2)(b), they must have "factual and legal foundations"⁷⁷⁸.

587. Claimants argue that Saudi Arabia bears the burden of proving that it took the Measures for justified national security concerns⁷⁷⁹. When assessing the evidence, tribunals should review political recommendations by governmental committees, ministry assessments, contemporaneous government commentary, and witness testimony, that show the need for the adoption of extraordinary measures⁷⁸⁰.

⁷⁶⁸ C I, paras. 266, 275; C II, para. 218; CPHB, para. 102. ↩
⁷⁶⁹ C II, para. 316. ↩
⁷⁷⁰ CPHB, para. 77. ↩
⁷⁷¹ CPHB, para. 78. ↩
⁷⁷² CPHB, para. 79. ↩
⁷⁷³ C II, para. 280. ↩
⁷⁷⁴ C II, para. 280; CPHB, para. 113. ↩
⁷⁷⁵ C II, paras. 283 et seq. ↩
⁷⁷⁶ C II, para. 288; CPHB, para. 113. ↩
⁷⁷⁷ C II, para. 324. ↩
⁷⁷⁸ C II, para. 322. ↩
⁷⁷⁹ C II, paras. 289-290; CPHB, para. 114. ↩
⁷⁸⁰ C II, para. 291. ↩

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588. Claimants submit that the Kingdom has failed to marshal any satisfactory evidence that supports its national security defence or the need to take preventive action: no Saudi official has provided testimony regarding the reasons of sovereign necessity that purportedly justified the Measures; Saudi Arabia has also not offered any first-hand and contemporaneous documents supporting its claims or showing how the Saudi authorities evaluated the national security threat at the time the Measures were conceived or implemented, or how they were calibrated and designed to respond to a specific threat⁷⁸¹.

589. The Kingdom has withheld all documents that assess its purported national security concerns and that discuss how and why the Measures were conceived and implemented – making it impossible for the Tribunal to conduct an informed evaluation of the Kingdom's motives and of the necessity and proportionality of the Measures when measured against their alleged purpose⁷⁸². Since the Kingdom is in possession of such evidence, the Tribunal must infer that Respondent's refusal to disclose implies that there is no valid national security justification⁷⁸³.

590. In sum, the Kingdom has failed to carry its burden of proof that its conduct with respect to the Measures is entitled to any "deference" or that it has a valid defence under Art. 10(2)(b) of the OIC Agreement⁷⁸⁴.

2. RESPONDENT'S POSITION

2.1 THE MEASURES ARE PERMISSIBLE UNDER ART. 10(2)(B)

591. The Kingdom submits that even if the Measures could constitute an expropriation contrary to Art. 10(1) of the OIC Agreement (quod non), they are permissible on the basis of Art. 10(2)(b), which allows States to adopt "preventive measures", if they are "issued in accordance with an order from a competent legal authority"⁷⁸⁵.

592. Saudi Arabia explains that the Measures were a legitimate response to a long-standing national security concern: the threat created by Qatar's state policies⁷⁸⁶. This is not a situation in which a State has retrospectively attempted to excuse its conduct by reference to amorphous national security concerns; here, there was a genuine tension between Saudi and Qatari foreign policy, and the Kingdom had a genuine apprehension that Qatar's foreign policy gave rise to a national security risk⁷⁸⁷. This is demonstrated by the evidence on the record⁷⁸⁸:

The 2017 statement by the Kingdom's Ministry of Foreign Affairs, which referred to "reasons related to Saudi security", namely Qatar's breach of the Riyadh Agreements and threats from terrorist groups⁷⁸⁹; and

⁷⁸¹ C II, paras. 296, 323; CPHB, para. 115. ↩
⁷⁸² C II, para. 297; CPHB, para. 116. ↩
⁷⁸³ CPHB, para. 118. ↩
⁷⁸⁴ C II, para. 302. ↩
⁷⁸⁵ R II, paras. 371-372; RPHB, para. 90. ↩
⁷⁸⁶ R I, paras. 14, 18, 385.3; R II, paras. 5, 8, 10. ↩
⁷⁸⁷ R II, para. 179. ↩
⁷⁸⁸ RPHB, para. 114. ↩
⁷⁸⁹ R I, para. 413; RPHB, para. 114, referring to Doc. R-122. ↩

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The Riyadh Agreements, which make clear reference to security concerns arising from Qatar's foreign policy over several years prior to the Measures.

593. These documents create a presumption that Saudi Arabia was acting in response to long-held national security concerns, having previously exhausted multiple diplomatic efforts at resolution⁷⁹⁰. The Measures had nothing to do with Qatar Pharma or Dr. Al Sulaiti⁷⁹¹.

594. In circumstances where the Tribunal does not (and could not, for reasons of national security) have all the evidence before it on the motives underlying the Kingdom's actions⁷⁹², the Tribunal must afford the Kingdom a wide margin of appreciation to assess and respond to matters of national security, and it should not second-guess the State's decision-making⁷⁹³. The Kingdom deserves a high (albeit not an absolute) degree of deference⁷⁹⁴: if the Tribunal is satisfied that the Measures were bona fide responses to national security concerns, then -- based on the principle of deference -- it must not second-guess their legality as a matter of international law⁷⁹⁵.

595. Saudi Arabia avers that considering the threat that Qatar's conduct posed to the Kingdom's national security, the application of Art. 10(2)(b) is manifest⁷⁹⁶: the Measures constituted "preventive measures" that were needed to deal with a serious national security crisis (i.e., Qatar's support for and financing of terrorism in the Gulf region)⁷⁹⁷.

596. According to the Kingdom, the Al-Warraq case sets forth the test to determine if a measure can be considered as "preventive", which can be distilled as follows⁷⁹⁸:

The measure adopted by the State has to be within the competence of the relevant authority taking the measure; and

The measure must be lawful as a matter of the State's domestic law.

597. The Kingdom submits that the test is satisfied in this case; the Measures were adopted pursuant to Saudi Arabia's announcement of 5 June 2017, for "reasons related to Saudi security" and they were⁷⁹⁹:

Fully within the competence of the Saudi authorities;

Lawful as a matter of Saudi Arabia's domestic law:

The Measures were adopted by a Royal Decree by His Majesty the King, which sets out the directions that must be taken by each government body to execute the

⁷⁹⁰ RPHB, para. 115. ↩
⁷⁹¹ R II, para. 10. ↩
⁷⁹² R I, para. 385.3. ↩
⁷⁹³ R I, para. 385.3; R II, para. 177. ↩
⁷⁹⁴ R II, paras. 341, 355. ↩
⁷⁹⁵ CHT, p. 2445, ll. 10-19 (Dr. Harris). ↩
⁷⁹⁶ R I, para. 409; R II, para. 373; RPHB, para. 90. ↩
⁷⁹⁷ R I, para. 416; R II, para. 377. ↩
⁷⁹⁸ R I, paras. 410-412; R II, para. 374, referring to Doc. CLA-32, Al-Warraq, paras. 527-530. ↩
⁷⁹⁹ R I, paras. 413-416; R II, para. 374. ↩

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decision⁸⁰⁰; as is normal practice in Saudi Arabia, the Kingdom did not publish the Decree - only the fact that the Measures had been adopted, the underlying reasons and a clear explanation of what they encompassed⁸⁰¹. It is not surprising that there is no publicly available record of the Kingdom's decision-making process, since matters of national security are not debated or determined in the public domain⁸⁰².

598. In sum, the Kingdom argues that there was both a "factual" and "legal" foundation for the Measures, which were necessary to deal with serious national security concerns. The Measures were properly adopted by competent authorities and in accordance with applicable Saudi law, and thus constituted permissible "preventive measures" within the meaning of Art. 10(2)(b)⁸⁰³ - with the consequence that there is no expropriation.

2.2 THE PROPER SCOPE OF ART. 10 OF THE OIC AGREEMENT

599. The Kingdom argues that, in any event, Claimants' proposed interpretation of Art. 10 of the OIC Agreement is overbroad: Claimants attempt to conflate this provision with other provisions on expropriation, thereby ignoring the ordinary meaning of the terms of the text in their context⁸⁰⁴.

600. According to the Kingdom, Art. 10 provides for a protection against measures which directly or indirectly affect the "ownership" of the investor's "capital" or "investment"; it follows that the investor's "ownership" of the investment is the touchstone for Art. 10(1)'s protections - contrasting with the expropriation provisions of other treaties cited by Claimants⁸⁰⁵.

601. In this case, none of the Measures taken by the Kingdom has affected the ownership of Claimants' assets – only their value. Dr. Al Sulaiti still owns the shares in QEMS, and Qatar Pharma still has its contractual relationship with QEMS. Therefore, the Measures do not rise to the level of being a "deprivation" and Art. 10(1) is not engaged⁸⁰⁶.

3. DECISION OF THE ARBITRAL TRIBUNAL

602. Art. 10 of the OIC Agreement provides that⁸⁰⁷:

"1. The host state shall undertake not to adopt or permit the adoption of any measure - itself or through one of its organs, institutions or local authorities - if such a measure may directly or indirectly affect the ownership of the investor's capital or investment by depriving him totally or partially of his ownership or of all or part of his basic rights or the exercise of his authority on the ownership, possession or utilization of his capital, or of his actual control over the investment, its management, making use out of it, enjoying

⁸⁰⁰ RPHB, para. 117. ↩
⁸⁰¹ RPHB, para. 118. ↩
⁸⁰² R II, para. 377. ↩
⁸⁰³ R II, para. 379. ↩
⁸⁰⁴ R II, para. 357. ↩
⁸⁰⁵ R II, para. 358. ↩
⁸⁰⁶ R I, paras. 391, 395-396; R II, paras. 362, 370. ↩
⁸⁰⁷ Doc. CLA-10. ↩

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its utilities, the realization of its benefits or guaranteeing its development and growth.

2. It will, however, be permissible to:

(a) [...]

(b) Adopt preventive measures issued in accordance with an order from a competent legal authority [...]." [Emphasis added]

603. It is Claimants' position that Saudi Arabia has unlawfully expropriated their investment in breach of Art. 10 and that it cannot avail itself of a defence under Art. 10(2)(b) invoking its national security interests. The Kingdom counters that it adopted the Measures for reasons of national security so that - even assuming there was an expropriation – the State's conduct was permissible considering the exception under Art. 10(2)(b) of the OIC Agreement⁸⁰⁸. Subsidiarily, the Kingdom says that Claimants' investments cannot have been expropriated, since the Measures have not affected the ownership of Claimants' assets, i.e., the ownership of the shares in QEMS⁸⁰⁹.

604. The Tribunal will first summarize the proven facts (3.1) and thereafter focus on Saudi Arabia's national security defence, within the exception provided for by Art. 10(2)(b) of the OIC Agreement. The Tribunal will find that the Kingdom issued the Measures for reasons of national security and that such Measures were permissible under Art. 10(2)(b) of the OIC Agreement (3.2).

3.1 SUMMARY OF PROVEN FACTS

A. The Riyadh Agreements

605. As explained by the Parties' geopolitical experts⁸¹⁰, the "Arab Spring", which spread across the Middle East and Northern Africa throughout 2010 and 2011, threatened the status quo in the Arab world. The fall of several leaders, in countries such as Tunisia, Egypt, Libya and Yemen, opened political and policy differences between neighbouring countries, and power vacuums, which ultimately led to the rise of groups such as Daesh and the Muslim Brotherhood.

606. It is against this backdrop that in 2013 Qatar and Saudi Arabia and the other members of the GCC signed the Riyadh Agreements, with the aim of "abolish[ing] whatever muddies the[ir] relations" and enhancing their common security⁸¹¹; due to the sensitivity of the issues involved, these Agreements were initially secret and were only disclosed to the public in 2017, after the adoption of the Measures⁸¹².

⁸⁰⁸ R I, para. 388; RPHB, para. 90. ↩
⁸⁰⁹ R I, para. 389. ↩
⁸¹⁰ CER-2, Ulrichsen, paras. 4.51-4.52; RER-3, Collis, paras. 60(c) and 80 et seq. See also Doc. KU-58, p. 1. ↩
⁸¹¹ See also CER-2, Ulrichsen, pp. 22-23; RER-3, Collis, paras. 85-87; Doc. H-4, slide 4. ↩
⁸¹² Doc. KU-50; CER-2, Ulrichsen, para. 4.47. ↩

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The first Riyadh Agreement

607. The first Riyadh Agreement was signed on 23 and 24 November 2013 and in it the GCC States made significant security undertakings⁸¹³; they pledged:

Not to interfere in their respective internal affairs, whether directly or indirectly;

Not to give harbour or naturalize "any citizen of the [GCC] States that has any activity which opposes his country's regimes, except with the approval of his country";

Not to support the Muslim Brotherhood or any other organization or group aimed at destabilizing the GCC States; and

Not to support any faction in Yemen that could pose a threat to Yemen's neighbouring countries (namely, Saudi Arabia).

Recalling of ambassadors from Qatar

608. Nevertheless, less than four months later, on 5 March 2014, Saudi Arabia, the UAE and Bahrain decided to recall their ambassadors in Qatar, in protest against Qatar's alleged refusal to abide by the terms of the first Riyadh Agreement and to agree on a monitoring mechanism⁸¹⁴.

609. Qatar, in turn, declared that it remained committed to the GCC's values, and would not be recalling its own ambassadors⁸¹⁵.

The Mechanism Implementing the Riyadh Agreement

610. Despite this diplomatic incident, on 17 April 2014 the GCC States (including Qatar) signed the Mechanism Implementing the Riyadh Agreement (a document classified as "Top Secret"), which reiterated the commitments and provided, among other things, that⁸¹⁶:

"Foreign ministers of the GCC Countries shall hold private meetings on the margins of annual periodic meetings of the ministerial council wherein violations and complaints reported by any member country of the Council against any [other] member country of the Council shall be reviewed by the foreign ministers to consider, and raise them to leaders." [Emphasis added]

and

"If any country of the GCC Countries fail[s] to comply with this mechanism, the other GCC Countries shall have the right to take any appropriate action to protect their security and stability." [Emphasis added]

⁸¹³ Doc. R-53. ↩
⁸¹⁴ Doc. KU-58, p. 4; Doc. KU-59, p. 1.; Doc. SC-44; Doc. RLA-212, para. 2.21; CER-2, Ulrichsen, para. 4.55; RER-3, Collis, para. 88. ↩
⁸¹⁵ Doc. KU-59, p. 3. ↩
⁸¹⁶ Doc. R-73. ↩

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The August 2014 Meeting of Foreign Ministers

611. As had been contemplated in the Mechanism, on 30 August 2014 the Ministries of Foreign Affairs met in Jeddah. On this occasion, the Saudi Foreign Minister voiced serious concerns in respect of Qatar⁸¹⁷:

"We presented during our meeting with His Highness Shaikh Tamim bin Hamad Al Thani [the Emir of Qatar] all the points of conflict, such as the support for Islamists, Muslim Brotherhood, political policy, Libya and the issue of the media as well as the groups that work against the GCC and the consequential dangers that affect us all. We discussed this in detail and we found an acceptance by His Highness and that he is exerting efforts in resolving this problem, particularly that he ascended to the throne a year ago and that he is the first and last person responsible for all that happens in Qatar. He gave his promise to the Custodian of the Two Holy Mosques and that he was committed to this promise. His Highness requested finding indisputable evidence for the implementation and said that he was prepared to cooperate in 'all that you want', adding that there is no problem without a solution.

We informed His Highness that we would like him to stand by Egypt and not with the Muslim Brotherhood or encourage extremists. His Highness agreed to stop the media treatment against us, and, as you know, the media is part of the political policy of any country. His Highness said the media would be committed and will not taunt Egypt, but instead will stand by Egypt and support its efforts, adding that Qatar will not have a hand in supporting extremists or encouraging them, and that this is the policy that we want.

The agreement now that His Highness committed to will be the same general policy that the GCC is committed to." [Emphasis added]

The Supplementary Riyadh Agreement

612. On 16 November 2014, the GCC States signed the Supplementary Riyadh Agreement⁸¹⁸, a treaty again labelled "Top Secret", with a particular focus on security. The States committed⁸¹⁹:

To fully implement the Riyadh Agreement within one month;

To deny support and actively prosecute "any person or media apparatus that harbors inclinations harmful to any [GCC State]"; and

To provide support to Egypt, "ceasing all media activity directed against the Arab Republic of Egypt in all media platforms, whether directly or indirectly, including all the offenses broadcasted on Al-Jazeera" – a Qatari news channel.

613. The Supplementary Riyadh Agreement finalized with an order to⁸²⁰:

⁸¹⁷ Doc. R-81, pp. 2-3. See also Doc. RLA-212, para. 2.27. ↩
⁸¹⁸ CER-2, Ulrichsen, paras. 4.55. ↩
⁸¹⁹ Doc. R-90, p. 1. ↩
⁸²⁰ Doc. R-90, p. 2. ↩

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"[...] intelligence chiefs to follow up on the implementation [...] and to report regularly to the leaders, in order to take the measures they deem necessary to protect the security and stability of their countries." [Emphasis added]

Mistrust between Saudi Arabia and Qatar

614. Notwithstanding the execution of the successive Riyadh Agreements, the friction between Saudi Arabia and Qatar did not abate⁸²¹.

615. On 19 February 2017 the Qatari Minister of Foreign Affairs addressed a letter to the GCC, suggesting that the GCC States had made no effort to implement the Riyadh Agreements, and therefore the subject of these agreements had "been exhausted". Qatar thus called upon the other GCC countries⁸²²:

"[...] to agree to terminate the Riyadh agreement which has been overtaken by events at the international and regional levels, and in turn, it may be necessary for the member states of the Council to take the necessary steps to amend the [GCC] Charter in line with their aspirations, to be prepared to face any issues that may arise regarding joint gulf cooperation, and regional and international developments in various fields." [Emphasis added]

616. The Kingdom, in turn, suspected that Qatar was providing financial and media support to various groups, including the Muslim Brotherhood, Daesh and Al-Qaeda, and several Iranian-backed groups, in breach of its obligations under the Riyadh Agreement⁸²³.

B. The Measures

617. The situation exploded in 2017: after recalling once again the Saudi ambassador to Qatar, on 5 June 2017 the Kingdom adopted the Measures.

618. The legal means by which the Measures were adopted was a Royal Decree issued by His Majesty the King [previously defined as the "Royal Decree"], setting forth the directions which must be taken by each Ministry and government body in execution of His Majesty's decision⁸²⁴. The precise text of the Royal Decree remains secret. The Saudi government only published a statement [previously defined as the "Official Statement"]⁸²⁵, distributed through the press service of the Saudi Ministry of Foreign Affairs, acknowledging the fact that the Measures had been adopted, explaining the underlying reasons and giving an outline of what they entailed.

619. The Official Statement explained that Qatar had repeatedly violated its international obligations and the agreements signed under the umbrella of the GCC to stand against terrorism. Therefore⁸²⁶:

⁸²¹ Doc. KU-49, p. 2; Doc. KU-58, p. 5. ↩
⁸²² Doc. R-116. See also Doc. RLA-212, para. 2.47. ↩
⁸²³ Doc. KU-49, p. 2; Doc. RLA-212, paras. 2.33-2.46; RER-3, Collis, para. 55. ↩
⁸²⁴ RPHB, para. 117. ↩
⁸²⁵ Doc. R-122. See also Doc. C-71. ↩
⁸²⁶ Doc. R-122. See also Doc. C-71. ↩

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"[...] the Government of Saudi Arabia, in exercising its sovereign rights guaranteed by the international law and protecting its national security from the dangers of terrorism and extremism has decided to sever diplomatic and consular relations with the State of Qatar, close all land, sea and airports, prevent crossing into Saudi territories, airspace and territorial waters [...] for reasons relating to Saudi national security. [...] Saudi citizens are prohibited from traveling to Qatar, residing in or passing through it, while Saudi residents and visitors have to hurry leaving Qatari territories within 14 days. The decision, for security reasons, unfortunately prevents Qatari citizens' entry to or transit through the Kingdom of Saudi Arabia and those Qatari residents and visitors have to leave Saudi territories within 14 days." [Emphasis added]

620. In sum, Saudi Arabia (and several other States, namely Egypt, the UAE and Bahrain [also known as the "Quartet"]) adopted the following Measures⁸²⁷:

Sever diplomatic and consular relations with Qatar;

Close all land, sea and air communications to and from Qatar;

Prevent crossings from Qatar into its territory, airspace and waters;

Prohibit Saudi citizens from traveling to or through Qatar;

Require Saudi citizens resident in Qatar to leave within 14 days; and

Order Qatari citizens visiting or residing in Saudi territory to leave within 14 days.

621. In compliance with the Royal Decree:

The Saudi Customs Directorate closed the Salwa Crossing⁸²⁸;

The Saudi Ports Authority issued a circular instructing the directors of ports in Saudi Arabia "not to receive any ship flying the Qatari flag, or owned by Qatari persons or companies, and not to unload any goods of Qatari origin in Saudi ports"⁸²⁹;

The General Authority of Civil Aviation in Saudi Arabia revoked Qatar Airways' licence to operate in the Kingdom and issued a notice that all flights registered in Qatar were no longer authorized to land at Saudi airports or to overfly Saudi Arabian airspace⁸³⁰.

⁸²⁷ Doc. R-122. See also Doc. C-71; CER-2, Ulrichsen, paras. 4.1-4.4; RER-3, Collis, para. 24; HT, Day 6, p. 1387 (Dr. Harris); RPHB, para. 93. ↩
⁸²⁸ Doc. KU-5; Doc. C-81; Doc. C-82; CER-2, Ulrichsen, para. 4.5; RER-3, Collis, fn. 2; R I, para. 415.4. ↩
⁸²⁹ Doc. C-80; CER-2, Ulrichsen, para. 4.2; RER-3, Collis, para. 24. ↩
⁸³⁰ Doc. C-78; Doc. C-79; Doc. R-179; CER-2, Ulrichsen, para. 4.3; RER-3, Collis, para. 24. ↩

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C. Mediation and negotiations

622. After the adoption of the Measures, a period of diplomatic mediation and negotiations, spearheaded by Kuwait, the United States and the European Union, ensued⁸³¹.

623. On 23 June 2017 Saudi Arabia and the other Quartet members delivered a list of 13 practical demands, requiring Qatar to agree to all demands within 10 days and thereafter to submit itself to monthly and annual monitoring⁸³². Qatar, however, rejected this list of demands, arguing that they would amount to a violation of its sovereignty⁸³³.

624. On 19 July 2017 Saudi Arabia transformed the 13 demands into six "principles", which required Qatar, inter alia,

to commit fully to the Riyadh Agreements,

to combat extremism and terrorism,

to refrain from inciting hatred and violence, and

to refrain from interfering in the internal affairs of other Arab States;

Qatar, however, once again declined to submit to the Kingdom's demands⁸³⁴.

D. The Al-Ula Declaration

625. More than three years later, on 5 January 2021, the GCC States (including Qatar) signed the Al-Ula Declaration, putting an end to the Measures and restoring their ties⁸³⁵. Pursuant to this Declaration, the signatory States undertook to "stand firm against any confrontation that could undermine the national or regional security of any of [them]" and to be "united against any direct or indirect interference in the internal affairs of any of [them]"⁸³⁶. Furthermore, the Al-Ula Declaration provides that the parties⁸³⁷:

"[...] to the present Declaration [are] committed to bringing an end to any claims, complaints, measures, protests, objections or disputes of any sort against any other State party to the Declaration, including by dropping, withdrawing or rescinding them, and to stopping implementation of the measures announced on 10 Ramadan A.H. 1438 (5 June 2017) [i.e., the Measures]." [Emphasis added]

⁸³¹ Doc. KU-100, p. 1; Doc. KU-96; RER-3, Collis, paras. 58, 111. ↩
⁸³² Doc. KU-72; Doc. KU-96; Doc. SC-13; Doc. C-159; CER-2, Ulrichsen, para. 4.81; RER-3, Collis, para. 57. ↩
⁸³³ Doc. KU-100, p. 2; CER-2, Ulrichsen, paras. 4.84, 4.86. ↩
⁸³⁴ Doc. C-160; Doc. KU-100; CER-2, Ulrichsen, para. 4.84; RER-3, Collis, para. 58. ↩
⁸³⁵ Doc. RLA-79/KU-101, p. 7. See also Doc. C-206; CER-2, Ulrichsen, para. 4.87; RER-3, Collis, paras. 110-112. The Al-Ula Declaration was also signed by Egypt. ↩
⁸³⁶ Doc. RLA-79/KU-101, p. 7. ↩
⁸³⁷ Doc. RLA-79/KU-101, p. 7. ↩

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626. Thereafter, the Qatar-Saudi land, air and sea borders reopened and trade and commercial relations between both States were restored⁸³⁸.

3.2 THE MEASURES ARE PERMISSIBLE UNDER ART. 10(2)(B) OF THE OIC AGREEMENT

627. The Kingdom's main defence is that it adopted the Measures for reasons of national security and that, consequently, the Measures were preventive and are permissible under Art. 10(2)(b) of the OIC Agreement. The Kingdom explains that the Measures against Qatar, taken together with Bahrain, the UAE and Egypt, were justified for a number of reasons:

Qatar was threatening the stability of the region by supporting terrorists and extremist groups such as the Muslim Brotherhood, Al-Qaeda, Al Nusrah and Daesh⁸³⁹;

Qatar's actions resulted in a very real and serious security threat to Saudi Arabia⁸⁴⁰; the Kingdom was concerned that Qatar's sponsorship of violent groups would permit attacks on Saudi soil and against Saudi interests⁸⁴¹;

Qatar had repeatedly violated the Riyadh Agreements⁸⁴² and in 2017 had even attempted to terminate them⁸⁴³; and

Qatar was funding terrorist organizations through ransom payments⁸⁴⁴.

628. Saudi Arabia adds that the Tribunal should afford it a wide (albeit not absolute) margin of appreciation to assess and respond to matters of national security, and it should be very cautious to second-guess the State's decision-making process⁸⁴⁵.

629. Claimants, on their side, stress that the OIC Agreement does not contain an express exception for national security and even less a "self-judging" clause⁸⁴⁶. In these circumstances, although States can be afforded "some latitude" for their decisions, this deference is far from unfettered and does not preclude a tribunal from engaging in its own independent review of the State's conduct⁸⁴⁷.

630. On this preliminary question, the Tribunal tends to agree with Claimants: States are owed a degree of deference when assessing their own security interests, given their

⁸³⁸ Doc. RLA-79/KU-101, p. 7; CER-2, Ulrichsen, para. 4.90; RER-3, Collis, paras. 117-130. See also RPHB, para. 81. ↩
⁸³⁹ R II, paras. 182-184. ↩
⁸⁴⁰ R II, para. 186. ↩
⁸⁴¹ R II, para. 187. ↩
⁸⁴² R I, paras. 142-143, 151. ↩
⁸⁴³ R I, paras. 175-176. ↩
⁸⁴⁴ R I, para. 166. ↩
⁸⁴⁵ R I, paras. 385.3, 414; R II, para. 177. ↩
⁸⁴⁶ C II, para. 280. ↩
⁸⁴⁷ C II, para. 282. ↩

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proximity to the situation, expertise and competence⁸⁴⁸ - but that deference cannot be unlimited. In the words of the Deutsche Telekom tribunal⁸⁴⁹:

"To assess the necessity of the measures to safeguard the state's essential security interests, the Tribunal will thus determine whether the measure was principally targeted to protect the essential security interests at stake and was objectively required in order to achieve that protection, taking into account whether the state had reasonable alternatives, less in conflict or more compliant with its international obligations."

631. In the present case, the OIC Agreement does not contain a general clause that expressly excludes from its scope measures adopted for national security reasons; but under Art. 10(2)(b) certain measures adopted by the State are exempted from the prohibition of expropriation⁸⁵⁰:

"It will, however, be permissible to [...] [a]dopt preventive measures issued in accordance with an order from a competent legal authority and the execution measures of the decision given by a competent judicial authority."

632. The Kingdom says that if the Tribunal finds that the Measures were justified to safeguard its national security interests, the necessary consequence is that its conduct falls within the scope of the exception in Art. 10(2)(b) of the OIC Agreement, and that no expropriation in breach of Art. 10(1) can have occurred⁸⁵¹. Claimants contradict this assertion: they say that the Kingdom cannot rely on Art. 10(2)(b) to justify its conduct, because the Measures do not qualify as "preventive" and there is no evidence that they were "issued in accordance with an order from a competent legal authority"⁸⁵².

633. In accordance with Art. 10(2)(b), "it will be permissible" for a host State to:

"Adopt preventive measures" (A.),

"issued in accordance with an order from a competent legal authority" (B.).

634. The Tribunal will now turn to the analysis of these requirements; if they are met, the Measures will be permissible, with the consequence that no expropriation can be found to have occurred.

A. The Measures were preventive

635. The OIC Agreement does not contain a definition of the concept "preventive measures", but the ordinary meaning of the word "preventive" refers to an action undertaken to stop something before it happens⁸⁵³ or to forestall an anticipated

⁸⁴⁸ Doc. CLA-249, Deutsche Telekom AG v. Republic of India, PCA Case No. 2014-10, Interim Award ["Deutsche Telekom"], para. 238. ↩
⁸⁴⁹ Doc. CLA-249, Deutsche Telekom, para. 239. ↩
⁸⁵⁰ Doc. CLA-10. Claimants recognise this exception (see C II, para. 320). ↩
⁸⁵¹ R I, para. 408; R II, para. 371. ↩
⁸⁵² C II, paras. 323-324. ↩
⁸⁵³ Cambridge Dictionary, available at: https://dictionary.cambridge.org/dictionary/english/preventive. Black's Law Dictionary (9th Edition) defines the verb "to prevent" as "to hinder or impede" something from occurring. ↩

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hostile act⁸⁵⁴. If follows that for a measure to be deemed permissible under the OIC Agreement, it must have been taken to avert or deter something that is perceived as a threat.

636. In Al-Warraq, the tribunal did not define the concept of "preventive" measure but decided to examine whether the measures it was dealing with had "factual and legal foundations"⁸⁵⁵ (and ultimately concluded that the measures were indeed permissible under Art. 10(2)(b)⁸⁵⁶). The Tribunal agrees with this approach, and in the following sub-sections will conclude that the stated purpose of the Measures was to further the Kingdom's national security (a.), and that it must defer to the Kingdom's judgement on how to best protect its national security (b.).

a. The stated motivation of the Measures was the protection of Saudi national security

637. What was the stated motivation of Saudi Arabia when it decided to close its borders with and to impose a blockade on Qatar, expelling Qatari citizens from the Kingdom and recalling Saudi citizens in Qatar - by any understanding a draconian sanction against a neighbouring State with whom the Kingdom shared and still shares significant cultural and economic ties?

638. The motivation can be understood from the Official Statement issued by the Saudi Ministry of Foreign Affairs. The precise wording of the Official Statement is as follows⁸⁵⁷:

"[...] the Government of Saudi Arabia, in exercising its sovereign rights guaranteed by the international law and protecting its national security from the dangers of terrorism and extremism has decided to sever diplomatic and consular relations with the State of Qatar, close all land, sea and air ports, prevent crossing into Saudi territories, airspace and territorial waters [...].

The Kingdom of Saudi Arabia has taken this decisive decision as a result of grave violations committed by the authorities in Doha over the past years in secret and public aiming at dividing internal Saudi ranks, instigating against the State, infringing on its sovereignty, adopting various terrorist and sectarian groups aimed at destabilizing the region including the Muslim Brotherhood Group, Daesh (ISIS) and Al-Qaeda, promoting the ethics and plans of these groups through its media permanently, supporting the activities of Iranian-backed terrorist groups in the governorate of Qatif of the Kingdom of Saudi Arabia and the Kingdom of Bahrain, financing, adopting and sheltering extremists who seek to undermine the stability and unity of the homeland at home and abroad, and enticing the media that seek to fuel the strife internally; and it was clear to the Kingdom of Saudi Arabia the support and backing from the authorities in Doha for coup [sic] Al-Houthi militias even after the announcement of the Coalition to Support the Legitimacy in Yemen. [...]

Since 1995, the Kingdom of Saudi Arabia and its brothers have made strenuous and continued efforts to urge the authorities in Doha to abide by its

⁸⁵⁴ Merriam-Webster Dictionary, available at: https://www.merriam-webster.com/dictionary/preventive. ↩
⁸⁵⁵ Doc. CLA-32, Al-Warraq, paras. 528 et seq. ↩
⁸⁵⁶ Doc. CLA-32, Al-Warraq, para. 539. ↩
⁸⁵⁷ Doc. R-122; Doc. C-71. ↩

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commitments and agreements, yet, they have repeatedly violated their international obligations and the agreements they signed under the umbrella of the Gulf Cooperation Council (GCC) for Arab States to cease the hostilities against the Kingdom and stand against terrorist groups and activities of which the latest one was their failure to implement the Riyadh Agreement." [Emphasis added]

639. The Official Statement explains that the motivation underlying the Measures is a perceived threat to Saudi Arabia's national security, caused by alleged "grave violations committed" by Qatar, namely:

Its failure to cease "hostilities" against the Kingdom and to "stand against terrorist groups and activities";

Its repeated violation of its "international obligations and the agreements signed under the GCC"; and

More recently, its "failure to implement the Riyadh Agreement".

Preceding events

640. The Measures were not taken in a vacuum: the Riyadh Agreements, whose alleged breach was one of the reasons underlying the Measures, had been executed in the aftermath of the "Arab Spring", in a context of geopolitical tensions within the member States of the GCC⁸⁵⁸. There is ample evidence showing that, from the very beginning, Saudi Arabia was never entirely satisfied with Qatar's implementation of the Riyadh Agreements; in fact:

In March 2014 Saudi Arabia recalled its ambassador from Qatar due to Qatar's alleged refusal to abide by the terms of the first Riyadh Agreement and to agree on a monitoring mechanism⁸⁵⁹;

In August 2014 the Saudi Foreign Minister publicly expressed its concern with alleged terrorist support by Qatar⁸⁶⁰.

641. In this context of dissatisfaction, the GCC countries tried to find an agreed solution by signing in 2014 the Mechanism Implementing the Riyadh Agreement and the Supplementary Riyadh Agreement. Both these documents contemplate that GCC countries would monitor complaints and potential violations of the first Riyadh Agreement and would have the right to take "any appropriate action to protect their

⁸⁵⁸ See section VI.2.3.1 supra. ↩
⁸⁵⁹ Doc. KU-58, p. 4; Doc. KU-59, p. 1.; Doc. SC-44; Doc. RLA-212, para. 2.21; CER-2, Ulrichsen, para. 4.55; RER-3, Collis, para. 88. ↩
⁸⁶⁰ Doc. R-81, pp. 2-3. See also Doc. RLA-212, para. 2.27. ↩

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security and stability"⁸⁶¹. More importantly, in the Supplementary Riyadh Agreement, Qatar and Saudi Arabia expressly "tasked" their⁸⁶²:

"[...] intelligence chiefs to follow up on the implementation of the results of this supplementary agreement and to report regularly to the leaders, in order to take the measures they deem necessary to protect the security and stability of their countries",

a statement which shows that there was a constant monitoring, at the highest secret intelligence level, of the implementation of the commitments undertaken in the Riyadh Agreements.

642. Furthermore, in February 2017 – i.e., four months prior to the adoption of the Measures - Qatar expressed its lack of satisfaction with the Riyadh Agreement and even called for its termination⁸⁶³.

643. Summing up, the historic background confirms that Qatar's foreign policy, and the alleged terrorist risks that it entailed for the Kingdom, were the very reasons which led to the adoption of the Measures.

Posterior events

644. After the issuance of the Measures, on 12 July 2017, Saudi Arabia, together with the other members of the Quartet, issued a list of 13 practical demands from Qatar⁸⁶⁴, which included inter multa alia:

Curbing diplomatic ties with Iran;

Severing all ties to "terrorist organizations" and handing over terrorist figures;

Shutting down the Qatari news site Al-Jazeera and other news outlets;

Terminating all Turkish military presence in Qatar; and

Ceasing contact with the political opposition in Saudi Arabia and other Quartet countries.

645. The Kingdom went on to refine these demands into six principles, which comprised commitments to combat extremism and terrorism, to prevent financing and safe havens for such groups and to suspend all acts of incitement⁸⁶⁵.

646. Finally, in 2018, the members of the Quartet made a submission to the International Court of Justice, in the context of an appeal against the International Civil Aviation

⁸⁶¹ Doc. R-73. See also Doc. R-90, p. 2: "it has been decided that the Riyadh Agreement, and its executive mechanism, and the components of this supplementary agreement, requires the full commitment to its implementation. The leaders have tasked the intelligence chiefs to follow up on the implementation of the results of this supplementary agreement and to report regularly to the leaders, in order to take the measures they deem necessary to protect the security and stability of their countries". ↩
⁸⁶² Doc. R-90, p. 2. ↩
⁸⁶³ Doc. R-116. See also Doc. RLA-212, para. 2.47. ↩
⁸⁶⁴ Doc. KU-72; Doc. KU-96; Doc. SC-13; Doc. C-159; CER-2, Ulrichsen, para. 4.81; RER-3, Collis, para. 57. ↩
⁸⁶⁵ Doc. C-160; Doc. KU-100; CER-2, Ulrichsen, para. 4.84; RER-3, Collis, para. 58. ↩

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Organization's decision in respect of proceedings commenced by Qatar⁸⁶⁶. In this submission, the Quartet explained that the Measures were lawful countermeasures adopted to induce Qatar to cease its international wrongful acts – namely its persistent breaches of the Riyadh Agreements⁸⁶⁷.

Claimants' alternative interpretation

647. Claimants propose an alternative reason for the Measures: based on the assessment of Dr. Ulrichsen, their policy expert, Claimants submit that the Measures "related to Saudi regional and geopolitical interests during Donald Trump's unconventional and highly transactional presidency rather than to any national security considerations"⁸⁶⁸ and were an "audacious attempt to curry favor with President Trump"⁸⁶⁹. Dr. Ulrichsen – an academic at the James Baker Institute for Public Policy at Rice University in Houston, Texas, who was an associate fellow with the Middle East North Africa programme at Chatham House for almost 10 years⁸⁷⁰ – presented an expert report⁸⁷¹ and was examined during the Hearing⁸⁷².

648. Although Dr. Ulrichsen has forcefully defended his position, he has failed to marshal sufficiently convincing evidence. His conclusions are belied by the long history of tensions between Qatar and Saudi Arabia, resulting from Qatar's assertion of an independent foreign policy and Saudi Arabia's concern that such foreign policy was furthering the risk of attacks by extremist groups supported by Iran. The first Riyadh Agreement already sought to assuage these tensions - a treaty executed in 2013, well before the election of President Trump.

b. The Tribunal defers to the Kingdom's assessment of its own national security

649. Were the Kingdom's security concerns real and did the Kingdom adopt the Measures to counteract a perceived threat to its sovereign security?

650. Claimants criticise the Kingdom for not having produced "political recommendations by governmental committees, ministry assessments, contemporaneous government commentary and witness testimony", proving the assertion that the Measures were a responsive reaction to a perceived security threat⁸⁷³. Claimants add that where measures are particularly severe, as in the present case, tribunals rightly expect to find witness testimony or other first-hand, contemporaneous documents evidencing the need for such draconian measures⁸⁷⁴.

651. The Tribunal agrees with Claimants that such evidence is lacking in the present case: the Kingdom has failed to offer any witness who can provide insight on the reasoning underlying the Measures; nor has it produced any contemporaneous

⁸⁶⁶ Doc. RLA-212. ↩
⁸⁶⁷ Doc. RLA-212, paras. 1.23-1.27. ↩
⁸⁶⁸ CER-2, Ulrichsen, para. 3.5. See also HT, Day 8, p. 1658, l. 14 to p. 1660, l. 11 and p. 1714, ll. 9-11. ↩
⁸⁶⁹ CER-2, Ulrichsen, para. 4.71. ↩
⁸⁷⁰ HT, Day 8, p. 1656, ll. 4-8 (Dr. Ulrichsen). ↩
⁸⁷¹ CER-2. ↩
⁸⁷² HT, Day 8, pp. 1654-1798. ↩
⁸⁷³ C II, para. 291. ↩
⁸⁷⁴ C II, para. 291. ↩

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internal document, report or memorandum, on which the political decision to implement the Measures was based.

652. The Kingdom, however, has produced the expert testimony of Ambassador Simon Paul Collis CMG, who between 2015 and 2020 was ambassador of the United Kingdom in Saudi Arabia and senior Arabist of the British government, and before that, ambassador to Qatar between 2005 and 2007⁸⁷⁵. Ambassador Collis presented an expert report⁸⁷⁶ and was examined at the Hearing⁸⁷⁷.

653. Ambassador Collis has convincingly explained that in a case like this, which affects "core national security matters", such as terrorism, military policy, external military bases, foreign relations, internal insurgency and regional political destabilization, the evidence used by the State, by its very nature, consists of secret intelligence, which normally cannot be made available to external parties (including arbitral tribunals). But even if such access were permitted, external parties would be incapable of assessing the relevance of the information⁸⁷⁸,

without insight into the process of collection,

without knowledge of the complex scenario planning done to identify future risks, and

without being capable of gauging the effects of different policy responses to the sovereign's security.

654. In Ambassador Collis' own words⁸⁷⁹:

"It is not possible to reach a meaningful conclusion about whether the measures were in fact justified without full access to national security archives."

655. The expert's conclusion is confirmed by two facts:

The Riyadh Agreements were stamped as "Top Secret" documents, and for many years were not publicly available⁸⁸⁰;

The Supplementary Riyadh Agreement finalized with an order to "intelligence chiefs to follow up on the implementation [...] and to report regularly to the leaders, in order to take the measures they deem necessary to protect the security and stability of their countries"⁸⁸¹, showing that each GCC country (including Qatar) entrusted compliance to the highest secret intelligence level.

⁸⁷⁵ RER-3, Collis, paras. 4-8; HT, Day 8, p. 1801, l. 19 to p. 1802, l. 16 (Amb. Collis). ↩
⁸⁷⁶ RER-3. ↩
⁸⁷⁷ HT, Day 8, pp. 1799-1918 (Amb. Collis). ↩
⁸⁷⁸ HT, Day 8, pp. 1810-1811 (Amb. Collis). ↩
⁸⁷⁹ RER-3, Collis, para. 22. ↩
⁸⁸⁰ Doc. KU-50; CER-2, Ulrichsen, para. 4.47. Both the Mechanism Implementing the Riyadh Agreement and the Supplementary Riyadh Agreement are marked as "Top Secret" (Doc. R-73 and Doc. R-90). ↩
⁸⁸¹ Doc. R-90, p. 2. ↩

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656. There is a further basis for the Tribunal's conclusions: the Riyadh Agreements (which were signed by Qatar) granted the GCC countries broad latitude to take "the measures they deem necessary to protect the security and stability of their countries"⁸⁸². Saudi Arabia (and the other members of the Quartet) determined that the best means to protect its national security interests was to adopt the Measures and to impose a blockade on Qatar.

657. The Tribunal has already found that it owes a degree of deference to the Kingdom's own assessment of its security interests. The degree of deference is heightened in the present case because core security interests of a sovereign State are at stake, and the risk situation can only be evaluated with full knowledge of all information available to the State – and, in this case, full knowledge necessarily requires access to secret intelligence at the highest level, which no sovereign can be expected to release⁸⁸³.

***

658. Summing up, the Tribunal accepts that the Measures adopted by the Kingdom do indeed constitute "preventive measures" as required by Art. 10(2)(b) of the OIC Agreement.

659. Official statements made by the Kingdom consistently declared that the Measures were adopted as a reaction to Qatar's foreign policy and its alleged support for terrorist groups and organizations. Proven facts both before and after the adoption of the Measures show that the Kingdom sincerely believed its own official position. The Tribunal does not have access to all relevant information sources, which include secret intelligence at the highest level, but is prepared to defer to Saudi Arabia's judgement that the policies adopted by Qatar posed an imminent threat to the Kingdom's national security, that the Measures were "necessary to protect [its] national security interests" and that the Riyadh Agreements authorized their adoption.

B. The Measures were issued in accordance with an order from a competent legal authority

660. Art. 10(2)(b) further requires that the "preventive measures" be issued by "an order from a competent authority".

661. The Measures were formalized in a Royal Decree issued by His Majesty the King, which has not been published and remains secret⁸⁸⁴. The public was made aware of the existence and scope of the Measures through an Official Statement published by the Ministry of Foreign Affairs on 5 June 2017⁸⁸⁵.

⁸⁸² Doc. R-90, p. 2. See also Doc. R-73: "If any country of the GCC Countries failed to comply with this mechanism, the other GCC Countries shall have the right to take any appropriate action to protect their security and stability". ↩
⁸⁸³ RER-3, Collis, para. 103. ↩
⁸⁸⁴ RPHB, paras. 117-118. ↩
⁸⁸⁵ Doc. R-122. ↩

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662. The Tribunal posed the question whether this procedure for approving and giving publicity to a government decision was in conformity with Saudi law⁸⁸⁶.

663. The answer has been provided by Ambassador Collis.

664. Ambassador Collis has explained that the Kingdom is an absolute monarchy and that the King, as Head of State, has both executive and legislative powers, aided by the Council of Ministers and the Shura Council⁸⁸⁷. Laws can be issued as Royal Decrees, resolutions of the Council of Ministers and ministerial resolutions and circulars⁸⁸⁸. He added⁸⁸⁹:

"It is not unusual for instructions to government institutions to be based [on] orders [from the King] that are not formally published. This is more likely to be the case on sensitive issues such as national security matters.

While I do not have insight into the process followed on this occasion, from my own time as Ambassador in Saudi Arabia, I observe this was the normal practice of the Saudi government for significant foreign and security policy decisions, in common with other Gulf governments."

665. Examples of this practice were the 2015 military intervention in Yemen, announced in a joint statement by Saudi Arabia and other participating countries published by the Saudi Press Agency, without reference to an underlying Royal Decree⁸⁹⁰, and a 2018 decision to freeze new trade with Canada following a dispute over Canadian criticism regarding human rights⁸⁹¹.

666. Ambassador Collis summarized his position with these words⁸⁹²:

"So, in short, it appears to me that while Saudi Arabia's system of governance and its process for making and announcing and implementing lawful decisions differs significantly from that of say, my own country, the United Kingdom[,] [i]t does have a system of governance, it does have a process for lawful decision-making and as far as I can tell on this occasion it followed the process that it has."

667. In his testimony at the Hearing, Dr. Ulrichsen, Claimants' expert, confirmed that on other occasions the Kingdom had also not published Royal Decrees - and that the national security concerns might justify the confidentiality in the present case⁸⁹³.

668. Summing up, Ambassador Collis' explanation, which is not contradicted by other evidence in the file, supports the conclusion that the Measures were properly approved and announced in accordance with municipal law. Saudi Arabia being an absolute monarchy, the King is the competent legal authority to adopt any

⁸⁸⁶ HT, Day 8, pp. 1789-1792. ↩
⁸⁸⁷ HT, Day 8, p. 1814, l. 17 to p. 1815, l. 3 (Amb. Collis). ↩
⁸⁸⁸ HT, Day 8, p. 1815, ll. 3-6 (Amb. Collis). ↩
⁸⁸⁹ HT, Day 8, p. 1815, ll. 7-17 (Amb. Collis). ↩
⁸⁹⁰ HT, Day 8, p. 1815, ll.18-24 (Amb. Collis). ↩
⁸⁹¹ HT, Day 8, p. 1816, ll. 1-7 (Amb. Collis). ↩
⁸⁹² HT, Day 8, p. 1816, ll. 8-15 (Amb. Collis). ↩
⁸⁹³ HT, Day 8, p. 1658, ll. 3-9; p. 1691, ll. 7-24; p. 1790, ll. 1-22 (Dr. Ulrichsen). ↩

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legislative or executive measure. The Measures were formalized in a Royal Decree. The second requirement of Art. 10(2)(b) has thus also been complied with.

***

669. In conclusion, the Tribunal finds that Claimants' expropriation claim must be dismissed. Even assuming, arguendo, that the Measures had resulted in an expropriation of Claimants' investment, in violation of Art. 10(1) of the OIC Agreement, such expropriation would be "permissible" under Art. 10(2)(b), the Measures having been issued in accordance with an order from His Majesty the King – the competent authority in accordance with Saudi law – with the aim of averting a perceived threat to the Kingdom's national security.

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VI.3. THE FET, FPS AND PERMITS CLAIMS

670. Claimants submit that the Kingdom has failed to observe several other obligations under the OIC Agreement, namely⁸⁹⁴:

The obligation to provide fair and equitable treatment ["FET"], including the obligation not to impair the investment through discriminatory or arbitrary measures; since the OIC Agreement does not contain a specific FET provision, Claimants propose to import this protection via the OIC Agreement's Art. 8 most-favoured-nation clause [the "MFN" clause or provision] and the Saudi Arabia-Austria BIT⁸⁹⁵, which has a FET and non-impairment clause;

The obligation to provide full protection and security ["FPS"]; Art. 2 of the OIC Agreement grants protected investors "adequate protection and security"; to the extent that "adequate protection and security" is a lesser standard than FPS, Claimants propose that the FPS standard be imported again via the OIC Agreement's MFN clause and the Saudi Arabia-Austria BIT (which in its Art. 4(1) uses the expression "full protection and security"⁸⁹⁶); and

The obligation to grant required permits for entry, exit, and residence to the investor and his employees ["Permits"] and to provide the necessary facilities, under Art. 5 of the OIC Agreement.

671. The Kingdom, in turn, denies that it breached any of the provisions of the OIC Agreement and argues that the MFN clause does not permit the import of higher protection standards established in treaties signed between Saudi Arabia and third States⁸⁹⁷. In any event, the Measures were a legitimate response to a long-standing national security concern by the Kingdom⁸⁹⁸.

672. The Tribunal will briefly summarise the Parties' positions (1. and 2.), and then make its decision (3.).

1. CLAIMANTS' POSITION

1.1 RESPONDENT HAS BREACHED THE FET STANDARD AND ACTED ARBITRARILY AND DISCRIMINATORILY

673. Claimants argue that the MFN provision in Art. 8 of the OIC Agreement allows an OIC investor to import into the OIC Agreement the protections specified in a treaty between Saudi Arabia and a third State, provided that such treaty does not expressly exclude or restrict the economic sector to which the investment belongs⁸⁹⁹.

674. Claimants submit that they are entitled to the substantive protections contained in all investment treaties concluded by Saudi Arabia, including the Saudi Arabia-

⁸⁹⁴ C I, para. 239; Doc. H-1, slides 94-96; CPHB, para. 244(2). ↩
⁸⁹⁵ Doc. CLA-133. ↩
⁸⁹⁶ Doc. CLA-133. ↩
⁸⁹⁷ R I, sections V.B, V.C, V.D and V.E; R II, para. 384. ↩
⁸⁹⁸ R II, para. 385.3. ↩
⁸⁹⁹ C I, para. 318, referring to Doc. CLA-32, Al-Warraq, paras. 551-552; C II, paras. 352-355. ↩

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Austria BIT⁹⁰⁰ – a treaty that shares the same subject-matter as the OIC Agreement (i.e., the protection and promotion of foreign investment), with the consequence that the ejusdem generis rule is satisfied⁹⁰¹. Furthermore, the Saudi Arabia-Austria BIT does not exclude Claimants' economic sector (the pharmaceutical industry) from the scope of investment protection⁹⁰².

675. Claimants note that other cases decided under the OIC Agreement have confirmed this understanding⁹⁰³, and so have the works of leading commentators⁹⁰⁴. On the other hand, the cases on which Saudia Arabia relies (İçkale v. Turkmenistan and Sehil v. Turkmenistan) are inapposite, because they concern a treaty provision different from Art. 8 of the OIC Agreement⁹⁰⁵.

676. Claimants seek to import the following standards of treatment from the Saudi Arabia-Austria BIT⁹⁰⁶:

Art. 2(1), on the obligation to provide FET (A.); and

Art. 2(2), on the prohibition to impair by arbitrary or discriminatory measures the management, maintenance, use, enjoyment or disposal of investments (B.).

A. Breach of the FET standard

677. According to Claimants, the obligation to provide FET is generally composed by the host State's obligation⁹⁰⁷:

To respect investors' legitimate expectations,

To act transparently, consistently, non-arbitrarily, and not to engage in conduct that is grossly unfair, unjust, idiosyncratic, or discriminatory, and

To afford due process.

678. Claimants submit that Saudi Arabia's actions have violated the FET standard, for several reasons⁹⁰⁸:

The Measures were contrary to Claimants' legitimate expectations and violated the Kingdom's obligation to afford a stable, predictable framework; Saudi Arabia encouraged Claimants' investments and then repudiated the assurances it had given, by banning the importation of Claimants' products,

⁹⁰⁰ C I, para. 320; C II, para. 367. ↩
⁹⁰¹ C I, para. 321. ↩
⁹⁰² C I, para. 322. ↩
⁹⁰³ C I, paras. 318-319 and C II, paras. 352, 356-357, referring to Doc. CLA-32, Al-Warraq; Doc. CLA-51, Kontinental Conseil Ingénierie S.A.R.L. v. Gabon Republic, PCA Case No. 2015-25, Final Award; Doc. CLA-54, Navodaya Trading. ↩
⁹⁰⁴ C II, para. 355. ↩
⁹⁰⁵ C II, paras. 358-364. ↩
⁹⁰⁶ C I, para. 322, referring to Doc. CLA-133; Doc. H-1, slides 95-96; C II, paras. 352, 367. ↩
⁹⁰⁷ C I, para. 327; C II, paras. 368 et seq. ↩
⁹⁰⁸ C I, paras. 344 et seq.; C II, paras. 392 et seq. ↩

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holding hostage their inventory and property, and depriving them of the benefit of authorizations, approvals and contractual rights⁹⁰⁹;

The Measures were neither motivated by rational reasons nor fairly applied; they were shrouded in secrecy and based on "prejudice", for reasons other than those put forward by the decision-maker⁹¹⁰; the Measures were also not aimed at defending a public or national security interest (for the reasons detailed in section VI.2.1.2 supra);

Even if the Measures were rational (quod non), they were entirely disproportionate⁹¹¹; if the Kingdom's national security concerns were legitimate, it could have imposed targeted sanctions on particular terrorist organizations or specific groups⁹¹²; Saudi Arabia's national security defence is belied by the testimony of its own witnesses, who stated that the Kingdom could have granted an exemption for pharmaceutical products, and therefore could have adopted less intrusive measures that would have avoided the catastrophic consequences that befell Qatar Pharma⁹¹³;

The Measures came out of nowhere, with no advance notice, without any legislation or transparency as to their scope of implementation, leaving investors in a state of uncertainty as to how to defend themselves and preserve their investments⁹¹⁴;

The Measures indiscriminately destroyed the businesses of Qatari investors, including Claimants'; in fact, the Measures were intended to arbitrarily discriminate against enterprises of Qatari nationality⁹¹⁵;

The Kingdom took many arbitrary actions, including the sealing of the Riyadh Warehouse by the SFDA, the cancelation of Dr. Al Sulaiti's residency permit, or the imposition of taxes and penalties while there were no taxable activities⁹¹⁶;

Finally, Saudi Arabia failed to accord due process to Claimants; Claimants received no notice of:

o the border closure,

o the sealing of the Riyadh Warehouse, and

⁹⁰⁹ C I, paras. 346-362; C II, paras. 394-401. ↩
⁹¹⁰ C I, paras. 344, 363-366. ↩
⁹¹¹ C I, paras. 371-373, referring to the three-pronged test on proportionality identified in Doc. CLA-155, PL Holdings S.à.r.l. v. Republic of Poland, SCC Case No. V 2014/163, Partial Award, para. 355 (i.e., "a measure must (a) be one that is suitable by nature for achieving a legitimate public purpose, (b) be necessary for achieving that purpose in that no less burdensome measure would suffice, and (c) not be excessive in that its advantages are outweighed by its disadvantages."); C II, paras. 412-417; CPHB, paras. 130-140. ↩
⁹¹² C II, paras. 416-417. ↩
⁹¹³ CPHB, paras. 109, 134. ↩
⁹¹⁴ C II, paras. 407-409. ↩
⁹¹⁵ C I, paras. 344, 367. ↩
⁹¹⁶ C I, paras. 368-370; C II, para. 406. ↩

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o the decision to cancel Dr. Al Sulaiti's residency permit;

Claimants were also not given any direction on how to deal with the border closure or how to preserve their investments⁹¹⁷; there was no justification for any of the Measures, and thus no way for Claimants to understand their scope or legal basis⁹¹⁸; Claimants were in any case denied the possibility to challenge these measures before the Saudi courts⁹¹⁹.

B. Breach of the non-impairment clause

679. Claimants argue that under Art. 2(2) of the Saudi Arabia-Austria BIT, the Kingdom is prohibited from impairing foreign investments "in any way" by arbitrary or discriminatory measures⁹²⁰.

680. According to Claimants, there is an overlap between conduct that violates the non-impairment provision and the FET standard: the breach of one standard entails the breach of the other. Indeed, arbitrary conduct includes that which is not based on legal standards but rather on discretion, prejudice or personal preference; is grossly unfair, unjust or idiosyncratic; lacks in due process such that it offends judicial propriety; or is engaged in for reasons that are different from those put forward by the decision-maker. Discriminatory conduct, on the other hand, is found where similarly-situated persons are treated in a different manner without reasonable or justifiable grounds⁹²¹.

Arbitrariness

681. Claimants aver that Saudi Arabia's conduct was arbitrary and impaired Claimants' ability to manage, maintain, use, enjoy and dispose of their investment⁹²²:

The Kingdom implemented border closure and entry restrictions, purposefully targeting Qatari nationals for political reasons; this impeded Qatar Pharma from selling products to Saudi customers and prevented Dr. Al Sulaiti and his team from entering Saudi Arabia to properly manage the business⁹²³;

The Kingdom promoted "Anti-Sympathy Measures" with the goal of instilling hate against Qataris and cease any cooperation from Saudi citizens and institutions⁹²⁴;

The Kingdom sealed the Riyadh Warehouse and deprived Claimants of access to their facilities, inventory and operational documentation, without valid justification⁹²⁵; even assuming, arguendo, that the Warehouse had been

⁹¹⁷ C I, paras. 364, 374; C II, paras. 418-419. ↩
⁹¹⁸ C I, para. 374; C II, para. 419. ↩
⁹¹⁹ C I, paras. 375-377. ↩
⁹²⁰ C II, para. 426. ↩
⁹²¹ C I, paras. 380-381. ↩
⁹²² C I, paras. 382-383; C II, para. 423. ↩
⁹²³ C I, para. 382.1; C II, para. 432. ↩
⁹²⁴ C I, para. 382.2; C II, para. 433. ↩
⁹²⁵ C I, para. 382.3; C II, para. 434. ↩

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sealed for failure to store product at the required temperature, that failure would have been caused exclusively and directly by the Measures⁹²⁶; and

The Kingdom suspended Claimants' access to their bank accounts⁹²⁷.

Discrimination

682. The Measures were also blatantly discriminatory: they targeted all Qatari citizens and businesses solely and explicitly based on their nationality⁹²⁸.

683. Claimants deny that they need to identify a direct comparator from the same industry sector that has been treated differently; the cases on discrimination make it clear that discrimination can be based on a disparate treatment between different groups of people or entities⁹²⁹. But even if a direct comparator were needed, none of the other registered pharmaceutical companies operating in Saudi Arabia was a victim of the Measures, and all were treated more favourably than Claimants⁹³⁰.

684. In sum, the Kingdom has failed to observe the obligations it assumed with regard to Claimants' investments in violation of the Saudi Arabia-Austria BIT and Art. 8 of the OIC Agreement⁹³¹.

1.2 RESPONDENT HAS BREACHED THE FPS STANDARD

685. Claimants submit that the obligation to provide FPS imposes positive obligations on the host State to protect investments: it requires the host State "to take active measures" to protect the investment from any adverse effects, either by the State or private parties⁹³². This standard requires the State to exercise due diligence and vigilance; to defend itself, the State must show that it has taken all measures of precaution to protect the investments in its territory⁹³³. The obligation ensures not only physical security, but also legal and commercial protection⁹³⁴.

686. In Claimants' view, there is no meaningful distinction between "adequate" and "full" protection and security⁹³⁵; but even if there were, Claimants would be entitled to import the "full protection and security" standard from the Saudi Arabia-Austria BIT, by means of the MFN provision⁹³⁶.

687. According to Claimants, Saudi Arabia failed to guarantee the requisite physical, commercial and legal protection of Claimants' various assets within its territory, in contravention of the FPS provision of Art. 2⁹³⁷: