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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT
DISPUTES

Gavrilović and Gavrilović d.o.o.

v.

Republic of Croatia

(ICSID Case No. ARB/12/39)

PROCEDURAL ORDER NO 1

Michael C. Pryles, President of the Tribunal
Stanimir A. Alexandrov, Arbitrator
Matthias Scherer, Arbitrator

Secretary of the Tribunal
Lindsay Gastrell

August 21, 2013

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Introduction

The first session of the Arbitral Tribunal was held on August 8, 2013 by telephone conference.

Participating in the session were:

Members of the Tribunal:

ICSID Secretariat:

Participating on behalf of the Claimants:

Participating on behalf of the Respondent:

An audio recording of the session was made and deposited in the archives of ICSID. The recording was subsequently distributed to the Members of the Tribunal and the parties.

Following the session, the Tribunal now issues the present order:

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Order

Pursuant to ICSID Arbitration Rules 19 and 20, this first Procedural Order sets out the Procedural Rules that govern this arbitration. The procedural calendar is attached as Annex A.

1. Applicable Arbitration Rules
Convention Article 44

1.1. These proceedings are conducted in accordance with the ICSID Arbitration Rules in force as of April 10, 2006.

2. Constitution of the Tribunal and Tribunal Members’ Declarations
Arbitration Rule 6

2.1. The Tribunal was constituted on June 26, 2013 in accordance with the ICSID Convention and the ICSID Arbitration Rules. The parties confirmed that the Tribunal was properly constituted and that no party has any objection to the appointment of any Member of the Tribunal.

2.2. The Members of the Tribunal timely submitted their signed declarations in accordance with ICSID Arbitration Rule 6(2). Copies of these declarations were distributed to the parties by the ICSID Secretariat on February 11, 2013, February 14, 2013 and June 24, 2013.

3. Fees and Expenses of Tribunal Members
Convention Article 60; Administrative and Financial Regulation 14; ICSID Schedule of Fees

3.1. The fees and expenses of each Tribunal Member shall be determined and paid in accordance with the ICSID Schedule of Fees and the Memorandum on Fees and Expenses of ICSID Arbitrators in force at the time the fees and expenses are incurred.

3.2. Under the current Schedule of Fees, each Tribunal Member receives:

3.2.1. US$3,000 for each day of meetings or each eight hours of other work performed in connection with the proceedings or pro rata; and

3.2.2. subsistence allowances, reimbursement of travel, and other expenses pursuant to ICSID Administrative and Financial Regulation 14.

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3.3. Each Tribunal Member shall submit his claims for fees and expenses to the ICSID Secretariat on a quarterly basis.

3.4. Non-refundable expenses incurred in connection with a hearing as a result of a postponement or cancellation of the hearing shall be reimbursed.

4. Presence and Quorum
Arbitration Rules 14(2) and 20(1)(a)

4.1. The presence of two Members of the Tribunal constitutes a quorum for its sittings, including by any appropriate means of communication.

5. Appointment of the Assistant to the President of the Tribunal
Convention Article 44

5.1. The President considers that it would greatly assist the overall cost and time efficiency of the proceedings if the President had an assistant. The President has proposed, with the approval of the other Members of the Tribunal, that Albert Dinelli of Owen Dixon Chambers West be appointed as assistant to the President. Albert Dinelli’s curriculum vitae has been distributed to the parties on July 16, 2013.

5.2. The President has explained that the assistant will undertake only such specific tasks as are assigned to him by the President such as the marshalling of evidence, the summary of witnesses’ evidence, or research of specific issues of law. The assistant will be subject to the same confidentiality obligations as the Members of the Tribunal and has provided a letter dated August 13, 2013 containing a confidentiality undertaking to that effect.

5.3. The parties approve the appointment of Albert Dinelli as assistant to the President of the Tribunal. It is agreed that he will receive US$250 for each hour of work performed in connection with the case or pro rata. He will also receive subsistence allowances and be reimbursed for his travel and other expenses in the limits prescribed by Administrative and Financial Regulation 14.

5.4. The assistant to the President shall be copied on all communications with the Tribunal. Dr. Dinelli’s contact details are:

Albert Dinelli
List A Barristers
Owen Dixon Chambers West
205 William Street
Melbourne 3000 DX 90

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Australia
Tel: +61 3 9225 6909
Fax: +61 3 9225 8395
Email: [email protected]

6. Decisions and Procedural Rulings of the Tribunal
Convention Article 48(1); Arbitration Rules 16, 19 and 20

6.1. Decisions of the Tribunal shall be taken by a majority of the Members of the Tribunal.

6.2. ICSID Arbitration Rule 16(2) applies to decisions taken by correspondence except that where the matter is urgent, the President may issue procedural decisions without consulting the other Members, subject to possible reconsideration of such decision by the full Tribunal.

6.3. The President is authorized to issue Procedural Orders on behalf of the Tribunal.

6.4. The Tribunal’s rulings on procedural matters may be communicated to the parties by the Tribunal Secretary in the form of a letter or email.

7. Delegation of Power to Fix Time Limits
Arbitration Rule 26(1)

7.1. The President has the power to fix and extend time limits for the completion of the various steps in the proceeding.

7.2. In exercising this power, the President shall consult with the other Members of the Tribunal. If the matter is urgent, the President may fix or extend time limits without consulting the other Members, subject to possible reconsideration of such decision by the full Tribunal.

8. Secretary of the Tribunal
Administrative and Financial Regulation 25

8.1. The Tribunal Secretary is Lindsay Gastrell, Legal Counsel, ICSID, or such other person as ICSID may notify the Tribunal and the parties from time to time.

8.2. To send copies of communications by email, mail, and courier/parcel deliveries to the ICSID Secretariat, the contact details are:

Lindsay Gastrell

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ICSID
MSN J2-200
1818 H Street, N.W.
Washington, D.C. 20433
USA
Tel: + 1 (202) 458-0419
Fax: + 1 (202) 522-2615
Email: [email protected]
Paralegal email: [email protected]

8.3. For local messenger deliveries, the contact details are:

Lindsay Gastrell
701 18^th Street, N.W. (“J Building”)
2^nd Floor
Washington, D.C. 20006
Tel.: + 1 (202) 458-0419

9. Representation of the Parties
Arbitration Rule 18

9.1. Each party shall be represented by its respective counsel listed below and may designate additional agents, counsel, or advocates by notifying the Tribunal and the Tribunal Secretary promptly of such designation.

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1010 Vienna, Austria
Tel: +43 1 24 250 571
Fax: +43 1 24 250 600
Email:
[email protected]
[email protected]
[email protected]

Zvonimir Buterin
Valentina Kučić
Jelena Lučić-Nothig
Buterin & Posavec
Draškovićeva 82
10000 Zagreb, Croatia
Tel: +385 1 5502 660
Fax: +385 1 5502 661
Email:
[email protected]
[email protected]
[email protected]

10. Apportionment of Costs and Advance Payments to ICSID
Convention Article 61(2); Administrative and Financial Regulation 14; Arbitration Rule 28

10.1. The parties shall defray the direct costs of the proceeding in equal parts, without prejudice to the final decision of the Tribunal as to the allocation of costs.

10.2. By letter of July 2, 2013, ICSID requested that each party pay US$150,000 to defray the initial costs of the proceeding. ICSID received payment from the Claimants on July 16, 2013 and from the Respondent on July 31, 2013.

10.3. ICSID shall request further advances as needed. Such requests shall be accompanied by an interim statement of account providing details of the direct costs of the proceeding, including the total fees and expenses of all arbitrators. At the end of the case, the financial statement will include a breakdown of each arbitrator’s fees and expenses.

11. Place of Proceeding
Convention Articles 62 and 63; Administrative and Financial Regulation 26; Arbitration Rule 13(3)

11.1. Washington, D.C. shall be the place of the proceeding.

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11.2. The Tribunal may hold hearings at any other place that it considers appropriate if the parties so agree.

11.3. The Tribunal may deliberate at any place it considers convenient.

12. Procedural Language, Translation and Interpretation
Administrative and Financial Regulation 30(3) and (4); Arbitration Rules 20(1)(b) and 22

12.1. English is the procedural language of the arbitration.

12.2. Documents filed in any other language must be accompanied by a translation into English.

12.3. If the document is lengthy and relevant only in part, it is sufficient if only the relevant parts are translated, provided that the Tribunal may require a fuller or a complete translation at the request of any party or on its own initiative.

12.4. Translations need not be certified unless there is a dispute as to the content of a translation provided and the party disputing the translation specifically requests a certified version.

12.5. Documents exchanged between the parties in a language other than English under §16 below (Production of Documents) need not be translated.

12.6. The testimony of a witness called for examination during the hearing who prefers to give evidence other than in the English language shall be interpreted. It is foreseeable that both parties will require interpretation between English and Croatian. The parties agree to defer the determination of whether interpretation should be simultaneous or consecutive to a later stage, but no later than at the pre-hearing organizational meeting (see §211 below).

12.7. The parties will notify the Tribunal, as soon as possible, and no later than at the pre-hearing organizational meeting (see §211 below), which witnesses or experts require interpretation.

12.8. The costs of the interpreter(s) will be paid from the advance payments made by the parties, without prejudice to the decision of the Tribunal as to which party shall ultimately bear those costs.

13. Routing of Communications
Administrative and Financial Regulation 24

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13.1. Written communications in the case shall be transmitted by email or other electronic means to the parties, the Tribunal Secretary, and the Tribunal.

13.2. Electronic versions of communications ordered by the Tribunal to be filed simultaneously shall be transmitted to the Tribunal Secretary only, who shall send them to the opposing party and the Tribunal.

13.3. The Tribunal Secretary shall not be copied on direct communications between the parties when such communications are not intended to be transmitted to the Tribunal.

14. Number of Copies and Method of Filing of Parties’ Pleadings
Administrative and Financial Regulation 30; Arbitration Rules 20(1)(d) and 23

14.1. By the relevant filing date, the parties shall submit by email to the Tribunal Secretary, the opposing party, and the Tribunal an electronic version of the pleading with witness statements, expert reports and a list of documents,¹ and upload the pleading with the supporting documentation to the FTP server created for this case.

14.1.1. courier to the Tribunal Secretary by the following business day:

14.1.1.1. one unbound hard copy in A4/Letter format² of the entire submission, including signed originals of the pleading, witness statements, and expert reports, together with documents (but not including legal authorities);

14.1.1.2. one hard copy in A4 or A5 format of the entire submission including the pleading as well as the witness statements, expert reports, and documents (but not including legal authorities); and

14.1.1.3. two USB drives, with full copies of the entire submission, including the pleading as well as the witness statements, expert reports, documents, and legal authorities.

14.1.2. at the same time, courier to the opposing party at the addresses indicated at §9.1 above:

14.1.2.1. one minimum USB drive, with a full copy of the entire submission,

¹ Please note that the World Bank server does not accept emails larger than 10 MB. ↩

² The A4/Letter format is required for ICSID’s archiving. ↩

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including the pleading as well as the witness statements, expert reports, documents, and legal authorities.

14.1.1. at the same time, courier to Michael Pryles at the address indicated at §9.1 below:

14.1.1.1. one hard copy in A5 format of the submission including the pleading as well as the witness statements and expert reports (but not including exhibits or legal authorities); and

14.1.1.2. one USB drive with a full copy of the entire submission, including the pleading as well as the witness statements, expert reports, documents, and legal authorities.

14.1.2. at the same time, courier to Stanimir Alexandrov at the address indicated at §9.1 below:

14.1.2.1. one USB drive with a full copy of the entire submission, including the pleading as well as the witness statements, expert reports, documents, and legal authorities.

14.1.3. at the same time, courier to Matthias Scherer at the address indicated at §9.1 below:

14.1.3.1. one hard copy in A5 format of the submission including the pleading as well as the witness statements, expert reports, exhibits and legal authorities; and

14.1.3.2. one USB drive with a full copy of the entire submission, including the pleading as well as the witness statements, expert reports, documents and legal authorities.

14.1.4. at the same time, courier to Albert Dinelli at the address indicated at §5.4 above:

14.1.4.1. one USB drive with a full copy of the entire submission, including the pleading as well as the witness statements, expert reports, documents and legal authorities.

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14.2. The Tribunal Members’ mailing addresses are as follows:

14.3. Electronic versions of a pleading shall be text searchable (i.e., OCR PDF or Word).

14.4. Pleadings shall be accompanied by an index hyperlinked to the supporting documentation.

14.5. The official date of receipt of a pleading or communication shall be the day on which the electronic version is sent to the Tribunal Secretary.

14.6. A filing shall be deemed timely if sent by a party by midnight, Washington, D.C. time, on the relevant date.

15. Number and Sequence of Initial Pleadings
Arbitration Rules 20(1)(c), 20(1)(e), 29 and 31

15.1. Each pleading shall include all factual and legal arguments in support thereof. The schedule for initial pleadings shall be as follows:

15.1.1. Claimants shall file a Memorial on the Merits by December 16, 2013;

15.1.2. Respondent shall file a Counter-Memorial on the Merits and, if Respondent wishes to raise preliminary objections, a Memorial on the Preliminary Objections by June 16, 2014.

15.1.3. If the Respondent decides to file a Memorial on the Preliminary Objections, Respondent shall file at the same time it observations as to whether, and if so to what extent, the proceeding shall be bifurcated.

15.1.4. Claimants shall file any observations as to whether, and if so to what extent,

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the proceeding shall be bifurcated in response to Respondent’s observations in this regard by July 16, 2014.

15.1.5. The Tribunal then shall decide whether it will deal with Respondent’s preliminary objections as a preliminary question or join them to the merits of the dispute.

15.2. The schedule for subsequent pleadings shall be fixed by the Tribunal in consultation with the parties following the submission of the initial pleadings indicated in this section.

16. Production of Documents
Convention Article 43(a); Arbitration Rules 24 and 33-36

16.1. Articles 3 and 9 of the International Bar Association Rules on the Taking of Evidence in International Arbitration (2010) shall guide the Tribunal and the parties regarding document production in this case.

16.2. The schedule for document production shall be fixed by the Tribunal in consultation with the parties following the submission of the initial pleadings indicated in Section 15 above.

16.3. Within the time fixed by the Tribunal, each party may serve a request for production of documents on the other party. Every request for production of documents shall precisely identify each document, or category of documents, sought and establish its relevance. Such a request shall not be copied to the Tribunal or the Tribunal Secretary.

16.4. Each party shall either provide the other party with the documents in its possession, custody or control that are responsive to the other party’s request or state in writing its objections with reference to the objections listed in Article 9(2) of the IBA Rules (without a copy to the Tribunal or the Tribunal Secretary).

16.5. The requesting party shall file its comments in writing on any response or objection made to production with the Tribunal, with a copy to the other party (in both Word and PDF formats).

16.6. The Tribunal shall rule on objections as soon as conveniently possible.

16.7. A party shall produce those documents for which no objection is sustained by the Tribunal.

16.8. The request, responses or objections to the request, the reply to the responses or

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objections to the request, and the Tribunal’s decisions referred to in this Section shall be recorded in a joint schedule in the form below:

17. Submission of Documents
Convention Article 44; Administrative and Financial Regulation 30; Arbitration Rule 24

17.1. The Memorial and Counter-Memorial shall be accompanied by the documentary evidence relied upon by the parties. Further documentary evidence relied upon by the parties may be submitted in rebuttal with the Reply and Rejoinder.

17.2. The documents shall be submitted in the manner and form set forth in §14 above.

17.3. Neither party shall be permitted to submit additional or responsive documents after the filing of its respective last written submission, save under exceptional circumstances at the discretion of the Tribunal upon a reasoned written request followed by observations from the other party.

17.3.1. Should a party request leave to file additional or responsive documents, that party may not annex the documents that it seeks to file to its request.

17.3.2. If the Tribunal grants such an application for submission of an additional or responsive document, the Tribunal shall ensure that the other party is afforded sufficient opportunity to make its observations concerning such a document.

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17.4. The Tribunal may call upon the parties to produce documents or other evidence in accordance with ICSID Arbitration Rule 34(2).

17.5. The documents shall be submitted in the following form:

17.5.1. Exhibits shall be numbered consecutively throughout these proceedings.

17.5.2. The number of each Exhibit containing a document produced by Claimants shall be preceded by the letter “C”. The number for each Exhibit containing a document produced by Respondent shall be preceded by the letter “R”.

17.5.3. Each Exhibit shall have a divider with the Exhibit identification number on the tab.

17.5.4. A party may produce several documents relating to the same subject matter within one Exhibit, numbering each page of such Exhibit separately and consecutively.

17.5.5. Exhibits shall also be submitted in PDF format and start with the number “C-0001” and “R-0001,” respectively.

17.5.6. Copies of documentary evidence shall be assumed to be authentic unless specifically objected to by a party, in which case the Tribunal will determine whether authentication is necessary.

17.6. To avoid duplicating submissions, the parties shall file all documents only once by attaching them to their pleadings. Documents so filed need not be resubmitted with witness statements even if referred to in such statements.

17.7. Demonstrative exhibits (such as Power Point slides, charts, tabulations, etc.) may be used at any hearing, provided they contain no new evidence. Each party shall number its demonstrative exhibits consecutively, and indicate on each demonstrative exhibit the number of the document(s) from which it is derived. The party submitting such exhibits shall provide them in hard copy to the other party, the Tribunal Members, the Tribunal Secretary, the court reporter(s) and interpreter(s) at the hearing.

18. Submission of Legal Authorities
Arbitration Rule 24

18.1. The Memorial and Counter-Memorial shall be accompanied by the legal authorities relied upon by the parties. The parties may submit rebuttal legal authorities with the Reply and Rejoinder.

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18.2. The legal authorities shall be submitted in the manner and form set forth in §144 above and shall start with the number “CL-0001” and “RL-0001,” respectively.

19. Witness Statements and Expert Reports
Convention Article 43(a); Arbitration Rule 24

19.1. Witness statements and expert reports shall be filed together with the parties’ pleadings.

19.2. The Tribunal shall not admit any testimony that has not been filed with the written submissions, unless the Tribunal determines that exceptional circumstances exist.

19.3. Each witness statement and expert report shall be signed and dated by the witness.

20. Examination of Witnesses and Experts
Arbitration Rules 35 and 36

20.1. Each witness shall be available for examination at the hearing, subject to the provisions of this Order.

20.2. Each party shall notify the other party, with a copy to the Tribunal, which witnesses and experts of the opposing party it wishes to cross-examine at the hearing and which of its own witnesses and experts it wishes to examine at the hearing.

20.3. Shortly after the parties’ notifications, the Tribunal will indicate the witnesses or experts not called by the parties whom it wishes to question, if any. Should the Tribunal request the presence of a witness or expert who has not been called by the parties, such witness or expert may be examined in direct examination, followed by cross-examination, and subsequently by redirect examination. The Tribunal may ask questions at any time.

20.4. The procedure for examining witnesses and experts at the hearing shall be the following:

20.4.1. Before giving evidence, witnesses shall make the declaration in ICSID Arbitration Rule 35(2), and experts shall make the declaration in ICSID Arbitration Rule 35(3).

20.4.2. The witness statement of each witness and expert shall stand in lieu of direct examination, subject to the provisions below.

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20.4.3. The examination shall be limited to matters raised in the pleadings, witness statements, documents that have been produced (including those by order of the Tribunal), and/or oral evidence of the other party’s witnesses, to the extent the witness is competent to testify on these statements and materials.

20.4.4. Witnesses giving oral testimony may first be examined in direct examination for no longer than 15 minutes.

20.4.5. Experts giving oral evidence shall first give a summary of their report for no longer than 30 minutes, followed by a direct examination.

20.4.6. The direct examination of witnesses is followed by cross-examination, and subsequently by redirect examination.

20.4.7. The redirect examination shall be limited to matters raised in cross-examination.

20.5. Unless the parties and the Tribunal agree otherwise, witnesses shall not be allowed in the hearing room before giving their testimony and shall not be permitted to read the transcript before testifying. Parties and their representatives shall be allowed in the hearing room at any time. Experts shall be allowed in the hearing room at any time unless the Tribunal decides otherwise.

20.6. If a witness or expert fails to appear at the hearing without justification, the Tribunal may order the witness statement of such witness or report of such expert to be struck from the record, or may attach such weight as it thinks appropriate in the circumstances to the witness statement or expert report.

20.7. Witnesses and experts shall appear at the hearing in person; however, examination by video-conference may be permitted for justified reasons only at the discretion of the Tribunal.

20.8. The Tribunal shall determine the order in which the witnesses and experts will be called after consultation with the parties during the pre-hearing organizational meeting in §21 below.

21. Pre-Hearing Organizational Meetings
Arbitration Rule 13

21.1. A pre-hearing organizational meeting shall be held by telephone between the Tribunal, or its President, and the parties in order to resolve any outstanding procedural, administrative, and logistical matters in preparation for the hearing.

21.2. Pre-hearing organizational meetings shall be held 4 to 6 weeks before each hearing. The date of the pre-hearing organizational meeting shall be fixed at a

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later date.

22. Hearings
Arbitration Rules 20(1)(e) and 32

22.1. The oral procedure shall consist of a hearing for examination of witnesses and experts, if any, and for oral arguments.

22.2. The hearing shall be held at a place to be determined in accordance with §11 above.

22.3. The date of the hearing shall be determined at a later stage.

22.4. The Members of the Tribunal shall reserve at least one day after the hearing to determine the next steps and to hold deliberations.

22.5. The principle of equal time shall be observed with flexibility at the hearing.

22.6. The parties will inform the Tribunal during the pre-hearing organizational meeting whether they consent to hold all or part(s) of the hearing in public.

23. Records of Hearings and Sessions
Arbitration Rules 13 and 20(1)(g)

23.1. Sound recordings shall be made of all hearings and sessions. The sound recordings shall be provided to the parties and the Tribunal Members.

23.2. The Tribunal Secretary may prepare summary minutes of hearings and sessions upon advance request.

23.3. Verbatim transcript(s) in the procedural language(s) shall be made of any hearing and session other than sessions on procedural issues. Unless otherwise agreed by the parties or ordered by the Tribunal, the verbatim transcripts shall be available in real-time using LiveNote or similar software and electronic transcripts shall be provided to the parties and the Tribunal on a same-day basis.

23.4. The parties shall agree on any corrections to the transcripts within 15 days of the later of the dates of the receipt of the sound recordings and transcripts. The agreed corrections may be entered by the parties/court reporter in the transcripts (“revised transcripts”). In case of disagreement between the parties, the Tribunal shall decide upon such disagreement and any correction adopted by the Tribunal shall be entered by the parties/court reporter in the revised transcripts.

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24. Post-Hearing Memorials and Statements of Costs
Convention Article 44; Arbitration Rule 28(2)

24.1. At the conclusion of any hearing, the Tribunal shall decide whether the parties will file Post-Hearing Memorials and Reply Post-Hearing Memorials as well as when and in what form the parties shall file evidence regarding the quantification of the costs.

25. Drafting of Rulings
Arbitration Rules 19 and 48

25.1. The Tribunal endeavors to draft the required rulings within a reasonable period of time after the latest step taken in relation to the matter concerned, such as a hearing or submission.

25.2. The Tribunal will send regular updates to the parties regarding the status of the drafting of the ruling if it has not been issued within the following periods of time:

25.3. Either Party may request any additional update from the Tribunal as to the timing of a ruling.

26. Publication
Convention Article 48(5), Administrative and Financial Regulation 22, Arbitration Rule 48(4)

26.1. Claimants consent to the publication of rulings issued in the present proceeding,

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while Respondent does not consent at this time to publication.

26.2. The ICSID Secretariat may seek Respondent’s consent to publish rulings at a later stage in the proceeding and shall not publish any ruling without the consent of Respondent, unless it has been previously published by any other source, once the Award has been rendered.

26.3. The ICSID Secretariat shall promptly publish excerpts of the legal reasoning of the Tribunal’s award unless it is already in the public domain.

[signed]
Michael C. Pryles
President of the Tribunal
Date: 21 | 08 | 13

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Annex A – Procedural Calendar

The following procedural calendar shall apply with respect to the initial pleadings: