Summary

Source: icsid.worldbank.org

INTRODUCTION

1. Respondent submits its Rejoinder on Annulment, in response to Applicant's Reply on Annulment of 7 February 2025, in which Mr. Rand reiterates his assertions that the Tribunal, in rendering its Award of 29 June 2023, failed to state reasons with regard to its decision on quantum as well as that it committed a manifest excess of powers by refusing to accept jurisdiction over certain claims submitted by Claimants in the Arbitration.

2. Mr. Rand's request for partial annulment of the Award must be rejected in its entirety as unfounded since his latest submission does not contribute anything to the persuasiveness of Applicant's contentions.

3. As it was the case with Applicant's Memorial on Annulment, Mr. Rand takes the issue with the Tribunal's determination of facts, application of law and evaluation of evidence and attempts to present the alleged mistakes of the Tribunal as a failure to state reasons, flawed and contradictory reasoning and a manifest excess of powers.

4. An inherent flaw in Applicant's case is his refusal to recognize the difference between an appeal and the annulment under the ICSID Convention. The Committee cannot annul the Award simply because it disagrees with the Tribunal's appreciation of evidence and understanding of the law or because it deems the Tribunal's reasoning unpersuasive or even incorrect.

5. Annulment is not an appeal against the Award.1 Mr. Rand argues against this firmly established principle by labeling it as "an incorrect, excessively stringent standard of review" and asserts that the Committee can look into the substance of the Award and examine the Tribunal's understanding of facts, interpretation of law and appreciation of evidence in order to assess whether the Tribunal committed annullable errors.2 The argument is trite. There is a clear distinction between the Committee's ability to analyze the Tribunal's determination of facts, interpretation of law and valuation of evidence forming the overall context of the dispute, on the one hand, and its power to annul the Award because it disagrees with the substance of the Award and the outcome of the proceeding, on the other. The latter is not a part of the Committee's mandate. This is, for example, explained by the committee in Daimler v. Argentina:

"If this Committee were to undertake a careful and detailed analysis of the respective submissions of the parties before the Tribunal, as Daimler suggests, and annul the Award on the ground that its understanding of facts or interpretation of law or appreciation of evidence is different from that of the Tribunal, it will cross the line that separates annulment from appeal."3

6. The distinction overlooked by Applicant is evident, for instance, in his case on the alleged manifest excess of powers - the Committee might consider that the Tribunal erred in holding that Article 25(1) of the Convention contains an objective notion of "investment", separate from the one contained in Article 1 of the Canada-Serbia BIT. However, it cannot annul the Award on this basis as long as the Tribunal's jurisdictional decision is not untenable and unreasonable.4

7. Likewise, Applicant must not be allowed to attack the Tribunal's appreciation of evidence or its understanding of the facts and to portrait such an attack as a discussion about the adequacy of the Tribunal's reasoning. As it was held by the committee in Churchill v. Indonesia: "Questions relating to the evaluation of evidence are subject to the primacy of the arbitrators' judgment and are not reviewable by ad hoc committees under Article 52 of the ICSID Convention."5 Similarly, an ad hoc committee cannot examine whether or not the tribunal wrongly established the facts.6 Thus, Mr. Rand's claim that the Committee has mandate to examine the Tribunal's factual findings simply because reasoning in the Award "refers both to fact and law" is clearly meritless.7

8. The character of the annulment proceedings also prevents Applicant from introducing new arguments or from developing arguments that he has used during the Arbitration. As it will be seen below, this remains a constant feature of Mr. Rand's submissions. Applicant's response is that those new arguments are simply "comments on the Tribunal's reasoning in the Award."8 Although the precise meaning of such assertion is unclear, the fact remains that Applicant cannot rely on arguments that were not part of the record before the Tribunal.9

9. Applicant denies that the ICISID Convention favors finality of ICSID arbitral awards.10 However, this is not a matter of perspective or opinion but rather the fact that follows from the manner in which annulment as a remedy is construed in the framework of the Convention. The role of annulment committees is informed by the fact that the Convention considers an award as final and not subject to any appeal.11 The Centre itself, summarizing practice of committees, describes the annulment as an "exceptional and narrowly circumscribed remedy" and defines the role of an ad hoc committee as limited.12 As a result, committees have mandate to examine the integrity of the arbitral process and not the substantive correctness of awards.13 In addition, grounds for annulment must be strictly construed in order to protect the interest of finality.14 This is explained by the committee in Hydro v. Albania:

"Given the undisputed fact that annulment in the ICSID system is an exceptional remedy, running contrary to the principle of finality, it seems clear to the Committee that all of the grounds for annulment, including Article 52(1)(e), need to be strictly construed in light of their fundamental purpose, on which the parties agree, of safeguarding the fundamental procedural integrity of the proceedings. If the principle of finality is to be set aside, the basis for doing so should be clearly identifiable in one or more of the relevant grounds for annulment, with doubts resolved in favor of the arbitral tribunal."15

10. Finally, an exceptional nature of annulment as a remedy also implies that ad hoc committees have a discretion not to annul the award even if they found that annullable error was present. Contrary to Applicant's assertion,16 Respondent does not contend that said discretion is unlimited. However, an ad hoc committee should refuse to annul the award "when annulment is clearly not needed to remedy procedural injustice and annulment would unwarrantably erode the binding force and finality of ICSID Awards."17

11. Respondent will again explain below how the application of principles mentioned infra necessarily leads to the rejection of all Applicant's claims. In Chapter B. Respondent addresses the alleged failure of the Tribunal to state reasons in accordance with Article 52(1)(e) of the Convention. In Chapter C.(I)-(II), Respondent demonstrates that the Tribunal's decision to reject jurisdiction over Mr. Rand's indirect shareholding in BD Agro does not represent a manifest excess of powers under Article 52(1)(b) of the Convention.

The alleged failure of the Tribunal to exercise jurisdiction with regard to Mr. Rand's payments for the benefit of BD Agro is addressed in Chapter C(III).

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