Summary

Source: icsid.worldbank.org

Table of Contents

List of defined terms
I. Introduction
II. Jurisdiction
A. Jurisdiction ratione materiae
1. The Tribunal has jurisdiction ratione materiae
2. The Respondent's objections based on the Salini test do not hold
a. The Salini test does not apply
b. The Claimant made a substantial contribution
(i) The relevant standard
(ii) The Claimant's investment meets the standard
(a) Aenergy was the exclusive distributor of GE products in Angola and not a mere intermediary
(b) Aenergy used its own funds to purchase the Four Turbines
c. The Claimant's investment meets the duration requirement
(a) Applicable standard
(b) The Claimant's investment meets the applicable standard
d. The Claimant assumed a risk when he made his investment
(i) The applicable standard
(ii) The Claimant's investment meets the applicable standard
3. The Claimant's investment was legitimate
a. The FWA did not oblige Aenergy to sell to Angola all turbines it purchased from GE
b. Aenergy did not use Angola's funds to pay for the turbines and did not participate in Mr da Costa's fraudulent scheme
(i) The chronology of events forecloses Angola's fraud objection
(ii) Mr da Costa perpetrated the fraudulent scheme
(iii) Mr Machado had no motive to participate in the forgery
(iv) The forgery by Mr da Costa had no effect on the scope of the 13 Contracts or the Credit Facility
(v) The payments to Mr da Costa were unrelated to the forgery
c. Angola was not the victim of Mr da Costa's fraud
B. Jurisdiction ratione temporis
1. The Tribunal has jurisdiction ratione temporis
2. The Respondent's objections must fail
a. The facts relevant to the dispute took place after the BIT entered into force
(i) Article 2(1) of the BIT does not include a double-exclusion clause
(ii) The installation and connection of the Four Turbines to the grid constitute independently actionable post-BIT conduct
(a) The relevant criteria to ascertain the consummation of the expropriation in the present case
(b) The expropriation of the Four Turbines was consummated with installation and connection to the power grid, i.e., with entry into operation
(c) IGAPE's communication to MINEA of 5 May 2020 did not consummate the expropriation
(d) Neither the transportation of the Four Turbines nor the use of consumables and isolated elements consummated the expropriation
(iii) IGAPE's actions fall within the jurisdiction of the Tribunal
(iv) The loss in value of Aenergy's shares occurred after the BIT's entry into force
b. Mr Machado's claim is not abusive
C. Jurisdiction ratione voluntatis
1. The relevant standard
2. The Tribunal has jurisdiction ratione voluntatis
D. Jurisdiction ratione personae
III. Standing
A. The Claimant has standing to bring his claims
B. The Respondent's objections must fail
IV. Merits
A. Angola has unlawfully expropriated the Four Turbines
1. The Claimant's expropriation case
2. Angola's expropriation of the Four Turbines was unlawful
a. Angola has not acted for the purposes of public interest
b. Angola has not provided prompt, adequate and effective compensation
c. Angola has not acted in accordance with legal procedures
3. The Respondent's other defences must fail
a. Regardless of how the expropriation is characterised, the relevant elements are met
b. Angola's conduct amounts to a substantial and definitive taking or deprivation of the Claimant's investments
(i) The Respondent's appropriation was final
(ii) The Respondent acted in bad faith
(iii) The measures taken by the Respondent were not proportionate
(iv) The Respondent misreads the authorities on which it relies
c. IGAPE and the Provincial Court of Luanda abdicated their responsibilities
(i) Angola failed to meaningfully respond to Aenergy's requests for information
(ii) The Provincial Court of Luanda should have responded to Aenergy's requests for information
(iii) Aenergy was under no obligation to initiate local proceedings
B. Angola has breached its duties to accord FET and FPS to the Claimant's investment
1. Angola has breached its obligation to accord FET to the Claimant's investment
a. Applicable standard
b. Angola has breached FET
(i) Legitimate expectations
(ii) Due process and transparency
(iii) Arbitrary acts
2. Angola has breached its obligation to accord FPS to the Claimant's investment
a. Applicable standard
b. Angola failed to accord FPS to Mr Machado's investment
V. Damages
A. The Claimant suffered a loss
1. Ownership
2. Possession pending the Provincial Court of Luanda's judgment
3. The situation after the Provincial Court of Luanda's judgment
a. Returning the Four Turbines became impossible
b. The Respondent's hypothesising about the outcome of the Provincial Court of Luanda's case is ill-conceived
B. Angola's contributory fault defence is without merit
C. The Claimant's damages are properly quantified and substantiated
1. The Claimant's valuation and underlying basis are appropriate
a. The Claimant's initial valuation date was as precise as possible given the Respondent's opacity and has now been updated
b. AlixPartners's valuation method is appropriate
c. AlixPartners relies on accurate information in its assessment
d. AlixPartners's report is adequately substantiated
e. AlixPartners's report rests on reliable evidence
2. Angola's breaches of the BIT are directly linked to the loss in value of Aenergy's shares
3. The interest rate selected is appropriate
VI. The Claimant's request for relief

I. Introduction

1. This Reply is submitted in response to the Statement of Defence filed by the Republic of Angola on 27 November 2025. In his Statement of Claim, Mr Machado demonstrated that Angola unlawfully expropriated the Four Turbines - brand-new turbines owned by Aenergy, the Claimant's company - by installing them in state-owned power plants and connecting them to the national power grid, while the court-appointed trustee and the supervising court abdicated their custodial responsibilities. Angola's Statement of Defence challenges the Tribunal's jurisdiction, the Claimant's standing, and the merits of his claims. As the Claimant will demonstrate in this Reply, none of Angola's objections withstands scrutiny.

2. On jurisdiction, Angola asks the Tribunal to accept that Aenergy was a "mere intermediary" - one that made no substantial contribution, assumed no genuine investment risk, and maintained no durable commitment to Angola. The record shows otherwise. Aenergy was GE's exclusive distributor for power generation equipment in Angola, employed hundreds of people, held over a billion dollars in contracts, and maintained a multi-year commercial presence in the country. Far from acting as a passive go-between, Aenergy purchased the Four Turbines in its own name, paid for them with its own funds - including millions of dollars by way of advance payments - and assumed all commercial risk under the Supply Contracts, including the full risk of resale.

3. Angola further asks the Tribunal to hold that it lacks jurisdiction ratione temporis on the ground that the dispute arises from events that pre-date the BIT's entry into force. Yet Angola has now conceded that the constitutive facts underlying the Claimant's claims - the installation and connection of the Four Turbines to the national grid, and the failure by IGAPE and the Provincial Court of Luanda to discharge their custodial responsibilities - occurred in or after 2022, well after the BIT entered into force on 22 December 2021.

4. From there, Angola would have the Tribunal believe that the Four Turbines were purchased through fraud. They were not. The fraud was committed by Mr da Costa - not the Claimant - and, in any event, title to the Four Turbines had already transferred to Aenergy before the fraud took place, foreclosing any suggestion that the fraud bore on their acquisition. Angola's reliance on Mr da Costa's fraud is therefore both misplaced and legally irrelevant. Angola was not even the victim of the fraud: it suffered no financial loss, as the Four Turbines were never included in the Contracts and were never financed with Angolan funds.

5. Turning to the expropriation itself, Angola maintains that the continuous operation of brand-new turbines in state-owned power plants for years on end amounts to nothing more than a "temporary" and "reversible" custodial measure. The facts tell a different story. The turbines were unlawfully installed and put into operation, integrated into the national grid in what Angola's own contractors describe as a "permanent regime", and subjected to catastrophic levels of degradation. Years have elapsed without any step toward returning them or bringing their use to an end.

The proposition that the indefinite, unauthorised operation of seized assets to the point of destruction is consistent with their preservation and eventual return defies any reasonable understanding of what a custodial measure entails.

6. In the same vein, Angola contends that IGAPE, the court-appointed trustee, discharged its duties faithfully. Yet this is a trustee who withheld all information from the owner of the Four Turbines while actively coordinating with the Angolan Government the deployment of those very turbines. It acquiesced in their installation and continuous operation despite knowing that equipment under identical conditions had already suffered severe degradation - and took no step to preserve the assets or notify the supervising court that they were exposed to danger.

7. Finally, Angola insists that the court which appointed that very trustee has not, through its prolonged and total abdication of its supervisory responsibilities, effectively converted a provisional custodial measure into a permanent deprivation without any adjudication on the merits. Yet this is a court that has remained entirely passive for over four years - failing to respond to Aenergy's requests for information, exercising no supervision over the trustee, and taking no step to prevent the appropriation of the assets it had itself ordered to be seized. In all that time, it has convened no hearing, issued no ruling, and given no procedural direction of any kind in respect of the unauthorised installation and continuous operation of the Four Turbines - thereby rendering every domestic remedy structurally unavailable to the Claimant.

8. In short, Angola's case is built on distortions of fact, mischaracterisations of the law, and a selective presentation of the record. As will be set out below, the Tribunal has jurisdiction to hear this dispute (section II); Mr Machado has standing to bring all of his claims (section III); and Angola has breached its obligations under the BIT - including the prohibition on unlawful expropriation, and the standards of fair and equitable treatment and full protection and security (section IV). Accordingly, Mr Machado is entitled to full reparation in the amount of USD 181,527,062, or such higher amount as the Tribunal may determine at the date of the award (section V).

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