Summary

Source: icsid.worldbank.org

AWARD

Members of the Tribunal
Mr. Jeremy K. Sharpe, President
Prof. Dr. Stephan Schill, Arbitrator
Prof. Brigitte Stern, Arbitrator

TABLE OF CONTENTS

I. INTRODUCTION AND PARTIES

II. PROCEDURAL HISTORY

III. FACTUAL BACKGROUND

A. The Claimant Companies

B. The Relevant Legal Framework

C. The Oak Loan

D. The Resolution of BES

E. The Deloitte Report

F. The Assignment of the Oak Loan to the Claimants

G. The Domestic Court Proceedings in Portugal and the United Kingdom

H. The BES Liquidation Proceedings

IV. PARTIES' CLAIMS AND REQUESTS FOR RELIEF

V. OBJECTIONS TO JURISDICTION

A. Jurisdiction Ratione Personae

(1) The Respondent's Position

a. The Claimants must engage in independent decision-making in Mauritius to have a main office/sede there under Article 1(3) of the BIT

b. The Claimants failed to show independent decision-making in Mauritius

(2) The Claimants' Position

a. The Respondent misinterprets BIT Article 1(3)(b)

b. Each Claimant has a "main office" or "sede" in Mauritius

B. Jurisdiction Ratione Materiae

(1) The Respondent's Position

a. The Claimants' purported Oak Loan interests fail to qualify as investments under Article 1(1) of the BIT or Article 25(1) of the ICSID Convention

b. The Claimants acquired their purported investments in violation of Portuguese law

c. The Claimants hold no title over interests in the Oak Loan

(2) The Claimants' Position

a. The Claimants hold investments within the meaning of the BIT and the ICSID Convention

b. The Claimants acquired their investments in accordance with Portuguese laws and regulations

c. The Claimants validly acquired title over the Oak Loan interests

C. Jurisdiction Ratione Temporis

(1) The Respondent's Position

a. The Tribunal lacks jurisdiction ratione temporis over claims based on events that occurred before the Claimants made their alleged investments

b. The Claimants' claims are based on events that occurred before the Claimants made their alleged investments

c. In any event, the dispute arose before the Claimants made their alleged investments

(2) The Claimants' Position

a. The relevant test is whether facts and considerations that gave rise to any earlier dispute between the Claimants' affiliates and Portugal continued to be central to the dispute that postdates the Claimants' investments

b. Facts central to the Parties' BIT dispute arose after the Claimants made their investments

D. Abuse of Process

(1) The Respondent's Position

a. Applicable legal test

b. The dispute was at least foreseeable when the Claimants acquired their alleged investments

(2) The Claimants' Position

a. Applicable legal test

b. The present dispute was not foreseeable when the Claimants acquired their investments

E. Fork-in-the-Road

(1) The Respondent's Position

a. The "fundamental basis" test, rather than the "triple identity" test, applies

b. The Portuguese court claims have the same fundamental basis as the BIT claims

c. In any event, the "triple identity" test is met

(2) The Claimants' Position

a. The BIT's fork-in-the-road provision is only triggered if the "triple identity" test is met

b. The "triple identity" test is clearly not met

c. Even if the "fundamental basis" test were adopted, it would not be met

F. Conflict Between the Portuguese Proceedings and this Arbitration

(1) The Parties' Positions on the Risk of Conflict

(2) The Parties' Positions on the Consequences of the Risk of Conflict

(3) The Tribunal's Analysis

VI. COSTS

A. The Claimants' Cost Submissions

B. The Respondent's Cost Submissions

C. The Tribunal's Decision on Costs

VII. AWARD

I. INTRODUCTION AND PARTIES

1. This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Portuguese Republic and the Republic of Mauritius for the Mutual Promotion and Protection of Investments, which entered into force on January 3, 1999 ("BIT" or "Treaty") and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 ("ICSID Convention").

2. The claimants are Suffolk (Mauritius) Limited ("Suffolk"), Mansfield (Mauritius) Limited ("Mansfield"), and Silver Point Mauritius ("Silver Point"), companies incorporated under the laws of Mauritius (the "Claimants").1

3. The respondent is the Portuguese Republic ("Portugal" or the "Respondent").

4. The Claimants and the Respondent collectively are referred to as the Parties ("Parties").

5. The Parties' representatives and their addresses are listed above on pages (i)-(ii).

6. This case concerns allegations that the Respondent, during the resolution of a major Portuguese bank, Banco Espírito Santo, S.A. ("BES"), deprived the Claimants of rights they claim as holders of a loan given to BES, wiping out the value of their investments.

The Claimants allege breaches of the BIT with respect to expropriation, fair and equitable treatment, non-impairment, full protection and security, and most-favored- nation treatment (by virtue of which Portugal is said to be additionally obliged to provide "effective means of asserting claims and enforcing rights" with respect to the Claimants' investments).

7. The Respondent objects to the Tribunal's jurisdiction over the Claimants' claims.

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II. PROCEDURAL HISTORY

8. On October 13, 2022, ICSID received a request for arbitration of that date from the Claimants against the Respondent ("Request for Arbitration").

9. On November 11, 2022, the ICSID Secretary-General registered the Request for Arbitration in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(c) of ICSID's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.

10. By letter of the same date, ICSID requested that the Claimants make an advance payment of USD 150,000 by December 12, 2022, to defray the estimated costs of the proceeding through the first session of the Tribunal. ICSID further informed the Parties that pursuant to ICSID Administrative and Financial Regulation 15(1)(a), this advance payment shall be considered partial payment by the Claimants of the further advance payment to be requested upon constitution of the Tribunal.

11. By letter dated December 12, 2022, the Claimants proposed a method for constituting the Tribunal and invited the Respondent to respond by December 19, 2022.

12. By email of December 19, 2022, the Respondent agreed to the Claimants' proposal that the Tribunal shall be composed of three arbitrators, stating that the Parties would revert shortly on the method and deadline for appointing each arbitrator.

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VII. AWARD

613. For the reasons set forth above, the Tribunal, by majority:

(1) Declares that it lacks jurisdiction over the Claimants' claims;

(2) Orders the Claimants to compensate the Respondent for its Legal Costs in this arbitration in the amount of ....

(3) Orders the Claimants to compensate the Respondent for its share of the costs of the arbitration in the amount of. ..

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DISSENTING OPINION PROFESSOR DR. STEPHAN W. SCHILL

TABLE OF CONTENTS

INTRODUCTION
I. PROCEDURAL BACKGROUND AND MAJORITY'S CORE REASONING
II. VIOLATION OF RULES OF PROCEDURE
A. Rule 44 of the 2022 Arbitration Rules
B. Rule 43 of the 2022 Arbitration Rules
C. Duty to Determine Jurisdiction of the Centre and Tribunal's Competence
D. Duty to Respect the Parties' Right to Be Heard
III. RELATIONSHIP BETWEEN THE PRESENT ARBTRATION AND THE DOMESTIC PROCEEDINGS
CONCLUSION

I. PROCEDURAL BACKGROUND AND MAJORITY'S CORE REASONING

1. I am unable to join my esteemed colleagues in their decision that the Tribunal "lacks jurisdiction over the Claimants' claims" because they consider that, in the present arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Convention") and in certain pending proceedings in Portuguese courts (which are referred to as the "Retransfer Cases"), [.....]. In my reading of the procedural law that applies in the present arbitration, and in my understanding of the facts of the case, the majority reaches a result that is fundamentally mistaken in substance and at odds with the procedural framework of the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings in force as of 1 July 2022 ("2022 Arbitration Rules"), which apply in the present case.

2. After recalling the procedural posture the proceedings are in at the time of the Award and summarizing the majority's core reasoning, I will, in the following, lay out the reasons for my disagreement with the Tribunal majority. As I will explain in more detail, the majority (i) incorrectly qualifies the issue on which it declines jurisdiction as going to jurisdiction, rather than admissibility or merits, (ii) incorrectly assumes the power to raise the issue in question proprio motu in the context of proceedings on bifurcated preliminary objections that the issue was not part of, (iii) incorrectly decides on the issue without having determined that the Centre has jurisdiction and that the Tribunal is otherwise competent to hear the dispute, (iv) incorrectly decides on the issue, without respecting the Parties' right to be heard, based on a legal theory and legal authorities that are not part of the record and have not been brought to the Parties' attention for comment, and (v) incorrectly characterize [...]

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CONCLUSION

54. In conclusion, for all of the reasons stated above, I dissent from the Award.

...

Footnotes omitted.