Summary

Arbitration pursuant to the Agreement Between the Government of the Islamic Republic of Iran and the Government of the Azerbaijan Republic on the Reciprocal Promotion and Protection of Investments

AWARD

ARBITRAL TRIBUNAL
Professor Gabrielle Kaufmann-Kohler, Presiding Arbitrator
Mr. Laurence Shore, Arbitrator
Sir Daniel Bethlehem KC, Arbitrator

TABLE OF CONTENTS

FREQUENTLY USED ABBREVIATIONS I. INTRODUCTION
A. THE PARTIES AND THEIR REPRESENTATIVES
B. THE ARBITRAL TRIBUNAL
C. LANGUAGE OF THE ARBITRATION AND PLACE OF ARBITRATION
II. PROCEDURAL HISTORY
A. COMMENCEMENT OF THE ARBITRATION AND CONSTITUTION OF THE TRIBUNAL
B. THE TERMS OF APPOINTMENT AND PO1
C. PO2 AND PO3
D. THE WRITTEN SUBMISSION PHASE
1. The Respondent's Response to Notice of Arbitration
2. The Respondent's request for information relating to the Claimant's funding arrangement
3. The Statement of Claim
4. The Request for Bifurcation
5. The Statement of Defence
6. The Order on Provisional Measures
7. The document production phase
8. The document inspection phase
9. The Claimant's request for third party production
10. The first supplement to the Order on Provisional Measures
11. The Statement of Reply
12. The Respondent's requests in connection with the Statement of Reply
13. The second supplement to the Order on Provisional Measures
14. Further issues related to the Order on Provisional Measures
15. The addition of new counsel for the Claimant
16. The Rejoinder
17. The Rejoinder on Jurisdiction and Admissibility
18. The pressures exerted on the Claimant's funder
E. PRE-HEARING MATTERS
1. Hearing organization
2. The unavailability of Dr. Kousedghi
3. The unavailability of Mr. Rudman
4. The attendance of Dr. Tabrizi
F. THE HEARING
G. POST-HEARING DEVELOPMENTS
H. CLOSURE OF THE PROCEEDINGS
III. REQUESTS FOR RELIEF
A. THE CLAIMANT'S REQUEST FOR RELIEF
B. THE RESPONDENT'S REQUEST FOR RELIEF
IV. PRELIMINARY MATTERS
A. THE APPLICABLE LAWS
1. Law governing the arbitration proceedings
2. Law governing the merits of the dispute
3. Jura novit arbiter
4. The relevance of prior awards
B. EVIDENTIARY MATTERS
1. Burden of proof
2. Standard of proof
C. LANGUAGES OF THE TREATY
D. CONFIDENTIALITY/TRANSPARENCY
E. PROVISIONAL MEASURES
V. FACTUAL BACKGROUND
A. THE CLAIMANT'S BUSINESS VENTURES IN IRAN IN THE 1980S-1990S
B. THE CLAIMANT'S PURPORTED INVESTMENTS IN AZERBAIJAN AND THEIR ALLEGED MISTREATMENT BY THE RESPONDENT
1. Coolak Baku
The Joint Venture Agreements relating to Coolak Baku
The implementation of the project
The alleged seizure of Coolak Baku's assets by ASFAN in collusion with the Azerbaijani Judiciary
2. Shuvalan Sugar
3. Caspian Fish
The inception of the project
Caspian Fish BVI
Caspian Fish LCC
The construction of the facilities between 1999 and 2001
Caspian Fish's operations
The alleged forced removal of Mr. Bahari from Caspian Fish as from the opening ceremony of 10 February 2001
The alleged sale of the Claimant's shares in Caspian Fish BVI
The alleged scheme to strip Mr. Bahari of his shareholding rights in Caspian Fish BVI
4. Ayna Sultan
The Ayna Sultan Property
The Ayna Sultan proceedings
5. The Carpets
C. THE PURPORTED CAMPAIGN AGAINST THE CLAIMANT FROM 2001 ONWARDS
1. The alleged expulsion of the Claimant from Azerbaijan in 2001
2. The alleged assaults and detentions of Mr. Moghaddam in 2001 and 2002
3. The alleged obstruction of the Claimant's investigative efforts in 2004
4. The conviction of Mr. Moghaddam for drug crimes in 2009
5. The alleged negotiations of Prof. Amirahmadi with senior Government officials on behalf of Mr. Bahari in 2009
6. The alleged encounter between Mr. Bahari and Mr. Heydarov in 2013
7. The alleged threats by Mr. Heydarov in 2014
8. The alleged obstruction of the Claimant's investigations efforts in 2019
9. The alleged campaign of harassment, intimidation and violence against Mr. Abdulmajidov and Ms. Ramazanova as of 2021
VI. JURISDICTION
A. JURISDICTION RATIONE MATERIAE
1. Requirements for a qualifying investment
The Respondent's position
The Claimant's position
Analysis
i. Inherent characteristics of an investment
ii. Ownership
iii. Indirect investments
2. Application to the Claimant's alleged investments
Preliminary remarks
Caspian Fish
i. The Parties' positions
(a) Shares in Caspian Fish BVI and Ownership and Participation in the Local Representative Office and Caspian Fish LLC
(b) Rights under the Caspian Fish Shareholders Agreement
(c) Equipment and the construction of the facility
(d) Design, know-how and goodwill
(e) Licenses
(f) Caspian Fish "as a whole"
ii. Analysis
Coolak Baku
i. The Parties' positions
(a) Shares in the Coolak Baku JV
(b) Choses-in-action under the 1998 JVA and the 1999 JVA
(c) Equipment and construction of the facility
(d) Design, know-how and goodwill
(e) License
(f) Coolak Baku "as a whole"
ii. Analysis
Shuvalan Sugar
i. The Parties' positions
ii. Analysis
Ayna Sultan
i. The Parties' positions
ii. Analysis
The Carpets
i. The Parties' positions
ii. Analysis
3. Conclusion on jurisdiction ratione materiae
B. JURISDICTION RATIONE TEMPORIS
1. The Respondent's position
2. The Claimant's position
3. Analysis
Does the Treaty derogate from the principle of non-retroactivity?
Does the Tribunal have temporal jurisdiction to hear the claims arising from alleged Treaty breaches?
i. Relevant principles
ii. Article 4 of the Treaty
iii. Article 2(3) of the Treaty
iv. Article 2(2)(a) of the Treaty
Does the Tribunal have jurisdiction over the Respondent's alleged pre-Treaty breaches of customary international law?
C. ARTICLE 9 OF THE TREATY
1. The Respondent's position
2. The Claimant's position
3. Analysis
Does Article 9 of the Treaty require that pre-existing investments be approved before they can benefit from Treaty protection?
What approval is required in respect of pre-existing investments?
Were the Claimant's investments in connection with Coolak Baku approved within the meaning of Article 9?
D. CONCLUSION ON JURISDICTION
VII. ADMISSIBILITY
A. THE RESPONDENT'S POSITION
B. THE CLAIMANT'S POSITION
C. ANALYSIS
1. Relevant principles
2. Does the Claimant's conduct in connection with the Chartabi Contracts constitute fraud?
Are the reissued Chartabi Contracts copies of genuine contracts?
How were the Chartabi Contracts "reissued" in 2019?
Procedural history relating to the Chartabi Contracts
3. Does the Claimant's fraud amount to an abuse of process rendering the claims inadmissible?
The seriousness of the fraud
The role of the Claimant in relation to the fraud
The nexus between the fraud and the claims
The time when the fraud was committed
The evidentiary specificities of the dispute
VIII. COSTS
A. THE COSTS OF THE ARBITRATION
1. The Parties' costs
2. The costs of the proceedings
B. ALLOCATION OF THE COSTS OF THE ARBITRATION
IX. DECISION

I. INTRODUCTION

This is an ad hoc arbitration (the "Arbitration") brought under the Agreement Between the Government of the Islamic Republic of Iran and the Government of the Republic of Azerbaijan on the Reciprocal Promotion and Protection of Investments of 1996 (the "Treaty") pursuant to the United Nations Commission on International Trade Law Arbitration Rules, as revised in 2013 (the "UNCITRAL Rules").

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II. PROCEDURAL HISTORY

This section provides a summary of the history of these arbitration proceedings. For ease of readability, given the numerous procedural issues and exchanges, the Tribunal has organized this section by topics. Within each topic, it has set out the procedural steps in chronological order.

A. COMMENCEMENT OF THE ARBITRATION AND CONSTITUTION OF THE TRIBUNAL

On 11 July 2022, pursuant to Article 10 of the Treaty, the Claimant sent a Notice of Arbitration, informing the Respondent of a dispute between him and the Republic of Azerbaijan under the Treaty. In the Notice of Arbitration, the Claimant appointed Mr. Laurence Shore as arbitrator.

On 30 September 2022, the Respondent informed the Claimant of its appointment of Sir Daniel Bethlehem KC as arbitrator.

On 3 November 2022, the arbitrators informed the Parties of their agreement to appoint Professor Gabrielle Kaufmann-Kohler as presiding arbitrator, who accepted her nomination.

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IX. DECISION

For the reasons set forth above, the Tribunals decides, orders and awards as follows:

The Tribunal has jurisdiction over the dispute in respect of the Claimant's investments in connection with Coolak Baku and Shuvalan Sugar;

The Tribunal lacks jurisdiction over the dispute in respect of the Claimant's other purported investments;

The claims founded on the Claimant's investments in connection with Coolak Baku and Shuvalan Sugar are inadmissible;

The Claimant shall pay the Respondent an amount of EUR 782,898.15, plus interest at a rate of SOFR 3-month +2%, compounded annually, as a reimbursement of the advance on costs paid by the latter;

The Claimant shall pay to the Respondent an amount of USD 13,513,750.93, GBP 1,317,189.50, and EUR 6,000, plus interest at a rate of SOFR 3-month +2%, compounded annually, as a contribution to the legal fees and other expenses incurred in connection with this arbitration; and

All other claims and requests are dismissed.

Footnotes omitted