I think the Jurisdiction has to do with money spent on project thus why the annulment of case ?
The Parties concentrated on Article 25(1) of the ICSID Convention (“Jurisdiction of the
Centre”) which provides:
The jurisdiction of the Centre shall extend to any legal dispute arising
directly out of an investment, between a Contracting State (or
any constituent subdivision or agency of a Contracting State
designated to the Centre by that State) and a national of another
Contracting State, which the parties to the dispute consent in
writing to submit to the Centre. When the parties have given their
consent, no party may withdraw its consent unilaterally.
302
(emphasis
added)
(i) The Claimants’ Position
288. Each of the jurisdictional requirements prescribed in Article 25(1) of the ICSID
Convention is satisfied in this case as follows.
“Legal Dispute”
289. The dispute at hand arises out of Kenya’s alleged violation of the Claimants' rights under
the BIT. The BIT is a treaty and, therefore, an instrument of international law. Accordingly, the
present dispute is inherently legal in nature.
302ICSID Convention, Article 25(1).
107
“Arising Directly”
290. The Claimants’ investments referenced above, include (without limitation) SPL 256 and
SML 351 and the rights granted under these instruments. The present dispute arises directly out
of Kenya’s allegedly unlawful revocation of SML 351, the measures the Kenyan Government took
against the Claimants’ other assets and interests (namely their shares, intellectual property rights
and know-how) and the resulting alleged injuries suffered by the Claimants. The dispute therefore
arises directly out of the Claimants' investments.
“Out of an investment”
291. The Claimants’ investments are specifically covered by Article 1(a)(i), (ii), (iv) and (v) of
the BIT. The Claimants note that the ICSID Convention does not define “investment” and so it is
for the Tribunal to ascertain the meaning of this term and apply it to the facts. In determining
whether there is an “investment” for ICSID Convention purposes, it is usual to take into account
some or all of the four Salini
303
indicators:
(a) contribution by the investor;
(b) duration of performance;
(c) participation in the risks of the transaction; and
(d) contribution by the investor to the economic development of the host State.
304
303
Salini Costruttori SpA and Italstrade SpA v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on
Jurisdiction, 23 July 2001, CL-3.
304
Salini Costruttori SpA v. Kingdom of Morocco, CL-3.
108
292. In the Claimants’ submission, the Salini criteria to determine the existence of an
“investment” are satisfied in this case.
293. The Claimants have contributed both money and assets in relation to their interests in the
project. They say that between 31 July 2007 and 5 August 2013 when CS Balala intervened, CMK
alone spent not less than Kshs 773,525,404 (US $9.32 million)
305
on the Mrima Hill project.
Cortec UK spent not less than Kshs 68,140,942 (US $775,651)
306
and Stirling spent not less than
Kshs 61,818,188 (US $703,679)
307
on the Mrima Hill project. Between 1 July 2009 and 31
December 2015, PAW spent over CAN $37 million (US $33.7 million)
308
in connection with the
Mrima Hill project.309
Throughout this period, the Claimants also contributed geological and
useful information regarding mine development.
310
294. The concept of “investment” must recognize the realities of funding and management
within a corporate group. The Vienna Convention requires the interpretation of the term
“investment” to have due regard to the object and purposes of the Convention.
311
This means the
term should be read in a way that recognizes the realities of funding and the essential role that
305
Based on an estimate of the average exchange rate of 0.01204818928 Kshs/US$ over the period from 1 January
2010 to 31 December 2013.
306
Based on an estimate of the average exchange rate of 0.0113830393 Kshs/US$ over the period from 1 January
2011 to 31 December 2011.
307
Based on an estimate of the average exchange rate of 0.0113830393 Kshs/US$ over the period from 1 January
2011 to 31 December 2011.
308
Based on an estimate of the average exchange rate of 0.91 CAN$/US$ over the period from 1 July 2009 to 31
December 2015.
309
Darren Townsend First Witness Statement, para. 88.
310
See for example, Cortec Mining Kenya (PTY) LTD, Quarterly Report, 1 July 2008 – 30 September 2008, Exhibit
C-171; Cortec Mining Kenya LTD. 6-Monthly Report, July – December, 2010, Exhibit C-172; Letter from Cortec Mining
Kenya LTD. To Dr. B. Rop, Commissioner of Ministry of Environment and Mineral Resources, attaching work
programmes for Kwale and Samburu Districts and confirmatory drilling programme for Mrima Hill, 20 July 2010,
Exhibit C-56.
311
There is nothing in the text of the Convention to require that a claimant investor itself make a monetary
contribution in order for there to be an “investment” for the purposes of Article 25.
109
corporate structures like that used by the Claimants play in financing private foreign investment
and driving economic development. The overwhelming weight of authority is against treating
“origin of capital” as a condition for ICSID jurisdiction.
312
In the case at hand, there is no dispute
that Stirling and Cortec UK contributed capital directly to CMK, the dispute is over how much
they contributed.
295. The BIT does not allow for the origins of CMK's capital to be treated any differently to the
origins of Cortec UK's and Stirling's capital. This is because, under Article 8(2) of the BIT, Kenya
agreed that CMK is to be “treated for the purposes of the [ICSID] Convention as a company of the
[UK].”
313
To permit the State to draw a distinction between the origin of capital expended by
Cortec UK and Stirling and the origin of capital expended by CMK would be to allow the State to
breach Article 8(2) of the BIT and to benefit from that breach by using it as a basis for objection.
296. Details of the proof and timing of Stirling’s, Cortec UK’s and PAW’s investments can be
found in the Claimants’ Memorial of Claim (paragraphs 213-217 under the heading “Damnum
emergens”). CMK’s audited Annual Reports note that “[t]he Company has received cash or had
its liabilities settled by persons or companies related to directors” and treat payments by Stirling
UK, Cortec UK, Messrs. O’Sullivan and Anderson and PAW as “Long Term Loans” and/or “Other
Liabilities”
314
312
See Claimants’ Rejoinder on Preliminary Objections dated 10 November 2017, para. 292.
313
See Claimants’ Rejoinder on Preliminary Objections dated 10 November 2017, paras. 293-294. The only condition
that must be met in order for CMK to be deemed British for ICSID purposes under Article 8(2) of the BIT is
that the majority of its shares were owned by nationals or companies of the UK before the dispute arose, which they
were. Once this condition is met, CMK has all the rights of a UK national under the ICSID Convention (including
the right to an award under Article 48).
314
Audited annual reports for CMK (2011-2013), Exhibit C-98, pp. 7, 11, 20, 24, 35 and 41 ; Case Concerning the
Factory At Chorzów (1928) PCIJ Ser. A No. 17, CL-22, p. 55.
110
(ii) The Government’s Position
297. Quite apart from the objection ratione personae, the Government alleges that Cortec UK
and Stirling are two shell companies that made no financial contribution and that no investment
was made from the United Kingdom into Kenya.
(iii) The Tribunal’s Ruling
298. In the Tribunal’s view, the Government has adopted an excessively narrow view of
financial contribution. In Wena Hotels v. Egypt,
315
the tribunal addressed not only the intertwined
“interests of subsidiaries and affiliates” but also the situation were at least some of the “subsidiaries
and affiliates” are nationals of other States:
ICSID practice has also been quite flexible on claims that include the
interests of subsidiaries and affiliates, including on occasion entities that
are nationals of States that are not contracting parties to the Convention.
316
299. The Tribunal agrees with the Claimants that the Respondent’s objection denies a realistic
appreciation of customary corporate structures and investment financing. The Tribunal concludes
that there was a contribution by the Claimants to the project in Kenya. |
