hcmulaw moot problem 2011

8/2/2019 Hcmulaw Moot Problem 2011

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MOOT TEAMS IN COOPERATION WITH ENGLISH CLUB

HCMULAW MOOT COURT

2011 MOOT PROBLEM

** HCMULAW MOOT COURT 2011 is a separate program from HCMULAW’s recruitment

for the annual LAWASIA International Moot Competitions.



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MOOT PROBLEM

HO CHI MINH CITY ARBITRATION CENTER

ANDERSON INFRASTRUCTURE GROUP v. MONROVA CORPORATION

1. Republic of Zamba is a young third world country with a long history of independence

struggle. Being a colony of the United Kingdom for more than three centuries, Zamba

successfully regained its independence after a fierce war of independence in 1970. After

the independence, Zamba had implemented a centralized command economy for nearly

thirty years resulting in the slow development of the economy and poverty throughout the

country.

2. In 2002, after being elected as the new President of Republic of Zamba, Doctor Shaun

McCarthy, an American-educated lawyer, decided to convert the economy into a free

market economy. However, as the National Assembly of Zamba was still dominated by

left-wing factions who viewed Dr McCarthy's policy to be overly capitalist, the first

Investment Act (See Appendix 3) of Zamba was passed, serving as a compromise

between the centralized command economy and the free market economy. Analysts

regarded the Zamban economy as a "market economy with the participation of the State

as the main actor".

3. To boost the economy of the country, in 2003, the Government of Zamba decided to

establish a State-owned conglomerate called Monrova Corporation (“Monrova”) to be at

the "cutting edge of the economy". (See Appendix 2 for the Charter of Monrova)

Monrova Corporation is considered as the main investment vehicle of the Government of

Zamba in all joint ventures with foreign investors.

4. In 2004, President McCarthy proposed a new plan to develop the infrastructure in Zamba.

As a result, Zamba attracted many infrastructure developers from around the worldinvesting into the country. One of the developers was Anderson Infrastructure Group

(“Anderson”), a well-known company originated from the Federal Republic of Tusland,

an industrialized country that has entered into a Bilateral Investment Treaty (“BIT”) with

Zamba since 2002 (See Appendix 5 for the BIT). In May 2004, the project relating to the

first highway of the country was awarded to Anderson.

5. As a result of the successful bid, Anderson entered into a joint venture agreement with

Monrova to form a joint venture called Unicorns JV (the “JV”) in which Anderson's

interest in the JV is 49% of the total capital. The main mission of the JV is stated as

follows: “to implement, develop and operate the Speedy Highway Project”. (See



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Appendix 4 for the Charter of the JV and Appendix 1 for the Joint Venture Agreement

between Monrova and Anderson)

In September 2004, the JV was established and the first stage of construction of the

Speedy Highway Project commenced.

6. In 2007, the Speedy Highway Project was completed. Upon completion of the project,

the representatives of Anderson and Monrova in the JV agreed to pass a resolution in

which it set the "travel fares through the Highway for the next 10 years" at 150 Zamban

Dollar (approximately USD2). In the context of the country’s economy, the fares were

regarded by analysts as slightly high. However, given the efforts invested into the project

by Anderson and the speed of the construction, it would be considered a reasonable

amount. As of 2007, the GDP per capitaof Zamba was USD1,000. The Highway soon

proved to be an important highway in the country connecting the North and the South.

7. In late 2007, the Financial Crisis broke out and caused a big downturn in the economy of Zamba. Foreign investment into Zamba dropped rapidly and dramatically as investors

decided to hedge their capital. The financial crisis caused an increasing unemployment

rate throughout the country and World Bank estimated that the GDP of the country has

dropped by 15%. Protests and outcries could be heard throughout the country in

particular from the opposing factions demanding the Government to reduce the taxes and

fees in order to support the people of Zamba.

8. Facing the situation, in January 2008, President McCarthy issued Decree 16-2008 on

management of State-owned enterprises in which it stated:

" Article 1

The State-owned enterprises which are assigned to be the local party in joint ventures

must try its best to implement any directions from the Government of Zamba, in relation

to the operation of the joint ventures."

9. In September 2008, President McCarthy directed Minister Alan Shorey of the Ministry of

Planning and Investment (the “MPI”) to send a letter to the management of Monrova to

"direct the representatives representing Monrova's interest in the Unicorns JV to vote to

effectively lower the travel fares in relation to the Speedy Highway Project from 150Zamban dollar to 75 Zamban Dollar."

10. In November 2008, to the surprise of Anderson, representatives representing Monrova's

interest in the JV exercised their voting right to pass a resolution which effectively

lowered the travel fares in relation to the Highway. It is reported that when lowering the

travel fares, the net income of Unicorns JV would decrease by 40%, which would cause

the dividend for each investor to the JV to fall for 20%.

11. After many negotiations and discussions without any mutual consent, Anderson decided

to file a motion to the Ho Chi Minh City Arbitration Center (“HCMIAC”) for resolutionin accordance with Article 65 of the Joint Venture Agreement between Monrova and



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Anderson (See Appendix 1). HCMIAC, after reviewing the documents, accepted to hear

the case. In July 2010, Monrova officially sent a letter to HCMIAC to accept its

jurisdiction. In August 2010, HCMIAC issued a letter informing the parties that the first

hearing will be held in December 2011 and the Arbitration is authorised to deal with two

questions:

i. Whether Monrova’s voting in Unicorns JV to decrease the travel fares in

relation to Speedy Highway Project is justifiable under relevant rules; and

ii. In case the HCMIAC finds Monrova’s voting in Unicorns JV to decrease the

travel fares is unjustifiable, what are the available remedies?

It should be noted that Republic of Zamba adopts the principles of common law in

relation to contract and the rules of the HCMIAC adopts the latest UNCITRAL Arbitration

Rules 2010 with modifications.

The HCMIAC is not requested to decide on the monetary amount of compensation or any

other remedy that may be determined.



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APPENDIX 1

JOINT VENTURE AGREEMENT

BETWEEN

MONROVA CORPORATION AND ANDERSON INFRASTRUCTURE GROUP

TO ESTABLISH UNICORNS JOINT VENTURE COMPANY

....

ARTICLE 32

VOTING

Monrova agrees that, in relation to the operation of the Unicorns JV, it will not vote in

favour of a resolution which may:

i. adversely affect the normal business of the Unicorns JV; or

ii. adversely affect the economic benefits of Anderson in the Unicorns JV.

....

ARTICLE 64

GOVERNING LAW

The governing law of the Joint Venture Agreement is the law of Republic of Zamba.

ARTICLE 65

ARBITRATION CLAUSE

65.1 Any dispute arising out of or in connection with this Joint Venture Agreement,

including any question regarding its existence, validity or termination, shall be settled

through consultations between the Parties. In the event that settlement cannot be

reached through such consultations, the dispute shall be referred to and finally resolved

by arbitration in Vietnam in accordance with the 2010 UNCITRAL Arbitration Rules.

65.2 The arbitration shall be final and binding and the arbitration fees shall be borne by the

losing party or otherwise as awarded by the arbitrator.

65.3 The language of the arbitration shall be English.



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APPENDIX 2

CHARTER

OF

MONROVA CORPORATION

....

ARTICLE 1

PURPOSE AND MISSION

The main purpose and mission of the Company is to boost the economy of the Republic of

Zamba, serves as an investment vehicle of the Republic, as represented by the Government,

and shall do its best for the sake of the Republic and will at all times obey the directions from

its Owner, the Government of Zamba.



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APPENDIX 3

2003 INVESTMENT ACT

OF

THE REPUBLIC OF ZAMBA

....

ARTICLE 5

FOREIGN INVESTMENT

Every foreign investment into the Republic of Zamba will be required to be conducted

structured as a joint venture between the foreign investor and a Zamban company which

is assigned by the Ministry of Planning and Investment.

The percentage of foreign ownership in joint ventures may not exceed 49% of the total

charter capital of the company.

ARTICLE 6

STATE OWNED ENTERPRISES

State-owned enterprises are business organisations which are established and fully owned

by the Government of Zamba. State-owned enterprises operate to accomplish the

economic goals set by the Government of Zamba and, to the best of its ability, at all

times, for the benefit of the people of Zamba.



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APPENDIX 5

AGREEMENT

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBAAND

THE GOVERNMENT OF THE FEDERAL REPUBLIC OF TUSLAND

FOR THE PROMOTION AND PROTECTION OF INVESTMENTS

The Government of the Republic of Zamba and the Government of the Federal

Republic of Tusland;

Desiring to create favourable conditions for greater investment by nationals and

companies of one State in the territory of the other State;

Recognising that the encouragement and reciprocal protection under international

agreement of such investments will be conducive to the stimulation of individual business

initiative and will increase prosperity in both States;

Have agreed as follows:

ARTICLE 1

Definitions

For the purposes of this Agreement:

(a) “investment” means every kind of asset and in particular, though not

exclusively, includes:

(i) movable and immovable property and any other property rights such

as mortgages, liens or pledges;

(ii) shares in and stock and debentures of a company and any other form

or participation in a company;

(iii) claims to money or to any performance under contract having a

financial value;

(iv) intellectual property rights, goodwill, technical processes and know-

how;

(v) business concessions conferred by law or under contract, including

concessions to search for, cultivate extract or exploit natural resources.

A change in the form in which assets are invested does not affect their character



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security in the territory of the other Contracting Party. Neither Contracting Party shall in any

way impair by unreasonable or discriminatory measures the management, maintenance, use,

enjoyment or disposal of investments in its territory of nationals or companies of the other

Contracting Party. Each Contracting Party shall observe any obligation it may have entered

into with regard to investments of nationals or companies of the other Contracting Party.

ARTICLE 3

National Treatment and Most-favoured-nation Provisions

(1) Neither Contracting Party shall in its territory subject investments or returns

of nationals or companies of the other Contracting Party to treatment less favourable than

that which it accords to its own nationals or companies or to nationals or companies of any

third State.

(2) Neither Contracting Party shall in its territory subject nationals or companies

of the other Contracting Party, as regards their management, maintenance, use, enjoyment or

disposal of their investments, to treatment less favourable than that which it accords to its

own nationals or companies or to nationals or companies of any third State.

ARTICLE 4

Compensations for Losses

Nationals or companies of one Contracting Party whose investments in the

territory of the other Contracting Party suffer losses owing to war or other armed

conflict, revolution, a state of national emergency, revolt, insurrection or riot in the

territory of the latter Contracting Party shall be accorded by the latter Contracting Party

treatment, as regards restitution, indemnification, compensation or other settlement, no less

favourable than that which the latter Contracting Party accords to its own nationals or

companies or to nationals or companies of any third State. Resulting payments shall be freely

transferable.

ARTICLE 5

Expropriation

(1) Investments of nationals or companies of either Contracting Party shall not be



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nationalised, expropriated or subjected to measures having effect equivalent to nationalisation

or expropriation (hereinafter referred to as “expropriation”) in the territory of the other

Contracting Party except for a public purpose related to the internal needs of that Party on a

non-discriminatory basis and against prompt, adequate and effective compensation. Such

compensation shall amount to the genuine value of the investment expropriated immediately

before the expropriation or before the impending expropriation became public knowledge,

whichever is the earlier, shall include interest at a normal commercial rate until the date of

payment, shall be made without delay, be effectively realizable and be freely transferable.

The national or company affected shall have a right, under the law of the Contracting

Party making the expropriation, to prompt review, by a judical or other independent authority

of that Party, of his or its case and of the valuation of his or its investment in accordance with

the principles set out in this paragraph.

(2) Where a Contracting Party expropriates the assets of a company which is

incorporated or constituted under the law in force in any part of its own territory, and in

which nationals or companies of the other Contracting Party own shares, it shall ensure

that the provisions of paragraph (1) of this Article are applied to the extent necessary to

guarantee prompt, adequate and effective compensation in respect of their investment to

such nationals or companies of the other Contracting Party who are owners of those

shares.

ARTICLE 6

Repatriation of Investment and Returns

Each Contracting Party shall in respect of investments guarantee to nationals or

companies of the other Contracting Party the unrestricted transfer of their investments and

returns. Transfers shall be effected without delay in the convertible currency in which the

capital was originally invested or in any other convertible currency agreed by the investor

and the Contracting Party concerned. Unless otherwise agreed by the investor transfers

shall be made at the rate of exchange applicable on the date of transfer pursuant to the

exchange regulations in force.

ARTICLE 7

Exceptions



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The provisions of this Agreement relative to the grant of treatment not less

favourable than that accorded to the nationals or companies of either Contracting Party or of

any third State shall not be construed so as to oblige one Contracting Party to extend to

the nationals or companies of the other the benefit of any treatment, preference or privilege

resulting from

(a) any existing or future customs union or similar international agreement to

which either of the Contracting Parties is or may become a party, or

(b) any international agreement or arrangement relating wholly or mainly to

taxation or any domestic legislation relating wholly or mainly to taxation.

ARTICLE 8

Settlement of Disputes between an Investor and a Host State

(1) Disputes between a national or company of one Contracting Party and the

other Contracting Party concerning an obligation of the latter under this Agreement in

relation to an investment of the former which have not been amicably settled shall, after a

period of three months from written notification of a claim, be submitted to international

arbitration if either party to the dispute so wishes.

(2) Where the dispute is referred to international arbitration, the national or

company and the Contracting Party concerned in the dispute may agree to refer the dispute

either to:

(a) the International Centre for the Settlement of Investment Disputes

(having regard to the provisions, where applicable, of the Convention on the Settlement of

Investment Disputes between States and Nationals of other States, opened for signature at

Washington DC on 18 March 1965 in the event that Zamba becomes a Party to this

Convention and the Additional Facility for the Administration of Conciliation, Arbitration

and Fact-Finding Proceedings); or

(b) an international arbitrator or ad hoc arbitral tribunal :

(i) by an agreement between the parties to the dispute; or

(ii) to be established under the Arbitration Rules of the United

Nations Commission on International Trade Law.

(3) If after a period or three months from written notification of the claim there

is no agreement to one of the above alternative procedures, the parties to the dispute shall be

bound to submit it to arbitration under the Arbitration Rules of the United Nations



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Commission on International Trade Law as then in force. The parties to the dispute may

agree in writing to modify these Rules.

(4) The arbitral tribunal constituted under paragraphs (2) and (3) above shall

reach its decisions on the basis of the domestic law of the Contracting Party in whose

territory the investment in question is situated (including its rules on the conflict of laws)

and the rules of international law (including this Agreement) as may be applicable.

ARTICLE 9

Disputes between the Contracting Parties

(1) Disputes between the Contracting Parties concerning the interpretation or

application of this Agreement should, if possible, be settled through the diplomatic

channel.

(2) If a dispute between Contracting Parties cannot thus be settled, it shall upon

the request of either Contracting Party be submitted to an arbitral tribunal.

(3) Such an arbitral tribunal shall be constituted for each individual case in

the following way. Within two months of the receipt of the request for arbitration, each

Contracting Party shall appoint one member of the tribunal. Those two members shall then

select a national of a third State who on approval by the two Contracting Parties shall be

appointed Chairman of the tribunal. The Chairman shall be appointed within two months

from the date of appointment of the other two members.

(4) If within the periods specified in paragraph (3) of this Article the necessary

appointments have not been made, either Contracting Party may, in the absence of any other

agreement, invite the President of the International Court of Justice to make any necessary

appointments. If the President is a national of either Contracting Party or if he is otherwise

prevented from discharging the said function, the Vice-President shall be invited to make

the necessary appointments. If the Vice-President is a national of either Contracting Party or

if he too is prevented from discharging the said function, the Member of the International

Court of Justice next in seniority who is not a national of either Contracting Party shall be

invited to make the necessary appointments.

(5) The arbitral tribunal shall reach its decision by a majority of votes. Such

decision shall be binding on both Contracting Parties. Each Contracting Party shall bear

the cost of its own member of the tribunal and of its representation in the arbitral

proceedings; the cost of the Chairman and the remaining costs shall be borne in equal parts



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by the Contracting Parties. The tribunal may, however, in its decision direct that a higher

proportion of costs shall be borne by one of the two Contracting Parties, and this award

shall be binding on both Contracting Parties. The tribunal shall determine its own

procedure.

ARTICLE 10

Subrogation

(1) If one Contracting Party or its designated Agency (“the first Contracting

Party”) makes a payment under an indemnity given in respect of an investment in the

territory of the other Contracting Party, (“the second Contracting Party”), the second

Contracting Party shall recognise

(a) the assignment to the first Contracting Party by law or by legal

transaction of all the rights and claims of the party indemnified, and

(b) that the first Contracting Party is entitled to exercise such rights and

enforce such claims by virtue of subrogation, to the same extent as the party indemnified.

(2) The first Contracting Party shall be entitled in all circumstances to

(a) the same treatment in respect of the rights and claims acquired by it by

virtue of the assignment, and

(b) any payments received in pursuance of those rights and claims, as the

party indemnified was entitled to receive by virtue of this Agreement in respect of the

investment concerned and its related returns.

(3) Any payments received in non-convertible currency by the first

Contracting Party in pursuance of the rights and claims acquired shall be freely available to

the first Contracting Party for the purpose of meeting any expenditure incurred in the

territory of the second Contracting Party.

ARTICLE 11

Application of other Rules

If the provisions of law of either Contracting Party or obligations under international

law existing at present or established hereafter between the Contracting Parties in addition

to the present Agreement contain rules, whether general or specific, entitling investments by

nationals or companies of the other Contracting Party to a treatment more favourable than



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is provided for by the present Agreement, such rules shall to the extent that they are more

favourable prevail over the present Agreement.

ARTICLE 12

Other Provisions

Notwithstanding any other provisions in this Agreement, each Contracting Party may:

(a) take any measure which it considers necessary for the protection of its

essential security interests;

(i) taken in time of war, or armed conflict, or other emergency in that

Contracting Party or in international relations; or

(ii) relating to the implementation of national policies or international

agreements respecting the non-proliferation of weapons;

(b) take any measure in pursuance of its obligations under the United Nations

Charter for the maintenance of international peace and security;

(c) take any measure necessary to protect human, animal or plant life or health; or

(d) take any measure necessary for the maintenance of public order. The public

order exceptions may be invoked only where a genuine and sufficiently serious threat is

posed to one of the fundamental interests of society.

ARTICLE 13

Entry into Force

This Agreement shall enter into force on the day of signature.

ARTICLE 14

Duration and Termination

This Agreement shall remain in force for a period of fifteen years. Thereafter it

shall continue in force until the expiration of twelve months from the date on which either

Contracting Party shall have given written notice of termination to the other. Provided that

in respect of investments made whilst the Agreement is in force, its provisions shall

continue in effect with respect to such investments for a period of twenty years after the

date of termination and without prejudice to the application thereafter of the rules of



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general international law.

This agreement was initialled in duplicate at Tusland on 1 July 2002.

In witness whereof the undersigned, duly authorised thereto by their respective

Governments, have signed this Agreement.

Done in duplicate at Tusland this first day of August 2002 in the English language,

both texts being equally authoritative.

…………………………………

For the Government of the

Republic of Zamba

……………………………………

For the Government of the

Federal Republic of Tusland

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