INTERNATIONAL COURT OF JUSTICE

SPECIAL AGREEMENT

BETWEEN THE REPUBLIC OF ASPATRIA (APPLICANT)AND THE KINGDOM OF RYDAL (RESPONDENT)

TO SUBMIT TO THE INTERNATIONAL COURT OF JUSTICETHE DIFFERENCES BETWEEN THE STATESCONCERNING THE WINDSCALE ISLANDS

jointly notified to the Court on 16 September 2009

COUR INTERNATIONALE DE JUSTICE

COMPROMIS

ENTRE LA RÉPUBLIQUE D’ASPATRIA (DEMANDERESSE)ET LE ROYAUME DE RYDAL (DÉFENDEUR)

VISANT À SOUMETTRE ÀLA COUR INTERNATIONALE DE JUSTICE

LES DIFFÉRENDS QUI OPPOSENT LES DEUX ÉTATSEN CE QUI CONCERNE LES ÎLES WINDSCALE

notifié conjointement à la Cour le 16 septembre 2009

JOINT NOTIFICATIONADDRESSED TO THE REGISTRAR OF THE COURT:

The Hague, 16 September 2009

On behalf of the Republic of Aspatria ("the Applicant") and the Kingdom of Rydal ("the Respondent"), in accordance with Article 40(1) of the Statute of the International Court of Justice, we have the honour to transmit to you an original of the Special Agreement for submission to the International Court of Justice of the Differences between the Applicant and the Respondent concerning the Windscale Islands, signed in Chicago, Illinois, United States of America, on the tenth day of September in the year two thousand and nine.

Ambassador of the Republic of Aspatria Ambassador of the Kingdom of Rydalto the Kingdom of The Netherlands to the Kingdom of The Netherlands

SPECIAL AGREEMENT

SUBMITTED TO THE INTERNATIONAL COURT OF JUSTICE BYTHE REPUBLIC OF ASPATRIA AND THE KINGDOM OF RYDAL

ON THE DIFFERENCES BETWEEN THEM CONCERNINGTHE WINDSCALE ISLANDS

The Republic of Aspatria and the Kingdom of Rydal (hereinafter referred to as "the Parties"),

Considering that differences have arisen between them concerning the sovereignty and status of

the Windscale Islands and other matters;

Recognising that the Parties concerned have been unable to settle these differences by

negotiation;

Desiring further to define the issues to be submitted to the International Court of Justice

(hereinafter referred to as "the Court") for settling this dispute;

In furtherance thereof the Parties have concluded the following Special Agreement:

Article 1

The Parties submit the questions contained in the Special Agreement (together with

Clarifications to follow) to the Court pursuant to Article 40(1) of the Statute of the Court.

Article 2

It is agreed by the Parties that the Republic of Aspatria shall act as Applicant and the Kingdom

of Rydal as Respondent, but such agreement is without prejudice to any question of the burden

of proof.

Article 3

(a) The Court is requested to decide the Case on the basis of the rules and principles of

general international law, as well as any applicable treaties.

(b) The Court is also requested to determine the legal consequences, including the rights and

obligations of the Parties, arising from its Judgment on the questions presented in the

Case.

Article 4

(a) All questions of procedure and rules shall be regulated in accordance with the provisions

of the Official Rules of the 2010 Philip C. Jessup International Law Moot Court

Competition.

(b) The Parties request the Court to order that the written proceedings should consist of

Memorials presented by each of the parties not later than the date set forth in the Official

Schedule of the 2010 Philip C. Jessup International Law Moot Court Competition.

Article 5

(a) The Parties shall accept any Judgment of the Court as final and binding upon them and

shall execute it in its entirety and in good faith.

(b) Immediately after the transmission of any Judgment, the Parties shall enter into

negotiations on the modalities for its execution.

In witness whereof, the undersigned, being duly authorised, have signed the present Special

Agreement and have affixed thereto their respective seals of office.

Done in Chicago, Illinois, United States of America, this tenth day of September in the year two

thousand and nine, in triplicate in the English language.

Ambassador of the Republic of Aspatria Ambassador of the Kingdom of Rydalto the Kingdom of The Netherlands to the Kingdom of the Netherlands

THE 2010 PHILIP C. JESSUP INTERNATIONAL LAW MOOT COURT COMPETITION

**COMPROMIS**

THE CASE CONCERNING THE WINDSCALE ISLANDS

(ASPATRIA/RYDAL)

1. The Windscale Islands ("the Islands") are an archipelago in the Southern Hemisphere

lying in the Eden Ocean, approximately 500 miles due west of the Republic of Aspatria.

2. Aspatria is a developed country with a coastline along the Eden Ocean. It is the closest

country to the Islands by some distance.

3. The Kingdom of Plumbland is a developed country located in the Northern Hemisphere,

approximately 6,000 miles from Aspatria. Aspatria was a colony of Plumbland from 1610 until

its independence.

4. The Kingdom of Rydal is a developed country located in the Northern Hemisphere,

approximately 7,500 miles from the Islands. Rydal has a long maritime history and during the

seventeenth and eighteenth centuries established a number of colonies throughout the world.

Rydal was originally ruled by an absolute monarch, but is currently governed by a constitutional

monarchy, with the King serving as head of state and a Prime Minister serving as head of

government.

5. The Islands were first discovered in the late eighteenth century by Captain Geoffrey

Parrish, the commander of The Wansfell, which was on a voyage of naturalist discovery under a

Commission from the King of Rydal. Captain Parrish recorded in his ship’s log:

On 6 December 1777, we discovered a group of remote and windswept islands not appearing on our charts. There were no signs of human habitation. Before our ship departed, we took short leave on one of the larger islands and left behind the flag of Rydal and a stone carved with a declaration asserting the sovereignty of King Andrew of Rydal and his successors over the Islands.

6. In early 1778, a naval ship from Plumbland, The Salkeld, came across the Islands. Shortly

afterwards, the Viceroy of Aspatria sent Lieutenant Manuel Ricoy to settle and claim the Islands

on behalf of the King of Plumbland. Lieutenant Ricoy established a fort and settlement named

Salkeld on one of the islands.

7. Internal disturbances in the Viceroyalty of Aspatria caused Lieutenant Ricoy and his men

to be ordered back to Langdale, the capital city of Aspatria. Before they left Salkeld on 20

December 1799, Lieutenant Ricoy left the flag of Plumbland flying over the fort at Salkeld

together with a notice which read:

These Islands were first settled on behalf of His Excellent Majesty King Piero of Plumbland some twenty years ago by His Excellent Majesty’s most loyal servant, Lieutenant Manuel Ricoy. These Islands will forever remain the territory and property of His Excellent Majesty. Dated this twentieth day of December in the Year of Our Lord seventeen hundred and ninety-nine. Manuel Ricoy.

8. It is not known to what extent Lieutenant Ricoy explored the archipelago beyond the

island on which Salkeld was located or to what extent he exercised control over them. Historians

say that the Islands were used by pirates, slave-ships, and other seafarers during the period Ricoy

and his men were in Salkeld.

9. The disturbances in Aspatria were quelled by forces from Plumbland. However, there

was no return to the Islands by Plumbland or its Viceroyalty of Aspatria. Nautical charts

produced in Plumbland and Aspatria from that period showed the Islands as belonging to

Plumbland. The charts ascribed to them the name "Windscale Islands," the name by which they

subsequently became known.

10. On the night of 6 September 1813, a naval ship of Rydal, HMS Applethwaite, under the

command of Admiral George Aikton, was wrecked on one of the smaller islands in the

archipelago. Admiral Aikton’s nautical charts indicated the Islands belonged to Rydal. He and

the other survivors of the wreck set about building what they initially intended to be a temporary

settlement named St. Bees. In Rydal, it was assumed that HMS Applethwaite and its crew had

been lost at sea.

11. In January 1814, war broke out between Rydal and Plumbland over matters unrelated to

the Islands.

12. In May 1815, The Unthank, a slave ship from the State of Sodor, drifted into the harbour

at St. Bees with her mast broken by a strong storm. The Unthank had been drifting for many

months and all on board were starving. The Rydalians assisted the 26 crew members and 150

slaves–men, women, and children–to shore. Admiral Aikton informed the crew of The Unthank

that they had landed on Rydalian territory. He declared the slaves free, since slavery had been

abolished in Rydal, and offered refuge to the crew and former slaves. The weakened and hungry

captain and crew of The Unthank did not resist; they, together with the former slaves, swore

loyalty to Queen Constance, the new Queen of Rydal.

13. By 1816, Admiral Aikton and his men had explored most of the other islands in the

archipelago. The men began to cultivate the land and to domesticate a wild equine species native

to the Islands. They discovered the abandoned settlement of Salkeld, including the fort with the

flag of Plumbland, although there is no indication that anyone found the notice left by Lieutenant

Ricoy.

14. Apart from The Unthank, historians have found no record of any ship discovering

Admiral Aikton and the other inhabitants of the Islands until The Grizedale landed in June 1817.

The Grizedale had been sent by the Viceroy of Aspatria to the Islands under Commander Javier

Crook to establish a penal colony. Settlers living in the fort at Salkeld noticed the approaching

vessel and immediately sent for Admiral Aikton. At his order, a small detachment of armed

sailors met the landing party of The Grizedale, including Commander Crook, when it reached the

shore. Admiral Aikton informed Commander Crook that he and his men must leave at once or be

subject to arrest. Outnumbered and out-armed, Commander Crook chose to depart, protesting as

he left at "the unfounded claims of a foreign monarch" over the Islands.

15. In the middle of 1818, King Piero learned of Rydal’s presence on the Islands from his

Viceroy in Aspatria. He immediately sent a letter to Queen Constance, protesting at Rydal’s

occupation of the Islands, which he termed "the territory and property of Plumbland by right of

first occupation." Rydal replied in a diplomatic note dated 15 September 1818:

Her Majesty Queen Constance and Her government were unaware of the survival of Admiral Aikton and the crew of HMS Applethwaite. Her Majesty gives thanks to God for their preservation. The Islands are within the dominion of Her Majesty and have been since they were discovered by Captain Parrish, a subject of Rydal. Plumbland’s settlement at Salkeld was an illegal occupation of Her Majesty’s territory, and was furthermore subsequently abandoned. Her Majesty embraces and adopts all of the actions of her loyal and noble subject, Admiral Aikton.

16. In March 1819, HMS Braithwaite set sail from Rydal for the Islands under the command

of Vice-Admiral Arthur Wilkinson, who had been appointed by Queen Constance as Governor of

the Islands. HMS Braithwaite subsequently returned to Rydal along with some members of its

crew and those members of the crew of HMS Applethwaite who wished to leave the Islands;

most chose to remain because they had been promised land on the Islands. Vice-Admiral

Wilkinson remained on the Islands as Governor.

17. In 1819, with war between Rydal and Plumbland intensifying, Plumbland’s garrison in

Langdale was reduced to a single battalion of soldiers. By then, an independence movement had

emerged in the Viceroyalty of Aspatria, led by a group of former soldiers from Plumbland who

had settled in Langdale. Assisted by conspirators within the regular army, on 31 October 1819,

the self-proclaimed commander of the movement, Colonel Alejandro Diaz, took advantage of the

reduction in Plumbland’s armed presence and led a night-time raid against the garrison at

Langdale. The attack succeeded, and the few surviving officers and soldiers loyal to King Piero

were brutally slaughtered.

18. Colonel Diaz and his supporters drafted and signed a Declaration of Independence on 2

November 1819, a copy of which he sent to King Piero. The King, unable to spare forces to

retake Aspatria, sent a short reply on 20 March 1820 declaring Diaz and anyone supporting him

to be traitors who would receive the "harshest of penalties befitting their treasonous crime."

19. A Constitutional Convention was held in Langdale in January 1820. The resulting

Aspatrian Constitution established a federal system of government and provided that the Islands

were included in the new Republic of Aspatria and that all laws applied to the whole of

Aspatria’s territory. On 1 July 1820, Colonel Diaz was elected the first President of Aspatria.

20. Plumbland was losing the war with Rydal and in mid-1821 sued for peace. The terms of

the Treaty of Great Corby, signed on 22 September 1821 and shortly thereafter ratified, included

an article that read:

His Majesty King Piero acknowledges the sovereignty of Her Excellent Majesty Queen Constance over the islands lying to the West of Aspatria, known as the Windscale Islands. His Majesty hereby irrevocably transfers any sovereignty that His Majesty possesses in the aforesaid Islands to Her Excellent Majesty.

21. By 1823, there had been attempts at revolution in Plumbland; the people were starving

and disease was rampant. As part of the Treaty of Great Corby, Plumbland had been required to

give up the majority of its army and navy. The retaking of Aspatria was impossible. At the time,

however, King Piero refused to acknowledge the independence of Aspatria.

22. In 1826, President Diaz sent a force to the Islands in an attempt to seize them. The force

landed on one of the smaller islands unopposed, but after several unsuccessful attempts to take

Salkeld, the force withdrew from the Islands.

23. The next year, President Diaz sent an ambassador, Miguel Trinidad, to Rydal. Queen

Constance received the Ambassador in a formal ceremony at Court, recognised the independence

of Aspatria and the government of President Diaz, and instructed her Foreign Minister, William

Smith, to take up with the Ambassador any diplomatic matters between the two States.

24. During subsequent meetings with Foreign Minister Smith, Ambassador Trinidad noted

that Plumbland had been the first to occupy the Islands. He argued that the Islands belonged to

Plumbland, administered by the Viceroyalty of Aspatria, until 1819. Upon the independence of

Aspatria, all territory of the Viceroyalty, including the Islands, devolved to the new State under

the principle of uti possidetis juris. He regarded the Treaty of Great Corby, to the extent that it

purported to affect the Islands, as a nullity, observing that "it was signed by the King of

Plumbland after Aspatria had ceased to be subject to His rule."

25. Foreign Minister Smith rejected all of Aspatria’s assertions, replying that Rydal would

never relinquish its claim to the Islands. He recalled that Rydal had discovered the Islands and

that, in any event, Plumbland had abandoned its settlement there. He concluded, "I understand

your contention that all of Plumbland’s rights in the Islands have descended to Aspatria. But I

regret to inform you that Aspatria has inherited nothing." The negotiations produced no

resolution.

26. In 1839, King Piero finally prevailed in his sixteen-year conflict against revolutionaries

within Plumbland. Weary of conflict and ill-equipped to re-conquer his remaining colonies in the

Southern Hemisphere, he recognised the independence of Aspatria. In the subsequent Treaty of

Woodside, Plumbland recognised Aspatria’s sovereignty over the former territory of the

Viceroyalty of Aspatria, excluding the Islands. At Aspatria’s insistence, a clause was included

within the Treaty acknowledging Aspatria’s continued claim to the Islands.

27. In 1845, Aspatria established a permanent diplomatic mission in Rydal. Between 1845

and 1880, in addition to conducting unrelated diplomatic business, the Ambassador routinely

reiterated Aspatria’s claim to the Islands, complaining particularly of any specific acts that

Aspatria considered inconsistent with its sovereignty over the Islands. The Rydalian Foreign

Ministry categorically dismissed these complaints.

28. Meanwhile, a succession of Rydalian governors of the Islands exercised control over the

whole archipelago. The early inhabitants brought by HMS Applethwaite, HMS Braithwaite and

The Unthank inter-married and produced offspring. The population was further supplemented by

other immigrants to the Islands, mainly from Rydal. Farming and fishing were developed and

whilst there was no great wealth on the Islands, they provided a useful strategic harbour for

Rydal’s navy. By 1899, the population was 4,420, and by 1999, it was 7,054.

29. In 1903, the King of Rydal issued an order to the Governor of the Islands to establish a

consultative Assembly to allow the Islanders to express their views to the Governor on matters of

day-to-day administration of the Islands. However, the Governor retained sole authority to act.

30. Between 1880 and 1910, Aspatria experienced a serious political and economic crisis

which led to a series of coups d’etat and counter-coups. During this period, Aspatria recalled all

of its ambassadors, lodged no complaints concerning the Islands, and made no attempts to assert

control over them. In 1910, civilian government was restored in Aspatria, and, in 1911, the new

President, Porfirio Sebastiani, appointed a new Ambassador to Rydal, who resumed the assertion

of Aspatria's claim to the Islands.

31. By the late 1930s, a small but regular trading link had been established between the

Islands and Aspatria. Aspatria did not impose import duties on goods from the Islands, although

Rydal levied duties on all goods imported to the Islands from outside Rydal, including those

from Aspatria.

32. Until World War II, foreign commercial activity on the Islands, especially by Aspatrian

companies, was limited because of restrictions imposed by Rydal. The Islands depended upon

Rydal for substantial investment in local business or infrastructure. Rydal paid for the

introduction of telephones and radio transmissions, and for the building of an airport. The Islands

did not have a self-sustainable economy and remained poor by international standards.

33. Since independence, Aspatrian law has treated persons born on the Islands as citizens of

Aspatria. They are free to enter Aspatria as citizens and some do so for educational or business

purposes. Rydal allows Aspatrians to visit the Islands only on presentation of a passport, a

requirement that Aspatria has consistently protested.

34. In 1945, Rydal joined the United Nations as an original member. It designated the Islands

a non-self-governing territory and has fulfilled its obligations under article 73 of the Charter by

regularly transmitting reports on the Islands to the Secretary-General.

35. In 1947, Rydal gave the Islands a constitution, in line with Rydal’s treatment of its other

colonies. It guaranteed universal suffrage to all adult residents of the Islands in elections to

choose the members of the Assembly of the Islands. The Constitution confirmed Rydalian

sovereignty over the Islands, but gave control over day-to-day governance, including the

exploitation of natural resources, to the Assembly, subject to the approval of the Governor

appointed by Rydal as the King’s representative. Rydal maintained exclusive authority over the

defence and foreign relations of the Islands.

36. When Aspatria joined the United Nations in 1949, its Ambassador, Francisco Hotton,

sent a diplomatic note to the Secretary-General, asserting:

Aspatria has indisputable sovereignty over the Windscale Islands, deriving from Plumbland’s first settlement and Aspatria’s subsequent independence, notwithstanding any provision of the Treaty of Great Corby. We trust that the member states and organs of the United Nations will recognise Aspatria’s rights and call for Rydal to cede administration of the Islands peacefully to Aspatria.

37. Since its formation in 1962, the U.N. Special Committee on the Situation with regard to

the Implementation of the Declaration on the Granting of Independence to Colonial Countries

and Peoples ("Special Committee") has regularly taken up the matter of the competing claims to

the Islands. In such proceedings, the Special Committee has always expressed concern for the

interests of the population on the Islands. When the Special Committee first discussed the

question of the Islands, the Prime Minister of Rydal appeared before the Committee and stated:

Rydal has committed itself to respecting the will of the peoples of its various territories. If they want self-government or independence, we will facilitate their desire and respect their right to determine their own futures. However, if any of these territories wish to remain within the Rydalian family, the rest of the world must respect their decision.

38. In the 1980s, the Special Committee began allowing a delegation from the Islands to

make presentations at the Committee’s meetings, despite Aspatria’s protests. The delegation

routinely expressed its desire that the Islands remain a part of Rydal. Before the Special

Committee and the General Assembly, a number of states regularly supported Aspatria’s claim to

the Islands. Among these were ten states located near Aspatria.

39. In the 1970s and 1980s, trade steadily increased between Rydal and Aspatria. Although

the two States continued to disagree over the status of the Islands, one Prime Minister of Rydal

noted, "This issue may in some future time be resolved, but for now, it is more productive for

these two great nations to focus upon matters of more significant mutual benefit." In 1985,

Aspatria and Rydal negotiated and signed a Treaty Concerning the Encouragement and

Reciprocal Protection of Investment ("the Aspatria-Rydal BIT"), which entered into force in the

same year. The relevant provisions of the Aspatria-Rydal BIT are set out in Annex I.

40. The Rydalian Oil Company ("ROCO"), incorporated in Rydal in 1972, is a multi-national

energy corporation with worldwide gross revenue of more than US$150 billion in 2007. ROCO’s

corporate structure includes dozens of subsidiaries and related corporations around the world,

including the A & L Exploration Corporation ("ALEC"), incorporated in Aspatria. ROCO owns

80% of the shares in ALEC, and the remaining 20% are owned by more than 5,000 shareholders

of various nationalities.

41. In 1991, the Natural Resources Act ("NRA") was passed in Aspatria, inter alia making it

a criminal offence, punishable by a fine of up to 5% of its worldwide revenues, for an Aspatrian

company to "take any action inconsistent with an exclusive government license or patent

concerning natural resources." The NRA also restricts licenses for the exploitation of energy

resources in Aspatria to locally incorporated companies. Following the enactment of the NRA,

ROCO has channelled its Aspatrian business through ALEC, over the years providing machinery

and capital for ALEC’s operations in Aspatria. In 1993, Aspatria granted ALEC a license to

exploit oil deposits in the northeast province of Aspatria, which has resulted in a consistent

stream of revenue to ALEC’s shareholders.

42. In 1997, oil was discovered in the basin around the Islands. Rydal contracted with ROCO

to explore and map the oil reserves. In 2001, ROCO submitted its findings, indicating significant

reserves located within 200 nautical miles of the Islands’ baselines. The report stated that the

Islands had the potential to become "one of the most important producers of oil outside the

Middle East."

43. The discovery of oil energised an already growing independence movement on the

Islands, led by a group calling itself Islanders Longing for Sovereignty and Autonomy ("ILSA").

ILSA’s statement of principles declared, "The Islands are entitled to independence, which ILSA

seeks as an ultimate goal. In the interim, continued administration by Rydal is preferable to

subjugation by Aspatria, which ILSA will never accept." ILSA cited the potential oil wealth as a

basis for the Islands’ viability as an independent state. In the 2002 and 2006 elections, members

of ILSA were elected to the Assembly of the Islands in growing numbers.

44. News of oil in the Islands also reinvigorated calls in the Aspatrian media and Aspatrian

Parliament for a more aggressive assertion of Aspatrian sovereignty over the Islands. Numerous

bills were proposed in Parliament, variously declaring Aspatria’s legal right to the Islands.

45. Felix Monte de Rosa is the richest man in Aspatria and, according to Forbes magazine,

one of the 25 wealthiest individuals in the world. His company, MDR Limited, is an Aspatrian

corporation engaged in the business of extracting and processing oil, coal, and other fuel sources

throughout the Southern Hemisphere. The weekly newspaper The Times of Rydal has estimated

that Monte de Rosa is the fifth-largest landowner in Rydal. MDR Limited also owns a diverse

portfolio of securities and other investment assets in Rydalian companies.

46. In 2003, MDR Limited petitioned the Aspatrian government for an exclusive license to

extract oil from the basin around the Islands. The Justice Minister of Rydal, a university

classmate of Monte de Rosa, addressed remarks directly to him in a press conference,

commenting, "Aspatria doesn’t actually control the Islands, so any rights you might be granted

would be worthless." Nonetheless, at a press conference of his own promoting the petition,

Monte de Rosa declared, "The Islands belong to Aspatria, and the oil belongs to Aspatria. I am a

son of Aspatria. So it is my patriotic responsibility to make sure that Aspatrian oil is extracted by

the Aspatrian people for the Aspatrian people."

47. The President of Aspatria, Cecilia Lavin, approved the petition, and the Parliament duly

endorsed it in legislation which explicitly referred to the NRA. In a subsequent press conference,

President Lavin stated, "By this decision, the government has granted Monte de Rosa an

exclusive license to extract the oil in the Windscale Islands."

48. The Prime Minister of Rydal, Agnes Abbott, protested at the decision by diplomatic note

to President Lavin, commenting that "the nonsensical grant of authority by Aspatria to exploit

the natural resources of the Windscale Islands, over which it has no sovereignty, needlessly

complicates the fragile relations between our two States." Meanwhile, in a letter published in

The Times of Rydal, Monte de Rosa wrote, "Let Aspatria worry about Aspatria; let Rydal worry

about Rydal. Monte de Rosa will take care of Monte de Rosa." Nevertheless, Monte de Rosa and

MDR Limited took no steps to extract oil from the Islands’ basin over the next several years.

49. In December 2006, the leader of the Assembly of Islands, First Minister Nigel Craven,

announced that the Rydalian government had approved an Assembly plan to invite and evaluate

bids for the rights to exploit the oil reserves within the exclusive economic zone of the Islands.

First Minister Craven issued a public call for bids, which announced that the bidding process

would be "open, transparent and competitive." To qualify, bidding companies had to be

incorporated or have a registered office in Rydal. First Minister Craven instructed companies

wishing to bid to set forth a strategic plan, a profit sharing proposal, and a list of existing

corporate resources to be committed to the project. A committee of the Assembly would evaluate

all bids and make recommendations to the full Assembly. A final decision would be made by a

majority vote of the Assembly, subject to the assent of the Governor of the Islands, Lucy Black.

President Lavin and the Aspatrian Ambassador to Rydal publicly protested the bidding process.

50. Although several companies expressed interest in the project, the Assembly received only

two bids: one from ROCO and one from MDR Limited. ROCO’s bid promised 45% of the net

proceeds to the Islands and listed the existing equipment, personnel, and assets of ALEC located

in Aspatria as resources that would be used to extract and process the oil.

51. MDR’s bid, which was submitted by its local registered office in Rydal, included an up-

front payment of US$500 million upon the signing of a final license agreement and a promise to

pay 50% of the net proceeds to the Islands. MDR’s strategic plan included a customer list,

projected sales, and proposed transportation routes. MDR also planned to build a facility in the

Islands and to employ Islanders as part of the enterprise. MDR’s bid noted that it already had the

approval of the Aspatrian government, and would be able to utilise ports and infrastructure in

Aspatria. In his cover letter accompanying the bid, Monte de Rosa stated:

I am not an international lawyer. All I know is oil. I do not know the outcome of the negotiations that Aspatria and Rydal plan to conduct concerning the long-term future of the Windscale Islands. Nor is this of any significance to me. As a practical matter, it is clear that I will need the acquiescence of both governments if I am to get oil from the Islands, and if I am to be able, in turn, to provide them with infrastructure, employment, and prosperity.

52. In October 2007, the committee of the Assembly recommended that MDR’s bid be

approved. The Assembly rapidly endorsed the committee’s recommendation by a vote of 20 in

favour and 15 against, and forwarded it to Governor Black for her signature. First Minister

Craven explained, "The MDR bid was without question the more economically attractive to the

people of the Islands." An ILSA spokesman explained his group’s dissenting votes, saying, "The

offer is attractive, but as the classic story of Troy tells us, we must be wary of Aspatrians bearing

gifts."

53. After a week of consultation with Prime Minister Abbott, on 1 November 2007,

Governor Black called a press conference to announce that she was withholding her signature.

She invited the Assembly to reconsider its recommendation:

The future of the Windscale Islands lies with that community of States, led by Rydal, which shares a common history, culture, and values. Whilst Mr Monte de Rosa’s proposal may be appealing in the short term, it is my responsibility as the King’s representative in the Islands to safeguard the long-term viability of the territory and its people.

54. On 14 November 2007, the Assembly approved the ROCO bid, by a vote of 22 to 13.

First Minister Craven explained his vote in favour on the floor of the Assembly, remarking,

"Whilst not as generous as the MDR bid, the ROCO bid is still quite lucrative for the Islands."

The ILSA members issued a joint press release, announcing that they "vote in favour of this bid

on its merits, but have grave concerns about the high-handed manner in which this matter has

been treated by the Governor. This is a defeat for the cause of self-determination, and

underscores the need for independence for the people of the Windscale Islands." Governor Black

promptly signed the recommendation and announced that First Minister Craven would

immediately initiate negotiations with ROCO towards a final contract.

55. The next day, Monte de Rosa held a press conference, denouncing the decision as

"discrimination, pure and simple." He concluded, "Aspatria and Rydal have open economic

relations, secured by a bilateral investment treaty. Yesterday, the old world of imperialism struck

a jarring blow against the new world of free trade. The colonial arrogance shown by Rydal must

not stand."

56. On 16 November 2007, the Public Prosecutor of Aspatria filed criminal charges against

ALEC under the NRA. In the official announcement, the Prosecutor said:

It is illegal for any Aspatrian company to interfere with an exclusive license over energy resources. In materially participating in the ROCO bid, ALEC violated the NRA by circumventing the Aspatrian license and claiming access to the same oil reserves that

are the subject of that license under a purported grant from the government of Rydal.

57. In connection with the criminal case, the Prosecutor contemporaneously filed an

administrative petition, asking the court to seize all assets of ALEC within Aspatria. The

Aspatrian criminal code authorises the seizure of assets within the jurisdiction of the court if they

"might be used to further, to promote, or to conceal criminal conduct." The Prosecutor requested

that the court order the sequestration of all ALEC vessels, drilling equipment, and cash within

the territory of Aspatria. The court granted the application, and Aspatrian federal police

immediately seized all assets of ALEC that could be found within Aspatrian territory, including

bank accounts and an oil tanker valued at approximately US$80 million.

58. Counsel for ALEC promptly filed a petition with the Supreme Administrative Court of

Aspatria, consistent with Aspatrian law, asking that the order be cancelled. On 3 March 2008, the

Supreme Administrative Court denied ALEC’s petition in ALEC v. Langdale Administrative

Court. No further direct or indirect appeal from the order is possible under Aspatrian law.

59. The underlying criminal case, Prosecutor v. ALEC, has not yet reached final decision.

According to reports from several independent international NGOs, most criminal cases in

Aspatrian courts take between four and six years to conclude, with another two to three years for

appeals. Counsel for ALEC, in a press conference on 4 March 2008, complained about this

process, saying, "The slow pace of justice in Aspatria means that this so-called ‘temporary’

seizure is for all practical purposes permanent. By the time this case wends its way through the

Aspatrian courts, ALEC will have lost millions of dollars in revenue."

60. Prime Minister Abbott sent a protest to President Lavin on 1 April 2008, asserting that

the seizure was unlawful under international law and violated the Aspatria-Rydal BIT. President

Lavin responded:

The assets of ALEC are not protected by the Aspatria-Rydal BIT. Furthermore, the administrative court’s order was necessary to preserve the status quo until the criminal court is able to deliver its final judgment. I reiterate that Rydal’s claim of authority to extract Aspatria’s natural resources without permission is a violation of our sovereignty, and adds insult to the great injury already inflicted

upon Aspatria by Rydal’s long illegal occupation of the Windscale Islands.

61. On 3 December 2007, Monte de Rosa filed a judicial challenge in the courts of Rydal

against the results of the Rydalian bidding process, but the case was dismissed for lack of

standing to sue. His expedited appeals from that dismissal failed to overturn it, and the Supreme

Court denied discretionary review on 22 August 2008. After the Supreme Court decision was

announced, in an interview with the Tokyo newspaper Asahi Shimbun, Monte de Rosa called

upon the Aspatrian government to assert its rights under the Aspatria-Rydal BIT.

62. Meanwhile, the controversy surrounding Governor Black’s rejection of the Assembly’s

acceptance of MDR’s bid sparked non-violent protests across the Islands. ILSA organised a

number of public rallies and called for a referendum on independence. First Minister Craven

called a meeting of the Assembly on 6 September 2008. It passed a resolution declaring that the

Islanders had the right to determine their own future and that a plebiscite should be held. In the

event the vote favoured independence, the resolution called upon Rydal to provide all necessary

assistance in the progression to independence, in accordance with a further resolution of the

Assembly which would be required to give effect to the results of the plebiscite.

63. A plebiscite was held on 6 December 2008, offering three options: (1) "full

independence," (2) "entering into negotiations over unification with Aspatria," or (3) "remaining

a part of Rydal." On 8 December, the Assembly concluded its tally, and announced that 76% of

the Islanders had voted for independence, 18% for remaining with Rydal, and 6% in favour of

prospective unification with Aspatria. The voter turnout was 93%.

64. Following the plebiscite, First Minister Craven scheduled a session of the Assembly to

consider the necessary steps to give effect to the desire of the Islanders for independence. Prime

Minister Abbott issued a statement indicating that the King of Rydal and His government

endorse the outcome of the plebiscite and pledge the full support of Rydal in assisting the

Islanders’ transition to independence.

65. President Lavin condemned the plebiscite as illegal and stated that she would do all in her

power to ensure that the Islands were "returned to Aspatria’s rightful control." The President

said, "Rydal cannot grant what it does not possess: it cannot grant independence where it does

not itself have lawful sovereignty. The Rydalian endorsement of the plebiscite exacerbates the

illegal occupation of the Islands in violation of Aspatria’s historic title."

66. On 1 February 2009, Prime Minister Abbott sent a diplomatic note to President Lavin.

The note read, in relevant part:

Aspatria’s unlawful prosecution and seizure of ALEC’s assets has made it impossible for ROCO to exploit this resource, and Rydal has no intention of respecting an Aspatrian license to exploit assets which Aspatria does not have. What is at stake goes beyond commercial interests. Issues of territorial sovereignty and self-determination for the Islanders are also in play. We therefore propose that our two governments begin negotiations immediately towards a Special Agreement for submission to the International Court of Justice.

67. When the media reported the diplomatic note, Monte de Rosa immediately called a press

conference. He stated:

I support the peaceful resolution of this dispute. However, I remind the Government of Aspatria that Rydal rejected MDR’s bid on the basis of blatant discrimination as to nationality. The economic interests of an Aspatrian national – namely, MDR Limited – have been irreparably harmed by this violation of the bilateral investment treaty. Regardless of how the other issues are resolved, MDR’s extraction of these resources has already been delayed for nearly two years by Rydal’s unjustifiable rejection of MDR’s bid.

68. President Lavin accepted the offer to negotiate, and the two States concluded the present

Special Agreement.

69. Aspatria and Rydal have ratified the United Nations Charter, the Statute of the

International Court of Justice, the Vienna Convention on the Law of Treaties, the International

Covenant on Civil and Political Rights, the International Covenant on Economic, Social and

Cultural Rights, and the United Nations Convention on the Law of the Sea. Neither Aspatria nor

Rydal are parties to the Convention on the Settlement of Investment Disputes between States and

Nationals of other States. Rydal is a member of the World Trade Organization ("WTO");

Aspatria has applied for WTO membership, but it has not been admitted.

70. Aspatria asks the Court to adjudge and declare that:

(1) Rydal may not lawfully take steps giving effect to the independence of the

Windscale Islands and must cede administration over the Islands to Aspatria because:

(a) sovereignty over the Islands belongs to Aspatria; and

(b) the Islanders are not entitled to independence based on the principle of

self-determination.

(2) Rydal’s rejection of MDR’s bid constituted a violation of the Aspatria-Rydal BIT.

(3) Rydal does not have standing to invoke the Aspatria-Rydal BIT to protect the

assets of ALEC, an Aspatrian company, and in any event, Aspatria did not violate the

Aspatria-Rydal BIT.

71. Rydal asks the Court to adjudge and declare that:

(1) Rydal is permitted under international law to take steps giving effect to

independence for the Windscale Islands because:

(a) sovereignty over the Islands belongs to Rydal; and/or

(b) the Islanders are entitled to independence as an exercise of their right to

self-determination.

(2) Rydal’s rejection of the MDR bid did not violate the Aspatria-Rydal BIT.

(3) Rydal has standing to invoke the Aspatria-Rydal BIT to protect the assets of a

Rydalian enterprise in Aspatria and the seizure of such assets was a violation of the

Aspatria-Rydal BIT.

ANNEX I

Treaty Concerning the Encouragement and Reciprocal Protection of Investment7 November 1985

The Republic of Aspatria and the Kingdom of Rydal (hereinafter referred to as "the Parties"),

Desiring to create favourable conditions for greater economic cooperation between the Parties, in particular, for investments by investors of one Party in the territory of the other Party based on the principles of equality and mutual benefit,

Recognising that the promotion and reciprocal protection of investments on the basis of this Agreement will be conducive to stimulating entrepreneurship and will increase prosperity in both States,

Hereby agree as follows:

* * *

"Investment" means every asset of an investor that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include: (a) an enterprise; (b) shares, stock, and other forms of equity participation in an enterprise; (c) licenses, authorisations, permits, and similar rights conferred pursuant to applicable domestic law.

"Investor of a Party" means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts to make, is making, or has made an investment in the territory of the other Party.

* * *

Article IV

Each Party shall accord investments and investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors and to investors of any non-Party.

Article V

Each Party shall accord to investments treatment in accordance with customary international law, including fair and equitable treatment, full protection and security, and non-discrimination.

Article VI

(a) Neither Party may expropriate or nationalise an investment either directly or indirectly through measures equivalent to expropriation or nationalisation ("expropriation"), except for a public purpose; in accordance with due process of law; in a non-discriminatory manner; and on prompt, adequate, and effective compensation.

(b) With the exception of measures so severe in light of their purpose that they cannot be reasonably viewed as having been adopted and applied in good faith, non-discriminatory measures of a Party that are designed and applied to protect legitimate public welfare objectives do not constitute indirect expropriation.

* * *

Article XIII

In the event of a dispute arising with respect to the rights conferred by this Treaty, in addition to any arbitration proceeding to which an Investor of a Party may be entitled under this Treaty or by contract, the Party of said Investor’s nationality may bring the claim before the International Court of Justice, and the other Party shall accept the personal and subject matter jurisdiction of that Court.

2010 PHILIP C. JESSUP INTERNATIONAL LAW MOOT COURT COMPETITION

CORRECTIONS AND CLARIFICATIONS TO THE COMPROMIS

The following corrections and clarifications have been agreed to by the parties, and the

Compromis should be considered amended accordingly. The Registrar of the Court reminds

all parties and participants of the following:

a. The Compromis is, in essence, a stipulation of facts. Its words have been carefully chosen, and are the result of extensive negotiation. The parties decline to “clarify” matters about which they are unlikely to agree. The parties will not stipulate as to which legal principles are relevant, or which arguments are acceptable or unacceptable.

b. Any request for clarification not addressed in the following paragraphs has been considered by the parties to be redundant, inappropriate, or immaterial, or the parties were unable to reach agreement on a mutually acceptable answer.

c. Except to the extent that corrections and clarifications are set out below, participants are to assume that the Compromis is accurate and complete in all respects. In

particular, both parties stipulate as to the authenticity of all documents and of the signatures on all documents referenced in the Compromis.

d. With respect to pronunciations of the various proper names used in the Compromis, all parties and the Court have agreed that they will not take formal or informal offense at any reasonable effort to pronounce proper names correctly.

CORRECTIONS

1. The last portion of the first sentence in Paragraph 49 is corrected to read as follows:

"… bids for the rights to exploit the oil reserves within 200 nautical miles of the Islands' baselines."

2. The beginning of the first and second sentences in paragraph 61 are corrected to read as follows:

a. "On 3 December 2007, MDR Limited filed a judicial challenge…"

b. "MDR Limited's expedited appeals…"

3. Paragraph 71(2) is corrected to read as follows:

"The rejection of MDR’s bid did not constitute a breach of Rydal’s obligations under the Aspatria-Rydal BIT."

CLARIFICATIONS

1. The Treaty of Woodside was signed and ratified in 1841.

2. In addition to the ten states located near Aspatria, eight other states have regularly supported Aspatria's claim to the Islands before the U.N. Special Committee and the General Assembly.

3. Felix Monte de Rosa is an Aspatrian citizen. MDR Limited was incorporated in Aspatria and is a private company wholly owned by Mr Monte de Rosa.

4. The exclusive license granted by Aspatria in 2003 was to MDR Limited and not to Mr Monte de Rosa in his private capacity.

5. ROCO’s bid satisfied all of the requirements set out by First Minister Craven in paragraph 49.

6. The administrative petition referenced in paragraph 57 was filed pursuant to section 117-10 of the Aspatrian Criminal Code, which sets forth a procedure by which the Public Prosecutor of Aspatria may petition an administrative court for an order to seize any assets which might be used to further, to promote, or to conceal criminal conduct alleged in an underlying criminal case. Assets seized are held by the administrative court until the

conclusion of the underlying criminal case. If the defendant is found guilty, the seized assets may be used in satisfaction of any penalty imposed. If the defendant is found not guilty, all seized assets are to be returned promptly to the defendant.

7. Islanders are classified by Rydal as "Rydalian Dependent Territory citizens" or "RDTs". Individuals with RDT status do not posses full Rydalian citizenship. For example, Islanders may not vote in Rydalian elections and have no representation in Rydalian Parliament.

St. Bees

THE WINDSCALE ISLANDS N

Parrish's Landing

Salkeld

0 10 20 30 40 50 MILE S

0 20 40 60 80 KM

Not to scale

Eden Ocean

WINDSCALE ISLANDS

ASPATRIA

ANNEX II

Team No: 248A

248A

INTERNATIONAL COURT OF JUSTICE

THE PEACE PALACE,

THE HAGUE, THE NETHERLANDS

THE 2010 PHILIP C. JESSUP

INTERNATIONAL LAW MOOT COURT COMPETITION

THE CASE CONCERNING THE WINDSCALE ISLANDS

THE REPUBLIC OF ASPATRIA

Applicant

v.

THE KINGDOM OF RYDAL

Respondent

MEMORIAL FOR THE APPLICANT

Team No: 248A

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TABLE OF CONTENTS

INDEX OF AUTHORITIES............................................................................................. IV

STATEMENT OF JURISDICTION................................................................................ XII

QUESTIONS PRESENTED .......................................................................................... XIII

STATEMENT OF FACTS ............................................................................................ XIV

SUMMARY OF PLEADINGS........................................................................................ XX

PLEADINGS ...................................................................................................................... 1

I. ASPATRIA IS THE TRUE SOVEREIGN OVER THE ISLANDS. ........................... 1

A. PLUMBLAND HAD ESTABLISHED SOVEREIGNTY OVER THE ISLANDS BY THE CRITICAL

DATE IN 1818. .......................................................................................................... 1

1. Plumbland established sovereignty over the Islands by a continuous and peaceful display of authority between 1778 and 1799. ......................................1

2. Plumbland did not abandon sovereignty over the Islands. ................................3

3. Rydal failed to establish a stronger claim than Plumbland over the Islands before the critical date in 1818...........................................................................4

a. Parrish’s act of discovery of the Islands did not establish sovereignty on behalf of Rydal. ........................................................................................... 4

b. The private acts of shipwrecked persons cannot establish Rydalian sovereignty over the Islands........................................................................ 5

B. SOVEREIGNTY OVER THE ISLANDS DEVOLVED TO ASPATRIA FROM PLUMBLAND

UPON ASPATRIA’S INDEPENDENCE IN 1820. ............................................................. 6

1. Aspatria became an independent State under international law in 1820. ..........6

a. Aspatria fulfilled all the criteria of statehood under international law in 1820............................................................................................................. 6

b. Aspatria’s statehood was independent of recognition by Plumbland or third States like Rydal. ................................................................................ 8

2. Sovereignty over the Islands devolved to Aspatria from Plumbland under the principle of uti possidetis juris. ........................................................................10

C. RYDAL’S SUBSEQUENT ACTS CANNOT SUPPLANT ASPATRIA’S SOVEREIGNTY OVER

THE ISLANDS. ......................................................................................................... 12

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1. Plumbland could not validly cede sovereignty over the Islands to Rydal by the 1821 Treaty of Great Corby. ............................................................................12

2. Rydal cannot establish sovereignty over the Islands by acquisitive prescription. .....................................................................................................12

II. RYDAL CANNOT INVOKE THE PRINCIPLE OF SELF-DETERMINATION TO GRANT INDEPENDENCE TO THE ISLANDS. ..................................................... 14

A. THE ISLANDERS DO NOT QUALIFY AS A “PEOPLE” ENTITLED TO INDEPENDENCE

UNDER THE PRINCIPLE OF SELF-DETERMINATION. .................................................. 14

B. THE PRINCIPLE OF SELF-DETERMINATION CANNOT IMPAIR ASPATRIA’S TERRITORIAL

INTEGRITY. ............................................................................................................. 15

C. THE ASPATRIAN GOVERNMENT IS REPRESENTATIVE AND NON-DISCRIMINATORY. . 17

III. RYDAL MUST CEDE ADMINISTRATION OF THE ISLANDS TO ASPATRIA AND CEASE ALL ACTS CONTRARY TO ASPATRIA’S SOVEREIGNTY ........ 18

IV. RYDAL’S REJECTION OF MDR’S BID VIOLATED ITS OBLIGATIONS UNDER THE ASPATRIA-RYDAL BIT. .................................................................. 18

A. ASPATRIA’S CLAIM IS ADMISSIBLE BECAUSE ALL LOCAL REMEDIES HAVE BEEN

EXHAUSTED............................................................................................................ 18

B. RYDAL OWES OBLIGATIONS UNDER THE ASPATRIA-RYDAL BIT TO ASPATRIAN

INVESTORS AND INVESTMENTS IN THE ISLANDS. .................................................... 19

C. RYDAL’S REJECTION OF THE MDR BID VIOLATED ITS OBLIGATION UNDER ARTICLE

IV OF THE ASPATRIA-RYDAL BIT. ......................................................................... 20

1. Rydal treated MDR less favourably than it did ROCO when the two were in “like circumstances”. .......................................................................................20

2. The rejection of the MDR bid bore no reasonable nexus to a rational government policy that does not discriminate against investors. ....................22

D. RYDAL’S REJECTION OF MDR’S BID VIOLATED ITS OBLIGATIONS UNDER ARTICLE V

OF THE ASPATRIA-RYDAL BIT. .............................................................................. 23

1. MDR’s bid is an “investment” under the Aspatrian-Rydal BIT. .....................23

2. Rydal’s rejection of the MDR bid violated its obligation to accord it “fair and equitable treatment”. ........................................................................................24

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V. ASPATRIA IS NOT LIABLE UNDER THE ASPATRIA-RYDAL BIT FOR SEQUESTERING THE ASSETS OF AN ASPATRIAN COMPANY. .................... 25

A. RYDAL LACKS STANDING TO INVOKE ASPATRIA’S RESPONSIBILITY FOR MEASURES

TAKEN AGAINST AN ASPATRIAN COMPANY. ........................................................... 25

1. The sequestration of ALEC’s assets is a matter essentially within Aspatria’s domestic jurisdiction. .......................................................................................25

2. Rydal cannot exercise diplomatic protection on behalf of ROCO for measures taken against ALEC. ........................................................................................26

a. The national State of shareholders cannot exercise diplomatic protection on behalf of the shareholders for an injury to their company. .................. 26

b. Nothing in the Aspatria-Rydal BIT permits Rydal to deviate from the general rule................................................................................................ 27

c. Rydal cannot avail itself of any exception under customary international law. ............................................................................................................ 28

3. In any event, Rydal’s claim is inadmissible because local remedies were not exhausted..........................................................................................................30

B. THE SEQUESTRATION OF ALEC’S ASSETS WAS NOT AN “EXPROPRIATION” UNDER

ARTICLE VI OF THE ASPATRIA-RYDAL BIT. .......................................................... 31

1. The measure was not a direct expropriation under Article VI(a). ...................31

2. The measure was not an indirect expropriation under Article VI(b). ..............31

a. The measure was designed and applied to protect legitimate public welfare objectives. ................................................................................................. 32

b. The measure was non-discriminatory. ...................................................... 33

c. The measure was not so severe in light of its purpose that it cannot be reasonably viewed as having been adopted and applied in good faith. .... 33

PRAYER FOR RELIEF ................................................................................................... 34

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INDEX OF AUTHORITIES

MULTILATERAL TREATIES AND CONVENTIONS

Charter of the Organization of American States, art. 9, Apr. 30 1948, 119 U.N.T.S. 3 ................. 9

Charter of the United Nations, 15 U.N.C.I.O. 335 (Jun. 26, 1945) ........................................ 14, 25

Convention on the Rights and Duties of States, Montevideo, 26 December 1933, 165 L.N.T.S. 19.................................................................................................................................. 7, 9

International Covenant on Civil and Political Rights, Dec. 16, 1996, 999 U.N.T.S. 171, 1057 U.N.T.S. 407 ........................................................................................................................ 14

Statute of the International Court of Justice, June 26, 1945, 33 U.N.T.S. 993 ............................. 13

Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331 ................... 15, 19

INTERNATIONAL COURT OF JUSTICE CASES

Ahmadou Sadio Diallo (Guinea v. Dem. Rep. Congo.) 46 I.L.M. 712 (I.C.J., Preliminary Objections, May 27, 2007)...................................................................................................... 26, 29

Asylum Case (Colomb. v. Peru) 1950 I.C.J. 266 (Nov. 20) ......................................................... 29

Barcelona Traction, Light and Power Company, Limited (Belg. v. Spain) 1970 I.C.J. 3 (Second Phase, Feb. 5) ...................................................................................................... 26, 28, 29

Elettronica Sicula S.p.A. (ELSI) (U.S. v. Italy), 1989 I.C.J. 15 (July 20) .................. 18, 27, 28, 30

Fisheries (U.K. v. Nor.), 1951 I.C.J. 116 (Dec. 18) .................................................................. 5, 14

Frontier Dispute (Burk. Faso v. Mali) 1986 I.C.J. 554 (Dec. 22) ....................................... 3, 10, 11

Kasikili/Sedudu Island (Bots. v. Namib.), 1999 I.C.J. 1045 (Dec. 13) .......................................... 5

Legal Consequences for States of the Continued Presence of South Africa in Namibia (South-West Africa) Notwithstanding Security Council Resolution 276 (1970), Advisory Opinion, 1971 I.C.J. 16 (June 21). ................................................................................................ 19

Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion 2004 I.C.J. 136 (July 9) ................................................................................... 15

Legality of Nuclear Weapons Case, Advisory Opinion, 1996 I.C.J. 226 (July 8) ........................ 30

Military and Paramilitary Activities in and against Nicaragua (Nica. v. U.S.) 1986 I.C.J. 14 (June 27)..................................................................................................................................... 3

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Minquiers and Ecrehos case (Fr. v. U.K.), 1953 I.C.J. 47 (Nov. 17) ......................................... 1, 4

North Sea Continental Shelf Cases (F.R.G. v. Den.), 1969 I.C.J. 3 (Feb. 20) .............................. 30

Rights of Nationals of the United States in Morocco (Fr. v. U.S.), 1952 I.C.J. 176 (Aug. 27) ................................................................................................................................................. 14

Sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malay. v. Sing.), 47 I.L.M. 833 (May 23). ............................................................................ 1, 4, 6

Sovereignty over Pulau Ligitan and Pulau Sipadan (Indon. v. Malay.), 2005 I.C.J. 625 (Dec. 17) ................................................................................................................................. 1, 5, 6

Territorial and Maritime Dispute Between Nicaragua and Honduras in the Caribbean Sea (Nica. v. Hond.), (Judgment of Oct. 8 2007), available at http://www.icj-cij.org/docket/files/120/14075.pdf ................................................................................................ 10

Western Sahara, Advisory Opinion, 1975 I.C.J. 12 (Oct. 16) .................................................. 6, 16

PERMANENT COURT OF INTERNATIONAL JUSTICE CASES

Customs Regime between Germany and Austria, Advisory Opinion, 1931 P.C.I.J. (ser. A./B.) 41 (Sept. 31) ......................................................................................................................... 8

Legal Status of Eastern Greenland 1933 P.C.I.J. (ser. A./B.) No. 53 (Apr. 5) ................... 1, 2, 3, 4

The Case of the S.S. “Lotus” (Fr. v. Turk.) 1927 P.C.I.J. (ser. A) No. 10 (Sept. 7).................... 29

ARBITRAL TRIBUNALS

Aguilar-Amory and Royal Bank of Canada claims (U.K. v. Costa Rica) 1 R.I.A.A. 369 (1923) .............................................................................................................................................. 9

American Manufacturing & Trading Inc. v. Zaire, 36 I.L.M. 1534 (Award) (ICSID, Feb. 21, 1997) ....................................................................................................................................... 27

Amoco Int’l Finance Corp. v. Iran, 15 Iran-U.S. Cl. Trib. Rep. 189 (1987) ................................ 33

Antoine Goetz v. Burundi, 6 ICSID (W. Bank) 5 (Award) (2004) .............................................. 22

Aves Island (Neth. v. Venez.) (Award of Mar. 30, 1865) in JOHN MOORE, 5 HISTORY AND

DIGEST OF INTERNATIONAL ARBITRATIONS 5027 (1898) ................................................................ 3

Azurix Corp. v. Argentina, I.I.C. 24 (Award) (ICSID, 2004) ................................................ 24, 28

Bayindir Insaat v. Pakistan, I.I.C. 27 (Decision on Jurisdiction) (ICSID, 2005). ........................ 23

Campbell McLachlan et al., International Investment Arbitration: Substantive Principles (2008) ............................................................................................................................................ 20

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Clipperton Island Arbitration (Fr. v. Mex.), 26 AM. J. INT’L L. 390 (1931) ........................... 1, 2, 3

CMS Gas Transmission Co. v. Argentina, ICSID (W. Bank) ARB/01/8 (Decision on Objections to Jurisdiction) (July 17, 2003) available at http://ita.law.uvic.ca/documents/cms-argentina_000.pdf. ...................................................... 27, 28

El Oro Mining & Railway Co. (Ltd.) v. Mexico, 5 R.I.A.A. 191 (1931) ..................................... 31

Finnish Ships Arbitration (Fin. v. U.K.), 2 R.I.A.A. 1479 (1934) ................................................ 18

GAMI Investments Inc. v. Mexico, (NAFTA/UNCITRAL) (Final Award) (Nov. 15, 2004), available at http://ita.law.uvic.ca/documents/Gami.pdf .................................................... 24

Honduras Borders (Guat. v. Hond.), 2 R.I.A.A. 1307 (1933)....................................................... 10

International Thunderbird Gaming Corp. v. Mexico, (NAFTA/UNCITRAL) (Award) (Jan. 25, 2006), available at http://ita.law.uvic.ca/documents/ThunderbirdAward.pdf ............... 25

Island of Palmas Arbitration (U.S. v. Neth.), 2 R.I.A.A. 829 (Perm. Ct. Arb. 1928) ....... 3, 4, 5, 12

Loewen v. The United States of America, 7 ICSID (W. Bank) 421 (Award) (2003) .................. 22

Marvin Feldman v. Mexico, 42 I.L.M. 625 (Award) (ICSID, Dec. 16, 2002) ............................. 20

Metalclad Corp v. Mexico, 5 ICSID (W. Bank.) 209 (Award) (ICSID, 2000) ............................ 24

Mihaly International Corporation v Sri Lanka, 41 I.L.M. 867 (Award) (ICSID, 2002)............... 23

MTD Equity v. Chile, 44 I.L.M. 91 (Award) (ICSID, 2004) ....................................................... 24

Opinion No. 1 (Dissolution of the Socialist Federal Republic of Yugoslavia), 92 I.L.R. 162 (Yugo. Arb. Comm. 1991) ....................................................................................................... 9

Pope & Talbot Inc. v. Canada, 7 ICSID (W. Bank) 43 (Award on the Merits of Phase 2) (Apr. 10, 2000) .............................................................................................................................. 20

S.D. Myers, Inc. v. Canada, 40 I.L.M. 1408 (Partial Award) (ICSID, Nov. 13, 2000) .......... 20, 33

Sempra Energy Int’l v. Argentina, I.I.C. 304 (Decision on Objections to Jurisdiction) (May 11, 2005).............................................................................................................................. 28

Técnicas Medioambientales Tecmed S.A. v Mexico, 43 I.L.M. 133 (Award) (ICSID, 2003) ............................................................................................................................................. 24

Territorial Sovereignty and Scope of the Dispute (Eri. v. Yemen) 22 R.I.A.A. 209 (Perm. Ct. Arb., 1998) ................................................................................................................................ 5

The Chamizal Case (Mex. v. U.S.) 11 R.I.A.A. 309 (Int’l Boundary Comm. 1911) ................... 12

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Zhinvali Development Limited v. Georgia, 10 ICSID (W. Bank) 6 (2003) ................................. 23

NATIONAL CASE LAW

Duff Development v. Government of Kelantan [1924] A.C. 747 (H.L.) (U.K.) ............................ 7

Harris v. Minister of the Interior 1952 (2) SA 428 (A) (S. Afr.) .................................................... 7

Re Secession of Quebec [1998] 2 S.C.R 217 (Can.) .................................................................... 17

Salomon v. Salomon & Co Ltd, [1897] A.C. 22 (H.L.) (U.K.) .................................................... 26

U.N. RESOLUTIONS AND DOCUMENTS

Aaland Islands Question, Report by the Commission of Rapporteurs, League of Nations Council Document B7 21/68/106 (1921) ................................................................................ 14, 17

Charter of Economic Rights and Duties of States, G.A. Res. 3281 (XXIX), U.N. Doc. A/RES/29/3281 (Dec. 12, 1974) ................................................................................................... 32

Declaration on Friendly Relations between States, G.A. Res. 2625 (XXV), U.N. Doc. A/RES/2625(XXV) (Oct. 24, 1970) ............................................................................................. 15

Declaration on the Granting of Independence to Colonial Territories and Peoples, G.A. Res. 1514 (XV), U.N. Doc. A/RES/1514(XV) (Dec. 14 1960) .................................................... 15

Draft Articles on Diplomatic Protection, International Law Commission, U.N. GAOR, 61st Sess., Supp. No. 10, U.N. Doc. A/61/10 ........................................................ 18, 26, 29, 30, 31

Draft Articles on Responsibility of States for Internationally Wrongful Acts, International Law Commission, U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (2001)................ 18

G.A. Res. 2065 (XX), U.N. Doc. A/6014 (Dec. 6, 1965) ............................................................ 16

G.A. Res. 2353 (XXII), U.N. Doc. A/6716 (Dec. 19, 1967) .................................................. 15, 16

G.A. Res. 2626 (XXV), U.N. Doc. A/RES/25/2626 (Oct. 24, 1970) ........................................... 32

G.A. Res. 3160 (XXVIII), U.N. Doc. A/9030 (Dec. 14, 1973) .................................................... 16

G.A. Res. 54/183, U.N. Doc. A/RES/54/183 (Dec. 17, 1999) ..................................................... 17

Gillot v. France, Human Rights Committee Case No. 932/2000, U.N. Doc. A/57/40 (26 July 2002)...................................................................................................................................... 14

International Law Commission, 55th Sess., 27764th mtg. U.N. Doc. A/CN.4/SR.2764 ............... 30

International Law Commission, 58th Sess., Diplomatic Protection: Comments and

observations received by Governments, U.N. Doc. A/CN.4/561 ................................................. 30

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Permanent Sovereignty Over Natural Resources, G.A. Res. 1803 (XVII), U.N. Doc. A/5217 (Dec. 14, 1962) ................................................................................................................ 32

S.C. Res. 1160, U.N. Doc. S/RES/1160 (Mar. 23, 1998) ............................................................. 17

S.C. Res. 1199, 11th preambular paragraph, U.N. Doc. S/RES/1199 (Sept. 23, 1998) ................ 17

Special Rapporteur John Dugard, Fourth Report on Diplomatic Protection, 13 March 2003, A/CN.4/530 ......................................................................................................................... 30

The Aaland Islands Question, Report of the International Committee of Jurists, League of Nations Official Journal, Special Supplement No. 3 (1920) .......................................................... 8

U.N. GAOR, 62nd Sess., 10th mtg. U.N. Doc. A/C.6/52/SR.10. ................................................... 30

United Nations General Assembly, Note verbale from States addressed to the Secretary General, 3, U.N. Doc. A/62/658 (Feb. 2, 2008) ............................................................................ 25

Vienna Declaration, U.N. Doc. A/CONF.157/24, (June 25, 1993) .............................................. 15

TREATISES, DIGESTS AND BOOKS

ARNOLD MCNAIR, INTERNATIONAL LAW OPINIONS (1956) ............................................................ 4

CHARLES HYDE, INTERNATIONAL LAW: CHIEFLY AS INTERPRETED AND APPLIED BY THE

UNITED STATES (2ND ED. 1945) ...................................................................................................... 12

CHARLES WEBSTER, 1 BRITAIN AND THE INDEPENDENCE OF LATIN AMERICA, 1812 – 1830

(1938) .............................................................................................................................................. 9

CHRISTOPH SCHREUER, THE ICSID CONVENTION: A COMMENTARY (2001) ........................... 24, 27

DAVID RAIČ, STATEHOOD AND THE LAW OF SELF-DETERMINATION (2002) .................................. 17

EMMERICH DE VATTEL, 2 THE LAW OF NATIONS (CHARLES FENWICK TRANS.) (1916) ................. 13

GREEN HACKWORTH, 1 DIGEST OF INTERNATIONAL LAW 400 (1940) ............................................. 4

HANS KELSEN, PRINCIPLES OF INTERNATIONAL LAW (1952) ....................................................... 4, 9

HERBERT SMITH, 1 GREAT BRITAIN AND THE LAW OF NATIONS (1932) .......................................... 9

HUGO GROTIUS, MARE LIBERUM (RALPH MAGOFFIN TRANS., 1916) (1609)................................... 4

IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW (7TH ED. 2008) ...................... 8, 12, 32

INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES, 2 HISTORY OF THE

ICSID CONVENTION (1970)........................................................................................................ 3, 28

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JAMES CRAWFORD, THE CREATION OF STATES IN INTERNATIONAL LAW (2ND ED. 2006) ........ 7, 8, 17

JAMES FAWCETT, THE BRITISH COMMONWEALTH IN INTERNATIONAL LAW (1963) ..................... 7, 8

JAN VERZIJL, 2 INTERNATIONAL LAW IN HISTORICAL PERSPECTIVE (1969) .................................... 7

JOHN MOORE, 1 A DIGEST OF INTERNATIONAL LAW (1906) ........................................................... 9

KENNETH VANDEVELDE, UNITED STATES INVESTMENT TREATIES: POLICY AND PRACTICE

(1992) ............................................................................................................................................ 22

LASSA OPPENHEIM, 1 OPPENHEIM’S INTERNATIONAL LAW (ROBERT JENNINGS & ARTHUR

WATTS EDS., 9TH ED. 1992) ............................................................................................................. 7

LASSA OPPENHEIM, 2 OPPENHEIM’S INTERNATIONAL LAW (ROBERT JENNINGS & ARTHUR

WATTS EDS., 9TH ED. 1992) .................................................................................................. 4, 10, 12

MALCOLM SHAW, INTERNATIONAL LAW (6TH ED. 2008) .................................................................. 8

MYRES MCDOUGAL ET AL., LAW AND PUBLIC ORDER IN SPACE (1963) ......................................... 3

P.A. VERYKIOS, LA PRESCRIPTION EN DROIT INTERNATIONAL (1934) ........................................... 12

PAUL FAUCHILLE, TRAITÉ DE DROIT INTERNATIONAL PUBLIC (8TH ED. 1921 – 1926) .............. 12, 13

ROBERT JENNINGS, THE ACQUISITION OF TERRITORY IN INTERNATIONAL LAW (1963) .................. 3

ROGER BLANCHARD, THE FUTURE OF GLOBAL OIL PRODUCTION: FACTS, FIGURES, TRENDS AND PROJECTIONS, BY REGION (2005) ............................................................................. 21

ROSALYN HIGGINS, THE DEVELOPMENT OF INTERNATIONAL LAW THROUGH THE

POLITICAL ORGANS OF THE UNITED NATIONS (1964) .................................................................... 14

RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT

LAW (2008) .............................................................................................................................. 24, 31

THOMAS MUSGRAVE, SELF-DETERMINATION AND NATIONAL MINORITIES (2000). ...................... 16

WILLIAM HALL, INTERNATIONAL LAW (8TH ED. 1924) .................................................................... 8

ARTICLES

Alejandro Schwed, Territorial Claims as a Limitation to the Right of Self-Determination

in the Context of the Falkland Islands Dispute, 6 FORDHAM INT’L L.J. 443 (1983) .................... 16

Alfred Verdross, Regles générales du droit de la paix, 30 Recueil des Cours 271 (1929) ............ 7

Antonio Parra, Applicable Substantive Law in ICSID Arbitrations Initiated Under

Investment Treaties, 16 ICSID REV. FOREIGN INV. L.J. 20 (2001) .............................................. 19

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Aron Broches, Arbitration Clauses and Institutional Arbitration, ICSID: A Special Case in COMMERCIAL ARBITRATION, ESSAYS IN MEMORIAM EUGENIO MINOLI 76 (1974) ................... 27

Aron Broches, The Convention on The Settlement of Investment Disputes Between States and Nationals of Other States, 136 RECUEIL DES COURS 330 (1972) ................................. 28

D.H.N. Johnson, Acquisitive Prescription in International Law 27 BRIT. Y.B. INT’L L. 332 (1950) ..................................................................................................................................... 12

Friedrich von der Heydte, Discovery, Symbolic Annexation and Virtual Effectiveness in

International Law 29 AM. J. INT’L L. 448 (1935) ........................................................................... 4

Hans Kelsen, Recognition in International Law: Theoretical Observations, 35 AM. J. INT’L L 605 (1941) .......................................................................................................................... 9

Hersch Lauterpacht, Sovereignty over Submarine Areas, 27 Brit. Y.B. Int’l L. 376 (1950) .......... 3

Ian MacGibbon, Some Observations on the Part of Protest in International Law 30 BRIT. Y.B. INT’L L. 293 (1953) .............................................................................................................. 13

Ian MacGibbon, The Scope of Acquiescence in International Law 31 BRIT. Y.B. INT’L L. 143 (1954) ..................................................................................................................................... 12

Jiménez de Aréchaga, International Law in the Past Third of a Century, 159 RECUEIL DES

COURS 1 (1978) ............................................................................................................................... 6

Josef Kunz, Critical Remarks on Lauterpacht’s Recognition in International Law, 44 AM. J. INT’L L. 713 (1950) ..................................................................................................................... 9

Jules Basdevant, Regles générales du droit de la paix, 58 Recueil des Cours 578 (1936) ............ 7

Malcolm Shaw, Peoples, Territorialism and Boundaries, 8 EUR. J. INT’L L. 478, 492 (1997) ............................................................................................................................................ 11

Sonia Viejobueno, Self-Determination v Territorial Integrity: The Falkland/Malvinas

Dispute with Reference to Recent Cases in the United Nations, 16 S. AFR. Y.B. INT'L L. 1 (1990-1991)................................................................................................................................... 15

Thomas Carey, Self-determination in the Post-Colonial Era: The Case of Quebec, 1 ILSA J. INT’L & COMP. L. 47 (1977) ............................................................................................. 14

MISCELLANEOUS

BRITISH FOREIGN AND STATE PAPERS, 40 B.S.P. 1216 (1826) ....................................................... 7

BRITISH PETROLEUM, ANNUAL REPORT AND ACCOUNTS, 7 (2007), available at

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/ara_2007_annual_report_and_accounts.pdf ................... 21

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Draft Convention on the International Responsibility of States for Injuries to Aliens, 55 AM. J. INT’L. L 545 (1961) ........................................................................................................... 32

Draft Convention on the Protection of Foreign Property, 7 I.L.M. 124 (1968) ...................... 32, 33

Eleanor McDowell, Digest of United States Practice in International Law (1976) ........................ 9

Française, Débats Parlementaires, Journal Officiel de la République Française [J.O.] [Official Gazette of France] (1988) ................................................................................................ 9

Organization for Economic Cooperation and Development [OECD], National Treatment

for Foreign-Controlled Enterprises (1985) .................................................................................. 20

Restatement (Third) of the Foreign Relations Law of the United States, 1 A. L. I. 524 ........ 32, 33

U.K. Parliamentary Debates, 102 Parl. Deb., H.C. (6th ser.) (1986) ............................................... 9

U.S. Annals of Congress, 41 ANNALS OF CONG. (1823) .................................................................. 9

United Nations Conference on Trade and Development, National Treatment, UNCTAD Series on Issues in International Investment Agreements, UNCTAD/ITE/IIT/11(Vol. IV) (2000) ............................................................................................................................................ 21

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STATEMENT OF JURISDICTION

The Republic of Aspatria and the Kingdom of Rydal have submitted the present dispute

to this Court by Special Agreement, dated 10 September 2009 pursuant to Article 40(1) of the

Court's Statute. Both parties have thus accepted the ad hoc jurisdiction of the Court in

accordance with Article 36(1) of the Court's Statute. Both parties shall accept the judgment of

this Court as final and binding and execute it in good faith in its entirety.

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QUESTIONS PRESENTED

The Republic of Aspatria respectfully asks this Court:

I. Whether sovereignty over the Islands belongs to Aspatria;

II. Whether Rydal can invoke the principle of self-determination to grant independence to

the Islands;

III. Whether Rydal’s rejection of the MDR bid constituted a violation of the Aspatria-Rydal

BIT;

IV. Whether Rydal has standing to invoke the Aspatria-Rydal BIT to protect the assets of

ALEC, an Aspatrian company; and if so, whether the sequestration of ALEC’s assets

violated Article VI of the Aspatria-Rydal BIT.

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STATEMENT OF FACTS

This dispute concerns sovereignty over an archipelago, the Windscale Islands (“the

Islands”). The Republic of Aspatria, 500 miles away, is the closest country to the Islands by

some distance. Prior to independence, Aspatria was a colony of the Kingdom of Plumbland. The

Kingdom of Rydal lies 7500 miles from the Islands.

First Occupation

In 1778, the Islands were discovered by a Plumbland naval ship. The Viceroy of

Aspatria then sent Lieutenant Ricoy to settle and claim the Islands for Plumbland. Ricoy’s men

established the first settlement on the Islands, called Salkeld, which they occupied for 21 years

before internal disturbances in Aspatria necessitated their return. They left the flag of Plumbland

flying over the Salkeld fort with a notice declaring Plumbland’s continued sovereignty over the

Islands. Nautical charts produced in Plumbland and Aspatria described the Islands as

Plumbland’s.

Shipwreck Survivors

In 1817, the Viceroy of Aspatria sent Commander Crook to the Islands to establish a

penal colony. Crook discovered a temporary settlement, called St. Bees, on one of the islands.

Outnumbered by the settlers, they departed under protest.

These settlers comprised Rydalian nationals, including Admiral Aikton, and Sodorian

nationals. Aikton and his crew had been shipwrecked in 1813. The Sodorians had landed in 1815

after drifting for months on board a damaged ship. Aikton declared the slaves free and offered

them and the crew refuge. Unable to resist, they swore allegiance. In 1816, the settlers found the

Salkeld settlement with the Plumbland flag.

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Following Crook’s return, Plumbland made a formal protest to Rydal regarding the St.

Bees settlement. Until then unaware of the survival of Aikton and his crew, the Queen sought to

adopt Aikton’s acts. She also relied on the discovery of the Islands in 1777 by a Captain Parrish,

who had been on a naturalist voyage by Rydal.

Aspatria’s Independence

Following the military expulsion of Plumbland from Aspatria in 1819, the leaders of

Aspatria’s independence movement signed a Declaration of Independence. A Constitutional

Convention was held in January 1820 which established a federal system of government and

defined Aspatria’s territory as including the Islands.

By 1821, Plumbland and Rydal had been at war for 7 years over issues unrelated to the

Islands. Plumbland sued for peace, signing the Treaty of Great Corby by which it, inter alia,

acknowledged Rydal’s sovereignty over the Islands and transferred any Plumbland sovereignty

over the Islands to Rydal.

In 1826, Aspatria unsuccessfully attempted to retake the Islands.

In 1827, Rydal recognized Aspatrian independence. Aspatria’s Ambassador to Rydal

asserted Aspatria’s sovereignty over the Islands. Rydal maintained that the Islands were

Rydalian. In 1839, Plumbland recognized Aspatria’s independence and acknowledged Aspatria’s

continued claim to the Islands.

In 1845, Aspatria established a permanent diplomatic mission in Rydal. Aspatria’s

Ambassador continued to protest any Rydalian acts inconsistent with Aspatrian sovereignty over

the Islands.

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Between 1880 and 1910, beleaguered by a political and economic crisis, Aspatria recalled

all its ambassadors. Aspatria resumed its claim to the Islands once civil government was

restored. Upon the restoration of civil government, the new President continued to assert

Aspatria’s claim.

In 1949, upon joining the United Nations, Aspatria asserted its sovereignty over the

Islands to the Secretary-General and before the Special Committee on Decolonisation. 18 states

have regularly supported Aspatria’s claim before the Special Committee and the General

Assembly.

Status of the Islanders

Under a succession of Rydalian governors, the main activities on the Island were fishing

and farming. Rydal’s navy used it as a strategic harbour.

Geographical proximity facilitated the establishment of regular trade between the Islands

and Aspatria. Aspatria levied no import duties on goods from the Islands and treated persons

born on the Islands as Aspatrians.

Rydal restricted foreign commercial activity on the Islands, which remained poor by

international standards with no self-sustainable economy. The Islanders do not possess full

Rydalian citizenship.

In 1945, Rydal joined the United Nations and designated the Islands a non-self-governing

territory. It gave the Islanders a Constitution in 1947, granting them control over day-to-day

administration subject to the Governor’s approval.

Discovery of Oil

In 1997, discovery galvanized a growing independence movement within the Islands.

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In 2003, MDR Limited, an Aspatrian company engaged in extracting and processing oil,

obtained from Aspatria an exclusive license to extract oil from the Islands, but took no steps to

extract the oil. The Islands remained under Rydalian control.

In 2006, with Rydal’s approval, the Assembly of the Islands invited bids for the right to

exploit the oil. The bidding process was promised to be “open, transparent and competitive”.

Bidding companies had to be incorporated or have a registered office in Rydal. The Assembly

would select the winning bid, subject to Rydal’s approval.

Only two bids were made. MDR’s included, inter alia:-

• an up-front payment of US$500 million upon the signing of a final license agreement;

• 50% of net proceeds;

• a strategic plan with

o a customer list,

o projected sales, and

o proposed transportation routes

• plans to build a facility in the Islands;

• employment of Islanders as part of the enterprise;

The second bid was from “ROCO”, a major shareholder of “ALEC”, an Aspatrian

company. ROCO’s bid :

• promised 45% of net proceeds;

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• listed the existing equipment, personnel, and assets of ALEC located in Aspatria as

resources to be used to extract and process the oil.

MDR’s bid was rapidly endorsed by a vote of 20 to 15. First Minister Craven declared

“the MDR bid was without question the more economically attractive”. However, the Rydalian

Governor withheld her assent and asked the Assembly to reconsider, reminding the Islanders of

their ties with Rydal. It was only after two weeks that the Assembly voted again to then approve

ROCO’s bid by 22 to 13, while still reiterating that MDR’s bid was more “generous”.

Repercussions

The Governor’s rejection of the Assembly’s first vote sparked protests across the Islands.

A plebiscite called by the Assembly resulted in 76% of the Islanders voting for independence,

18% for remaining with Rydal, and 6% for prospective unification with Aspatria. The plebiscite

was endorsed by Rydal but rejected by Aspatria as illegal.

The owner of MDR, an Aspatrian, filed a judicial challenge in Rydal against the result of

the bid. The case was dismissed for lack of standing. Appeals were unsuccessful. The Supreme

Court denied discretionary review. MDR’s owner called upon Aspatria to assert its rights under

the Bilateral Investment Treaty (BIT) between Aspatria and Rydal, concluded in 1985, which

required parties to extend “no less favourable treatment” and fair and equitable treatment to

investments by nationals of one state in the territory of the other.

In Aspatria, criminal charges were filed against ALEC under the Natural Resources Act

for “action inconsistent with an exclusive government license or patent concerning natural

resources”. Contemporaneously, all of ALEC’s assets that "might be used to further, to promote,

or to conceal criminal conduct" was sequestered pending the conclusion of the criminal case.

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ALEC’s petition against this was dismissed. International non-governmental organisations

estimate the criminal case will be concluded within 4 to 6 years.

On 16 September 2009, the parties agreed to submit their dispute to this Court.

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SUMMARY OF PLEADINGS

I. Sovereignty over the Islands belongs to Aspatria. Plumbland first claimed and occupied

the Islands in 1778. The 21 years of settlement at Salkeld established Plumbland’s sovereignty

by a continuous and peaceful display of state authority. This sovereignty was preserved by the

flag and notice left by Ricoy upon his departure.

Parrish’s discovery of the Islands in 1777 did not establish Rydalian sovereignty because

it was not followed by occupation. Any effect it had in law was extinguished by the Salkeld

occupation. Neither can Rydal acquire sovereignty through the subsistence of shipwrecked

Rydalian sailors on the Islands.

Sovereignty over the Islands devolved to Aspatria under the principle of uti possidetis

juris when it became independent from Plumbland in 1820. Plumbland’s purported cession of

sovereignty to Rydal by treaty in 1821 was void because it could not cede what it did not

possess.

Rydal’s de facto administration of the Islands cannot establish sovereignty by acquisitive

prescription without Aspatria’s acquiescence. Aspatria has consistently protested Rydal’s

unlawful administration, both to Rydal and to the United Nations.

II. Rydal cannot invoke the principle of self-determination to grant the Islands

independence. Rydal’s unlawful colonisation of the Islands redrew the lines of Aspatrian

sovereignty. The Islanders are a Rydalian settler population whose settlement on the Islands was

unlawful. The United Nations has refused to allow a colonial power to invoke the wishes of an

imported settler population to defeat a pre-colonial territorial claim. The principle of territorial

integrity requires the reintegration of Aspatria and the Islands. This principle can only be

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breached as a last resort if a government is discriminatory and non-representative, but the

Aspatrian government has always granted the Islanders full rights as citizens.

III. Because Aspatria is the true sovereign over the Islands, MDR’s license from the

Aspatrian government should have been sufficient to grant it access to the Islands’ oil reserves.

Rydal’s tender process was an unlawful exercise of sovereignty over Aspatrian territory.

Nevertheless, Rydal owes obligations under international law with regard to its acts in the

Islands because of its physical control over the territory, including its obligations under the

Aspatria-Rydal BIT.

IV. Rydal violated its obligations under the Aspatria-Rydal BIT when it rejected MDR’s bid.

By bidding for the right to exploit the oil around the Islands, MDR was an investor attempting to

make an investment within the Islands. Rydal’s rejection of MDR’s bid violated the obligation

under Article IV to accord MDR no less favourable treatment than it accorded to ROCO, a

Rydalian investor. It discriminated on the basis of nationality and cannot be justified by any

rational government policy. In the alternative, MDR’s bid bears the objective features of an

investment under the Aspatria-Rydal BIT. Rydal’s rejection violated the obligation under Article

V to accord fair and equitable treatment to the bid. Rydal’s specific representations during the

bidding process raised the legitimate expectation that economic competitiveness, and not

nationality, would be the basis of selection. Instead, Rydal interfered with the initial approval by

the Assembly on the basis of nationalistic concerns.

V. Rydal does not have standing to invoke the Aspatria-Rydal BIT to protect the assets of

ALEC, an Aspatrian company. The measure taken against ALEC was in accordance with

Aspatria’s criminal law, a matter within Aspatria’s domestic jurisdiction. Under international

law, the national State of shareholders cannot exercise diplomatic protection for injuries suffered

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by their company. The Aspatria-Rydal BIT does not modify this general rule and the present case

does not fall within any exception under customary international law. In any event, the

sequestration of ALEC’s assets did not constitute indirect expropriation as defined by Article

VI(b) of the Aspatria-Rydal BIT. It was a non-discriminatory measure designed and applied to

protect legitimate public welfare objectives: the legitimate exercise of police powers and the

protection of Aspatria’s permanent sovereignty over its natural resources. Further, it was a

temporary measure that left intact ALEC’s most essential asset in Aspatria: its license to exploit

oil in Aspatria’s northeast province. Therefore, it was not so severe in light of its purpose that it

cannot be reasonably viewed as having been adopted and applied in good faith.

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PLEADINGS

I. ASPATRIA IS THE TRUE SOVEREIGN OVER THE ISLANDS.

A. PLUMBLAND HAD ESTABLISHED SOVEREIGNTY OVER THE ISLANDS BY THE CRITICAL

DATE IN 1818.

The dispute between Plumbland and Rydal concerning sovereignty over the Islands

crystallized on the critical date of 15 September 1818, when both States formally opposed each

other’s claims to the Islands.1 As this Court stated in Pedra Branca, the critical date is significant

in “distinguishing between those acts which should be taken into consideration for the purpose of

establishing…sovereignty and those acts occurring after such date”.2 Acts after the critical date

cannot be considered because the State could have taken those actions purely to buttress its

claims of sovereignty.3

1. Plumbland established sovereignty over the Islands by a continuous and

peaceful display of authority between 1778 and 1799.

A State establishes sovereignty over previously unoccupied territory when it

demonstrates a continuous and peaceful display of authority over the territory (corpus

occupandi), reflecting its intention and will to act as sovereign (animus occupandi).4 In Eastern

Greenland, the Permanent Court held that Norway demonstrated “a manifestation and exercise

1 Compromis, para.15.

2 Sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malay. v. Sing.), 47 I.L.M. 833, para.32 (May 23).

3 Id., at para.32; Minquiers and Ecrehos case (Fr. v. U.K.), 1953 I.C.J. 47, 59-60 (Nov. 17); Sovereignty over Pulau Ligitan and Pulau Sipadan (Indon. v. Malay.), 2005 I.C.J. 625, para.135 (Dec. 17).

4 Legal Status of Eastern Greenland 1933 P.C.I.J. (ser. A./B.) No. 53, 45-46 (Apr. 5); Clipperton Island Arbitration (Fr. v. Mex.), 26 AM. J. INT’L L. 390, 394 (1931).

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of sovereign rights” over Greenland when Hans Egede founded colonies in Greenland in 1721

for the King of Norway and subsequently established settlements in those colonies.5

The discovery of the Islands by a Plumbland naval ship in 1778 was followed by

Lieutenant Ricoy’s claim of sovereignty over the Islands for the King of Plumbland, on the

instructions of the Viceroy of Aspatria. Ricoy and his men established a fort and settlement

named Salkeld and displayed Plumbland’s authority for a continuous period of 21 years

thereafter until 1799. Nautical charts from Plumbland and Aspatria during that period showed the

Islands as Plumbland’s territory.

At the time of Ricoy’s departure, the planting of the flag of Plumbland and a notice

claiming the Islands for the King of Plumbland provided sufficient notice to other States about

Plumbland’s claim. 6 Indeed, Salkeld was subsequently discovered by the Rydalian, Aikton.

Considering the notoriety of Plumbland and Rydal’s strained relations, culminating in the war in

1814, and Aikton’s position as an Admiral of the Rydalian navy, he must have realized the

significance of the flag of Plumbland, even without Ricoy’s notice.7

Plumbland’s sovereignty over the Islands is not affected by the absence of evidence that

Ricoy had explored the entire archipelago.8 According to Judge Huber in the Palmas arbitration,

under the doctrine of contiguity, uninhabited groups of islands may “be regarded as in law a unit,

5 Eastern Greenland, supra n.4 at 28, 48, 55.

6 Clipperton Island, supra n.4 at 394.

7 Compromis, para.6-11.

8 Compromis, para.8.

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and the fate of the principal part may involve the rest”.9 This permits “a State to establish

exclusive appropriation of areas which form a geographical whole, even though the area has not

been subjected to activity”.10 The Salkeld settlement was on one of the largest islands in the

uninhabited archipelago, and was therefore sufficient to imply sovereignty over the entire

territory. The inclusion of the entire archipelago as Plumbland’s territory in nautical charts from

Plumbland and Aspatria confirms that Plumbland’s sovereignty was exercised over the whole of

the Islands.11

2. Plumbland did not abandon sovereignty over the Islands.

Rydal bears the burden of proving that Plumbland had abandoned the Islands.12 It must

show that Plumbland had the intention to abandon the Islands, and it is insufficient to establish a

short hiatus during which Plumbland’s authority was not actually exercised.13 In the Clipperton

Island arbitration, the absence of effective administration by France over Clipperton Island for

three decades after sovereignty was acquired over the Island did not imply France’s intention to

forfeit sovereignty.14

9 Island of Palmas Arbitration (U.S. v. Neth.), 2 R.I.A.A. 829, 840, 854, 855 (Perm. Ct. Arb. 1928). See also Eastern Greenland, supra n.4 at 46.

10 MYRES MCDOUGAL ET AL., LAW AND PUBLIC ORDER IN SPACE 864-865 (1963). SEE ALSO

ROBERT JENNINGS, THE ACQUISITION OF TERRITORY IN INTERNATIONAL LAW 75 (1963); Hersch Lauterpacht, Sovereignty over Submarine Areas, 27 Brit. Y.B. Int’l L. 376, 426-428 (1950).

11 Compromis, paras. 8, 9, Annex II.

12 Frontier Dispute (Burk. Faso v. Mali) 1986 I.C.J. 554, para.65. (Dec. 22).

13 Eastern Greenland, supra n.4 at 47. See also Clipperton Island, supra n.4 at 394; Aves Island (Neth. v. Venez.) (Award of Mar. 30, 1865) in JOHN MOORE, 5 HISTORY AND DIGEST OF

INTERNATIONAL ARBITRATIONS 5027 (1898).

14 Clipperton Island, supra n.4 at 394.

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Plumbland never abandoned the Islands. Ricoy’s return to Aspatria was a matter of

military necessity, and, quite contrary to any intention to abandon the Islands, he planted

Plumbland’s flag and the notice asserting Plumbland’s continued claim. Commander Crook’s

subsequent voyage to establish a penal colony on the Islands in 1817, on the authority of the

Viceroy of Aspatria, further affirms Plumbland’s intention to maintain its sovereignty.15

3. Rydal failed to establish a stronger claim than Plumbland over the Islands

before the critical date in 1818.

This Court in Minquiers and Ecrehos stated that, in determining sovereignty over territory,

it must “appraise the relative strength of the opposing claims to sovereignty” before the critical

date. 16 Plumbland’s sovereignty over the Islands is unassailable because Rydal could not

establish a stronger claim to the Islands before the critical date in 1818.

a. Parrish’s act of discovery of the Islands did not establish sovereignty on

behalf of Rydal.

Distinguished publicists from Grotius17 to Oppenheim18 agree that discovery without

more cannot establish sovereignty over territory. Judicial decisions19 and state practice20 support

15 Compromis, paras. 7, 14.

16 Minquiers and Ecrehos, supra n.3 at 67. See also Eastern Greenland, supra n.4 at 46.

17 HUGO GROTIUS, MARE LIBERUM 11 (Ralph Magoffin trans., 1916) (1609).

18 LASSA OPPENHEIM, 2 OPPENHEIM’S INTERNATIONAL LAW 689 (Robert Jennings & Arthur Watts eds., 9th ed. 1992). See also HANS KELSEN, PRINCIPLES OF INTERNATIONAL LAW 214-215 (1952); Friedrich von der Heydte, Discovery, Symbolic Annexation and Virtual Effectiveness in

International Law 29 AM. J. INT’L L. 448, 452 (1935).

19 Island of Palmas, supra n.9 at 846; Pedra Branca, supra n.2 at para.29 (Separate Opinion of Judge Rao), available at http://www.icj-cij.org/docket/files/130/14504.pdf.

20 ARNOLD MCNAIR, INTERNATIONAL LAW OPINIONS 285, 287, 300 (1956); GREEN HACKWORTH, 1 DIGEST OF INTERNATIONAL LAW 400, 453, 469 (1940).

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the view that title by discovery exists only as an “inchoate title” until it is perfected by effective

occupation of the territory. In the meantime, this inchoate title can be defeated by sovereignty

acquired through a continuous and peaceful display of authority.21 This describes precisely the

circumstances of the present case. Parrish’s accidental discovery of the Islands was

unaccompanied by any occupation by Rydal, and unlike Plumbland’s flag and settlement which

were later discovered, nothing indicates that the flag of Rydal and the carved stone were ever

discovered. Therefore, once Plumbland established sovereignty over the Islands through a

continuous and peaceful display of authority, Rydal’s inchoate title was defeated.

b. The private acts of shipwrecked persons cannot establish Rydalian

sovereignty over the Islands.

This Court in Sedudu Island emphasized that “the use of the disputed territory by private

individuals for their private ends” is irrelevant as to a State’s claim of sovereignty.22 The Court

then found that since the Masubia tribe “used the island intermittently, according to the seasons

and their needs, for exclusively agricultural purposes”, it was insufficient to establish Namibia’s

sovereignty “even if links of allegiance may have existed between the Masubia and the

[Namibian] authorities”.23 Similarly, this Court in Pulau Sipadan found that the Bajau Laut’s

21 Island of Palmas, supra n.9 at 869.

22 Kasikili/Sedudu Island (Bots. v. Namib.), 1999 I.C.J. 1045, para. 94 (Dec. 13). See also Fisheries (U.K. v. Nor.), 1951 I.C.J. 116, 184 (Dec. 18) (Dissenting Opinion of Sir Arnold McNair); Territorial Sovereignty and Scope of the Dispute (Eri. v. Yemen) 22 R.I.A.A. 209, 283-284 (Perm. Ct. Arb., 1998).

23 Sedudu Island, id., at 1105.

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private acts of fishing and collecting forest products could not establish sovereignty for the

Sultan of Sulu despite the existence of links of allegiance.24

Aikton and his crew were stranded on the Islands in 1813 as a result of a shipwreck. The

Queen of Rydal knew nothing of their survival, let alone their private act of building the

temporary settlement of St. Bees. Likewise, the cultivation of land and domestication of animals

were for their survival and subsistence, and not functions of State authority. These acts cannot

establish Rydalian sovereignty even if any links of allegiance arose when the Sodorians,

weakened and hungry, swore loyalty to the Queen of Rydal.25 Even if Aikton had intended to

claim the Islands for Rydal, these acts were invalid because the Queen of Rydal only purported

to ratify them five years after Aikton’s landing. As former ICJ President de Aréchaga stated,

private individuals can only perform valid acts of acquisition if “their acts are immediately

ratified by their Governments”.26

B. SOVEREIGNTY OVER THE ISLANDS DEVOLVED TO ASPATRIA FROM PLUMBLAND

UPON ASPATRIA’S INDEPENDENCE IN 1820.

1. Aspatria became an independent State under international law in 1820.

a. Aspatria fulfilled all the criteria of statehood under international law in 1820.

24 Pulau Sipadan, supra n.3 at 669, 670, 675. See also Western Sahara, Advisory Opinion, 1975 I.C.J. 12, para.95 (Oct. 16); Pedra Branca, supra n.2 at para.15 (Separate Opinion of Judge Rao).

25 Compromis, para.12, 13.

26 Jiménez de Aréchaga, International Law in the Past Third of a Century, 159 RECUEIL DES

COURS 1, 188 (1978).

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A State comes into existence when “a people is settled in a territory under its own

sovereign government”.27 The customary character of these criteria since the 19th century is

confirmed by the writings of distinguished publicists such as Crawford28 and Verzijl,29 and state

practice.30 As British Foreign Secretary Canning stated in relation to the secession of Greece

from Austria in 1826, a new State must be “capable of maintaining an independent existence, of

carrying on a Government of its own…and of being responsible to other nations for the

observance of international laws”. 31 These criteria were codified in Article I of the 1933

Montevideo Convention.32

Aspatria’s emergence into statehood had already commenced in 1819, when the

Aspatrian independence movement purged the Plumbland forces from the garrison at Langdale.

At the time, Plumbland’s forces were severely incapacitated by the Plumbland-Rydal war and

there was no reasonable possibility of retaking Aspatria. Therefore, Aspatria already possessed

27 LASSA OPPENHEIM, 1 OPPENHEIM’S INTERNATIONAL LAW 120-121 (Robert Jennings & Arthur Watts eds., 9th ed. 1992).

28 JAMES CRAWFORD, THE CREATION OF STATES IN INTERNATIONAL LAW 55-60, 382-383 (2nd ed. 2006).

29 JAN VERZIJL, 2 INTERNATIONAL LAW IN HISTORICAL PERSPECTIVE 62 (1969); Jules Basdevant, Regles générales du droit de la paix, 58 RECUEIL DES COURS 578 (1936); Alfred Verdross, Regles générales du droit de la paix, 30 RECUEIL DES COURS 271, 333 (1929).

30 Duff Development v. Government of Kelantan [1924] A.C. 747, 814 (H.L.) (U.K.); Harris v. Minister of the Interior 1952 (2) SA 428 (A) at 478 (S. Afr.).

31 BRITISH FOREIGN AND STATE PAPERS, 40 B.S.P. 1216, 1244 (1826).

32 Convention on the Rights and Duties of States, Montevideo, 26 December 1933, 165 L.N.T.S. 19.

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“freedom from control by any external authority”,33 without any “relation of superiority and

subordination” between itself and Plumbland. 34 Aspatria’s formation as a sovereign State

continued through the Declaration of Independence on 2 November 1819, and was consummated

by the adoption of its Constitution in July 1820, which established a federal system of

government, extending Aspatria’s domestic jurisdiction over the whole of its territory, including

the Islands.35

b. Aspatria’s statehood was independent of recognition by Plumbland or third

States like Rydal.

Distinguished publicists like Hall36 and Brownlie37 agree that, since the 19th century,

recognition by other States has been unnecessary to confer a new State international legal rights,

and recognition is merely declaratory of an existing state of law and fact (the declaratory theory).

These publicists disavow the notion that a new State’s international legal rights are contingent on

recognition (the constitutive theory) because it would mean that a new State can simultaneously

33 JAMES FAWCETT, THE BRITISH COMMONWEALTH IN INTERNATIONAL LAW 89 (1963). See also The Aaland Islands Question, Report of the International Committee of Jurists, League of Nations Official Journal, Special Supplement No. 3, 5 (1920).

34 Customs Regime between Germany and Austria, Advisory Opinion, 1931 P.C.I.J. (ser. A./B.) 41, 45 (Sept. 31) (Separate Opinion of Judge Anzilotti).

35 Compromis, para.17, 18, 19.

36 WILLIAM HALL, INTERNATIONAL LAW 19 (8th ed. 1924).

37 IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 86-88 (7TH ED. 2008). See also

MALCOLM SHAW, INTERNATIONAL LAW 447 (6th ed. 2008); Crawford, supra n.28 at 376-379.

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exist in relation to some States but not in relation to others. Further, a legal vacuum would result

where a new State is deprived of any legal rights until recognition.38

The declaratory theory is supported by State practice from the time of Aspatria’s

independence until the present day.39 In the early 19th century, many Spanish colonies, like

Mexico (1810) and Colombia (1810) declared and maintained their independence from Spain.

Notwithstanding the absence of formal recognition, these States acquired international legal

rights and obligations such as the use of their flags for commercial purposes and appointment of

consul.40 As Canning put it, the “assumed Independence is therein admitted, not created”.41

International tribunals have also supported the view that “the effects of recognition by

other states are purely declaratory”.42 This was codified in international agreements like the

Montevideo Convention.43

38 Hans Kelsen, Recognition in International Law: Theoretical Observations, 35 AM. J. INT’L L 605, 609 (1941); Josef Kunz, Critical Remarks on Lauterpacht’s Recognition in International

Law, 44 AM. J. INT’L L. 713, 718 (1950).

39 ELEANOR MCDOWELL, DIGEST OF UNITED STATES PRACTICE IN INTERNATIONAL LAW, 19-20 (1976); U.K. Parliamentary Debates, 102 Parl. Deb., H.C. (6th ser.) (1986) 977; Française, Débats Parlementaires, Journal Officiel de la République Française [J.O.] [Official Gazette of France] at 2324 (1988).

40 JOHN MOORE, 1 A DIGEST OF INTERNATIONAL LAW, 43-45 (1906); HERBERT SMITH, 1 GREAT

BRITAIN AND THE LAW OF NATIONS, 271-275 (1932).

41 CHARLES WEBSTER, 1 BRITAIN AND THE INDEPENDENCE OF LATIN AMERICA, 1812-1830, 292 (1938). See also: U.S. Annals of Congress, 41 ANNALS OF CONG. 22-23 (1823) (Statement of James Monroe, United States President).

42 Aguilar-Amory and Royal Bank of Canada claims (U.K. v. Costa Rica) 1 R.I.A.A. 369, 381 (1923). See also Opinion No. 1 (Dissolution of the Socialist Federal Republic of Yugoslavia), 92 I.L.R. 162, 165 (Yugo. Arb. Comm. 1991).

43 Montevideo Convention, supra n.32, art. 3. See also Charter of the Organization of American States, art. 9, Apr. 30 1948, 119 U.N.T.S. 3.

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Therefore, Aspatria possessed international legal rights, including the right to acquire

territory,44 once it fulfilled the criteria of statehood in 1820. The subsequent recognition of

Aspatria by Rydal in 1827 and Plumbland in 1839 were, at best, declarations of this pre-existing

condition. In consequence, any subsequent acts of Rydal and Plumbland purporting to affect

Aspatria’s sovereignty, such as the 1821 Treaty of Great Corby, were unlawful and invalid.45

2. Sovereignty over the Islands devolved to Aspatria from Plumbland under the

principle of uti possidetis juris.

This Court in Frontier Dispute defined uti possidetis juris as “a principle which upgraded

former administrative delimitations, established during the colonial period, to international

frontiers”,46 and that uti possidetis juris is “a general principle, which is logically connected with

the phenomenon of the obtaining of independence, wherever it occurs”.47 As a former colony

which has achieved independence, Aspatria would acquire sovereignty over the Islands under uti

possidetis juris if the Islands had formed part of the former Viceroyalty.

Territorial boundaries ascribed to a new State under uti possidetis juris extend as far as

“administrative control was exercised by the colonial entity with the will of the [former]

monarch”.48 Plumbland’s administrative control of the Islands, from the initial occupation in

1778 to the attempt to establish a penal colony in 1817, was exercised upon the initiative of the

44 2 OPPENHEIM, supra n.18 at 677.

45 Infra, Section I.C.1.

46 Frontier Dispute, supra n.12 at para.23.

47 Id., at para.20. See also: Territorial and Maritime Dispute Between Nicaragua and Honduras in the Caribbean Sea (Nica. v. Hond.), at para.151 (Judgment of Oct. 8 2007), available at http://www.icj-cij.org/docket/files/120/14075.pdf.

48 Honduras Borders (Guat. v. Hond.), 2 R.I.A.A. 1307, 1324 (1933).

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Viceroyalty of Aspatria, the closest Plumbland colony to the Islands by some distance. King

Piero of Plumbland, some 6000 nautical miles away from the Islands, was only alerted to

Rydal’s unlawful presence by his Viceroy in Aspatria.49 Nothing indicates Plumbland’s intention

to administer the Islands independently from the Viceroyalty of Aspatria. Therefore, upon

Aspatria’s independence, the boundaries separating its territory, including the Islands, from the

rest of Plumbland, were consolidated into international frontiers under uti possidetis juris.

Rydal’s de facto administration over the Islands in 1820 did not impede the operation of

uti possidetis juris.50 This Court declared in Frontier Dispute that, “where the territory…is

effectively administered by a State other than the one possessing the legal title [under uti

possidetis juris], preference should be given to the holder of the title”.51 This is consistent with

the purposes of “securing respect for the territorial boundaries at the moment when independence

is achieved”52 and preventing the usurpation and renewal of colonization in the territories of new

States.53 Rydal’s attempt to resurrect colonization in the Islands is precisely the sort of insidious

conduct that uti possidetis juris seeks to prevent.

49 Compromis, para.6, 14.

50 Compromis, para.16.

51 Frontier Dispute, supra n.12 at para.63.

52 Id., at para.20, 23. See also Maritime Dispute Between Nicaragua and Honduras supra, n.47 at para.153.

53 Frontier Dispute, id., at para.23; Malcolm Shaw, Peoples, Territorialism and Boundaries, 8 EUR. J. INT’L L. 478, 492 (1997).

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C. RYDAL’S SUBSEQUENT ACTS CANNOT SUPPLANT ASPATRIA’S SOVEREIGNTY OVER

THE ISLANDS.

1. Plumbland could not validly cede sovereignty over the Islands to Rydal by

the 1821 Treaty of Great Corby.

The principle of nemo dat non quod habet is a general principle of international law.54

Plumbland’s sovereignty over the Islands had devolved to Aspatria when Aspatria became an

independent State in 1820. Therefore, Plumbland could not cede the Islands to Rydal in 1821.

2. Rydal cannot establish sovereignty over the Islands by acquisitive

prescription.

A State can only establish prescriptive title when contesting States acquiesce in its

adverse possession of the territory.55 Acquiescence can only be inferred when these States have

remained “silent without good reason in the face of acts in derogation of their rights”.56

Aspatria never acquiesced to Rydal’s unlawful administration of the Islands.

Distinguished writers57 and tribunals58 agree that diplomatic protests suffice to indicate a lack of

acquiescence. In the Chamizal arbitration, the United States could not acquire prescriptive title

over El Chamizal because Mexico had persistently made diplomatic protests against the adverse

possession of the territory.59 Even writers supporting forcible measures as the principal means of

54 BROWNLIE, supra n.37 at 121; JENNINGS, supra n.10 at 16; Palmas, supra n.9 at 842.

55 D.H.N. Johnson, Acquisitive Prescription in International Law 27 BRIT. Y.B. INT’L L. 332, 346 (1950), PAUL FAUCHILLE, TRAITÉ DE DROIT INTERNATIONAL PUBLIC 760 (8th ed. 1921-1926).

56 Ian MacGibbon, The Scope of Acquiescence in International Law 31 BRIT. Y.B. INT’L L. 143, 171 (1954); P.A. VERYKIOS, LA PRESCRIPTION EN DROIT INTERNATIONAL 26 (1934).

57 CHARLES HYDE, INTERNATIONAL LAW: CHIEFLY AS INTERPRETED AND APPLIED BY THE UNITED

STATES 387-388 (2nd ed. 1945); 2 OPPENHEIM AT 706-707; BROWNLIE AT 149.

58 The Chamizal Case (Mex. v. U.S.) 11 R.I.A.A. 309 (Int’l Boundary Comm. 1911).

59 Id., at 323, 329.

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interrupting prescription emphasize that protests would suffice if a State were too weak to utilize

forcible measures.60

Aspatria has persistently protested against Rydal’s unlawful occupation of the Islands,

starting with the attempt to retake Salkeld by force and continuing with Ambassador Trinidad’s

regular complaints against any acts inconsistent with Aspatria’s sovereignty over the Islands,

Aspatria’s diplomatic note to the UN Secretary-General in 1949, and regular protests before the

GA.61 These protests continued until this dispute was brought before this Court.62 Rydal cannot

be allowed to usurp Aspatria’s rightful sovereignty over the Islands on the basis of

‘acquiescence’ when Aspatria has protested in every possible manner short of declaring war.

The brief lapse in Aspatria’s protests did not amount to acquiescence. As Vattel put it, a

State claiming prescriptive title cannot impute acquiescence to a State which “sets forth valid

reasons for [its] silence such as the impossibility of speaking”.63 Aspatria was beleaguered by an

internal crisis from 1880 to 1910 and recalled all of its ambassadors. Aspatria’s claim under the

Aspatria-Rydal BIT relating to oil exploitation within the Islands does not amount to

acquiescence. During negotiations, the parties deliberately left the question of sovereignty over

60 FAUCHILLE, supra n.55 at 760, cited in Ian MacGibbon, Some Observations on the Part of

Protest in International Law 30 BRIT. Y.B. INT’L L. 293, 307 (1953).

61 Compromis, paras. 22, 27, 33, 36, 38.

62 Statute of the International Court of Justice art. 36(1), June 26, 1945, 33 U.N.T.S. 993 [hereinafter I.C.J. Statute].

63 EMMERICH DE VATTEL, 2 THE LAW OF NATIONS at para. 144 (Charles Fenwick trans.) (1916).

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the Islands open, which “implies the reservation and preservation of the legal positions of both

Parties”.64

II. RYDAL CANNOT INVOKE THE PRINCIPLE OF SELF-DETERMINATION TO

GRANT INDEPENDENCE TO THE ISLANDS.

A. THE ISLANDERS DO NOT QUALIFY AS A “PEOPLE” ENTITLED TO INDEPENDENCE

UNDER THE PRINCIPLE OF SELF-DETERMINATION.

An imported settler population is a minority not forming a “peoples” entitled to

independence under the principle of self-determination. 65 According to Professor Higgins,

“peoples” refers not to minority groups within a sovereign State, but a “majority within a

generally accepted political unit”.66 In considering the Aaland Islands question, the League of

Nations Special Rapporteurs found that the Swedish population in the Aaland Islands were no

more than a Finnish minority without a right to independence from Finland.67 Similarly, in the

case of Gibraltar, over which Spain had sovereignty, the GA rejected the right of independence

64 Fisheries, supra n.22 at 203 (Dissenting Opinion of Judge Read). See also Rights of Nationals of the United States in Morocco (Fr. v. U.S.), 1952 I.C.J. 176, 200-201 (Aug. 27).

65 Charter of the United Nations, art. 1 (2), art. 55, 15 U.N.C.I.O. 335 (Jun. 26, 1945) [hereinafter U.N. Charter]; International Covenant on Civil and Political Rights, art. 1(1), Dec. 16, 1996, 999 U.N.T.S. 171, 1057 U.N.T.S. 407.

66 ROSALYN HIGGINS, THE DEVELOPMENT OF INTERNATIONAL LAW THROUGH THE POLITICAL

ORGANS OF THE UNITED NATIONS 104 (1964). See also Thomas Carey, Self-determination in the

Post-Colonial Era: The Case of Quebec, 1 ILSA J. INT’L & COMP. L. 47, 50 (1977); Gillot v. France, Human Rights Committee Case No. 932/2000, U.N. Doc. A/57/40, para. 13.16 (26 July 2002).

67 Aaland Islands Question, Report by the Commission of Rapporteurs, League of Nations Council Document B7 21/68/106, 318 (1921).

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on the part of the population of Gibraltar, which comprised imported settlers from Britain, the

colonizing power.68

The Islanders comprise Rydalian descendants and freed Sodorian slaves who swore

loyalty to Rydal, who inter-married and produced offspring. They also include Rydalian

immigrants.69 The Islanders do not form a population with a separate identity and interest from

Rydal, but a Rydalian minority illegally annexed into the sovereign territory of Aspatria. This

Court stated in the Legal Consequences advisory opinion concerning Palestine that a State’s

annexation of its population into territory not under its sovereignty is contrary to the very idea of

self-determination.70

B. THE PRINCIPLE OF SELF-DETERMINATION CANNOT IMPAIR ASPATRIA’S

TERRITORIAL INTEGRITY.

GA Resolutions, which constitute “subsequent practice” for interpreting UN Charter

provisions,71 prohibit the principle of self-determination from dismembering or impairing “the

territorial integrity or political unity of sovereign and independent States”.72 UN practice shows

68 G.A. Res. 2353 (XXII), U.N. Doc. A/6716 (Dec. 19, 1967); Sonia Viejobueno, Self-

Determination v Territorial Integrity: The Falkland/Malvinas Dispute with Reference to Recent

Cases in the United Nations, 16 S. AFR. Y.B. INT'L L. 1, 15 (1990-1991).

69 Compromis, para.28.

70 Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, 2004 I.C.J. 136, 181 (July 9).

71 Vienna Convention on the Law of Treaties, art. 31(3)(b), May 23, 1969, 1155 U.N.T.S. 331 [VCLT].

72 Declaration on the Granting of Independence to Colonial Territories and Peoples, G.A. Res. 1514 (XV), para. 6, U.N. Doc. A/RES/1514(XV) (Dec. 14 1960); Declaration on Friendly Relations between States, G.A. Res. 2625 (XXV), principle 5, para.7, U.N. Doc. A/RES/2625(XXV) (Oct. 24, 1970); Vienna Declaration, U.N. Doc. A/CONF.157/24, (June 25, 1993).

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that territorial limitations “based on a legitimate historical title supersede the right to self-

determination” in non-self-governing territories. 73 In 1967, Britain held a referendum in

Gibraltar, a non-self-governing territory under its administration, in breach of Spain’s historical

sovereignty over the territory. Notwithstanding the wishes of Gibraltar’s population to retain

links with Britain, the GA declared the referendum invalid, condemning “any colonial situation

which partially or completely destroys the national unity and territorial integrity of a country”.74

In the case of the Falkland Islands, the GA decided that it is the “interests of the population”, not

their wishes that must be taken into account.75

The territorial integrity principle was recognized by this Court in Western Sahara,76

where Judge Singh explained that the principle of self-determination would not apply to the

territory if, at the time of colonization, there was evidence of “the existence of one single

State…which would have been dismembered by the colonizer and thus justify reunion on

decolonization at the present time”.77

The Islands do not fall within the typical case of colonialism. Rydal’s unlawful

administration dismembered the sovereign State comprising Aspatria and the Islands. The

territorial integrity principle demands a reintegration of the Islands with Aspatria upon

73 THOMAS MUSGRAVE, SELF-DETERMINATION AND NATIONAL MINORITIES 247 (2000). See also Alejandro Schwed, Territorial Claims as a Limitation to the Right of Self-Determination in the

Context of the Falkland Islands Dispute, 6 FORDHAM INT’L L.J. 443, 459 (1983).

74 G.A. Res. 2353, supra n.68.

75 G.A. Res. 2065 (XX), para.1, U.N. Doc. A/6014 (Dec. 6, 1965); G.A. Res. 3160 (XXVIII), 3rd preambular paragraph, U.N. Doc. A/9030 (Dec. 14, 1973).

76 Western Sahara, supra n.24 at 33.

77 Id., (Declaration of Judge Singh) at 79-80. See also Separate Opinion of Judge Petren at 110.

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decolonization. The Special Committee explained that it is the “interests”, not the wishes of the

Islanders that are paramount.78 It follows that the plebiscite endorsed by Rydal was invalid under

international law.

C. THE ASPATRIAN GOVERNMENT IS REPRESENTATIVE AND NON-DISCRIMINATORY.

The only exception to the territorial integrity principle is when the government fails to

“represent the whole people belonging to the territory without distinction [and] without

discrimination on grounds of race, creed or colour”.79 Secession “can only be considered as an

altogether exceptional solution, a last resort”, 80 like Bangladesh from Pakistan (1971) and

Croatia from Yugoslavia (1991), where the parent State committed widespread and systematic

violations of human rights. 81 The pending decision regarding the unilateral declaration of

independence by Kosovo must be considered with Serbia’s “grave violations of human rights in

Kosovo which affected ethnic Albanians” identified by the GA82 and the Security Council.83

78 Compromis, para.37.

79 G.A. Res. 2625, supra n.72, principle 5, para.7; CRAWFORD, supra n.28 at 118; Reference Re Secession of Quebec [1998] 2 S.C.R 217, para.126 (Can.).

80 The Aaland Islands Question, Report by the Commission of Rapporteurs, supra n.67 at 318.

81 DAVID RAIČ, STATEHOOD AND THE LAW OF SELF-DETERMINATION 332-372 (2002).

82 G.A. Res. 54/183, 5th and 6th preambular paragraphs, U.N. Doc. A/RES/54/183 (Dec. 17, 1999).

83 S.C. Res. 1160, U.N. Doc. S/RES/1160 (Mar. 23, 1998); S.C. Res. 1199, 11th preambular paragraph, U.N. Doc. S/RES/1199 (Sept. 23, 1998).

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Aspatria has always granted those born on the Islands full rights as Aspatrian citizens and

full access into the mainland.84 The Islanders cannot claim independence under the banner of

institutionalized discrimination.

III. RYDAL MUST CEDE ADMINISTRATION OF THE ISLANDS TO ASPATRIA

AND CEASE ALL ACTS CONTRARY TO ASPATRIA’S SOVEREIGNTY

In light of the above, Aspatria’s sovereignty over the Islands renders Rydal’s

administration over the Islands illegal. Rydal must cease all acts that are inconsistent with

Aspatria’s sovereignty over the Islands, 85 and must cede administration over the Islands to

Aspatria. The Governor must be recalled, the tender process for concessions to exploit the

Islands’ oil is void, and Rydal’s attempts to grant independence to the Islanders are ineffective.

IV. RYDAL’S REJECTION OF MDR’S BID VIOLATED ITS OBLIGATIONS

UNDER THE ASPATRIA-RYDAL BIT.

A. ASPATRIA’S CLAIM IS ADMISSIBLE BECAUSE ALL LOCAL REMEDIES HAVE BEEN

EXHAUSTED.

Under customary international law,86 all local remedies must be pursued within the State

allegedly responsible before an international claim is admissible.87 Aspatria’s claim is admissible

since MDR had pursued all administrative and judicial remedies possible under Rydalian law.88

84 Compromis, para.33.

85 Draft Articles on Responsibility of States for Internationally Wrongful Acts art. 30(a), International Law Commission, U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (2001) [Draft Articles on State Responsibility].

86 Elettronica Sicula S.p.A. (ELSI) (U.S. v. Italy), 1989 I.C.J. 15 at para.50 (July 20); Finnish Ships Arbitration (Fin. v. U.K.), 2 R.I.A.A. 1479, 1502 (1934).

87 ELSI, id., at para.59; Draft Articles on Diplomatic Protection, art. 14(1), International Law Commission, U.N. GAOR, 61st Sess., Supp. No. 10, U.N. Doc. A/61/10 [Draft Articles on Diplomatic Protection]; Draft Articles on State Responsibility, supra n.85, art. 44(b).

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B. RYDAL OWES OBLIGATIONS UNDER THE ASPATRIA-RYDAL BIT TO ASPATRIAN

INVESTORS AND INVESTMENTS IN THE ISLANDS.

Since the Aspatria-Rydal BIT is an instrument of international law, a court “should have

recourse to the rules of general international law to supplement those of the treaty”.89 The Legal

Consequences advisory opinion concerning Namibia states that “[p]hysical control of a territory,

and not sovereignty or legitimacy of title, is the basis of State liability for acts affecting other

States”.90 This Court held that South Africa owed obligations to other States under a League of

Nations Mandate, “an international agreement having the character of a treaty or convention”, in

relation to the exercise of its powers within Namibia.91 South Africa’s lack of sovereignty did not

preclude the imposition of these treaty obligations because it had physical control over Namibia.

Interpreted in accordance with international law, the Aspatria-Rydal BIT imposes

obligations on Rydal to protect Aspatrian investors and investments within the Islands because of

Rydal’s physical control over the Islands, not because of Rydalian sovereignty. This is consistent

with the object and purpose of the Aspatria-Rydal BIT to promote and reciprocally protect

investments irrespective of the sovereignty dispute over the Islands.92

88 Compromis, para.61.

89 VCLT, supra n.71, art. 31(3)(c); Antonio Parra, Applicable Substantive Law in ICSID

Arbitrations Initiated Under Investment Treaties, 16 ICSID REV. FOREIGN INV. L.J. 20, 21 (2001).

90 Legal Consequences for States of the Continued Presence of South Africa in Namibia (South-West Africa) Notwithstanding Security Council Resolution 276 (1970), Advisory Opinion, 1971 I.C.J. 16, para.118 (June 21).

91 Id., at para.92, 94.

92 VCLT, supra n.71, art. 31(1).

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C. RYDAL’S REJECTION OF THE MDR BID VIOLATED ITS OBLIGATION UNDER ARTICLE

IV OF THE ASPATRIA-RYDAL BIT.

MDR is an “investor” under the Aspatrian-Rydal BIT as an Aspatrian national

“attempting to make…an investment” in the Islands by submitting a bid for the concession to

exploit the oil reserves.

Decisions of the Iran-U.S. Claims Tribunal and International Centre for Settlement of

Investment Disputes (“ICSID”) form “subsidiary means”93 for determining the content of the

national treatment principle in Article IV, a term found in most modern investment treaties.94

The Tribunal in Pope & Talbot held that a host State violates the national treatment requirement

when it: (1) accords different treatment to foreign and domestic investors in “like

circumstances”; and (2) cannot prove that the differentiation bears a reasonable nexus to a

rational government policy which is not discriminatory, either on its face or de facto.95

1. Rydal treated MDR less favourably than it did ROCO when the two were in

“like circumstances”.

The term “like circumstances” in Article IV encompasses investors within the same

business or economic sector.96 MDR and ROCO fulfill this requirement since they both operate

93 I.C.J. Statute, supra n.62, art. 38(1)(d).

94 Campbell McLachlan et al., International Investment Arbitration: Substantive Principles 251 (2008).

95 Pope & Talbot Inc. v. Canada, 7 ICSID (W. Bank) 43, at para.78-79 (Award on the Merits of Phase 2) (Apr. 10, 2000); Marvin Feldman v. Mexico, 42 I.L.M. 625, 662 (Award) (ICSID, Dec. 16, 2002).

96 Pope and Talbot Interim Award at para.78; S.D. Myers, Inc. v. Canada, 40 I.L.M. 1408, 1437 (Partial Award) (ICSID, Nov. 13, 2000); Organization for Economic Cooperation and Development [OECD], National Treatment for Foreign-Controlled Enterprises at 16-17 (1985).

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in the oil exploitation industry. Indeed, the likeness goes further since they are in direct

competition for the same concession.

In consequence, the national treatment principle demands that MDR and ROCO “be

subject to the same competitive conditions” during the Rydalian bidding process.97 The bidding

process was promised to be “open, transparent and competitive”. The MDR bid was superior to

the ROCO bid. It provided an upfront payment of USD 500 million, and 50 percent of the net

proceeds. The ROCO bid only promised 45 percent of the net proceeds, an amount realizable

only after the realization period that can extend to 50 years, according to studies within the oil

production industry. 98 Industry practice further reveals that the 5 percent difference in net

proceeds between the two bids translates to a difference of USD 1 billion in absolute terms.99

Additionally, the MDR bid provided infrastructure development on the Islands and guaranteed

local employment of the Islanders. As First Minister Craven himself admitted, “the MDR bid

was without question the more economically attractive to the people of the Islands”.100

97 United Nations Conference on Trade and Development, National Treatment, 8, UNCTAD Series on Issues in International Investment Agreements, UNCTAD/ITE/IIT/11(Vol. IV) (2000).

98 ROGER BLANCHARD, THE FUTURE OF GLOBAL OIL PRODUCTION: FACTS, FIGURES, TRENDS AND

PROJECTIONS, BY REGION 20 – 21 (2005).

99 BRITISH PETROLEUM, ANNUAL REPORT AND ACCOUNTS, 7 (2007), available at

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/ara_2007_annual_report_and_accounts.pdf

100 Compromis, para.49, 50, 51, 52.

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The first vote of the Assembly was clearly in favour of the MDR bid. As ILSA stated,

Governor Black’s refusal to assent was a denial of the freely will of the Islanders. It is telling that

Black herself admitted that the MDR proposal was appealing in the short term.101

2. The rejection of the MDR bid bore no reasonable nexus to a rational

government policy that does not discriminate against investors.

Rydal cannot invoke its government policies to justify its differential treatment, unless

the policies were not intentionally discriminatory nor discriminatory in effect. 102 The

circumstances surrounding the rejection of the MDR bid reveal Rydal’s prejudice on the basis of

nationality. The ILSA members voting against the MDR bid asserted that they had to “be wary

of Aspatrians bearing gifts”, and Black also declared that “the future of the Windscale Islands

lies with that community of States, led by Rydal”.103 This intentional discrimination is fatal to

any justification by Rydal for its differential treatment.

101 Compromis, para.53.

102 KENNETH VANDEVELDE, UNITED STATES INVESTMENT TREATIES: POLICY AND PRACTICE AT 77 (1992); Loewen v. The United States of America, 7 ICSID (W. Bank) 421, para.132 (Award) (2003); Antoine Goetz v. Burundi, 6 ICSID (W. Bank) 5, para.121 (Award) (2004).

103 Compromis, para.52, 53.

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D. RYDAL’S REJECTION OF MDR’S BID VIOLATED ITS OBLIGATIONS UNDER ARTICLE V

OF THE ASPATRIA-RYDAL BIT.

1. MDR’s bid is an “investment” under the Aspatrian-Rydal BIT.

ICSID Tribunals have found that pre-contractual “development costs” constitute

protected investments if (1) they fulfill the requisite conditions within the investment treaty; and

(2) such an interpretation is consistent with the intentions of the State parties.104

The Aspatria-Rydal BIT defines “investment” to include “every asset”, and this term

“embraces everything of economic value, virtually without limitation”. 105 The MDR bid

involved an exposure to the latent obligation of an upfront payment of USD 500 million, which

ripened into an asset of economic value once the Assembly reached the initial consensus to select

the MDR bid.106 At that stage of the bidding process, the approved bid became a protected

investment and Rydal was bound to treat it fairly and equitably.

Such a finding is consistent with the intentions of the parties under the Aspatria-Rydal

BIT. In Mihaly v. Sri Lanka, the investment treaty both defined the conditions of an investment

and further provided for “the Parties’ prerogative in this respect”. Since the host State explicitly

represented that it did not consider there to be an investment until a contract was signed, the

Tribunal found that the development costs did not constitute an investment.107 The Aspatria-

Rydal BIT does not make reference to the intentions of the parties apart from providing the

104 MCLACHLAN, supra n.94 at 178-179; Zhinvali Development Limited v. Georgia, 10 ICSID (W. Bank) 6, para.415 (2003); Mihaly International Corporation v Sri Lanka, 41 I.L.M. 867, para.48, 49, 60 (Award) (ICSID, 2002).

105 Bayindir Insaat v. Pakistan, I.I.C. 27, para.112-113 (Decision on Jurisdiction) (ICSID, 2005).

106 Compromis, para.51, 52.

107 Mihaly, supra n.104 at para.51, 60.

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requisite conditions for an investment. Therefore, the MDR bid constituted an investment since it

fulfilled the necessary conditions. Indeed, Rydal expressed no contrary intention during its

intercourse with the bidders.

2. Rydal’s rejection of the MDR bid violated its obligation to accord it “fair and

equitable treatment”.

The standard of “fair and equitable treatment” encompassed in Article V provides “an

autonomous standard that is additional to general international law”.108 This requires treatment

“that does not affect the basic expectations [of] the foreign investor”.109

ICSID Tribunals have ruled that clear and unambiguous conduct by the host State

“creates reasonable and justifiable expectations on the part of an investor (or investment) to act

in reliance on said conduct”.110 In Metalclad v. Mexico, Mexican federal officials assured the

investor that a federal permit was “all that was needed to undertake the landfill project”. The

refusal of the investor’s operations for lack of a municipal permit breached the investor’s

legitimate expectation.111

108 RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW, 124 (2008); Azurix Corp. v. Argentina, I.I.C. 24, para.361 (Award) (ICSID, 2004); MTD Equity v. Chile, 44 I.L.M. 91, para.109-115 (Award) (ICSID, 2004).

109 Técnicas Medioambientales Tecmed S.A. v Mexico, 43 I.L.M. 133, para.154 (Award) (ICSID, 2003).

110 International Thunderbird Gaming Corp. v. Mexico, para.147 (NAFTA/UNCITRAL) (Award) (Jan. 25, 2006), available at http://ita.law.uvic.ca/documents/ThunderbirdAward.pdf. See also GAMI Investments Inc. v. Mexico, at para. 76 (NAFTA/UNCITRAL) (Final Award) (Nov. 15, 2004), available at http://ita.law.uvic.ca/documents/Gami.pdf.

111 Metalclad Corp v. Mexico, 5 ICSID (W. Bank.) 209, 228 (Award) (ICSID, 2000).

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The bidding process was expressly represented to be “open, transparent and competitive”,

and the only qualification required was a registered office in Rydal.112 These representations

raised MDR’s legitimate expectations that economic competitiveness, and not nationality, would

be the yardstick against which bids would be evaluated. Rydal’s eventual rejection of the MDR

bid on the basis of nationality113 was irreconcilable with the initial representations and breached

the standard of fair and equitable treatment. This is unlike Thunderbird v. Mexico, where

Mexican authorities provided no assurance that gaming machines would be approved, and the

investor was aware that gaming was illegal in Mexico.114

V. ASPATRIA IS NOT LIABLE UNDER THE ASPATRIA-RYDAL BIT FOR

SEQUESTERING THE ASSETS OF AN ASPATRIAN COMPANY.

A. RYDAL LACKS STANDING TO INVOKE ASPATRIA’S RESPONSIBILITY FOR MEASURES

TAKEN AGAINST AN ASPATRIAN COMPANY.

1. The sequestration of ALEC’s assets is a matter essentially within Aspatria’s

domestic jurisdiction.

Article 2(7) of the UN Charter prohibits the organs of the UN, including this Court, from

intervening in “matters which are essentially within the domestic jurisdiction of any State”.115

Accepted State practice shows that, absent any human rights violations, domestic criminal justice

is invariably a matter in which this Court cannot intervene.116

112 Compromis, para.49.

113 Supra, Section IV.C.

114 Thunderbird, supra n.110, at para.149-164.

115 U.N. Charter, supra n.65, art. 2, para.7.

116 United Nations General Assembly, Note verbale from States addressed to the Secretary General, 3, U.N. Doc. A/62/658 (Feb. 2, 2008).

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The sequestration of the assets of ALEC, an Aspatrian company, was a valid exercise of

the jurisdiction of the Aspatrian courts, in accordance with the Aspatrian Criminal Code and the

NRA.117 These measures were essentially within Aspatria’s domestic jurisdiction and this Court

should declare its lack of competence over this claim.118

2. Rydal cannot exercise diplomatic protection on behalf of ROCO for

measures taken against ALEC.

a. The national State of shareholders cannot exercise diplomatic protection on

behalf of the shareholders for an injury to their company.

The doctrine of separate legal personality is a general principle of international law,

under which the only proper claimant for an injury suffered by a company is the company itself,

not its shareholders.119 Accordingly, the national State of shareholders in a company is not

entitled to exercise diplomatic protection on behalf of the shareholders for an injury to the

corporation.120 As this Court stated in Barcelona Traction, “an act directed against and infringing

only the company’s rights does not involve responsibility towards the shareholders, even if their

interests are affected”.121 Prima facie, Rydal cannot exercise diplomatic protection on behalf of

ROCO, a shareholder of ALEC, for an alleged injury to ALEC alone.

117 Compromis, para.40, 57; Compromis Clarifications, para.6.

118 I.C.J. Statute, supra, n.62, art. 36(6).

119 GRAZHDANSKII KODEKS RF [GK] [CIVIL CODE] art. 48(1) (Russ.), 中国人民共和国公司法 [COMPANY LAW] art. 3 (promulgated by the Standing Comm. Nat’l People’s Cong., Oct. 7, 2005, effective Jan. 1, 2006) (P.R.C.); Salomon v. Salomon & Co Ltd, [1897] A.C. 22 (H.L.) (U.K.).

120 Barcelona Traction, Light and Power Company, Limited (Belg. v. Spain) 1970 I.C.J. 3, 42, 46 (Second Phase, Feb. 5); Ahmadou Sadio Diallo (Guinea v. Dem. Rep. Congo.) 46 I.L.M. 712, 727 (I.C.J., Preliminary Objections, May 27, 2007), Draft Articles on Diplomatic Protection, supra n. 87, art. 11.

121 Barcelona Traction, supra n.120 at 35-36.

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b. Nothing in the Aspatria-Rydal BIT permits Rydal to deviate from the general

rule.

The general rule on diplomatic protection of companies can only be modified by an

express and unambiguous treaty provision. 122 In ELSI, the United States could exercise

diplomatic protection on behalf of United States shareholders of an Italian company because the

United States-Italy Treaty provided for obligations owed to Italian companies “organized or

participated in” or “controlled” by United States companies.123

The inclusion of “shares, stock and equity participation in an enterprise” in the definition

of “investment” under the Aspatria-Rydal BIT is no such exception.124 There is no resemblance

to the position under the ICSID Convention. ICSID tribunals125 have only allowed shareholder

claims on the basis of similar definitions of “investment” because of the special exception in

Article 25(2)(b) of the ICSID Convention, which permits parties to agree to treat a company of

host State incorporation as a national of another State “because of foreign control”.126 Former

ICSID Secretary-General Broches,127 and several ICSID tribunals128 have emphasized that the

122 ELSI, supra n.86 at 86 (Separate Opinion of Judge Oda); Aron Broches, Arbitration Clauses

and Institutional Arbitration, ICSID: A Special Case in COMMERCIAL ARBITRATION, ESSAYS IN

MEMORIAM EUGENIO MINOLI 76 (1974).

123 ELSI, supra n.86 at 49 (Judgment), 89 (Judge Oda).

124 Compromis, Annex I.

125 American Manufacturing & Trading Inc. v. Zaire, 36 I.L.M. 1534, 1544 (Award) (ICSID, Feb. 21, 1997); CMS Gas Transmission Co. v. Argentina, ICSID (W. Bank) ARB/01/8 at para. 57, (Decision on Objections to Jurisdiction) (July 17, 2003) available at http://ita.law.uvic.ca/documents/cms-argentina_000.pdf.

126 Convention on the Settlement of Disputes between States and Nationals of Other States, art. 25(2)(b), Oct. 14, 1966, 575 U.N.T.S. 159 [ICSID Convention]; CHRISTOPH SCHREUER, THE

ICSID CONVENTION: A COMMENTARY 292–293 (2001).

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ICSID mechanism of investor-State arbitration involves the role of “the State host to the

investment” and is conceptually distinct from diplomatic protection, which involves “the role of

the State of the investor’s nationality”.

To replicate the ICSID position and modify the general rule of diplomatic protection, an

investment treaty must expressly provide for obligations owed to a company incorporated in the

host State, as provided in ELSI. No such provision exists in the Aspatria-Rydal BIT. As this

Court in Barcelona Traction warned, extending diplomatic protection to shareholders without

express treaty provision to that end would create “confusion and insecurity in international

economic relations”.129 This is especially where “the shares of companies whose activity is

international are widely scattered and frequently change hands”, creating the risk of multiple

claims.130 This risk eventuates here because ALEC’s has more than 5000 shareholders of various

nationalities.131

c. Rydal cannot avail itself of any exception under customary international law.

Customary international law only permits diplomatic protection of shareholders in two

situations: (1) when the company has ceased to exist according to the law of the State of

127 Aron Broches, The Convention on The Settlement of Investment Disputes Between States and

Nationals of Other States, 136 RECUEIL DES COURS 330, 360-361 (1972).

128 Sempra Energy Int’l v. Argentina, I.I.C. 304, para.150 (Decision on Objections to Jurisdiction) (May 11, 2005). See also CMS Gas, supra n.125 at para.43; Azurix, supra n.108 at para.72.

129 Barcelona Traction, supra n.120 at para.96.

130 Ibid. See also INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES, 2

HISTORY OF THE ICSID CONVENTION 581 (1970).

131 Compromis, para.40.

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incorporation for a reason unrelated to the injury;132 and (2) when a State causes direct injury to

the rights of shareholders as such, as distinct from those of the company itself.133

None of these exceptions apply. ALEC still retains its corporate personality under

Aspatrian laws, and none of ROCO’s direct rights qua shareholder like voting at general

meetings, and sharing in the company’s assets on liquidation have been infringed.134

Rydal may rely on an alleged third exception suggested in Article 11(b) of the

International Law Commission Draft Articles on Diplomatic Protection (“Draft Articles”): that

the company had, at the date of the injury, the nationality of the State responsible for causing the

injury, and incorporation in that State was required as a precondition for doing business there.135

Rydal bears the burden of proving the existence of this alleged exception under

customary international law.136 However, this Court has never affirmed the customary character

of this exception, even when the occasion arose for clarification.137 Judge Nervo in Barcelona

Traction strongly objected to it because it undermines “the essential need not to have public

utilities and national resources subordinated to the private interests of foreign corporations”.138

132 Draft Articles on Diplomatic Protection, supra n.87, art. 11(a); Barcelona Traction, supra n.120 at para. 64.

133 Draft Articles on Diplomatic Protection, supra n.87, art. 12; Barcelona Traction supra n.120 at para. 47.

134 Barcelona Traction, supra, n.120 at para.46-47.

135 Draft Articles on Diplomatic Protection, supra n.87, art. 11(b).

136 Asylum Case (Colomb. v. Peru) 1950 I.C.J. 266, 276 (Nov. 20); The Case of the S.S. “Lotus” (Fr. v. Turk.) 1927 P.C.I.J. (ser. A) No. 10 at 18 (Sept. 7).

137 Barcelona Traction supra n.120, at 42; Ahmadou, supra n.120 at para.91.

138 Barcelona Traction, supra n.120 at 259 (Separate Opinion of Judge Nervo).

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Also, Article 11(b) of the Draft Articles was, at best, progressive development rather than a

codification of custom. The Commission itself was divided on the customary character of this

exception.139 Finally, no constant and uniform State practice or opinio juris exists as to the

normative character of this exception.140 Several States have rejected Article 11(b) because “it

lacks support in customary international law”.141

3. In any event, Rydal’s claim is inadmissible because local remedies were not

exhausted.

Under customary international law,142 an international claim is not admissible unless the

essence of the claim has been pursued as far as permitted by the local law of the State allegedly

responsible.143 These include all judicial and administrative remedies.144 The Aspatrian Criminal

Code allows the sequestration of assets to prevent the furtherance, promotion, or concealment of

the alleged criminal conduct. A final determination on the criminal charges against ALEC is

required before the legality of the sequestration can be assessed. Rydal’s claim is premature.145

139 International Law Commission, 55th Sess., 27764th mtg. at para.7-9, U.N. Doc. A/CN.4/SR.2764. See also Special Rapporteur John Dugard, Fourth Report on Diplomatic

Protection, 13 March 2003, A/CN.4/530, at para.68.

140 North Sea Continental Shelf Cases (F.R.G. v. Den.), 1969 I.C.J. 3, 42-43 (Feb. 20). See also

Legality of Nuclear Weapons Case, Advisory Opinion, 1996 I.C.J. 226, 254-255 (July 8).

141 International Law Commission, 58th Sess., Diplomatic Protection: Comments and

observations received by Governments, at 34 (United States), U.N. Doc. A/CN.4/561. See also U.N. GAOR, 62nd Sess., 10th mtg. at para.6 (Portugal), 15 (Venezuela), 40 (United States), 50 (Russian Federation), U.N. Doc. A/C.6/52/SR.10.

142 ELSI, supra n.86 at para. 50; Finnish Ships, supra n.86 at 1479.

143 Draft Articles on State Responsibility, supra n.85, art. 44(b); Draft Articles on Diplomatic Protection, supra n.87, art. 14(1); ELSI, supra n.86 at para.59.

144 Commentaries on Draft Articles on Diplomatic Protection, supra n.87 at 72.

145 Compromis, para.58-59; Compromis Clarifications, para.6.

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ALEC must exhaust all local remedies because there was no undue delay in the Aspatrian

remedial process.146 In light of “the volume of the work involved by a thorough examination of

the case”,147 which concerns a multi-billion-dollar tender bid and USD 80 million worth of

ALEC’s assets, the period of four to six years for a first instance decision is permissible.148 This

is unlike the EL Oro Mining arbitration, where the Mexican judicial system failed to render a

decision after nearly a decade.149

B. THE SEQUESTRATION OF ALEC’S ASSETS WAS NOT AN “EXPROPRIATION” UNDER

ARTICLE VI OF THE ASPATRIA-RYDAL BIT.

1. The measure was not a direct expropriation under Article VI(a).

Direct expropriation only occurs when there is a formal transfer of individual property

rights by the State through administrative or legislative action.150 The measure against ALEC is

not direct expropriation since ALEC retains its formal property rights over all of its assets.151

2. The measure was not an indirect expropriation under Article VI(b).

Article VI(b) of the Aspatria-Rydal BIT provides that a measure does not constitute

indirect expropriation if it is (1) designed and applied to protect legitimate public welfare

objectives; (2) non-discriminatory; and (3) not so severe in light of its purpose that it cannot be

reasonably viewed as having been adopted and applied in good faith.

146 Draft Articles on Diplomatic Protection, supra n.87, art. 15(b).

147 El Oro Mining & Railway Co. (Ltd.) v. Mexico, 5 R.I.A.A. 191, 198 (1931).

148 Compromis, para.57, 59.

149 El Oro, supra n.147 at 198-199.

150 DOLZER & SCHREUER, supra n.108 at 92.

151 Compromis, para.57.

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a. The measure was designed and applied to protect legitimate public welfare

objectives.

The Aspatrian Criminal Code and the NRA were both applied to protect legitimate public

welfare objectives. Legitimate exercises of police power, including “confiscation as a penalty for

crimes”, 152 are acceptable measures justifying the affectation of foreign property. The

sequestration of ALEC’s assets was not a confiscation, but a temporary measure to prevent the

furtherance, promotion and concealment of criminal conduct alleged under the NRA, pending the

conclusion of the criminal case.153

Legitimate public welfare objectives also include public health, safety, the environment

and real estate price stabilization. 154 The NRA prohibits “any action inconsistent with an

exclusive government license or patent concerning natural resources”.155 Its object is to protect

Aspatria’s peoples from deprivation of their permanent sovereignty over natural resources, a

right that transcends purely domestic concerns and constitutes an “inalienable right” protected

under international law.156 A fortiori, the NRA was for the protection of a legitimate public

welfare purpose.

152 BROWNLIE, supra n.37 at 536; Restatement (Third) of the Foreign Relations Law of the United States, §712, comment (g), 1 A. L. I. 524 [hereinafter Restatement (3

rd)].

153 Compromis, para.57, 60; Compromis Clarifications, para.6.

154 James v. United Kingdom, 98 Eur. Ct. H.R. (ser. B) at para.46 (1986); Draft Convention on the Protection of Foreign Property, art. 3, 7 I.L.M. 124 (1968); Draft Convention on the International Responsibility of States for Injuries to Aliens, art. 10.5, 55 AM. J. INT’L. L 545, 554 (1961).

155 Compromis, para.41.

156 Permanent Sovereignty Over Natural Resources, G.A. Res. 1803 (XVII), 4th and 6th preambular paragraphs, U.N. Doc. A/5217 (Dec. 14, 1962); Charter of Economic Rights and Duties of States, G.A. Res. 3281 (XXIX), art. 1, U.N. Doc. A/RES/29/3281 (Dec. 12, 1974); G.A. Res. 2626 (XXV), para.73, U.N. Doc. A/RES/25/2626 (Oct. 24, 1970).

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b. The measure was non-discriminatory.

In order for measures affecting foreign property to be discriminatory, there must be

unreasonable distinctions without objective justification.157 Nothing indicates that the actions

against ALEC were unreasonable compared to any similarly situated comparator.

c. The measure was not so severe in light of its purpose that it cannot be

reasonably viewed as having been adopted and applied in good faith.

Temporary measures affecting foreign property are a mere delay of opportunities, not

measures severe enough to constitute expropriation. 158 A measure can only constitute

expropriation if its effects on foreign property are not merely ephemeral.

ALEC retains its most essential asset in Aspatria: the license to exploit oil in the

northeast province of Aspatria. Its sole source of income within Aspatria is preserved. The

sequestration ends once ALEC is found innocent. 159 There is no permanent impairment of

ALEC’s viability.

157 Draft Convention on the Protection of Foreign Property, supra n.154, art. 3; Restatement (3rd), supra n.152, §712; Amoco Int’l Finance Corp. v. Iran, 15 Iran-U.S. Cl. Trib. Rep. 189, para.139 (1987).

158 S.D. Myers, supra n.96 at para.287; Case 44/79, Liselotte Hauer v. Land Rheinland Pfalz , 1979 E.C.R. 3727, para.2, 29 (Dec. 13).

159 Compromis, para.41, 57, 59, 60; Compromis Clarifications, para.6.

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PRAYER FOR RELIEF

For the foregoing reasons, Aspatria respectfully requests this Honorable Court to:

1. DECLARE that Rydal may not lawfully take steps giving effect to the independence of

the Islands and must cede administration over the Islands to Aspatria because:

(a) sovereignty over the Islands belongs to Aspatria; and

(b) the Islanders are not entitled to independence under the principle of self-

determination;

2. DECLARE that Rydal’s rejection of the MDR bid violated the Aspatria-Rydal BIT; and

3. DECLARE that Rydal does not have standing to invoke the Aspatria-Rydal BIT to

protect the assets of ALEC, and in any event, the sequestration of ALEC’s assets did not

violate the Aspatria-Rydal BIT.

Respectfully submitted,

________________________

Agent for Aspatria, 248A

448R

IN THE

INTERNATIONAL COURT OF JUSTICE

AT THE PEACE PALACE,

THE HAGUE

THE CASE CONCERNING THE WINDSCALE ISLANDS

REPUBLIC OF ASPATRIA

(APPLICANT)

V.

KINGDOM OF RYDAL

(RESPONDENT)

MEMORIAL FOR THE RESPONDENT

2010 Philip C. Jessup

International Law Moot Court Competition

Respondent’s Preliminaries Page i of xxvi

TABLE OF CONTENTS

TABLE OF CONTENTS i

INDEX OF AUTHORITIES vi

STATEMENT OF JURISDICTION xvi

QUESTIONS PRESENTED xvii

STATEMENT OF FACTS xviii

SUMMARY OF PLEADINGS xxiii

PLEADINGS 1

A. RYDAL HAS SOVEREIGNTY OVER THE WINDSCALE ISLANDS 1

I. RYDAL, AND NOT PLUMBLAND, ACQUIRED TITLE BY OCCUPATION 1

1) The Islands were res nullius 1

2) Rydal effectively occupied the Islands 2

(a) Admiral Aikton’s actions are attributable to Rydal 3

(b) Rydal displayed actual state authority 3

(c) Rydal manifested sovereign intent 4

3) Occupation was peaceful and uninterrupted for a reasonable period 4

II. ASPATRIA CANNOT DERIVE TITLE UTI POSSIDETIS JURIS FROM PLUMBLAND 5

III. RYDAL HAS TITLE BY ACQUISITIVE PRESCRIPTION 6

1) Acquisitive prescription is a valid mode of acquiring territory 6

2) Determination of a critical date 7

Respondent’s Preliminaries Page ii of xxvi

3) The elements of acquisitive prescription are satisfied 8

(a) Possession was à titre de souverain 9

(b) Possession was peaceful and uninterrupted 9

(i) Aspatria did not protest for 30 years between 1880 and 1910 9

(ii) Alternatively, Aspatria did not protest effectively between 1919 and 2009 10

(c) Possession persisted for a reasonable period 10

B. THE ISLANDERS ARE ENTITLED TO INDEPENDENCE AS AN EXERCISE OF

THEIR RIGHT TO SELF-DETERMINATION 12

I. SELF-DETERMINATION IS A LEGAL RIGHT UNDER INTERNATIONAL LAW 12

II. THE ISLANDERS ARE ENTITLED TO THE RIGHT OF SELF-DETERMINATION 14

1) The Islands have been correctly classified as a Chapter XI non-self-governing territory

14

(a) The Islands are geographically separate 15

(b) The Islands are culturally distinct 15

(c) The Islands also satisfy Principle V of Resolution 1541 15

2) The exceptional circumstances in which self-determination has been denied do not apply

to the Islands 16

3) The right can be exercised even if Aspatria has sovereignty 17

(a) Territorial integrity does not prevail over self-determination 17

(b) No “colonial enclave exception” applies 17

III. THE ISLANDERS ARE ENTITLED TO INDEPENDENCE 18

1) Independence is a legitimate outcome of self-determination 18

Respondent’s Preliminaries Page iii of xxvi

2) Viability does not impact the Islands’ right to independence 18

IV. RYDAL MAY LEGALLY ASSIST WITH THE ISLANDERS’ INDEPENDENCE EVEN IF RYDAL DOES

NOT HOLD SOVEREIGNTY OVER THE ISLANDS 19

1) Rydal has obligations as the administering state 19

2) Additionally, there is an erga omnes obligation to promote self-determination 20

C. THE NON-ADMISSION OF MDR’S BID DID NOT VIOLATE ARTICLE IV OF THE

BIT 21

I. RYDAL HAS AFFORDED MDR TREATMENT NO LESS FAVOURABLE THAN THAT IT ACCORDS, IN

LIKE CIRCUMSTANCES, TO ITS OWN INVESTORS (“NATIONAL TREATMENT”) 21

1) There is no breach of national treatment 22

(a) MDR and ROCO were not in like circumstances 22

(b) Alternatively, MDR has not received “less favourable” treatment than ROCO 23

2) Further, and in the alternative, any differential treatment was justified 23

D. THE NON-ADMISSION OF MDR’S BID DID NOT VIOLATE ARTICLE V OF THE

BIT 25

I. ARTICLE V DOES NOT EXTEND TO PRE-ADMISSION ACTIVITIES 25

II. FURTHER, AND IN THE ALTERNATIVE, MDR’S BID IS NOT AN INVESTMENT UNDER THE BIT

25

1) There are five “characteristics of an investment” that must be satisfied 26

2) MDR’s bid does not have the “characteristics of an investment” 26

(a) There has been no significant commitment of capital 26

(b) There is no reasonable expectation of profit or gain 27

(c) There is no assumption of risk 27

Respondent’s Preliminaries Page iv of xxvi

(d) The bid was not of sufficient duration 27

(e) There has been no contribution to Rydal’s economic development 28

III. IN THE ALTERNATIVE, RYDAL’S ACTIONS SATISFIED THE REQUIREMENTS OF ARTICLE V

28

1) The treatment of MDR was fair and equitable 29

(a) Rydal’s conduct was not arbitrary 29

(b) There was no violation of due process 29

(c) Rydal provided a transparent framework for investments to protect legitimate

expectations 30

2) The treatment of MDR was non-discriminatory 31

E. ASPATRIA’S SEIZURE OF ALEC’S ASSETS CONSTITUTES A BREACH OF THE

BIT FOR WHICH RYDAL HAS STANDING 32

I. RYDAL HAS STANDING TO MAKE A CLAIM EITHER ON BEHALF OF ALEC OR ROCO 32

1) Rydal has standing on the basis of effective nationality 32

2) Alternatively, Rydal has standing on the basis of substitution 33

3) Further, and in the alternative, Rydal has standing on the basis of ROCO’s investment

35

4) There is no requirement to exhaust local remedies 35

II. THE SEIZURE IS A VIOLATION OF ARTICLE VI 36

1) Aspatria has directly expropriated ALEC’s assets 36

2) Alternatively, Aspatria has indirectly expropriated ALEC’s northeast licence and

ROCO’s shareholding 37

(a) The degree of interference is not proportional to the purpose 38

Respondent’s Preliminaries Page v of xxvi

(i) The economic impact is substantial 38

(ii) The duration of the seizure renders it permanent 38

(b) The seizure was discriminatory 39

3) Aspatria’s failure to pay compensation is a violation of Art VI 39

III. THE SEIZURE IS A VIOLATION OF ART V 40

1) The threshold for a breach of the minimum standard has been significantly liberalised

40

2) Aspatria has not afforded ALEC fair and equitable treatment 41

(a) Aspatria’s conduct was arbitrary, grossly unfair, unjust or idiosyncratic 41

(b) Aspatria’s conduct was a denial of justice 42

3) Aspatria has not afforded ALEC full protection and security 42

PRAYER FOR RELIEF 43

Respondent’s Preliminaries Page vi of xxvi

INDEX OF AUTHORITIES

TREATIES

Agreement for the Promotion and Protection of Investments,

Netherlands and Philippines, 27 February 1985, 1488 U.N.T.S. 304

40

Convention (No. 169) Concerning Indigenous and Tribal Peoples

in Independent Countries, 28 June 1989, 1650 U.N.T.S. 383

15

Energy Charter Treaty, 17 December 1994, 2080 U.N.T.S. 100 30, 40

Fourth ACP-EEC Convention (LOME IV), 15 December 1989,

1924 U.N.T.S. 4

30, 40

International Covenant on Civil and Political Rights, 16 December

1966, 999 U.N.T.S. 171

13, 24, 31

International Covenant on Economic, Social and Cultural Rights,

16 December 1966, 993 U.N.T.S. 3

13, 24

North American Free Trade Agreement, 17 December 1992, Can.

T.S. 1994 No. 2

22

Statute of the International Court of Justice 7, 21, 22

UN Charter 12, 14, 19

Vienna Convention on the Law of Treaties, 23 May 1969, 1155

U.N.T.S. 331

21, 32, 35

UN DOCUMENTS

Declaration on Principles of International Law Concerning

Friendly Relations and Co-operation among States in accordance

with the Charter of the United Nations, GA Res. 2625(XXV), UN

GAOR, 25th Sess., Supp. No. 28, UN Doc. A/8082 (1970)

12, 13, 17, 20

Declaration on the Granting of Independence to Colonial

Countries and Peoples, GA Res. 1514(XV), UN GAOR, 15th

Sess.,

Supp. No. 16, UN Doc. A/4684 (1960)

12, 13, 18

Respondent’s Preliminaries Page vii of xxvi

Draft International Covenant on Human Rights and Measures of

Implementation, GA Res. 421(V), UN GAOR, 5th

Sess., Supp. No.

20, UN Doc. A/1775 (1950)

13

Factors which should be taken into account in deciding whether a

Territory is or is not a Territory whose people have not yet

attained a full measure of self-government, GA Res. 742(VIII), UN

GAOR, 8th

Sess., Supp. No. 17, UN Doc. A/2630 (1953)

18

International Law Commission, Diplomatic Protection: Comments

and Observations Received from Governments, 58th

Sess., UN

Doc. A/CN.4/561 (2006)

34

International Law Commission, Diplomatic Protection: Comments

and Observations Received from Governments - Addendum, 58th

Sess., UN Doc. A/CN.4/561/Add.1 (2006)

34

International Law Commission, Report of the International Law

Commission: Draft Articles on Diplomatic Protection, UN GAOR,

61st Sess., Supp. No. 10, UN Doc. A/61/10 (2006)

34

International Law Commission, Report on the Work of its Fifty-

third Session, UN GAOR, 56th

Sess., Supp. No. 10, UN Doc.

A/56/10 (2001)

3, 40

International Law Commission, Seventh Report on Diplomatic

Protection, 58th

Sess., UN Doc. A/CN.4/567 (2006)

32, 33, 36

Permanent Sovereignty Over Natural Resources, GA Res.

1803(XVII), UN GAOR, 17th

Sess., UN Doc. A/5217 (1962)

21, 24, 25

Principles which should guide Members in determining whether or

not an obligation exists to transmit the information called for

under Article 73e of the Charter, GA Res. 1541(XV), UN GAOR,

15th

Sess., Supp. No. 16, UN Doc. A/4684 (1960)

13, 14, 15, 18

Question of Gibraltar, GA Res. 2353(XXII) UN GAOR, 22d Sess.,

Supp. No. 16, UN Doc. A/6716 (1967)

16

Question of the Falkland Islands (Malvinas), GA Res. 2065(XX)

UN GAOR, 10th

Sess., Supp. No. 14, UN Doc. A/9030 (1965)

16

Respondent’s Preliminaries Page viii of xxvi

Question Relating to Angola, SC Res. 163, UN SCOR, 16th

Sess.,

Supp. April-June, UN Doc. S/4835 (1961)

13

INTERNATIONAL COURT OF JUSTICE CASES

Anglo-Norwegian Fisheries Case (UK v. Norway), [1952] I.C.J.

Rep. 116

3, 6, 10

Case Concerning Ahmadou Sadio Diallo (Guineau v. Democratic

Republic of Congo), Judgment of 24 May 2007, I.C.J. General List

No. 103

33, 34, 35

Case concerning East Timor (Portugal v. Australia), [1995] I.C.J.

Rep. 90

13, 20

Case Concerning Elettronica Sicula S.p.A (ELSI) (United States v.

Italy), [1989] I.C.J. Rep. 16

29, 36, 40, 41, 42

Case Concerning Kasikili/Sedudu Island (Botswana v. Namibia),

[1999] I.C.J. Rep. 1045

3, 6, 8, 9

Case Concerning Military and Paramilitary Activities in and

against Nicaragua (Nicaragua v. United States), [1986] I.C.J. Rep.

14

7, 14

Case Concerning Oil Platforms (Iran v. United States), [2003]

I.C.J. Rep. 161

32

Case Concerning Sovereignty over Pedra Branca/Pulau Batu

Puteh, Middle Rocks and South Ledge (Malaysia v. Singapore),

Judgment of 23 May 2008, I.C.J. General List No. 130

6, 9

Case Concerning the Barcelona Traction, Light and Power

Company, Limited (Belgium v. Spain), [1970] I.C.J. Rep. 3

13, 20, 33, 34

Case Concerning the Frontier Dispute (Burkina-Faso v. Mali),

[1986] I.C.J. Rep. 554

5

Case Concerning the Temple of Preah Vihear (Cambodia v.

Thailand), [1962] I.C.J. Rep. 6

9

Respondent’s Preliminaries Page ix of xxvi

Case Concerning the Territorial Dispute (Libya v. Chad), [1994]

I.C.J. Rep. 6

6, 8, 9, 10

Case of Certain Norwegian Loans (France v. Norway), [1957]

I.C.J. Rep. 9

35

Fisheries Jurisdiction Case (Second Phase) (United Kingdom v.

Iceland), [1974] I.C.J. Rep. 3

14

Legal Consequences for States of the Continued Presence of South

Africa in Namibia (South West Africa) Notwithstanding Security

Council Resolution 276, Advisory Opinion, [1971] I.C.J. Rep. 16

13, 14

Minquiers and Ecrehos Case (France v. United Kingdom), [1953]

I.C.J. Rep. 47

1, 7, 8

North Sea Continental Shelf Cases (Germany v. Denmark;

Germany v. Netherlands), [1969] I.C.J. Rep. 3

7

Nottebohm (Second Phase) (Liechtenstein v. Guatemala), [1955]

I.C.J. Rep. 4

22, 32

Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia v.

Malaysia), [2002] I.C.J. Rep. 554

7, 8

Territorial and Maritime Dispute between Nicaragua and

Honduras in the Caribbean Sea (Nicaragua v. Honduras),

Judgment of 8 October 2007, I.C.J. General List No. 120

8

Western Sahara, Advisory Opinion, [1975] I.C.J. Rep. 12 13, 16, 17, 18

PERMANENT COURT OF INTERNATIONAL JUSTICE CASES

Case Concerning the Factory at Chorzow (Germany v Poland)

(1928), P.C.I.J. (Ser. A) No. 17

39, 40

Case Concerning the Legal Status of Eastern Greenland (Denmark

v. Norway) (1933), P.C.I.J. (Ser. A/B) No. 53

1, 2, 4, 5

Oscar Chinn Case (UK v Belgium) (1934), P.C.I.J. (Ser. A/B) No.

63

31, 39

Respondent’s Preliminaries Page x of xxvi

ARBITRAL AWARDS

Affaire relative à la concession des phares de l’Empire ottoman

(1956), 12 R.I.A.A. 155

3

Ambatielos Claim (Greece v. United Kingdom) (1956), 12 R.I.A.A.

83

35

Amoco International Finance Corporation v. Iran (1987), 15 Iran-

US C.T.R. 189

37

Argentine-Chile Frontier Case (Argentina v. Chile) (1969), 38

I.L.R. 20

7, 8

Award regarding the Boundary between the Colony of British

Guiana and the United States of Venezuela (2007), 28 R.I.A.A 331

7, 11

Bayindir v. Pakistan (2005), Case No. ARB/03/09, Decision on

Jurisdiction (ICSID)

27

Case concerning the delimitation of maritime boundary between

Guinea-Bissau and Senegal (Guinea-Bissau v. Senegal) (1989), 20

R.I.A.A. 119

6

Chamizal Arbitration (United States v. Mexico) (1911), 11

R.I.A.A. 309.

9, 10

Clipperton Island Arbitration (France v. Mexico) (1931), 2

R.I.A.A. 1105

2, 5

Compania Del Desarrollo de Santa Elena, S.A. v. Costa Rica

(2000), 39 I.L.M. 1317 (ICSID)

37, 38

Consortium R.F.C.C. v. Morocco (2003), Case No. ARB/00/6,

Award (ICSID)

22, 23

Dubai-Sharjah Border Arbitration (Dubai v. Sharjah) (1993), 91

I.L.R 543

6

Fedax N.V. v. Venezuela (1998), 37 I.L.M. 1378 (ICSID) 26

Respondent’s Preliminaries Page xi of xxvi

F-W Oil Interests Inc. v. Trinidad and Tobago (2006), Case No.

ARB/01/14, Award (ICSID)

26, 27

GAMI Investments, Inc. v. Mexico (2004), 44 I.L.M. 545 (NAFTA) 24,37, 38

Glamis Gold, Ltd. v. United States, Award, 8 June 2009 (NAFTA) 36, 37, 38

Indo-Pakistan Western Boundary (Rann of Kutch) between India

and Pakistan (India v. Pakistan) (1968), 17 R.I.A.A. 1

9

International Thunderbird Gaming Corporation v. Mexico, Award,

26 January 2006 (NAFTA)

29, 30

Island of Palmas Case (Netherlands v. USA) (1928), 2 R.I.A.A.

829

1, 2, 4, 6, 8, 9

Joy Mining Machinery Ltd. v. Egypt (2004), ICSID Rev.- F.I.L.J.

486 (ICSID)

26, 27

L. F. H. Neer and Pauline Neer (U.S.A.) v. United Mexican States

(1926), 4 R.I.A.A. 60

40

LG&E Energy Corporation v. Argentina (2006), 46 I.L.M. 40

(ICSID)

37, 38

Libyan American Oil Company v. Libya (1977), 20 I.L.M. 1 39

Loewen Group, Inc. v. United States (2003), 42 I.L.M. 811

(ICSID)

29, 30, 42

Malaysian Historical Salvors v. Malaysia (2007), Case No.

ARB/05/10, Award on Jurisdiction (ICSID)

26

Metalclad Corporation v. Mexico (2000), 40 I.L.M. 36 (ICSID) 29, 30, 35, 36

Methanex Corporation v. United States (2005), 46 I.L.M. 1345

(NAFTA)

22

Middle East Cement Shipping Company v. Egypt (2000), 18 ICSID

Rev. - F.I.L.J. 602 (ICSID)

42

Respondent’s Preliminaries Page xii of xxvi

Mihaly International Corporation v. Sri Lanka (2002), 41 I.L.M.

867 (ICSID)

26, 27, 28

Mondev International Ltd. v. United States (2002), 42 I.L.M. 85

(ICSID)

29, 40

Parkerings-Compagniet AS v. Lithuania (2007), Case No.

ARB/05/8, Award (ICSID)

22

Patrick Mitchell v. Democratic Republic of Congo (2006), Case

No. ARB/99/7, Decision on Application for Annulment of Award

(ICSID)

26

Pope & Talbot, Inc. v. Canada (Merits of Phase 2) (2001), 122

I.L.R. 352 (NAFTA)

21, 23, 24

S.D. Myers, Inc. v. Canada (2000), 40 I.L.M. 1408 (NAFTA) 23, 24, 35, 36, 38

Salini Costruttori S.P.A v. Morocco (2003), 42 I.L.M. 609 (ICSID) 26

Saluka Investments B.V. v. Czech Republic, Partial Award, 17

March 2006 (UNCITRAL)

31, 37, 39, 40

Starrett Housing Corporation v. Iran (1984), 4 Iran-US C.T.R. 123 37

Técnicas Medioambientales Tecmed, S.A. v. Mexico (2003), 43

I.L.M. 133 (ICSID)

30, 37, 38

Tippets, Abbett, McCarthy, Stratton v. TAMS-AFFA Consulting

Engineers of Iran (1984), 6 Iran-US C.T.R. 219

36, 37

Waste Management, Inc. v. Mexico (2004), 43 I.L.M. 967 (ICSID) 29, 40, 41

William Nagel v. Czech Republic (2004), 1 Stockholm Arb. Rep

141 (ICSID)

26, 27

BOOKS

Asamoah, O. The Legal Significance of the Declarations of the

General Assembly of the United Nations (Hague: M.Nijhoff, 1966)

18

Respondent’s Preliminaries Page xiii of xxvi

Brownlie, I. Principles of Public International Law, 7th

ed.

(Oxford: Oxford University Press, 2008)

3, 13, 22, 33, 39

Cassese, A. Self-Determination of Peoples (Cambridge: Cambridge

University Press, 1995)

12

Crawford, J. The Creation of States in International Law, 2d ed.

(Oxford: Clarendon Press, 2006)

12, 17, 18, 19

Dolzer, R. & Schreuer, C. Principles of International Investment

Law (Oxford: Oxford University Press, 2008)

23, 25, 33

Dolzer, R. & Stevens, M. Bilateral Investment Treaties (The

Hague: Martinus Nijhoff, 1995)

28

Higgins, A.P. & Colombos, C.J. International Law of the Sea

(New York: Longmans, Green & Co, 1943)

2

Jennings, R. & Watts, A. eds. Oppenheim’s International Law

(Vol.1, Pt.2), 9th

ed. (London: Longman, 1996)

3, 10

Jennings, R. The Acquisition of Territory in International Law

(Manchester: Manchester University Press, 1963)

7

Lindley M. F. The Acquisition and Government of Backward

Territory in International Law (New York: Greenwood Publishing,

1929)

3

McLachlan, C., Shore, L. & Weiniger, M. International

Investment Arbitration (Oxford: Oxford University Press, 2007)

41

OECD, International Investment Law: Understanding Concepts

and Tracking Innovations (Paris: OECD Publishing, 2008)

32

Riga, S. The Evolution of the Right to Self-Determination (Leiden:

A.W.Sijthoff, 1973)

12

Roche, A.G. The Minquiers and Ecrehos Case (Geneva: Droz,

1959)

7

Respondent’s Preliminaries Page xiv of xxvi

Russell, R. & Muther, J. A History of the United Nations Charter

(Washington: Brookings Institution, 1958)

18

Schreuer, C. The ICSID Convention: A Commentary (Cambridge:

Cambridge University Press, 2001)

35

Shahabuddeen, M. Precedent in the World Court (Cambridge:

Cambridge University Press, 1996)

22

Sornarajah, M. The International Law on Foreign Investment, 2d

ed. (Cambridge: Cambridge University Press, 2004)

37

UNITAR, Small States and Territories: Status and Problems (New

York: Arno Press, 1971)

18

Verykios, P.A. La Prescription en droit international public (Paris:

A. Pedone, 1934)

7, 10

ARTICLES

Christie, G.C. “What Constitutes a Taking of Property Under

International Law?” (1962) 38 B.Y.I.L. 307

36, 38

Fischer Williams, J. “Sovereignty, Seisin, and the League” (1926)

3 B.Y.I.L. 24

7

Fitzmaurice, G. “The Law and Procedure of the International Court

of Justice, 1951-54” (1954) 31 B.Y.I.L. 371

5

Franck, T. & Hoffman, P. “The Right of Self-Determination in

Very Small Places” (1975) 8 N.Y.U.J.I.L.P. 332

16

Goldie, L.F.E. “Critical Date” (1963) 12 I.C.L.Q. 1251 8

Hannum, H. “Rethinking Self-Determination” (1993) 34 V.J.I.L. 1 15, 19

Hasani, E. “Uti possidetis juris: from Rome to Kosovo” (2003) 27

Fletcher F. World Aff. 85

5

Higgins, R. “The Taking of Property by the State” (1982) 3

R.C.A.D.I. 263

38

Respondent’s Preliminaries Page xv of xxvi

Johnson, D. H. N. “Acquisitive Prescription in International Law”

(1950) 27 B.Y.I.L. 332

6, 7, 8, 10

MacGibbon, I.C. “Scope of Acquiescence in International Law”

(1954) 31 B.Y.I.L. 143

5, 9

Schwebel, S. “The Overwhelming Merits of Bilateral Investment

Treaties” 32 Suffolk Transnat’l L. Rev. 263

41

Sloan, B. “General Assembly Resolutions Revisited” (1987) 58

B.Y.I.L. 39

14

MISCELLANEOUS

Case Concerning the Legal Status of Eastern Greenland (Denmark

v. Norway), "Memorial of Denmark" (1933) Ser. C No. 52

7

E. Lauterpacht, S. Schwebel et al., Joint Legal Opinion on Belize,

online: Global Arbitration Review

<http://www.globalarbitrationreview.com/_files/legal-opinion_-

_Guatemala_Belize_2001.pdf>

4, 6

Non-Self-Governing Territories Listed by General Assembly in

2002, online: United Nations

<http://www.un.org/Depts/dpi/decolonization/trust3.htm>.

16

OECD, Directorate for Financial and Enterprise Affairs, “Indirect

Expropriation” and the “Right to Regulate” in International

InvestmentLaw, Working Paper No. 4, September 2004

37

Restatement (Third) of Foreign Relations Law of the United

States (1986)

29, 31, 39

UNCTAD, Fair and Equitable Treatment, UNCTAD/ITE/IIT/11

(Vol. III) (1999)

28

Treaty Between the Government of the United States of America

and the Government of [Country] Concerning the Encouragement

and Reciprocal Protection of Investment, online: United States

Department of State

<http://www.state.gov/documents/organization/117601.pdf>

30

Respondent’s Preliminaries Page xvi of xxvi

STATEMENT OF JURISDICTION

The Kingdom of Rydal and the Republic of Aspatria have agreed to submit this dispute to the

International Court of Justice pursuant to article 40(1) of the Statute of the International Court of

Justice (‘the Statute’) and in accordance with the Compromis notified to the Court on 16

September 2009. Pursuant to article 36(1) of the Statute, the Court has jurisdiction to decide all

matters referred to it for decision. Both parties shall accept the Court’s decision as final and

execute it in good faith.

Respondent’s Preliminaries Page xvii of xxvi

QUESTIONS PRESENTED

I.

Whether Rydal has territorial sovereignty over the Windscale Islands.

II.

Whether the Windscale Islanders are entitled to independence as an exercise of their right to self-

determination and whether Rydal may takes steps to give effect to this independence.

III.

Whether the non-admission of MDR Ltd’s bid is a breach of Rydal’s obligations under the

Aspatria-Rydal Bilateral Investment Treaty.

IV.

Whether Rydal has standing to invoke the Aspatria-Rydal Bilateral Investment Treaty to protect

the assets of the A & L Exploration Corporation, either on behalf of the A & L Exploration

Corporation itself or on behalf of the Rydalian Oil Company.

V.

Whether the seizure of the A & L Exploration Corporation’s assets is a violation by Aspatria of

its obligations under the Aspatria-Rydal Bilateral Investment Treaty.

Respondent’s Preliminaries Page xviii of xxvi

STATEMENT OF FACTS

The Kingdom of Rydal (“Rydal”) is a developed country in the Northern Hemisphere. Rydal has

established colonies throughout the world, including the Windscale Islands (“Islands”), an

archipelago in the Southern Hemisphere, approximately 7,500 miles from Rydal.

Discovery and occupation of the Islands

The Islands were first discovered on 6 December 1777 by Captain Geoffrey Parrish (“Parrish”)

on a voyage commissioned by the King of Rydal. They were uninhabited. Parrish left behind the

Rydalian flag and a stone carving asserting Rydalian sovereignty over the Islands.

Historical evidence shows that, between 1778 and 1799, the Islands were used by pirates,

slave-ships and other seafarers. During this period, sailors from the Viceroyalty of Aspatria

(“Aspatria”), a colony of the Kingdom of Plumbland (“Plumbland”) inhabited a fort and

settlement named Salkeld on one of the islands. They all left Salkeld in 1799.

In September 1813, a Rydalian naval ship commanded by Admiral George Aikton

(“Aikton”) was wrecked on one of the islands. He and his crew built a settlement named St. Bees.

In May 1815, a storm-damaged Sodorian slave ship drifted into St. Bees’ harbour. Those on

board were helped to shore and the slaves were freed in accordance with Rydalian law. All

pledged allegiance to Queen Constance of Rydal.

By 1816, Aikton and his men had explored most of the archipelago. They cultivated the

land and domesticated a wild equine species. They discovered an abandoned fort and settlement

at Salkeld, containing only a flag of Plumbland. Settlers began living in the fort.

Respondent’s Preliminaries Page xix of xxvi

In June 1817, an Aspatrian ship landed at Salkeld. Rydalian sailors turned away the

landing party.

In 1818, in a diplomatic note, the King of Plumbland protested Aikton’s actions on the

Islands. Upon learning of Aikton’s survival, Queen Constance of Rydal ratified and adopted all

of his actions and reasserted Rydal’s sovereignty over the Islands.

In 1819, Rydal sent HMS Braithwaite to the Islands under the command of the newly-

appointed Governor of the Islands, Vice-Admiral Arthur Wilkinson. Though some of the crew

and some of Aikton’s men returned to Rydal, the majority chose to remain on the Islands.

After a long war between Rydal and Plumbland, the Treaty of Great Corby was signed in

1821, by which Plumbland ceded any title it had over the Islands to Rydal.

In 1827, the newly-independent Republic of Aspatria was recognised by Rydal. Aspatria

asserted that, upon independence, the territory of the former Viceroyalty, including the Islands,

devolved to the new Republic. Rydal expressly rejected this claim.

Between 1845 and 1880, successive Rydalian governors established control over the

entire archipelago. The population of the Islands grew steadily, supplemented by immigration.

By 1999, the population of the Islands had grown to 7,054.

Between 1880 and 1910, Aspatria took no action in relation to the Islands and made no

claims over them.

Political and economic development of the Islands

In 1903, Rydal established a consultative Assembly on the Islands to facilitate the expression of

Islanders’ views on day-to-day administrative matters. The Governor retained sole authority to

act. Rydal maintained control over the defence and foreign relations of the Islands.

Respondent’s Preliminaries Page xx of xxvi

The Islands were given a constitution in 1947, which granted the Assembly control over

day-to-day governance, subject to the approval of the Governor. Universal suffrage was

guaranteed to all adult Islanders and elections were held for the Assembly.

Rydal has invested in and significantly developed local businesses and infrastructure on

the Islands. An extensive telecommunications network has been installed and an airport built.

Farming and fishing have been developed and the Islands are used as a harbour for Rydal’s navy.

Duties are levied on all goods imported to the Islands from outside Rydal, including those

from Aspatria, and foreign commercial activity on the Islands is limited.

Economic relations with Aspatria

Despite the disagreement over the Islands, Rydal enjoys good trade relations with Aspatria. In

1985, the Aspatria-Rydal Bilateral Investment Treaty (“BIT”) was concluded in order to foster

mutual investment for the economic benefit of both states.

The Rydalian Oil Company (“ROCO”) has made significant investments in Aspatria

through its shareholding in the A & L Exploration Corporation (“ALEC”), an Aspatrian oil

company. ROCO’s Aspatrian business is conducted through ALEC.

The bid for the Islands’ oil

Oil was discovered in the Islands’ basin in 1997. Rydal contracted with ROCO to explore and

map these reserves.

In 2003, Aspatria granted MDR Ltd (“MDR”), an Aspatrian company, a licence to

exploit the Islands’ oil. The Rydalian Prime Minister, Agnes Abbott, strongly protested this

blatant violation of Rydalian sovereignty. MDR did not extract any oil under the licence.

Respondent’s Preliminaries Page xxi of xxvi

In December 2006, the Assembly invited bids to exploit the Islands’ oil reserves. A

number of conditions were attached to the bidding process. It was made clear that the decision

would be made by a majority vote of the Assembly, with the subsequent assent of the Governor.

MDR and ROCO submitted bids. Though both bids were economically attractive, the Assembly

and the Governor decided that ROCO’s bid was more beneficial to the Islands. After

consultation with Prime Minister Abbott, the Governor approved ROCO’s bid.

MDR was refused standing to challenge the decision in the Rydalian courts.

The seizure of ALEC’s assets

After the acceptance of ROCO’s bid, Aspatria filed criminal charges against ALEC for an

alleged violation of the Aspatrian Natural Resources Act. By an order of the Aspatrian

Administrative Court, all of ALEC’s assets in Aspatria were seized. ALEC has pursued all

administrative remedies in Aspatria. The criminal case against ALEC has been continuing for

two years and is likely to take much longer, costing ALEC millions of dollars in forgone revenue.

Rydal publicly protested against the seizure of ALEC’s assets. MDR was not prosecuted.

The Islands’ movement towards independence

In 1945, Rydal joined the United Nations (‘UN’). The Islands were designated a non-self-

governing territory under Chapter XI of the UN Charter. Rydal has conscientiously fulfilled its

obligations under Article 73 of the Charter.

The UN Special Committee has always expressed concern for the interests of the

Islanders. Rydal has committed to respect and facilitate the Islanders’ wishes.

Respondent’s Preliminaries Page xxii of xxvi

The discovery of oil around the Islands energised the Islanders Longing for Sovereignty

and Autonomy (“ILSA”), a growing independence movement on the Islands. ILSA’s ultimate

goal is independence, but it has expressed a desire to remain with Rydal in the meantime. In

2002 and 2006, ILSA members were elected to the Assembly in growing numbers.

Following the approval of ROCO’s bid, ILSA organised a number of rallies calling for

the Islands’ independence. On 6 September 2008, the Assembly passed a resolution declaring

that the Islanders had the right to determine their own future and calling for a plebiscite.

A plebiscite was held on 6 December 2008. The Islanders had the option to become

independent, remain with Rydal or unify with Aspatria. Independence was favoured by 76% of

the Islanders and 18% voted to remain part of Rydal. Only 6% chose unification with Aspatria.

Rydal endorsed the plebiscite’s outcome and pledged full support in assisting the Islanders

towards independence.

Aspatria denounced the plebiscite process from its inception and has sought to hinder the

Islands’ movement towards independence.

Respondent’s Preliminaries Page xxiii of xxvi

SUMMARY OF PLEADINGS

Pleading A

Sovereignty over the Islands belongs to Rydal for three reasons.

First, Rydal acquired inchoate title through discovery which was perfected by occupation.

The Islands were res nullius because Plumbland had not effectively occupied them. Rydal

effectively occupied them for a period sufficient to create title.

Secondly, in the alternative, Aspatria derived no title uti possidetis juris from Plumbland

because it was not the applicable law of the period. In any event, uti possidetis juris only applies

where parties have expressly consented to its application. This has not occurred here.

Thirdly, in the alternative, Rydal has acquired title by acquisitive prescription.

Acquisitive prescription is a customary norm and a general principle of municipal law.

Irrespective of any determination of a critical date, the four elements of acquisitive prescription

are satisfied by Rydal.

Rydal therefore has sovereignty over the Islands.

Pleading B

Rydal may lawfully take steps to give effect to the Islanders’ independence for four reasons.

First, the right to self-determination is a well-established customary norm and may have

the status of jus cogens.

Secondly, the right attaches to all non-self-governing territories. The Islands have been

correctly classified as a non-self-governing territory, as they satisfy the criteria for classification.

Therefore, the Islanders have a right to self-determination.

Respondent’s Preliminaries Page xxiv of xxvi

Thirdly, independence is a legitimate outcome of the exercise of self-determination and

has been chosen by the Islanders in the plebiscite. Viability does not preclude independence and,

in any case, the Islands have the potential to be a viable nation state.

Fourthly, the obligation to promote and facilitate the exercise of self-determination is an

erga omnes obligation. Even if Rydal does not have sovereignty over the Islands, it must fulfill

this obligation. Therefore, Rydal may lawfully take steps to give effect to the Islands’

independence

Pleading C

Rydal’s rejection of MDR’s bid is not a violation of Article IV of the BIT.

First, there can be no breach of the national treatment standard because ROCO and MDR

were not in like circumstances. In any case, MDR has not received treatment less favourable than

ROCO because both companies were in a competitive bidding process and subject to the same

criteria.

Secondly, any differential treatment of MDR was justified on rational grounds. ROCO’s

bid carried less risk and there were doubts about MDR’s desire or ability to exploit the oil.

As a result, Rydal has not violated Article IV.

Pleading D

The rejection of MDR’s bid is not a violation Article V of the BIT. The protections in Article V

do not extend to MDR’s bid for two reasons.

Respondent’s Preliminaries Page xxv of xxvi

First, Article V applies only to ‘investments’. Given the distinction between ‘investors’

and ‘investments’, Article V does not extend to pre-admission activities. MDR’s bid is merely a

pre-admission activity and is not protected by Article V.

Secondly, in the alternative, MDR’s bid does not have the ‘characteristics of an

investment’ required by the definition of ‘investment’ in the BIT. As a result, the bid cannot

come within the protection of Article V.

Alternatively, if MDR’s bid is an investment, Rydal has treated MDR in accordance with

the customary standards in Article V.

Pleading E

Aspatria’s seizure of ALEC’s assets is a violation of Articles V and VI of the BIT. Rydal has

standing to bring a claim for three reasons.

First, ALEC is a Rydalian national on the basis of effective nationality or substitution.

This gives Rydal standing pursuant to Article XIII of the BIT

Secondly, if ALEC is not Rydalian, ROCO’s shareholding is an investment according to

the BIT. This makes ROCO a Rydalian investor for the purposes of Article XIII.

Thirdly, there is no requirement for ALEC or ROCO to exhaust local remedies. Even if

there is such a requirement, local remedies have been exhausted.

The seizure of ALEC’s assets is a direct expropriation by Aspatria. Alternatively, the

seizure is an indirect expropriation of ALEC’s Aspatrian oil licence and ROCO’s shareholding

because it was not a valid exercise of Aspatria’s police powers. Aspatria’s failure to pay

compensation is a violation of Article VI.

Respondent’s Preliminaries Page xxvi of xxvi

Additionally, the seizure is a violation of Article V. Aspatria has not accorded fair and

equitable treatment and full protection and security to ALEC or ROCO.

Respondent’s Memorial Page 1 of 43

PLEADINGS

A. RYDAL HAS SOVEREIGNTY OVER THE WINDSCALE ISLANDS

Rydal has sovereignty over the Windscale Islands (‘Islands’) because: first, Rydal, and not

Plumbland, acquired title by occupation; secondly, in the alternative, Aspatria could not derive

title uti possidetis juris from Plumbland; and thirdly, in the alternative, Rydal has acquired title

by acquisitive prescription.

I. RYDAL, AND NOT PLUMBLAND, ACQUIRED TITLE BY OCCUPATION

The annexation of the Islands by Rydal's Captain Parrish1 created inchoate title which was

perfected by occupation.2 Occupation requires that: first, the Islands were res nullius; secondly,

occupation was effective; and thirdly, occupation endured for a reasonable period.

1) The Islands were res nullius

The Islands were res nullius when settled by Rydalians in 18133 because Plumbland had not

effectively occupied them. Effective occupation requires the display of actual state authority and

sovereign intent.4

1 Compromis, 5 [C.].

2 Island of Palmas Case (Netherlands v. United States) (1928), 2 R.I.A.A. 829, 869 [Palmas].

3 C.10.

4 Case Concerning the Legal Status of Eastern Greenland (Denmark v. Norway) (1933), P.C.I.J.

(Ser. A/B) No. 53, 42 [Eastern Greenland]; Minquiers and Ecrehos Case (France v. United

Kingdom) [1953] I.C.J. Rep. 47, 71 [Minquiers].

Respondent’s Memorial Page 2 of 43

Plumbland did not display state authority because it did not establish an organisation

capable of making its laws respected.5 This is evidenced by the absence of any exploration

6 or

inhabitation of the Islands, except for a fort at Salkeld.7 Additionally, Plumbland failed to extend

requisite minimum protections to other states’ interests.8 In particular, Plumbland took no action

to protect other states’ seafarers from pirates who used the Islands during this period.9 As piracy

was an international crime, Plumbland had an obligation to take action against it.10

Sovereign intent requires acts of jurisdiction and local administration.11

There is no

evidence that Plumbland exercised jurisdiction or local administration over the Islands.

2) Rydal effectively occupied the Islands

Rydal displayed actual state authority and manifested sovereign intent to occupy the Islands.

5 Clipperton Island Arbitration (France v. Mexico) (1931), 2 R.I.A.A. 1105, 1110 [Clipperton].

6 C.8.

7 C.6.

8 Palmas, n2, 839.

9 C.6.

10 C.8; A.P. Higgins & C.J. Colombos, International Law of the Sea (New York: Longmans,

Green & Co, 1943), 283.

11 Eastern Greenland, n4, 65.

Respondent’s Memorial Page 3 of 43

(a) Admiral Aikton’s actions are attributable to Rydal

The acts of public officials in their official capacity are attributable to a state. 12

Admiral Aikton

(‘Aikton’), an official of Rydal, acted in his official capacity in establishing a settlement,13

governing the survivors of the shipwreck,14

and adopting the laws of Rydal.15

Alternatively, private acts when subsequently ratified are attributable to the state.16

Unequivocal adoption is given retroactive effect.17

Rydal’s ratification18

transformed Aikton’s

actions retrospectively into those of Rydal.

(b) Rydal displayed actual state authority

The exploration19

and settlement of the Islands,20

domestication of livestock21

and military

protection of the Islands22

indicate Rydal’s establishment of an organisation capable of making

12

International Law Commission, Report on the Work of its Fifty-third Session, UN GAOR,

56th

Sess., Supp. No. 10, UN Doc. A/56/10 (2001), art.9 [Draft Articles on State Responsibility];

R. Jennings & A.Watts, eds., Oppenheim’s International Law (Vol.1), 9th

ed. (London: Longman,

1996), 138 [Oppenheim].

13 C.10.

14 C.10.

15 C.12.

16 Draft Articles on States Responsibility, n12, art.11; Case Concerning Kasikili/Sedudu Island

(Botswana v. Namibia), [1999] I.C.J. Rep. 1045, 1105 [Kasikili]; Anglo-Norwegian Fisheries

Case (United Kingdom v. Norway), [1952] I.C.J. Rep. 116, 184 [Fisheries]; I. Brownlie,

Principles of Public International Law, 7th

ed. (Oxford: Oxford University Press, 2008), 138

[Brownlie].

17 Affaire relative à la concession des phares de l’Empire ottoman, (1956), 12 R.I.A.A. 155, 197-

8; M. F. Lindley, The Acquisition and Government of Backward Territory in International Law

(New York: Greenwood Publishing, 1929), 286.

18 C.15.

Respondent’s Memorial Page 4 of 43

its laws respected. Rydal extended minimum protections to another state by assisting those

onboard The Unthank.23

(c) Rydal manifested sovereign intent

Aikton manifested acts of jurisdiction and local administration24

by adopting Rydalian laws,

freeing slaves, and swearing non-nationals to the crown.25

These acts manifest sovereign intent.

3) Occupation was peaceful and uninterrupted for a reasonable period

Occupation must remain unchallenged for a period of time, such that any other state claiming

sovereignty has a reasonable opportunity to discover the occupation.26

A protest will only preserve the pre-existing title of a protesting state.27

As Aspatria never

effectively occupied the Islands, it had no title upon which a protest could be based.28

Therefore,

Aspatria’s protests29

could not affect Rydal’s occupation.30

19

C.13.

20 C.14.

21 C.13.

22 C.12.

23 C.12.

24 Eastern Greenland, n4, 65.

25 C.12.

26 Palmas, n2, 867.

27 E. Lauterpacht, S. Schwebel et al., Joint Legal Opinion on Belize, online: Global Arbitration

Review <http://www.globalarbitrationreview.com/_files/legal-opinion_-

_Guatemala_Belize_2001.pdf> 158 [Belize].

Respondent’s Memorial Page 5 of 43

Rydal’s occupation of the Islands remained uninterrupted until the present day. Its

occupation remained peaceful from 1813 until the attempted Aspatrian invasion in 1826.31

This 13 year period was sufficient for any other state claiming sovereignty to become

aware of Rydal’s occupation.32

II. ASPATRIA CANNOT DERIVE TITLE UTI POSSIDETIS JURIS FROM PLUMBLAND

Even if Plumbland obtained title by occupation, Plumbland ceded title to the Islands to Rydal in

the Treaty of Great Corby of 1821.33

Aspatria can only have acquired title prior to this treaty.

Uti possidetis juris prescribes that borders of new states follow the administrative

boundaries of the antecedent colonial power.34

However, the prevailing law of the nineteenth

century was uti possidetis defacto,35

as evidenced in the breakup of the Ottoman and Austro-

Hungarian empires.36

Uti possidetis defacto restricted the borders of new states to territory they

28

G. Fitzmaurice, “The Law and Procedure of the International Court of Justice, 1951-54”

(1954) 31 B.Y.I.L. 1, 167; I.C. MacGibbon “Scope of Acquiescence in International Law”

(1954) 31 B.Y.I.L. 143, 167 [MacGibbon].

29 C.14, C.15.

30 Eastern Greenland, n4, 42.

31 C.22.

32 Clipperton, n5, 1110.

33 C.20.

34 Case Concerning the Frontier Dispute (Burkina-Faso v. Mali), [1986] I.C.J. Rep. 554, 565.

35 E. Hasani, “Uti possidetis juris: from Rome to Kosovo” (2003) 27 Fletcher F. World Aff. 85,

87 [Hasani].

36 Hasani, n35, 87.

Respondent’s Memorial Page 6 of 43

effectively controlled. Aspatria could not derive title to the Islands uti possidetis defacto, as it

had no effective control over them.

Aspatria’s claims in 1819 must be assessed in light of the law of that period; uti

possidetis juris cannot apply retrospectively.37

In the nineteenth century, uti possidetis juris was

only applied to determine the boundaries between states where they specifically consented to its

operation.38

There being no such agreement here, uti possidetis de facto should be applied.

III. RYDAL HAS TITLE BY ACQUISITIVE PRESCRIPTION

Even if Aspatria derived title uti possidetis juris from Plumbland, it has since passed to Rydal

through acquisitive prescription. Prescription arises where possession is initially wrongful, but

the legal title holder fails to assert their rights.39

1) Acquisitive prescription is a valid mode of acquiring territory

This Court has on several occasions held that title can be lost by long and uninterrupted

possession by another.40

It is a norm of customary international law (“custom”),41

supported by

37

Palmas, n2, 845; Case Concerning the Territorial Dispute (Libya v. Chad), [1994] I.C.J. Rep.

6, 89 (Separate Opinion of Judge Ajibola) [Territorial Dispute]; Belize, n27, 60-61.

38 Case concerning the delimitation of maritime boundary between Guinea-Bissau and Senegal

(Guinea-Bissau v. Senegal) (1989), 20 R.I.A.A. 119, 143, Dubai-Sharjah Border Arbitration

(Dubai v. Sharjah) (1993), 91 I.L.R 543, 579.

39 D. H. N. Johnson, “Acquisitive Prescription in International Law” (1950) 27 B.Y.I.L. 332, 337

[Johnson].

40 Fisheries, n16, 139; Kasikili, n16, 1105; Case Concerning Sovereignty over Pedra

Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malaysia v. Singapore), Judgment of

23 May 2008, I.C.J. General List No. 130, ¶274-7 [Pedra Branca].

41 Kasikili, n16, 1103; Palmas, n2, 839, 846; Pedra Branca, n40, ¶274-277.

Respondent’s Memorial Page 7 of 43

constant and “virtually uniform”42

state practice and widespread43

opinio juris.44

It is also a

general principle of law, prevalent in all legal systems,45

in the doctrines of adverse possession,46

seisin,47

and uscapio.48

2) Determination of a critical date

Where acquisitive prescription is asserted, the Court has discretion49

to determine a critical date

after which no evidence can be adduced,50

as it may be self-serving.51

The critical date may differ for different modes of territorial acquisition.52

The legal

dispute in relation to acquisitive prescription crystallised at the date of the Special Agreement.53

42

North Sea Continental Shelf Cases (Germany v. Denmark; Germany v. Netherlands), [1969]

I.C.J. Rep. 3, 43.

43 Case Concerning Military and Paramilitary Activities in and against Nicaragua (Nicaragua v.

United States), [1986] I.C.J. Rep. 14, 99-100 [Nicaragua].

44 Award regarding the Boundary between the Colony of British Guiana and the United States of

Venezuela (2007), 28 R.I.A.A 331, 335 [British Guiana]; Case Concerning the Legal Status of

Eastern Greenland (Denmark v. Norway), "Memorial of Denmark" (1933) Ser. C No. 52, 103.

45 Statute of the International Court of Justice, art.38(1)(c) [I.C.J. Statute]; P.A. Verykios, La

Prescription en droit international public (Paris: A. Pedone, 1934), 25 [Verykios].

46 R. Jennings, The Acquisition of Territory in International Law (Manchester: Manchester

University Press, 1963), 21; A.G. Roche, The Minquiers and Ecrehos Case (Geneva: Droz,

1959), 35.

47 J. Fischer Williams, “Sovereignty, Seisin, and the League” (1926) 3 B.Y.I.L. 24, 32.

48 Johnson, n39, 334.

49 Argentine-Chile Frontier Case (Argentina v. Chile) (1966), 16 R.I.A.A. 109, 167 [Argentine-

Chile].

50 Minquiers, n4, 59.

51 Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia v. Malaysia), [2002] I.C.J. Rep.

554, 682 [Pulau Ligitan].

Respondent’s Memorial Page 8 of 43

Should the critical date be earlier, subsequent Rydalian acts should be considered because

Rydal’s activities on the Islands commenced before any critical date, have continued without

interruption since,54

and were not carried out to improve its legal position55

but rather because it

viewed its activities as confirmation of already existing sovereignty.56

3) The elements of acquisitive prescription are satisfied

To acquire title by prescription, possession must: first, be exercised à titre de souverain;

secondly, be peaceful and uninterrupted; thirdly, persist for a reasonable period; and fourthly, be

public.57

Rydal’s occupation and administration was public, according to the state practice of the

period.58

52

Territorial Dispute, n37, 91 (Separate Opinion of Judge Ajibola); Territorial and Maritime

Dispute between Nicaragua and Honduras in the Caribbean Sea (Nicaragua v. Honduras),

Judgment of 8 October 2007, I.C.J. General List No.120 ¶123 [Caribbean Sea].

53 Argentine-Chile, n49, 166-7; Caribbean Sea, n52, ¶129.

54 Minquiers, n4, 59-60; Pulau Ligitan, n51, 682; L.F.E. Goldie, “Critical Date” (1963) 12

I.C.L.Q. 1251, 1254.

55 Pulau Ligitan, n51 ,682.

56 Argentine-Chile, n49, 166.

57 Kasikili, n16, 1103; Johnson, n39, 344-347.

58 Palmas, n2, 868.

Respondent’s Memorial Page 9 of 43

(a) Possession was à titre de souverain

Acts à titre de souverain are acts performed as a function of state authority.59

By settling and

militarily defending the Islands,60

freeing slaves and swearing non-nationals to allegiance,61

Aikton and subsequent Rydalian governors exercised state authority.

(b) Possession was peaceful and uninterrupted

Possession is peaceful when it is unchallenged by other states.62

A state must do everything

reasonable to protest against encroachment.63

Absence of protest may amount to tacit

acquiescence in a rival claim to sovereignty.64

(i) Aspatria did not protest for 30 years between 1880 and 1910

In the Passamaquoddy Bay Award, silence for 23 years was sufficient for acquiescence.65

Similarly, Judge Ajibola, in his Separate Opinion in the Territorial Dispute,66

held that silence

for 31 years constituted acquiescence.

59

Kasikili, n16, 1104.

60 C.14; C.22.

61 C.12.

62 Palmas, n2, 867; Pedra Branca, n40, ¶66.

63 Chamizal Arbitration (United States v. Mexico) (1911), 11 R.I.A.A. 309, 328 [Chamizal].

64 Indo-Pakistan Western Boundary (Rann of Kutch) between India and Pakistan (India v.

Pakistan) (1968), 17 R.I.A.A. 1, 75; Pedra Branca, n40, ¶121; Case Concerning the Temple of

Preah Vihear (Cambodia v. Thailand), [1962] I.C.J. Rep. 6, 23.

65 MacGibbon, n28, 162.

66 Territorial Dispute, n37, 82 (Separate Opinion of Judge Ajibola).

Respondent’s Memorial Page 10 of 43

Aspatria had to protest to preserve any title it had. Aspatria’s inaction for 30 years

amounts to tacit acquiescence in Rydal’s sovereignty.

(ii) Alternatively, Aspatria did not protest effectively between 1919 and 2009

Following the establishment of the Permanent Court of International Justice in 1919, diplomatic

protest was no longer the sole means of asserting sovereignty.67

In the Chamizal Arbitration,

diplomatic protests by Mexico were insufficient once there was a competent international body

before which it could bring its claim.68

By making no attempt at judicial settlement, Aspatria failed to take all reasonable steps to

resolve the dispute.69

Its acquiescence should be presumed, even though paper protests were

occasionally made.70

(c) Possession persisted for a reasonable period

Possession must persist for a period such that there develops a “general conviction that the

present condition of things is in conformity with international order”. 71

Various courts and

tribunals, including this Court, have held 64 years,72

60 years,73

and 50 years74

to be reasonable

67

Verykios, n45, 101; Johnson, n39, 341-2.

68 Chamizal, n63, 328.

69 Chamizal, n63, 329.

70 C.33,36,38; Verykios, n45, 101; Johnson, n39, 341-2.

71 Oppenheim, n12, 707.

72 Fisheries, n16.

73 Territorial Dispute, n37, 81 (Separate Opinion of Judge Ajibola).

Respondent’s Memorial Page 11 of 43

periods. Rydal’s possession of the Islands has persisted for 90 years since 1919, when Aspatrian

protests ceased to be effective. Accordingly, possession has persisted for a reasonable period.

74

British Guiana, n44.

Respondent’s Memorial Page 12 of 43

B. THE ISLANDERS ARE ENTITLED TO INDEPENDENCE AS AN EXERCISE

OF THEIR RIGHT TO SELF-DETERMINATION

Rydal’s actions were lawful under international law because: first, there is a legal right to self-

determination; secondly, the Islanders are entitled to this right; and thirdly, this right includes the

choice of independence. Even if Rydal does not have sovereignty over the Islands, its actions are

lawful because of the erga omnes obligation to facilitate self-determination.

I. SELF-DETERMINATION IS A LEGAL RIGHT UNDER INTERNATIONAL LAW

Self-determination is the right of peoples to “freely determine their political status”75

and

includes the option to become an independent state or freely associate or integrate with an

independent state.76

State practice and opinio juris since 1945 recognise a customary norm of self-

determination.77

This state practice and opinio juris is evidenced in the UN Charter,78

the

75

Declaration on the Granting of Independence to Colonial Countries and Peoples, GA Res.

1514(XV), UN GAOR, 15th

Sess., Supp. No. 16, UN Doc. A/4684 (1960) 66, art.2 [Colonial

Declaration].

76 Declaration on Principles of International Law Concerning Friendly Relations and Co-

operation among States in accordance with the Charter of the United Nations, GA Res.

2625(XXV), UN GAOR, 25th Sess., Supp. No. 28, UN Doc. A/8082 (1970) 121, 124 [Friendly

Relations Declaration].

77 J. Crawford, The Creation of States in International Law, 2d ed. (Oxford: Clarendon Press,

2006) 108-121 [Crawford]; S. Riga, The Evolution of the Right to Self-Determination (Leiden:

A.W.Sijthoff, 1973); A. Cassese, Self-Determination of Peoples (Cambridge: Cambridge

University Press, 1995).

78 UN Charter, arts.1(2), 55, 73(b), 76(b).

Respondent’s Memorial Page 13 of 43

Security Council’s work relating to non-self-governing territories,79

and the General Assembly’s

recognition of self-determination as a fundamental human right.80

The right is also incorporated

in the International Covenant on Civil and Political Rights81

and the International Covenant on

Economic, Social and Cultural Rights,82

to which both Rydal and Aspatria are party.83

Further,

this Court has recognised the customary nature of the right to self-determination.84

The right is so

well-established that many eminent publicists consider it to be a jus cogens norm.85

A number of General Assembly Resolutions86

on self-determination reflect binding

customary norms, as they intend to declare law and were adopted by genuine consensus.87

They

79

Question Relating to Angola, SC Res. 163, UN SCOR, 16th

Sess., Supp. April-June, UN Doc.

S/4835 (1961), 7.

80 Draft International Covenant on Human Rights and Measures of Implementation, GA Res.

421(V), UN GAOR, 5th

Sess., Supp. No. 20, UN Doc. A/1775 (1950) 42, 43.

81 International Covenant on Civil and Political Rights, 16 December 1966, 999 U.N.T.S. 171

[I.C.C.P.R.].

82 International Covenant on Economic, Social and Cultural Rights, 16 December 1966, 993

U.N.T.S. 3 [I.C.E.S.C.R.].

83 C.69.

84 The Legal Consequences for States of the Continued Presence of South Africa in Namibia

(South West Africa) Notwithstanding Security Council Resolution 276, Advisory Opinion, [1971]

I.C.J. Rep. 16, 31 [Namibia]; Western Sahara, Advisory Opinion, [1975] I.C.J. Rep. 12, 31-33

[Western Sahara]; Case concerning East Timor (Portugal v. Australia), [1995] I.C.J. Rep. 90,

102 [East Timor].

85 Brownlie, n16, 511-512; Case Concerning the Barcelona Traction, Light and Power

Company, Limited (Belgium v. Spain), [1970] I.C.J. Rep. 3, 304 (Separate Opinion of Judge

Ammoun) [Barcelona Traction].

86 Friendly Relations Declaration, n76; Colonial Declaration, n75; Principles which should

guide Members in determining whether or not an obligation exists to transmit the information

called for under Article 73e of the Charter, GA Res. 1541(XV), UN GAOR, 15th

Sess., Supp.

No. 16, UN Doc. A/4684 (1960) 29 [Res.1541].

Respondent’s Memorial Page 14 of 43

clarify the scope and application of self-determination, as their widespread adoption is indicative

of state practice and opinio juris.88

II. THE ISLANDERS ARE ENTITLED TO THE RIGHT OF SELF-DETERMINATION

Self-determination is a recognised right for peoples in non-self-governing territories.89

The

Islands have been recognised as a non-self-governing territory by Rydal90

and the UN Special

Committee.91

While self-determination has been denied to peoples on rare occasions, the

exceptional circumstances in which this has occurred do not apply to the Islands. The Islanders’

right to self-determination exists even if Aspatria has sovereignty over the Islands.

1) The Islands have been correctly classified as a Chapter XI non-self-governing territory

The Islands are prima facie a non-self-governing territory because they are geographically

separate from Rydal and culturally distinct.92

The Islands also satisfy the requirements of

Principle V of Resolution 1541,93

which further supports their classification as a non-self-

governing territory.

87

B. Sloan, “General Assembly Resolutions Revisited” (1987) 58 B.Y.I.L. 39, 93; Fisheries

Jurisdiction Case (Second Phase) (United Kingdom v. Iceland), [1974] I.C.J. Rep. 3, 162

(Dissenting Opinion of Judge Petren).

88 Nicaragua, n43, 101.

89 UN Charter, Ch. XI; Namibia, n84, 31.

90 C.34.

91 C.37; C.38.

92 Res.1541, n86, Annex Principle IV.

93 Res.1541, n86.

Respondent’s Memorial Page 15 of 43

(a) The Islands are geographically separate

The Islands are approximately 7,500 miles away from Rydal and in a different hemisphere.94

(b) The Islands are culturally distinct

The existence and increasing popularity of the political group “Islanders Longing for

Sovereignty and Autonomy” indicates that the people identify themselves as “Islanders” rather

than Rydalians.95

Self-identification is indicative in identifying cultural distinctiveness.96

The

original Rydalians and Sodorians have intermarried and produced offspring and there has been

immigration to the Islands from other states.97

Farming and fishing were developed by early

settlers,98

indicating traditions unique to the Islands. After almost two centuries of geographic

isolation and separate governance the Islanders cannot be considered culturally homogeneous

with Rydal.

(c) The Islands satisfy Principle V of Resolution 1541

According to Principle V, the political status of the Islands can support their classification as a

non-self-governing territory.99

Rydal has continued to assist with the governance of the Islands,

94

C.4.

95 C.43.

96 H. Hannum, “Rethinking Self-Determination” (1993) 34 V.J.I.L. 1, 35 [Hannum]; Convention

(No. 169) Concerning Indigenous and Tribal Peoples in Independent Countries, 28 June 1989,

1650 U.N.T.S. 383, art.1(2).

97 C.28.

98 C.28.

99 Res.1541, n86, 29.

Respondent’s Memorial Page 16 of 43

but as a Rydalian Dependent Territory, the population has no right to vote in Rydalian

elections.100

Historically, the Islands have relied on political assistance from Rydal. Rydal wishes

to rectify this by supporting and facilitating the Islander’s exercise of the right to external self-

determination, in accordance with the Islanders’ wishes.

2) The exceptional circumstances in which self-determination has been denied do not apply

to the Islands

The Islands are not analogous to the exceptional cases of the Falkland Islands and Gibraltar,

where self-determination has been denied.101

In those cases, the denial of the right was linked to

the colonial disruption of earlier inhabitants of the territory.102

State practice illustrates that

islands of settlers without an indigenous population, such as the Pitcairn Islands, can be

classified as non-self-governing territories.103

100

C.29; Clarifications, 7.

101 Question of Gibraltar, GA Res. 2353(XXII) UN GAOR, 22d Sess., Supp. No. 16, UN Doc.

A/6716 (1967) 53; Question of the Falkland Islands (Malvinas), GA Res. 2065(XX) UN GAOR,

10th

Sess., Supp. No. 14, UN Doc. A/6014 (1965) 57.

102 T. Franck & P. Hoffman, “The Right of Self-Determination in Very Small Places” (1975) 8

N.Y.U.J.I.L.P. 332, 379-384; Western Sahara, n84, 79-81.

103 Non-Self-Governing Territories Listed by General Assembly in 2002, online: United Nations

<http://www.un.org/Depts/dpi/decolonization/trust3.htm>.

Respondent’s Memorial Page 17 of 43

3) The right can be exercised even if Aspatria has sovereignty

(a) Territorial integrity does not prevail over self-determination

Although a state’s territorial integrity is protected by international law,104

the right of self-

determination cannot be overridden by the competing territorial claims of third states.105

If Aspatria has sovereignty over the Islands, it cannot rely on territorial integrity to deny the

Islanders’ right to self-determination.

(b) No “colonial enclave exception” applies

Crawford106

has argued for a “colonial enclave” exception to the right to self-determination.

However, no such exception has been recognised as forming part of customary law. Accordingly,

it should not be applied to the Islands. In any case, the exception formulated by Crawford only

applies to territories that are “ethnically and economically…derivative of”107

the sovereign state.

The Islands are not ethnically Aspatrian,108

and have never been economically derivative of

Aspatria. All Aspatrian settlers left the territory after only twenty years of settlement.109

This

does not meet the “limited circumstances” 110

in which the exception is said to apply.

104

Friendly Relations Declaration, n76, Annex Principle 5(7).

105 Western Sahara, n84, 36.

106 Crawford, n77, 637-38.

107 Crawford, n77, 647.

108 Memorial, B(II)(1)(b).

109 C.7.

110 Crawford, n77, 646.

Respondent’s Memorial Page 18 of 43

III. THE ISLANDERS ARE ENTITLED TO INDEPENDENCE

1) Independence is a legitimate outcome of self-determination

“Emergence as a sovereign independent state”111

is an option for non-self-governing territories

that have exercised the right of self-determination. When drafting the UN Charter, delegates

made it clear that the stipulated objective of “self-government” for non-self-governing territories

did not exclude independence.112

A majority of 76% in a plebiscite with 93% participation113

reflects the “freely expressed will”114

of the Islanders to become a sovereign independent state.

2) Viability does not impact the Islands’ right to independence

Viability has been rejected as a means of denying the right to independence of a non-self-

governing territory.115

In any case, the Islands have the potential to be a viable nation state.

The Islands have a functioning political system116

and infrastructure, including an airport

and telephone and radio communications.117

The sizable oil reserves118

are sufficient to secure

111

Factors which should be taken into account in deciding whether a Territory is or is not a

Territory whose people have not yet attained a full measure of self-government, GA Res.

742(VIII), UN GAOR, 8th

Sess., Supp. No. 17, UN Doc. A/2630 (1953) 21, art.6; Res.1541, n86,

Annex Principle VI.

112 R. Russell & J. Muther, A History of the United Nations Charter (Washington: Brookings

Institution, 1958), 813-818.

113 C.63.

114 Res.1541, n86, principle VII; Western Sahara, n84, 21, 36.

115 Colonial Declaration, n75, art.3; Crawford, n77, 634-35; O. Asamoah, The Legal

Significance of the Declarations of the General Assembly of the United Nations (Hague:

M.Nijhoff, 1966), 170; UNITAR, Small States and Territories: Status and Problems (New York:

Arno Press, 1971), 22-23.

Respondent’s Memorial Page 19 of 43

the economic future of the Islands. Further, similarly sized states, such as Tuvalu, have become

independent and have been accepted as members of the United Nations.119

IV. RYDAL MAY LEGALLY ASSIST WITH THE ISLANDERS’ INDEPENDENCE EVEN IF RYDAL DOES

NOT HOLD SOVEREIGNTY OVER THE ISLANDS

A legitimate claim to sovereignty by Aspatria does not interfere with the Islanders’ right to self-

determination. Territories may be classified as non-self-governing, and therefore be entitled to

independence, without the consent of the sovereign state.120

Even if Rydal does not have

sovereignty over the Islands, it can assist with the Islanders’ independence.

1) Rydal has obligations as the administering state

As the administering state, Rydal has an obligation under article 73 of the UN Charter to

“develop self-government”121

on the Islands and “to take due account of the political aspirations

of the [Islanders]”.122

As a result, Rydal may lawfully take steps to assist the Islanders to achieve

independence.

116

C.35.

117 C.32.

118 C.42.

119 Crawford, n77, 185.

120 Hannum, n96, 36.

121 UN Charter, art.73(b).

122 UN Charter, art.73(b).

Respondent’s Memorial Page 20 of 43

2) Additionally, there is an erga omnes obligation to promote self-determination

The obligation to facilitate and respect self-determination is an erga omnes obligation,123

binding

on all states.124

“Every State has the duty to promote, through joint and separate action,

realisation of the principle of equal rights and self-determination of peoples”.125

Regardless of

whether it has sovereignty over the Islands, Rydal may lawfully take steps to facilitate the

Islanders’ independence, as it has an obligation to promote the self-determination of the Islands.

By committing to respect and facilitate the Islanders’ desire for independence, as expressed in

the plebiscite,126

Rydal has fulfilled its international obligations, and has not acted unlawfully.

123

East Timor, n84, 102.

124 Barcelona Traction, n85, 32.

125 Friendly Relations Declaration, n76, 123-124.

126 C.64.

Respondent’s Memorial Page 21 of 43

C. THE NON-ADMISSION OF MDR’S BID DID NOT VIOLATE ARTICLE IV OF

THE BIT

The Aspatria-Rydal Treaty Concerning the Encouragement and Reciprocal Protection of

Investments (“BIT”) must be interpreted in good faith according to the ordinary meaning of its

terms in their context and in light of its object and purpose.127

The preamble of the BIT

establishes that its object and purpose is the protection and promotion of investments. The

emphasis on economic benefit and prosperity indicates a desire to preserve control over

admission of investments, particularly those that concern natural resources.128

I. RYDAL HAS AFFORDED MDR TREATMENT NO LESS FAVOURABLE THAN THAT IT ACCORDS, IN

LIKE CIRCUMSTANCES, TO ITS OWN INVESTORS (“NATIONAL TREATMENT”)

The purpose of Article IV is to prevent discrimination on the basis of nationality.129

The terms “less favourable” and “like circumstances” are not defined in the BIT.

Reference can be made to international jurisprudence interpreting analogous provisions.130

127

Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331, art.31

[V.C.L.T.].

128 Permanent Sovereignty Over Natural Resources, GA Res. 1803(XVII), UN GAOR, 17

th

Sess., UN Doc. A/5217 (1962) [Res.1803].

129 Pope & Talbot, Inc. v. Canada (Merits of Phase 2) (2001), 122 I.L.R. 352, 373 (NAFTA)

[Pope & Talbot II].

130 VC.L.T., n127, art.31(3)(c); I.C.J. Statute, n45, art.38(1)(d).

Respondent’s Memorial Page 22 of 43

The decisions of international arbitral tribunals, which have been referred to by this Court,

are subsidiary sources of international law,131

and may hold evidentiary value outside the scope

of the particular treaty they are interpreting.132

The North American Free Trade Agreement133

and several bilateral investment treaties

share the aims of the BIT and contain analogous national treatment provisions. World Trade

Organisation (“WTO”) jurisprudence is of limited relevance due to textual discrepancies and the

differing aims of WTO instruments.134

1) There is no breach of national treatment

(a) MDR and ROCO were not in like circumstances

The national treatment standard can only be breached where investors are in like

circumstances.135

In a bid process, like circumstances cannot exist where there is an objective

difference between bids.136

131

I.C.J. Statute, n45, art.38(1)(d); Brownlie, n16, 19.

132 Nottebohm (Second Phase) (Liechtenstein v. Guatemala), [1955] I.C.J. Rep. 4, 22

[Nottebohm]; M. Shahabuddeen, Precedent in the World Court (Cambridge: Cambridge

University Press, 1996), 35.

133 North American Free Trade Agreement, 17 December 1992, Can. T.S. 1994 No. 2,

art.1102(1).

134 Methanex Corporation v. United States (2005), 44 I.L.M. 1345, 1447-1448 (NAFTA).

135 C.Annex 1 (BIT art.IV).

136 Consortium R.F.C.C. v. Morocco (2003), Case No. ARB/00/6, Award, ¶75 (ICSID)

[R.F.C.C.]; Parkerings-Compagniet AS v. Lithuania (2007), Case No. ARB/05/8, Award, ¶396

(ICSID).

Respondent’s Memorial Page 23 of 43

A difference in risk is an objective difference between bids.137

The Rydalian Oil

Company’s (“ROCO”) bid carried less risk, as ROCO’s exploration and mapping of the oil

reserves in the Islands’ Exclusive Economic Zone (“EEZ”)138

gave it prior experience and

detailed knowledge of the reserves.

(b) Alternatively, MDR has not received “less favourable” treatment than ROCO

“Less favourable treatment” is treatment which discriminates against foreign investors as

compared to domestic investors.139

MDR Ltd (“MDR”) has not received less favourable

treatment than ROCO. Both companies were in a competitive bidding process where the

ultimate decision was discretionary. They were subject to the same criteria and treated in the

same manner throughout the bid process.

2) Further, and in the alternative, any differential treatment was justified

The existence of rational and non-discriminatory grounds for differentiation justifies any

differential treatment.140

Rydal had rational grounds for differential treatment, as it was controlling the

exploitation of a natural resource. Sovereignty over natural resources is a well-recognised

137

R.F.C.C., n136, ¶75.

138 C.42.

139 R. Dolzer & C. Schreuer, Principles of International Investment Law (Oxford: Oxford

University Press, 2008), 178 [Dolzer & Schreuer]; Pope & Talbot II, n129, 373.

140 S.D. Myers, Inc v. Canada (2000), 40 I.L.M. 1408, 1437 (NAFTA) [S.D.Myers]; Pope &

Talbot II, n129, 373.

Respondent’s Memorial Page 24 of 43

principle at international law.141

In reliance on this sovereign right, Rydal had legitimate reasons

to award the licence to ROCO. First, as submitted,142

ROCO had prior experience with the oil

reserves. Secondly, Monte de Rosa had expressed his intent to exploit the oil for the benefit of

Aspatria, and not the Islands.143

This professed patriotism is inconsistent with the basis of the

project, which is to support the self-determination claims of the Islanders. Thirdly, there could

be doubts about MDR’s ability or desire to exploit the oil. It held what it believed to be a valid

Aspatrian licence, but took no steps to exploit the oil under that licence.144

Therefore, Rydal was

justified in granting the licence to ROCO.145

The rejection of MDR’s bid was the least restrictive measure available to Rydal to

achieve the above objectives146

and was reasonable in the circumstances.147

Rydal did not

discriminate against MDR on the basis of nationality. Rather, it was concerned with MDR’s

experience and intentions. Rydal allowed MDR to submit a bid and gave it full consideration.

141

I.C.C.P.R., n81, art.1(2); I.C.E.S.C.R., n82, art.1(2); Res.1803, n128.

142 Memorial, C(I)(1)(a).

143 C.46.

144 C.48.

145 S.D. Myers, n140, 1437.

146 S.D. Myers, n140, 1437; Pope & Talbot II, n129, 373.

147 GAMI Investments, Inc. v. Mexico (2004), 44 I.L.M. 545, 564 (NAFTA) [GAMI].

Respondent’s Memorial Page 25 of 43

D. THE NON-ADMISSION OF MDR’S BID DID NOT VIOLATE ARTICLE V

OF THE BIT

I. ARTICLE V DOES NOT EXTEND TO PRE-ADMISSION ACTIVITIES

International law imposes no obligation to admit investments.148

In refusing to admit MDR’s bid,

Rydal was exercising its sovereign right to control the admission of foreign investments. This

right has not been curtailed by Article V.

Article V applies only to investments. The BIT distinguishes “investors” from

“investments”, prescribing certain rights only to investors. Future investments have been

intentionally excluded from the definition of investment. The inclusion of such investments

would affect the plain meaning of the treaty. The exclusion of future investments prevents

foreign investments from receiving treatment potentially better than that afforded to domestic

investments at the admission stage.149

II. FURTHER, AND IN THE ALTERNATIVE, MDR’S BID IS NOT AN INVESTMENT UNDER THE BIT

MDR’s bid does not fall into any of the listed categories in the definition of investment.

Therefore, the bid must be an asset of MDR which has the “characteristics of an investment”.150

148

Res.1803, n128; Dolzer & Schreuer, n139, 79.

149 Dolzer & Schreuer, n139, 178.

150 C.Annex 1.

Respondent’s Memorial Page 26 of 43

1) There are five “characteristics of an investment” that must be satisfied

The three illustrative characteristics in the definition are non-exhaustive. Tribunals have also

considered long-term duration and contribution to the economic development of the host state as

typical characteristics of an investment.151

In light of the object and purpose of the BIT,152

these

additional requirements are of significance. Short term projects that do not contribute to the host

state’s development will not satisfy these objectives. All five characteristics must be satisfied for

an investment to exist.153

2) MDR’s bid does not have the “characteristics of an investment”

(a) There has been no significant commitment of capital

Tribunals have repeatedly rejected attempts to characterise pre-investment costs during a bid as a

commitment of capital.154

MDR has merely provided documents in association with its bid

application and made an offer concerning an up-front payment.

151

Fedax N.V. v. Venezuela (1998), 37 I.L.M. 1378, 1387 (ICSID); Salini Costruttori S.P.A v.

Morocco (2003) 42 I.L.M. 609, 622 (ICSID).

152 Memorial, C.

153 Joy Mining Machinery Ltd. v. Egypt (2004), 19 ICSID Rev.—F.I.L.J. 486, 500 (ICSID) [Joy

Mining]; Patrick Mitchell v. Democratic Republic of Congo (2006), Case No. ARB/99/7,

Decision on Application for Annulment of Award, ¶27 (ICSID); Malaysian Historical Salvors v.

Malaysia (2007), Case No. ARB/05/10, Award on Jurisdiction, ¶106 (ICSID).

154 Mihaly International Corporation v. Sri Lanka (2002), 41 I.L.M. 867, 877 (ICSID) [Mihaly];

F-W Oil Interests Inc. v. Trinidad and Tobago (2006), Case No. ARB/01/14, Award, ¶184

(ICSID) [F-W Oil]; William Nagel v. Czech Republic (2004), 1 Stockholm Arb. Rep. 141, 164-

165 (ICSID) [Nagel].

Respondent’s Memorial Page 27 of 43

(b) There is no reasonable expectation of profit or gain

An expectation of profit or gain must have financial value.155

Financial value must be real rather

than potential; disappointed expectations are not enough.156

MDR’s mere prospect of obtaining

the right to exploit the oil reserves is not a legitimate expectation with financial value.

The only legitimate expectation MDR could have held was the expectation to be

considered. This is not an expectation of profit or gain; further, Rydal did consider the bid.

(c) There is no assumption of risk

The risk assumed by MDR that it would not be awarded the final right to exploit the oil reserves

was an ordinary commercial risk and not the type of long term risk generally associated with

investments.157

(d) The bid was not of sufficient duration

This element requires a long-term commitment of capital by the investor.158

MDR only made a

one-off transaction in preparing documentation for its application, and an offer to make an up-

front payment if its bid was accepted.

155

Nagel, n154, 164.

156 Nagel, n154, 164.

157 Joy Mining, n153, 501; Bayindir v. Pakistan (2005), Case No. ARB/03/09, Decision on

Jurisdiction, ¶136 (ICSID).

158 Joy Mining, n153, 500; Mihaly, n154, 875; F-W Oil, n154, ¶184; Nagel, n154, 164-165.

Respondent’s Memorial Page 28 of 43

(e) There has been no contribution to Rydal’s economic development

MDR merely submitted a bid in a competitive bidding process. It failed to inject any funds or

capital into Rydal.

Even if the above factors are not independent requirements, the bid’s failure to satisfy any

of them demonstrates that at most, it can be characterised as a ‘pre-investment expenditure’. As

stated above,159

pre-investment expenditures have been repeatedly rejected as constituting an

investment. International investment would be significantly harmed if every unsuccessful bidder

in a bid process had recourse to international arbitration. Rydal did not undertake to treat

MDR’s application expenditures as an investment. MDR could not expect that its bid would be

treated as such, given the preliminary nature of the bid process and the absence of exclusive

negotiations.160

III. IN THE ALTERNATIVE, RYDAL’S ACTIONS SATISFIED THE REQUIREMENTS OF ARTICLE V

An interpretation of Article V according to the above principles161

reveals that the parties have

provided for the application of the customary standards of treatment rather than an autonomous

treaty standard.162

The customary standard includes requirements of fair and equitable treatment

and non-discrimination. Rydal’s actions did not breach these requirements.

159

Memorial, D(II)(2)(a).

160 Mihaly, n154, 875.

161 Memorial, C.

162 UNCTAD, Fair and Equitable Treatment, UNCTAD/ITE/IIT/11 (Vol. III) (1999), 20; R.

Dolzer & M. Stevens, Bilateral Investment Treaties (The Hague: Martinus Nijhoff, 1995), 60.

Respondent’s Memorial Page 29 of 43

1) The treatment of MDR was fair and equitable

Under custom, states are requires to provide fair and equitable treatment to foreign

investments.163

This standard contains several requirements,164

all of which Rydal has satisfied.

(a) Rydal’s conduct was not arbitrary

Conduct is arbitrary if it is “unfair and unreasonable”165

such that it “surprises...a sense of

judicial propriety”.166

A discretionary decision is not arbitrary if all relevant matters are given

due consideration and clear reasons are provided.167

MDR’s bid was duly considered and clear

reasons were provided for the selection of ROCO’s bid. Therefore, Rydal’s actions were not

arbitrary.

(b) There was no violation of due process

A violation of due process occurs where there is an “an outcome which offends judicial

propriety”.168

Nothing in the bid process violated this standard.

163

International Thunderbird Gaming Corporation v. Mexico, Award, 26 January 2006, ¶194

(NAFTA) [Thunderbird]; Metalclad Corporation v. Mexico (2000), 40 I.L.M. 36, 47 (ICSID)

[Metalclad]; Mondev International Ltd. v. United States (2002), 42 I.L.M. 85, 107 (ICSID)

[Mondev].

164 Waste Management, Inc. v. Mexico (2004), 43 I.L.M. 967, 986 (ICSID) [Waste Management].

165 Restatement (Third) of Foreign Relations Law of the United States § 712 (1986)

[Restatement].

166 Case Concerning Elettronica Sicula S.p.A (ELSI) (United States of America v. Italy), [1989]

I.C.J Rep 16, 76 [ELSI].

167 ELSI, n166, 76.

168 Loewen Group, Inc. v. United States (2003), 42 I.L.M. 811, 831 (ICSID) [Loewen]; ELSI,

n166, 76.

Respondent’s Memorial Page 30 of 43

First, the bid process afforded MDR the same treatment extended to ROCO. This

treatment was in accordance with the criteria outlined in the request for bids.

Secondly, Aspatria must demonstrate that the refusal of standing to MDR was a denial of

due process. The Compromis does not reveal the reasons for the refusal. Thus, there is no

evidence whether the refusal of standing amounted to “manifest injustice.”169

(c) Rydal provided a transparent framework for investments to protect legitimate

expectations

A state must provide a transparent and stable framework for investments to preserve the

legitimate expectations of investors.170

The standard can only be breached if expectations are

held.171

MDR had no expectation that only economic considerations would be taken into account

in the bid process. Monte de Rosa’s statements that he believed the oil ought to be exploited by

Aspatrians,172

his letter published in The Times of Rydal recognising that MDR was involved in a

dispute between Rydal and Aspatria, 173

and his letter acknowledging that the granting of the oil

licence was linked to the future of the Islands reveal that MDR recognised that non-economic

169

Loewen, n168, 831.

170 Técnicas Medioambientales Tecmed, S.A. v. Mexico (2003), 43 I.L.M. 133, 173 (ICSID)

[Tecmed]; Metalclad, n163, 47; Energy Charter Treaty, 17 December 1994, 2080 U.N.T.S. 100,

art.20(2) [ECT]; Treaty Between the Government of the United States of America and the

Government of [Country] Concerning the Encouragement and Reciprocal Protection of

Investment, online: United States Department of State

<http://www.state.gov/documents/organization/117601.pdf> art.10(1)(a); Fourth ACP-EEC

Convention (LOME IV), 15 December 1989, 1924 U.N.T.S. 4, art.258(c) [ACP-EEC].

171 Thunderbird, n163, ¶164.

172 C.46.

173 C.48.

Respondent’s Memorial Page 31 of 43

considerations would be taken into account.174

Thus, MDR had no expectation that Rydal could

have frustrated.

2) The treatment of MDR was non-discriminatory

A state action satisfies the customary protection175

of non-discrimination if there is a reasonable

justification for any differential treatment.176

The refusal of MDR’s bid was based on

safeguarding the Islanders’ capacity to pursue their economic and social future. Rydal’s actions

occurred within the framework of the bid process itself and were therefore reasonable.

174

C.51.

175 I.C.C.P.R., n81, art.26.

176 Saluka Investments B.V. v. Czech Republic, 17 March 2006, Partial Award, ¶ 313

(UNCITRAL) [Saluka]; Oscar Chinn Case (United Kingdom v Belgium) (1934), P.C.I.J. (Ser.

A/B) No. 63, 92 (Dissenting Opinion of Judge Altamira) [Oscar Chinn]; Restatement, n165, §

711.

Respondent’s Memorial Page 32 of 43

E. ASPATRIA’S SEIZURE OF ALEC’S ASSETS CONSTITUTES A BREACH OF THE

BIT FOR WHICH RYDAL HAS STANDING

I. RYDAL HAS STANDING TO MAKE A CLAIM EITHER ON BEHALF OF ALEC OR ROCO

Art XIII of the BIT confers standing on the basis of nationality. The term ‘national’ can be

interpreted by reference to “any relevant rules of international law applicable in the relations

between the parties”,177

including custom.178

Rydal has standing because the A & L Exploration Corporation (“ALEC”) is a Rydalian

national, either on the basis of effective nationality or substitution. ROCO is an investor for the

purposes of Art XIII, as its shareholding in ALEC is an investment. There is no requirement for

ALEC or ROCO to exhaust local remedies in Aspatria; alternatively, all available remedies have

been exhausted.

1) Rydal has standing on the basis of effective nationality

Effective nationality permits a corporation to have multiple nationalities based on a ‘genuine

link’ with a state.179

This is determined by a combination of factors, including place of

incorporation, seat of management and shareholding.180

Although this Court in Barcelona

177

V.C.L.T., n127, art.31(3)(c).

178 Case Concerning Oil Platforms (Iran v. United States), [2003] I.C.J. Rep. 161, 182.

179 International Law Commission, Seventh Report on Diplomatic Protection, 58

th Sess., UN

Doc. A/CN.4/567 (2006), 23 [Diplomatic Protection]; Nottebohm, n132, 23.

180 Diplomatic Protection, n179, 23; OECD, International Investment Law: Understanding

Concepts and Tracking Innovations (Paris: OECD Publishing, 2008), 18.

Respondent’s Memorial Page 33 of 43

Traction excluded effective nationality in relation to corporations,181

a number of Separate

Opinions affirmed its application.182

Additionally, custom and corporate realities have evolved;

Barcelona Traction does not reflect the law in this area.183

ROCO’s shareholding in ALEC,184

as well as its provision of machinery and capital to

ALEC185

provides a genuine link between ALEC and Rydal. As a result, ALEC is a Rydalian

national.

2) Alternatively, Rydal has standing on the basis of substitution

Even if incorporation is the test for corporate nationality at custom, there are recognised

exceptions to the test.186

Substitution is an exception to the incorporation test that applies where the state of

incorporation is the author of the injury to the company.187

The corporation’s nationality is

substituted for that of its primary shareholders and the corporation becomes a foreign investor.188

181

Barcelona Traction, n85, 42.

182 Barcelona Traction, n85, 83, 186, 280-281 (Separate Opinions of Judges Fitzmaurice, Jessup

and Gros).

183 Brownlie, n16, 482-483; Diplomatic Protection, n179, 23.

184 C.40.

185 C.41.

186 Barcelona Traction, n85, 40.

187 Barcelona Traction, n85, 40, 48; Case Concerning Ahmadou Sadio Diallo (Guineau v.

Democratic Republic of Congo), [2007] I.C.J. Rep. 1, 30 [Diallo].

188 Dolzer & Schreuer, n139, 57.

Respondent’s Memorial Page 34 of 43

The exception was recognised in the majority judgment in Barcelona Traction189

and in a

number of Separate Opinions.190

This Court has left open the question of whether a narrow

formulation of substitution is a norm of custom.191

The narrow formulation requires the

incorporation of the company in the injuring state as a precondition for doing business there.192

State practice and opinio juris193

support this formulation of substitution.

ALEC’s assets have been seized by Aspatria, the state of incorporation. The Natural

Resources Act (“NRA”) effectively requires ALEC to be incorporated in Aspatria in order to do

business there. ALEC could not have obtained its Aspatrian licence in 1993 (“northeast licence”)

had it not been incorporated in Aspatria. ROCO has been forced to channel its Aspatrian

business through ALEC due to the NRA.194

As the exception applies, ALEC’s Aspatrian nationality is substituted for ROCO’s

Rydalian nationality, giving Rydal standing to bring a claim.

189

Barcelona Traction, n85, 40, 48.

190 Barcelona Traction, n85, 72, 131, 191, 240 (Separate Opinions of Judges Fitzmaurice,

Tanaka, Jessup, Morelli).

191 Diallo, n187, 31.

192 International Law Commission, Report of the International Law Commission: Draft Articles

on Diplomatic Protection, UN GAOR, 61st Sess., Supp. No. 10, UN Doc. A/61/10 (2006),

art.11(b).

193 International Law Commission, Diplomatic Protection: Comments and Observations

Received from Governments, 58th

Sess., UN Doc A/CN.4/561 (2006), 32, 34-35; International

Law Commission, Diplomatic Protection: Comments and Observations Received from

Governments - Addendum, 58th

Sess., UN Doc A/CN.4/561/Add.1 (2006), 9-10, 15.

194 C.41.

Respondent’s Memorial Page 35 of 43

3) Further, and in the alternative, Rydal has standing on the basis of ROCO’s investment

A fundamental feature of an investment is its extended duration.195

ROCO has held its shares in

ALEC for twenty-four years after the conclusion of the BIT, indicating the long-term nature of

its investment. In S.D. Myers196

and Metalclad,197

it was assumed that an investment made prior

to NAFTA was an investment for the purposes of that treaty.

4) There is no requirement to exhaust local remedies

The BIT contains no requirement to exhaust local remedies. An importation of customary norms

is an amendment of the BIT that can only occur through the procedure contained in Art 40 of the

V.C.L.T.,198

to which both states are party.

Even if the requirement does apply, ALEC need only exhaust remedies that are effective

and adequate.199

ALEC has exhausted all administrative remedies.200

The criminal proceedings

cannot be considered a ‘remedy’, as they have not been sought by ALEC and do not redress the

injury suffered.

195

C. Schreuer, The ICSID Convention: A Commentary (Cambridge: Cambridge University

Press, 2001), 140.

196 S.D.Myers, n140.

197 Metalclad, n163.

198 V.C.L.T., n127.

199 Ambatielos Claim (Greece v. United Kingdom), [1956] 12 R.I.A.A. 83, 119; Case of Certain

Norwegian Loans (France v. Norway) [1957] I.C.J. Rep. 9, 39 (Separate Opinion of Judge

Lauterpacht); Diallo, n187, 26.

200 C.58.

Respondent’s Memorial Page 36 of 43

ROCO is deemed to have exhausted local remedies because the essence of the claim has

been brought before Aspatrian courts by ALEC.201

II. THE SEIZURE IS A VIOLATION OF ARTICLE VI

1) Aspatria has directly expropriated ALEC’s assets

A permanent seizure of property is a direct expropriation202

regardless of whether legal title has

been transferred.203

Temporary restrictions on the use of property are effectively permanent where the

restriction on the use of the property is significant and “not merely ephemeral”.204

ALEC has

been deprived of its assets for two years. This deprivation could extend to six years.205

This is a

significant restriction on ALEC’s use of its assets. As a result, the seizure is effectively

permanent and is a direct expropriation of ALEC’s assets.

201

ELSI , n166, 46; Diplomatic Protection, n179, 29.

202 ELSI, n166, 71; G.C. Christie, “What Constitutes a Taking of Property Under International

Law?” (1962) 38 B.Y.I.L. 307, 322 [Christie].

203 Metalclad, n163, 50; Glamis Gold, Ltd. v. United States, Award, 8 June 2009, ¶355 (NAFTA)

[Glamis].

204 Tippets, Abbett, McCarthy, Stratton v. TAMS-AFFA Consulting Engineers of Iran (1984), 6

Iran-US C.T.R. 219, 225 [TAMS-AFFA]; S.D. Myers, n140, 1440; Christie, n202, 322.

205 C.59.

Respondent’s Memorial Page 37 of 43

2) Alternatively, Aspatria has indirectly expropriated ALEC’s northeast licence and

ROCO’s shareholding

The seizure has interfered with ALEC’s use of its licence to such an extent that the “economic

value of the property interest [has been] radically diminished”.206

It is a norm of custom that

measures having such an effect constitute an indirect expropriation.207

Any decline in the value

of ROCO’s shareholding also constitutes an indirect expropriation.208

The submissions below in

relation to ALEC’s licence also apply to ROCO’s shareholding.

Rydal concedes that a seizure of property in the exercise of a state’s police powers is not

an indirect expropriation. However, where the degree of interference with the investment is not

proportional to the purpose of the state measure, the police power is not exercised in good faith

and the seizure will be expropriatory and compensable.209

Additionally, a discriminatory

measure is not a valid exercise of police powers.210

These principles are reflected in Art VI(b) of

the BIT.

206

Glamis, n203, ¶355.

207 Starrett Housing Corporation v. Iran (1984), 4 Iran-US C.T.R. 123, 164; TAMS-AFFA, n204,

226; Compania Del Desarrollo de Santa Elena, S.A. v. Costa Rica (2000), 39 I.L.M. 1317, 1330

(ICSID) [Santa Elena]; Glamis, n203, ¶355.

208 Saluka, n176, ¶246, 266-267; GAMI, n147, 566; LG&E Energy Corporation v. Argentina

(2006), 46 I.L.M. 40 at 6, (ICSID) [LG&E].

209 Tecmed, n170, 164; LG&E, n208, 64; OECD, Directorate for Financial and Enterprise

Affairs, “Indirect Expropriation” and the “Right to Regulate” in International Investment Law,

Working Paper No. 4, September 2004, 10-11.

210 Amoco International Finance Corporation v. Iran (1987), 15 Iran-US C.T.R. 189, 231;

Saluka, n176, ¶255; M. Sornarajah, The International Law on Foreign Investment, 2d ed.

(Cambridge: Cambridge University Press, 2004), 387.

Respondent’s Memorial Page 38 of 43

(a) The degree of interference is not proportional to the purpose

The degree of interference is determined by the economic impact and duration of the seizure.211

The stated purpose of the seizure was to prevent ALEC from taking action inconsistent with the

NRA. This does not justify Aspatria’s interference with ALEC’s northeast licence.

(i) The economic impact is substantial

The seizure must have substantially impaired ALEC’s ownership, use and enjoyment of its

licence, by rendering it useless.212

Without its assets, ALEC is unable to utilise its rights under

the licence and generate revenue from the exploitation of oil reserves. The economic impact is

substantial, as the licence has been rendered effectively useless.

(ii) The duration of the seizure renders it permanent

Temporary measures can be expropriatory.213

The delay in the criminal proceedings214

renders

the seizure effectively permanent. ALEC is unable to utilise its licence and will lose millions of

dollars in revenue.215

Thus, the severity of the interference with ALEC’s northeast licence is not proportional to

the public welfare objectives of the seizure.

211

Glamis, n203, ¶356; Tecmed, n170, 162; LG&E, n208, 64-65.

212 Glamis, n203, ¶357; Tecmed, n170, 162; GAMI, n147, 566; R. Higgins, “The Taking of

Property by the State” (1982) 3 R.C.A.D.I. 263, 351.

213 S.D. Myers, n140, 1440; Santa Elena, n207, 1329-1330; Christie, n202, 322.

214 C.59.

215 C.59.

Respondent’s Memorial Page 39 of 43

(b) The seizure was discriminatory

An exercise of police powers is discriminatory if “(i) similar cases are (ii) treated differently (iii)

without reasonable justification”.216

MDR also participated in the bid process. This was

inconsistent with its Aspatrian licence. Aspatria has not taken action against MDR. There is no

reasonable justification for the differential treatment of ALEC when MDR has also violated the

NRA by participating in the bid.

3) Aspatria’s failure to pay compensation is a violation of Art VI

The seizure is an expropriation requiring compensation. The requirements of public purpose, due

process and non-discrimination in Art VI(a) are cumulative; the absence of one renders the

expropriation unlawful.217

As discussed above,218

the seizure of ALEC’s assets was

discriminatory. This discriminatory expropriation is per se unlawful.219

Aspatria must compensate ALEC or ROCO for the value of its investment and loss of

profits.220

This compensation must be “prompt, adequate and effective”.221

Aspatria’s failure to

provide compensation is a violation of Art VI(a) of the BIT.

216

Saluka, n176, ¶313; Oscar Chinn, n176, 92; Restatement, n165, § 711.

217 Saluka, n176, ¶ 266; Brownlie, n16, 538-539.

218 Memorial, E(II)(2)(b).

219 Libyan American Oil Company v. Libya (1977), 20 I.L.M. 1, 59; Brownlie, n16, 538-539.

220 Case Concerning the Factory at Chorzow (Germany v Poland) (1928), P.C.I.J. (Ser. A) No.

17, 47 [Chorzow Factory].

221 C.Annex 1 (BIT art.VI(a)).

Respondent’s Memorial Page 40 of 43

Even if the expropriation is lawful, Aspatria must compensate ALEC or ROCO for the

value of its investment.222

Aspatria’s failure to do so is a violation of Art VI(a) of the BIT.

III. THE SEIZURE IS A VIOLATION OF ART V

As previously submitted,223

ALEC is a Rydalian national. ALEC is an investor and its assets are

an investment according to the BIT. The following submissions also apply to ROCO.

As submitted above in relation to MDR’s bid,224

Article V contains customary standards

of treatment. Aspatria has not afforded ALEC fair and equitable treatment and full protection and

security.

1) The threshold for a breach of the minimum standard has been significantly liberalised

State practice and opinio juris, in the form of bilateral and multilateral investment treaties,225

have modified custom such that no special level of conduct is required to breach the minimum

standard of treatment.226

Jurisprudence has recognised that the Neer227

standard no longer

reflects custom.228

As a result, treaty practice and custom have converged and treaty

222

Chorzow Factory, n220, 47.

223 Memorial, E(I).

224 Memorial, D(III).

225 ACP-EEC, n170, art.258(c); Agreement for the Promotion and Protection of Investments,

Netherlands and Philippines, 27 February 1985, 1488 U.N.T.S. 304, art.3.2; ECT, n170, art.10.

226 Mondev, n163, 107-108; Saluka, n176, ¶282; Draft Articles on State Responsibility, n12, 34.

227 L. F. H. Neer and Pauline Neer (U.S.A.) v. United Mexican States (1926), 4 R.I.A.A. 60.

228 ELSI, n166, 76; Waste Management, n164, 983-984.

Respondent’s Memorial Page 41 of 43

jurisprudence now elucidates custom.229

Therefore, no particular standard must be reached

before a breach occurs. Instead “the standard...must be adapted to the circumstances of each

case.”230

2) Aspatria has not afforded ALEC fair and equitable treatment

(a) Aspatria’s conduct is arbitrary, grossly unfair, unjust or idiosyncratic

Arbitrary conduct, as outlined above,231

is a violation of the customary minimum standard.232

As the oil reserves in the EEZ of the Islands do not belong to Aspatria, the licence

granted by Aspatria to MDR has no effect. As a result, ALEC’s participation in ROCO’s bid

could not be inconsistent with the NRA. The prosecution was commenced without any legal

basis and was therefore arbitrary.233

Alternatively, Aspatria’s seizure of ALEC’s assets is arbitrary. The discretion to

prosecute must have been exercised in good faith.234

Any interference by ALEC with MDR’s

licence occurred when the bids were submitted. Between December 2006 and October 2007,

ALEC acted inconsistently with any rights under the licence. Aspatria did not enforce the NRA

229

C. McLachlan, L. Shore & M. Weiniger, International Investment Arbitration (Oxford:

Oxford University Press, 2007) 20; S. Schwebel “The Overwhelming Merits of Bilateral

Investment Treaties” 32 Suffolk Transnat’l L. Rev. 263, 265.

230 Waste Management, n164, 986.

231 Memorial, D(III)(1)(a).

232 ELSI, n166, 76.

233 ELSI, n166, 76.

234 Memorial, D(III)(1)(b).

Respondent’s Memorial Page 42 of 43

until the point at which it was most detrimental to ROCO’s interests. As a result, the discretion

was not honestly and reasonably exercised.

(b) Aspatria’s conduct is a denial of justice

A denial of justice occurs when a decision leads to “justified concerns as to the judicial propriety

of the outcome.”235

The seizure order by the Aspatrian administrative court and the subsequent

refusal to revoke the order constitute a denial of justice. The seizure should only have extended

to any asset that may have been used in the exploitation of the Islands’ reserves. Instead, cash

and equipment that were lawfully being used to exploit ALEC’s northeast licence were seized.

This action goes beyond the scope of the Aspatrian Criminal Code. Thus, there are justified

concerns about the judicial propriety of the decision not to revoke the seizure order, which

amounts to a denial of justice.

3) Aspatria has not afforded ALEC full protection and security

In Middle East Cement v. Egypt,236

the Tribunal held that a failure to provide direct notification

of a seizure of a ship was a breach of full protection and security.237

Aspatria did not notify

ALEC by direct communication of the seizure of its assets, particularly its oil tanker. Thus,

Aspatria has breached the requirement of full protection and security in Article V.

235

Loewen, n168, 831; ELSI, n166, 76.

236 Middle East Cement Shipping Company v. Egypt (2000), 18 ICSID Rev. - F.I.L.J. 602

(ICSID) [Middle East Cement].

237 Middle East Cement, n236, 637.

Respondent’s Memorial Page 43 of 43

PRAYER FOR RELIEF

The Respondent requests the Court to adjudge and declare that:

a) Rydal has sovereignty over the Windscale Islands;

b) The Islanders are entitled to independence as an exercise of their right to self-

determination and Rydal may take steps to give effect to this independence;

c) The non-admission of MDR’s bid was not a violation of Articles IV and V of the BIT by

Rydal

d) Rydal has standing to invoke the BIT to protect ALEC’s assets; and

e) The seizure of ALEC’s assets by Aspatria is a violation of Articles V and VI of the BIT.

Respectfully Submitted,

AGENTS OF THE RESPONDENT.