Tribunal majority dismisses case with prejudice after claimant fails to honour security for costs

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Background: power plant deal is inked after introduction of martial law by President Marcos

Tribunal failed to allow submissions on effect of domestic legal opinion

Fraport’s secondary claims for annulment, based on the tribunal’s alleged manifest excess of power and failure to state reasons, were rejected by the committee.

Tribunal majority found that Philippine Anti-Dummy Law was concerned with managerial control

Respondent was ordered to produce documents from parallel ICC arbitration

Linguistic differences were deemed irrelevant

Majority held that Philippine authorities did not have secret shareholder agreements before them when deciding on prosecution

Having concealed the shareholder agreements, Fraport could not invoke the Philippines’ inaction

Majority found that Fraport knowingly structured its investment so as to circumvent local law through secret shareholder agreements

Each party was ordered to bear its own legal costs; arbitration costs were split equally

Cancellation of airport concession led to ICSID arbitration

In his dissent, Bernardo Cremades saw no breach of the ADL, pointed to respondent’s procedural bad faith, and argued that legality of investor conduct was a merits issue

Majority pointed to investor obligations

No estoppel since government was unaware of secret shareholder agreements

Majority found that the legality requirement only applied to the establishment phase

Tribunal majority deemed that the BIT’s definition of “investment” served as lex specialis with respect to the ICSID Convention

Fraport’s conduct was deemed “egregious”

Majority found implicit legality requirement in the BIT

Legality requirement applied whether or not the investment involved a direct agreement with the host state, said the majority

Standard of proof requires “clear and convincing evidence” for corruption allegations

Common sense favours application of a single governing law

Allegedly corrupt local representative had individual reasons to favour awarding the contract to claimants

Respondents failed to carry their burden of proof despite extensive evidence at their disposal

Tribunal discusses Kompetenz-Kompetenz and separability

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