Question Three: Whether Rydal’s Rejection of MDR’s bid constituted a violation of the Aspatria-Rydal

BID?

III. ​RYDAL’S REJECTION OF THE MDR’S BID VIOLATED ITS OBLIGATIONS UNDER THE ASPATRIA-RYDAL
BID

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

The rule of prior exhaustion of domestic remedies has a long and consistent history in international

law. Its frequent application by international courts, its recognition in inter-state practice, and its

extensive scholarly analysis allow for the assumption that the existence or general validity of the rule do
1
not have to be questioned. Aspatria’s claim is admissible since the MDR had pursued all administrative
2
and judicial remedies possible under Rydalian law.

B. RYDAL OWES OBLIGATIONS UNDER THE ASPATRIA-RYDAL BIT TO ASPATRIAN INVESTORS AND
INVESTMENTS IN THE ISLANDS

As BITs are international law instruments, international law is applicable by virtue of the Vienna

Convention on the Laws of Treaties, which provides that treaties are “governed by international law”
3
and must be interpreted in the light of “any relevant rules of international law applicable.”

The Aspatria-Rydal BIT interpreted in accordance with international law imposed obligations on

Rydal to protect Aspatrian investors and investments within the Islands because of Rydal’s physical

control over the Islands. 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.

C. RYDAL’S REJECTION OF THE MDR BID VIOLATED ITS OBLIGATION UNDER ARTICLE IV OF THE
ASPATRIA-RYDAL BIT

1
Silvia D’ Ascoli and Kathrin Maria Scherr, The Rule of Prior Exhaustion of Local Remedies in the International Law
Doctrine and Its Application in the Specific Context of Human Rights Protection, EUI Working Papers, 2007. p. 2.
2
Compromis, par. 61
3
VCLT, Art 31(3)(c)
MDR Limited is an “investor” under the Aspatrian-Rydal BIT owned by Felix Monte de Rosa, an

Aspatrian national engaged in the business of extracting and processing oil, coal, and other fuel

sources throughout the southern hemisphere, “attempting to make an investment” in the islands by

submitting a bid for the concession to exploit the oil reserves.

Although sovereignty over the Windscale Islands has continually remained with Aspatria, Rydal’s

interference and/or control over the Islands engaged its responsibility under the Aspatria-Rydal BIT.

1​. ​Rydal treated MDR less favourably than it did ROCO when the two were in

“like circumstances”.

MDR and ROCO both satisfy the prerequisite of the “like circumstances" in Article IV, which

includes financial specialists inside a similar business or monetary division since they both work in

the oil exploitation industry. The similarity goes further since they are in coordinate rivalry for a

similar concession. In consequence, the national treatment principle​[1] demands that MDR and

ROCO “be subject to the same competitive conditions.”

The MDR offer was better than the ROCO offer. It gave a forthright installment of USD 500 million,
and 50 percent of the net continues. The ROCO offer just guaranteed 45 percent of the net continues,
a sum feasible simply after the acknowledgment time frame that can stretch out to 50 years, as
indicated by thinks about inside the oil generation industry.

2. The rejection of the MDR bid bore no reasonable nexus to a rational government policy that
does not discriminate against investors.
Rydal cannot conjure its administration strategies to legitimize its differential treatment, unless the
arrangements were not purposefully discriminatory nor discriminatory in effect. The conditions​[2]
encompassing the dismissal of the MDR uncovers Rydal's bias based on nationality. Members of the
ILSA who voted against the MDR tried to declare that they had to “be wary of Aspatrians bearing
gifts”, and Black also did the same that “the future of the Windscale Islands lies with that community
of States, led by Rydal”. ​[3]​This deliberate segregation is lethal to any legitimization by Rydal for its
differential treatment.

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.

“Investment” defined by the Aspatria-Rydal BIT comprises “every asset”, as well as the term
“embraces everything of economic value, virtually without limitation”. The MDR bid included a
presentation to the inert commitment of a forthright installment of USD 500 million, which matured
into an advantage of monetary esteem once the assembly achieved the underlying agreement to
choose the MDR bid. ​[4]​That stage of the bidding process had the approved bid became a protected
investment and Rydal had been bound to equally treat it.

There’s consistency according to the finding when it comes to the intention of the parties under the
Aspatria-Rydal BIT. “The parties’ prerogative in this respect”, as investment is defined in Mihaly v.
Sri Lanka. Investments cannot be concluded until a contract is signed.
2. Rydal’s rejection of the MDR bid violated

its obligation to accord it “fair and equitable

treatment”.

According to Article V​[5]​’s “fair and equitable treatment” it includes the independency ​[6]​of the
general international law that entails the remedy that does not affect the basic expectations of the
foreign investors.

As also clarified by the host State that creates “reasonable and justifiable expectations on the part of
an investor to act in reliance on said conduct”. When the investor’s operations were refused in
Metalcad ​[7]​v. Mexico, due to lack of municipal permit has breached the investor’s expectations
provided by law. The bidding process was supposed to be “open, transparent and competitive, what’s
prerequisite is a registered Rydal officer.

These portrayals raised MDR's lawful expectations that financial intensity, and not nationality, would
be the gauge against which offers would be assessed. Rydal's possible dismissal of the MDR offer
based on nationality was hostile with the underlying portrayals and ruptured the standard of
reasonable and evenhanded treatment. This is not at all like Thunderbird v. Mexico​[8]​, where
Mexican experts gave no confirmation that gaming machines would be endorsed, and the speculator
knew that gaming was illicit in Mexico.
[1] Hanbook of International Trade / edited by E. Kwan Choi and James Harrigan, 2004, p.16

[2] 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)

[3] Compromis, para.52, 53.

[4] Compromis, para.51, 52.

[5] Article V

[6] Fair and Equitable Treatment: A Key Standard in Investment Treaties Rudolf Dolzer The International LawyerVol. 39,
No. 1 (SPRING 2005), pp. 87-106

[7] Metalclad Corp v. Mexico, 5 ICSID (W. Bank.) 209, 228 (Award) (ICSID, 2000).

[8]​ International Thunderbird Gaming Corpotation v. The United Mexican States, Award, 26 January 2006