Title
Ad Hoc Award of March 3, 2013, Mohamed Abdulmohsen Al-Kharafi & Sons Co. v. Libya
Content
Final Arbitral Award Summary award to be immediately enforced and not subject to any means of recourse in line with Article 2/8 of the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States In accordance with the Unified Agreement for the Investment of Arab Capital in the Arab States Rendered in Cairo on 22/3/2013 In the Arbitral Proceeding between: Mohamed Abdulmohsen Al‐Kharafi & Sons Co.  (Kuwaiti Company) represented by the Vice-­President of the Board of  Directors, Mr. Omar Mohamed Helmi Dessouki Plaintiff And 1­‐ The Government of the State of Libya 2-­ The Ministry of Economy in the State of Libya 3-­ The General Authority for Investment Promotion and Privatization Affairs (formerly the General Authority for Investment and Ownership) 4‐ Ministry of Finance in Libya 5­‐ The Libyan Investment Authority Defendants (Defendants in solidum) The Court of Arbitration is composed of: Dr. Abdel Hamid El-­Ahdab: Chairman Dr. Ibrahim Fawzi: Arbitrator Justice Mohamed El­‐Kamoudi El‐Hafi: Arbitrator The Plaintiff: Mohamed Abdulmohsen Al-­Kharafi & Sons Co. Kuwaiti Company (represented by the Vice-­President of the Board of Directors, Mr. Omar Mohamed Helmi Dessouki) Address: 3, Abbas El-­Akkad Street, Nasr City – Cairo – Arab Republic of Egypt Represented by: 1-­ Dr Fathi Waly Address: Nile Road­‐ Nasr Bldg- Giza­‐ Egypt Tel: 00 202 37483059 Fax: 00 202 33367673 Email: walyfirm@gmail.com 2­‐ Dr. Mahmoud Samir Sharkawi Address: 76, League of Arab States Street­‐ Mouhandiseen-­ 9th floor-­ Egypt Tel: 00 202 37622044 Fax: 00 202 33382050 Email: sharkawi.lawoffice@gmail.com 3­‐ Dr. Nasser Ghanim El‐Zaid, Attorney at Law Address: Al-­Dasma District – Bloc 4 – 41st Street – Villa No. 2– Kuwait Tel: +965 22515194 Fax: +965 22515149 Email: phdlaw@hotmail.com 4­‐ Rajab Bashir Al-­Bakhnug, Attorney at Law Address: Appartment No. 5 – Haddad Building – Omar El-­Mukhtar Street – Tripoli – Libya Tel: +218 4440886 Fax: +218 213333929 Email: bakhug@yahoo.com The Defendants: 1‐ The Government of the Republic of Libya   Tripoli‐ Libya 2­‐ The Ministry of Economy in the Republic of Libya   Tripoli­‐ Libya 3-­ The General Authority for Investment Promotion and Privatization Affairs (formerly the General Authority for Investment and Ownership)   Tripoli­‐ Libya 4-­ Ministry of Finance in Libya   Tripoli-­ Libya 5-­ The Libyan Investment Authority   Tripoli­‐ Libya (Defendants in solidum) Represented by: 1‐ Mahfouz Ahmad El-­Fokhi, Counselor Address: Court Complex-­ Sidi Street, 3rd floor‐ The General Authority for Investment and Ownership Tel: +218 913830984 Fax: +218 213 607116 Email: mahfudelfoghi@yahoo.com 2-­ Dr. Hafiza El­‐Haddad Address: Beirut Arab University – Beirut Tel: +961 71 498747 Fax: +961 1 818402 Email: hafizaelhaddad@hotmail.com 3-­ Dr. Hisham Sadek Address: 7, El-­Salloum Rushdi Street – Alexandria -­ Cairo Tel: +203 5429615 Fax: +203 4806129 Type of arbitration: Ad­‐hoc arbitration subject to the Unified Agreement for the Investment of Arab Capital in the Arab States. Period of arbitration: Six months starting from September 14, 2012, extended with the approval of H.E. the Secretary General of the Arab League till 14/4/2013. Place of arbitration: Cairo Regional Center for International Commercial Arbitration – Cairo – 1, El­‐Saleh Ayoub Street in Zamalek. Applicable Law: Libyan Law and the Unified Agreement for the Investment of Arab Capital in the Arab States. * * * PART ONE: THE FACTS Chapter One: Circumstances of the Dispute 1. On 7/6/2006, and by virtue of decision No. 135/2006, the Libyan Ministry of Tourism granted approval and license to the Plaintiff Company for the establishment of a major touristic investment project in Shabiyat Tajura (administrative district) in Tripoli – Libya. 2. On 8/6/2006, the Tourism Development Authority and the Plaintiff Company, Mohammed Abdulmohsen Al-­Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures, signed a contract called “the lease of a land for the purpose of establishing a tourism investment project” (Contract No. 4) which encompassed the following arbitration clause: “Article (29): In the event of a dispute between the two parties arising from the interpretation or performance of the present contract during its validity period, such a dispute shall be settled amicably. Failing that, the dispute shall be referred to arbitration pursuant to the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States adopted on Nawar (November) 26, 1980”. By virtue of said contract the Authority leased to the Plaintiff Company a plot of land located in shabiyat Tripoli and extending over an area of 240 000 square meters. The borders of the plot of land were specified in the contract which further provides for the contractual terms and conditions agreed upon by both parties. For several years, the two parties have exchanged correspondences on land taking over to initiate the execution of works thereon. Among these correspondences, there was a letter referring to the assaults against the workers of the Plaintiff Company by police officers, and assaults by those who claim that they own the plot of land. This letter was dated 22/12/2007 and was addressed by the Plaintiff Company to the Director of the Department for the Development of Touristic Areas. It stated the following: "On 15/12/2007, and during the storage of building material, a group of individuals assaulted the workers of the contractor and forced them to stop the works and vacate the premises…" 3. Following these events, the third Defendant requested the Plaintiff to stop the works. The letter addressed by the Plaintiff Company to the Secretary of the General Authority for Tourism and Traditional Industries and dated 31/12/2007, reads as follows: "…Some individuals from the Club assaulted the contractor and forced him to stop the works…". The letter further stated that the Tourism Development Authority requested the Plaintiff to stop project execution, indicating: "…Consequently, five tourism police cars showed up and the works were stopped until a security force car arrived at the site. Afterwards, the Tourism Development Authority requested that we stop the works and remove our equipment from the site until the matter is permanently resolved…". 4. On 21/1/2009, the Director of the Department for the Development of Touristic Areas and head of the permanent working team at the General Authority for Tourism and Traditional Industries sent a letter to the Vice‐President of the Board of Directors of the Plaintiff Company, in which he referred to the proposal submitted to the Plaintiff of choosing an alternative plot of land for project execution, while retaining the current plot of land pending the resolution of all impediments. The letter reads as follows: "We have proposed that the company chooses an alternative plot of land for project execution, while retaining the current plot of land pending the resolution of all impediments. However, the Company refused the proposal and chose to wait for the resolution of the problems on the current site". 5. On 9/6/2010, the Libyan Minister of Industry, Economy and Trade issued Decision No. 203/2010 by virtue of which Decision No. 135/2006 was annulled, following the transfer of decision-making prerogatives on the approval of foreign investment projects to said Ministry. 6. On 27/3/2011, the Plaintiff submitted a request to H.E. the Secretary General of the Arab League to approve the start of the arbitral proceedings. 7. On 11/4/2011, Mr. Omar Mohamed Dessouki, the Vice‐President of the Board of Directors of the Plaintiff Company, received the approval of the Secretary General of the Arab League to initiate the necessary arbitral proceedings based on the provisions stipulated in the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States. 8. On 26/5/2011, the Plaintiff notified the Defendants, through the South-­Tripoli Court bailiff, of the referral of the dispute to arbitration and the appointment of an arbitrator, and requested the appointment of a second arbitrator to represent the Defendants. 9. On 23/8/2012, the Plaintiff submitted to the Arbitral Tribunal a statement of claim, including a docket. 10. On 23/11/2012, the Defendants submitted to the Arbitral Tribunal the statement of defense, including a docket. Chapter Two: The Arbitration Clause: The arbitration clause is included in the lease contract of the land plot, contract No. 4, concluded for the purpose of establishing a tourism investment project. Said contract was signed on 8/6/2006 between the Tourism Development Authority, herein represented by D. Ali Fares Ouaida, as Secretary of the People’s Committee for Tourism Development Authority from one side, and Mohammed Abdulmohsen Al‐Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures herein represented by Mr. Omar Mohamed Helmi Dessouki as the legal representative, on the other side. Article 29 of said contract stipulates the following: “In the event of a dispute between the two parties arising from the interpretation or performance of the provisions of the present contract during its validity period, such a dispute shall be settled amicably. Failing that, the dispute shall be referred to arbitration pursuant to the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States adopted on Nawar (November) 26, 1980 A.D.”. Chapter Three: The Arbitral Proceedings: 1. By virtue of the bailiff’s notice dated 26/5/2011 addressed to the Secretary of the General People’s Committee, the Secretary of the General People's Committee for Industry, Economy and Trade, the Secretary of the General People’s Committee for Finance, and to the legal representative of the General Authority for Investment and Ownership, each acting in his own capacity, notified on 26/5/2011 by the Secretary of the Litigation Department in Tripoli and authorized signatory, Attorney Abdel Ghani An­‐Nasiri in his own capacity, the Plaintiff Company, Mohammed Abdulmohsen Al-­Kharafi & Sons Co., appointed Dr. Ibrahim Fawzi, arbitrator, as member of the Arbitral Tribunal that will decide the request for arbitration. 2. On 30/5/2012 Arbitrator Dr. Ibrahim Fawzi received a letter from Justice Bashir el-­Akari, Director of the Litigation Department in the Ministry of Justice in the Libyan Transitional government whereby he informs him that the Libyan government, legally represented herein by the Litigation Department, has designated Mr. Mahmoud El-­Kamoudi El‐Hafi, Justice in the Libyan Supreme Court, as Arbitrator in the Arbitral Tribunal. 3. On 7 June, 2012, the General Assembly of the Supreme Court in the Transitional National Council in Libya issued decision No. 7 of 2012 authorising Mr. Mohamed el­‐Kamoudi el-­Hafi, Justice in the Supreme Court, to act as arbitrator of the Libyan party in the arbitration case between the Libyan State and Al-­Kharafi International Co. 4. On 13/6/2012, the two arbitrators agreed on selecting the third arbitrator, Dr. Abdel Hamid El-­Ahdab, as president of the arbitral Tribunal. The latter decided the following:  4-1.  The Arbitration shall take place in Cairo. However, this shall not preclude holding hearings anywhere else. 4-2.  The rules of Arbitration of the Cairo Regional Centre for International Commercial Arbitration shall be applicable to the arbitral proceedings without being administered by Cairo Center, whereby the arbitration remains non-­institutional or ad hoc arbitration. 4‐3. The Tribunal decided that the arbitrators’ fees shall be equal to 400 thousand US dollars and added 40 thousand US dollars as expenses to be paid by both parties equally. If one of the parties defaults, the second party shall be immediately notified to pay on its behalf in order to carry on the arbitral proceedings. The arbitral award shall take the aforementioned into account. 4-­4. The first hearing shall be held at 11:00 am on Saturday 14/7/2012 in Cairo Regional Centre for International Commercial Arbitration.  4-5. The first hearing shall determine the arbitral proceedings, dates of exchange of memoranda between the two parties, as well as the date of the oral hearing, taking into consideration the fact that the arbitration period is of six months that can only be extended by virtue of an approval from the Secretary General of the Arab League. 5. On 5/7/2012, procedural order No. 1 was issued, and provided that the Kuwaiti Plaintiff, Mohammed Abdulmohsen Al-Kharafi & Sons Co, has credited the bank account opened for the purposes of the present arbitration under the name of the chairman Dr. Abdel Hamid El-Ahdab, the sum of USD 220,000 (two hundred and twenty thousand US dollars), and that the Libyan Defendant, the General Authority for Investment Promotion represented by the Litigation Department, has not paid within the time limit, and that the Arbitral Tribunal shall notify the Plaintiff thereof and shall require him to pay on behalf of the Libyan party within a period that ends on July 25, 2012, under penalty of staying the arbitral proceedings after the said date. Should the Libyan Defendant settle its dues, the Kuwaiti Plaintiff shall be reimbursed for what it had already paid; otherwise the Libyan Defendant shall born the arbitration fees and costs. The Arbitral Tribunal also decided the following: 5-1. The 14 July 2012 first hearing shall be held on time with the presence of both parties. Representatives of each party shall bear a power of attorney allowing them to represent the parties. Each party shall also submit a list of the parties’ requests to the Arbitral Tribunal with all the necessary documents of support thereto. 5-2. Should the Kuwaiti Plaintiff fail to pay by 25/7/2012, the arbitral proceedings decided upon in the July 14, 2012 hearing shall be stayed. 5-3. Should any of the parties refrain from attending the July 14, 2012 hearing, arbitration shall continue and shall not be affected by any such absence. Article 47 of the arbitral proceedings of the Cairo Regional Center for International Commercial Arbitration (CRCICA) shall apply to the procedural order. 6. On 11/7/2012, Counselor Bashir Ali EL-Akari, Head of the Litigation Department and Head of the Foreign Disputes Committee at the Litigation Department of the Ministry of Justice in the transitional government, informed the presiding arbitrator Dr. Abdel Hamid EL-Ahdab in writing that the Litigation Department in Libya appoints Justice Mahfouz Ahmad EL-Fokhi to attend the hearing of 14/7/2012 on behalf of the General Authority for Investment and Ownership. 7. On 14/7/2012, the first hearing was held at eleven a.m. at the Cairo Regional Center for International Commercial Arbitration (CRCICA) and was attended by the attorney of the Mohamed Abdulmohsen Al-Kharafi & Sons Co, the Plaintiff Company, as well as the representative of the Litigation Department for the Defendants. The arbitrators declared their independence. The attendees endorsed the terms of reference and the procedural time table submitted by the Arbitral Tribunal without any amendments thereto. The two parties signed the terms of reference and the procedural time table as an indication of their endorsement. The terms of reference provided that this arbitration is subject to the Unified Agreement for the Investment of Arab Capital in the Arab States, and that the Arbitral Tribunal had decided that the Cairo Regional Center for International Commercial Arbitration (CRCICA) arbitral proceedings shall govern this arbitration in accordance with the requirements proper thereto, especially the timelines, as the main rules governing this arbitration are the rules set forth in the arbitral proceedings of the Unified Agreement for the Investment of Arab Capital in the Arab States stipulating that the arbitral award shall be rendered within six months from the date of the first hearing held by the arbitral Tribunal, i.e. the July 14, 2012 hearing. The Arbitral Tribunal considered that the six months period shall commence as of the July 14, 2012 hearing and not of the date of notice. The terms of reference also provided for the following: 7-1. The delay for exchange of memoranda between the two parties shall be of one month for each party, and the deadline for submitting the statement of claim shall be the 14th of September. 7-2. The Defendant, i.e. the General Authority for Investment Promotion, represented by the Litigation Department, shall communicate the statement of defense within a period ending on October 20, 2012. 7-3. The statement of defense shall reply to the particulars of the statement of claim, and contain a reference to all the documents and other evidence relied upon by the Plaintiff in the statement of claim. 7-4. Should they find a need thereto, the Defendants shall submit in their statement of defense a counterclaim, and may duly rely on a claim for the purpose of a set-off provided the Arbitral Tribunal has jurisdiction therein. 7-5. The Plaintiff shall submit a replication in response to the statement of defense within a period of fifteen days that ends on November ten. 7-6. The Defendants shall submit a rejoinder in response to the replication within a period of fifteen days that ends on the end of November. 7-7. The two parties shall submit during the hearing: the name, phone number, fax, e-mail and address of the representative that the arbitration Tribunal may contact. 7-8. The hearing shall be set on December 5, to hear witnesses and pleading arguments. Each party shall send to the arbitral Tribunal and the other party a list of their witnesses within a period ending on November 20. 7-9. Each party may submit their written arguments following the hearing within a period that ends on December 15. 7-10. The Arbitral Tribunal shall render the arbitral award within a period that ends on January 10, 2013. 7-11. Should the Plaintiff Mohamed Abdulmohsen Al-Kharafi & Sons Co. fail to pay the Defendant’s part, the General Authority for Investment Promotion represented by the Litigation Department within a period that ends on July 25, 2012, arbitral proceedings shall be stayed, and all aforementioned dates reexamined. Should the Libyan Defendant settle his part after payment was made by the Kuwaiti Plaintiff on behalf of said Defendant, the paid amount shall be returned to the Plaintiff immediately. 8.  On 25/7/2012, the Arbitral Tribunal issued the procedural order No. 3 that was sent to both parties providing that, in line with procedural order No. 1 and procedural order No. 2 including the minutes of the hearing held in Cairo on 14/7/2012, a payment of USD 220,000 (two hundred and twenty thousand US dollars) was made on 25/7/2012 to the bank account bearing the name of this arbitration by Mohamed Abdulmohsen Al-Kharafi & Sons Co., thereby settling all arbitrators’ fees and. The arbitral proceedings shall therefore continue as per the minutes of the hearing held on 14/7/2012 that was signed by both parties and the arbitrators. 9. On 24/9/2012, procedural order No. 4 was issued and provided that after the Plaintiff Mohamed Abdulmohsen Al-Kharafi & Sons Co. had amended the claim to increase the relief sought from USD 55 million to USD 1.144.930 billion, a review of the arbitration fees and costs shall be carried out in line with the amendment to the claim by increasing the relief sought. The Arbitral Tribunal, in its decision dated 13/6/2012, approved the arbitration costs and arbitrators’ fees as stipulated in the Cairo Regional Center for International Commercial Arbitration (CRCICA). The Arbitral Tribunal approved the abovementioned claims amounting to USD 55 million before the statement of claim was submitted, and had endorsed the arbitration fees amounting to USD 400,000 (four hundred thousand US dollars), and an extra USD 40,000 (forty thousand US dollars), knowing that the amount approved is an average amount. The Arbitral Tribunal, and upon approval of all three arbitrators, shall approve the average rate mentioned in the tables under annex to CRCICA Arbitration Rules; accordingly, the fees would amount to USD 1,200,000 (one million two hundred thousand US dollars) after the Plaintiff has amended the claim to increase the relief sought to one billion one hundred and forty four million and nine hundred thirty US dollars, to be paid equally by the two parties, knowing that they had previously paid USD 400,000 (four hundred thousand US dollars). The value of the set fees shall be calculated as follows: 1,200,000 – 400,000= USD 800,000 (eight hundred thousand US dollars), and shall be paid within a period that ends on October 30, 2012. Should both parties fail to pay, the claim shall be limited to the relief sought claimed before the statement of claim was submitted, i.e. fifty five million US dollars. Should only one of the parties make a payment of USD 400,000 (four hundred thousand dollars) within the time limit and should the other party fail to pay, the paying party shall be required to pay USD 400,000 (four hundred thousand US dollars) within a period that ends on November 30, 2012. Payment shall be made by a transfer to BEMO bank, account No. 02058683601, arbitration account: Dr. Abdul Hamid El-Ahdab, Al Kharafi arbitration, Libya, i.e. the same bank to which the two previous transfers were made. 10. On 24/9/2012, a misprint in procedural order No. 4 was corrected, the error being that the claim was amended to increase the amount sought to one billion one hundred forty four million nine hundred thirty thousand US Dollars, and that the ceiling for the arbitration costs and the arbitrators’ fees mentioned in the tables under annex to CRCICA Arbitration Rules is of two million US Dollars. 11. On 15/10/2012, procedural order No. 5 was issued by virtue of which the Arbitral Tribunal decided to amend procedural order No. 4 so that it provides that the two parties shall pay USD 800,000 to be added to the previously paid USD 400,000; the amount of USD 800,000 shall be paid in half within a time limit that does not exceed October 25, 2012 to the bank account held under the name of Dr. Abdul Hamid El-Ahdab, Al-Kharafi arbitration/Libya - $1 $2USD- Libya. The procedural order also provided that in the event one of the parties failed to pay his part within the set time limit, the other party shall be given until November 5, 2012 to pay on his behalf, and the amount paid shall be included in the final arbitral award. Should the amount of USD 800,000 be paid in its entirety, an arbitral hearing shall be held in the presence of the Arbitral Tribunal, the parties and their representatives on Monday 12/11/2012 at ten a.m. in the Cairo Regional Center for International Commercial Arbitration (CRCICA). During this hearing, the parties and the Arbitral Tribunal shall agree on a new procedural timetable to replace the one set out in the 14/7/2012 hearing regarding the dates for submitting statements of claim, submissions, lists of witnesses, and for the hearing, witness statements, and the rendering of the arbitral award. The Arbitral Tribunal shall send, prior to the hearing of November 12, 2012 if held, a new procedural timetable that shall be discussed during this hearing. If the parties and arbitrators fail to agree over the new procedural timetable, the Arbitral Tribunal shall issue a procedural order setting new dates which shall include that the Arbitral Tribunal shall send the procedural order via e-mail, fax or express mail to the parties and their representatives. Should no objection be made to this procedural order, it shall be adopted as the basis for notifying parties of the proceedings, exchanging of memoranda and submissions by e-mail or fax, in line with article 2 of Chapter one (paragraph 2) of the Cairo Regional Center for International Commercial Arbitration (CRCICA) Arbitration Rules. This procedural order shall mention the text of the said article. 12. On 17/10/2012, upon the approval of the Arbitral Tribunal, and upon consulting both parties and their representatives, procedural order No. 6 was issued to replace the November 12, 2012 hearing with another to be held on November 17, 2012 at ten a.m. in the Cairo Regional Center for International Commercial Arbitration (CRCICA). During this hearing, a new procedural timetable shall be agreed upon for exchanging memoranda, for setting a new date for the hearing, witnesses’ testimonies and for the date of rendering the arbitral award, in the event the two parties settled the arbitration costs. 13. On 25/10/2012, procedural order No. 7 was issued in line with procedural order No. 5, stating that the Plaintiff has paid the amount indicated in procedural order No. 5. Procedural order No. 6 also provided that should the Plaintiff pay on behalf of the Defendant prior to November 5, 2012, the arbitral hearing shall be held on 17/11/2012 to agree over the procedural timetable. Otherwise, the Arbitral Tribunal shall issue a decision thereon. 14. On 2/11/2012, procedural order No. 8 was issued, stating that the Arbitral Tribunal has verified that the Plaintiff has credited the arbitration account prior to November 5 on behalf of the Defendants with the sum of USD 400,000 (four hundred thousand US dollars) that will be factored into the arbitral award, and that, in line with procedural orders No. 5 and 6, the November 17 hearing shall be held in its due date at ten a.m. at the Cairo Regional Center for International Commercial Arbitration (CRCICA), to agree over a new procedural timetable to communicate memoranda, to set a date for the hearing, witnesses’ testimonies and the rendering of the arbitral award. 15. On 9/11/2012, procedural order No. 9 was issued and a draft “terms of reference” suggesting new procedural timetable to exchange memoranda, to set a date for the hearing and the rendering of the arbitral award annexed thereto. The procedural order called upon both parties and their representatives to agree over the dates that they see convenient and that the Arbitral Tribunal deems appropriate. In the event of failure to agree over the new procedural timetable, the Arbitral Tribunal shall issue a decision thereon at the end of the hearing. 16. On 17/11/2012, procedural order No. 10 was issued, and the Arbitral Tribunal appended thereto the terms of reference agreed upon in the November 17 hearing held in Cairo and ratified by the Arbitral Tribunal. This arbitration shall be governed by this terms of reference, and the Arbitral Tribunal is keen to confirm that what has been agreed upon during the hearing, i.e. the exchange of memoranda shall be carried out via e-mail pursuant to Article 2 Chapter one Paragraph 2 of the Arbitration Rules of the Cairo Regional Center for International Commercial Arbitration (CRCICA). This was mentioned in procedural order No. 5 dated 15/10/2012. The Arbitral Tribunal requested every party who may receive a memorandum or a submission to inform the other party having received the e-mail. The terms of reference appended to procedural order No. 10 dated 17/11/2012 included the minutes of the hearing held in Cairo on 17/11/2012 which encompassed that the Chairman said that this arbitration is subject to the Unified Agreement for the Investment of Arab Capital in the Arab States, that the period of arbitration is of six months, and that the extension of this period is not an easy task as it requires the approval of the Secretary General of the Arab League. The minutes also included that the Arbitral Tribunal, upon discussions with both parties to the dispute, decided the following: 1- Memoranda shall be exchanged via e-mail as previously agreed. 2- The Defendants shall submit the statement of defense within a period ending on 24/11/2012. 3- The Plaintiff shall submit a replication within a period ending on 7/1/2013. 4- The Defendants shall submit a rejoinder in reply within a period ending on 7/2/2013. 5- The Plaintiff shall submit a final submission within a period ending on 21/2/2013. 6- The Defendants shall submit a final submission within a period ending on 6/3/2013. 7- Each party shall submit a list of all the witnesses and their testimonies within a period ending on 27/2/2013. 8- The hearing and witnesses’ testimonies shall be held on Saturday 9/3/2013, and may be extended for another day at the discretion of the Arbitral Tribunal. 9- Both parties shall present arguments in writing that do not include any new particulars within a period ending on 13/3/2013. The members of the Arbitral Tribunal, Dr. Abdul Hamid El-Ahdab, Dr. Ibrahim Fawzi and Justice Mohammad El-Hafi signed the minutes that included the agreed upon dates. The minutes were also signed by the two parties represented by Mr. Rajab Bashir El-Bakhnug, Dr. Nasser Ghanim El-Zaid, Dr Omar Dsouki and Mr Saad Salem for the Plaintiff, and Dr Hisham Sadek, Dr. Hafiza El-Haddad and Mr. Mahfouz EL-Fokhi for the Defendants. 17. On 4/1/2013, procedural order No. (11) was issued, whereby the Arbitral Tribunal decided that the submissions were received via e-mail by the arbitrators and the parties to the dispute. It further stated that the Plaintiff expressed its position and response in view of dissipating any ambiguity in the three submissions presented by Dr. Sharkawi, Dr. Wali, Dr. Zaid and Counsel El- Bakhnug. The Plaintiff also submitted to the Arbitral Tribunal the Legal Opinion of Judge Burhan Amrallah for examination. 18. On 4/1/2013, procedural order No. (12) was issued whereby it was provided that following the increase by the Plaintiff of its relief sought to the sum of USD 2,055,530,000, the Arbitral Tribunal, and after reviewing the table of arbitration costs and arbitrators' fees stipulated in the Cairo Regional Center for International Commercial Arbitration and adopted by the Arbitral Tribunal, found that the difference in arbitration costs between what the Plaintiff previously requested in its statement of claim and its current request in its replication dated 3/1/2013 is USD 700,000. The Arbitral Tribunal binds both parties to disburse the sum. Article 47 of the Arbitration Rules of the Cairo Regional Center for International Commercial Arbitration stipulated in its first paragraph that the parties shall deposit at the Center the determined administrative and arbitrators' fees before the commencement of the arbitral proceedings. The Arbitral Tribunal applied this rule when the Plaintiff increased the relief sought in its statement of claim to USD 1,144,930,000, while knowing that said paragraph also stated towards its end "…unless otherwise decided by the Arbitral Tribunal". Therefore, it is within the competence of the Tribunal to determine the deposit of the arbitrators' fees, not prior to the commencement of the arbitral proceedings but at an advanced stage of the arbitration, especially that paragraph (2) of article (47) of the Arbitration Rules of the Cairo Center granted the Arbitral Tribunal the freedom to violate the rule of payment prior to the commencement of the proceedings. The Arbitral Tribunal, within its competence and as stipulated by the Statute of the Unified Agreement for the Investment of Arab Capital in the Arab States and paragraph (1) of article (47) of the Arbitration Rules of the Cairo Regional Center for International Commercial Arbitration, may determine the payment of arbitrators' fees on the basis of the new requests submitted during the course of the arbitration. The Arbitral Tribunal already sent a request to His Excellency the Secretary General of the Arab League to extend the arbitration period when the Plaintiff increased its relief sought to USD 1,144,930 and decided to stay the arbitral proceedings pending the disbursement of the arbitration costs and arbitrators' fees on the basis of this new relief sought. His Excellency the Secretary General of the Arab League approved the request of the Arbitral Tribunal and extended the arbitration period to 14/4/2013. The Arbitral Tribunal may no longer submit a request for extension again, given that the provisions of article (9) of the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States, expressly provide that the Secretary General may extend the period only once. Therefore, the Arbitral Tribunal has decided to move forward with the arbitral proceedings on the basis of the relief sought by the Plaintiff in the sum of USD 2,055,530,000 and entrusted both parties to equally pay the arbitration costs and arbitrators' fees until March 4, 2013. In case of non-disbursement, the arbitration case shall proceed until the rendering of the final arbitral award on the basis of the value of the relief sought mentioned in the statement of claim in the sum of USD 1,144,930,000. Procedural order No. (12) provided that the arbitral proceedings, deadlines and procedural dates signed by both parties on November 17 and approved by the Arbitral Tribunal shall remain unamended. 19. On 4/1/2013, procedural order No. (13) was issued, whereby the Arbitral Tribunal entrusted the Plaintiff Company with the task of informing the Libyan Ministry of Finance of all the case papers, exhibits and any other submissions issued by the Plaintiff as of the date of issuance of this procedural order, following the request of the Plaintiff to join the Ministry of Finance as a party. 20. On 7/1/2013, procedural order No. (14) was issued, whereby the Arbitral Tribunal noted that the submission of some of the parties were sent to the Cairo Regional Center for International Commercial Arbitration. The Arbitral Tribunal further noted and ascertained that the present arbitration is an ad-hoc arbitration subject to the Unified Agreement for the Investment of Arab Capital in the Arab States, whereby article (6) therein stipulates that the Arbitral Tribunal "shall determine its own procedure" and therefore requests that, as of the issuance of this procedural order, all correspondences, under any form, shall be addressed to the Arbitral Tribunal, while designating the members of the Tribunal and applying the procedures relating to the proceedings in accordance with the decisions of the arbitrators, without being linked to any arbitration institution or center applying these procedures. 21. On 16/1/2013, procedural order No. (15) was issued, whereby the Arbitral Tribunal approved in form the joinder of the Libyan Ministry of Finance to the present arbitral proceedings, given that such joinder preserves its right of defense and due process, following the receipt by the Arbitral Tribunal from attorney Rajab El-Bakhnug, the authorized representative of the Plaintiff Company, of a copy of a document issued by the South-Tripoli Court of First Instance containing the joinder of a party to an arbitration case and that the Ministry of Finance shall be notified of all the exhibits pertaining to the arbitration case as well as the dates of the hearings. 22. On 15/2/2013, procedural order No. (16) was issued, whereby it was noted that the Plaintiff, Mohamed Abdulmohsen Al-Kharafi & Sons Co., paid its share of the arbitration costs and arbitrators' fees in accordance with the requirements of procedural order No. (12), and in the sum of three hundred and fifty thousand US dollars. It further noted that if the Defendant fail to pay their equal share of the costs and fees in accordance with the requirements of procedural order No. (12), the Arbitral Tribunal shall entrust the Plaintiff to pay the balance of three hundred and fifty thousand US dollars until March 4, 2013, to be factored into the arbitral award. If the Plaintiff fails to pay this sum on behalf of the Defendants by the specified date, the sum of three hundred and fifty thousand US dollars disbursed by the Plaintiff shall be returned and the claim shall proceed on the basis of the value of the relief sought mentioned in the statement of claim. 23. On 20/2/2013, procedural order No. (17) was issued following the receipt by the members of the Arbitral Tribunal of the submissions presented by the representatives of the Plaintiff by the date of issuance of this order, whereby a request was made to add the Libyan Investment Authority to the Defendants' list. By virtue of this order, the Arbitral Tribunal entrusted the Plaintiff with the task of informing the Libyan Investment Authority of all the arbitral documents as well as all that was issued and shall be issued by the Plaintiff as of the date of issuance of this order. 24. By virtue of procedural order No. (18), the Arbitral Tribunal informed both parties to the dispute that the Plaintiff paid, prior to March 4, 2013, the sum of three hundred and fifty thousand US dollars in accordance with procedural order No. (16). Therefore, the value of the dispute now stands at USD 2,055,530,000, two billion fifty five million five hundred and thirty thousand US dollars. 25. On 27/2/2013, procedural order No. (19) was issued, whereby it was provided that the Arbitral Tribunal has been notified on that date of a copy of the notification sent to the Libyan Investment Authority on 26/2/2013, through the member of the Litigation Department, attorney Mahfouz El-Fokhi, entrusted with notification and receipt given that he was joined to the case. The Arbitral Tribunal, in its attempt to ensure the right of the Libyan Investment Authority to defend its position and maintain equality between all parties and their right to due process, has decided to grant the Authority a deadline extending till March 7, 2013 to submit its statement of defense to the request to join it as a Defendant, whereas the Plaintiff shall have the right to respond on March 8, 2013. A hearing shall be held during which witnesses will testify about the joinder of the Libyan Investment Authority to the arbitral proceedings on March 10, 2013 following the end of the hearing that shall be held and during which witnesses will testify about the main issue in accordance with procedural order No. (10). The hearing of March 10, 2013 shall be dedicated to the aforementioned issue and the witnesses’ statements shall be heard in the event there are witnesses designated by one or both parties. Both parties shall submit on March 14 their written arguments limited to the subject of the hearing and dedicated to the issue of joining the Libyan Investment Authority to the case. The written arguments shall not include any new evidence outside the framework of the hearing. 26. Following procedural order No. (10) and procedural order No. (19), procedural order No. (20) dated 5/3/2013 noted that on Saturday March 9, 2013, a hearing shall be held during which witnesses will testify, to be extended until Sunday March 10, 2013, at 10 a.m. at the Cairo Regional Center for International Commercial Arbitration to examine the merits of the dispute. The second independent hearing to be held on Sunday at 3$1 $2 p.m. shall examine the request of the Plaintiff to join the Libyan Investment Authority to the arbitral proceedings and listen to the witnesses’ statements and arguments of the attorneys. 27. Procedural order No. (20) has determined the schedule of the hearing to be held on Saturday March 9, 2013. It shall commence at 10 o'clock in the morning with the hearing of witnesses, mainly: expert Habib el-Masri, an expert from Ernst & Young, an expert from the firm of Ahmad Ghatour, an expert from the firm of Khaled el-Ghannam, and engineer Salah el-din Mohamed Malek. The attorneys for the Plaintiff and the Defendants shall then have the opportunity to address their questions to the witnesses. The Arbitral Tribunal shall also have the right to address their questions to the witnesses at any stage. Afterwards, the attorneys for the Plaintiff and Defendants shall present their argument respectively. The hearing of Sunday March 10, 2013 shall be held at 3$1 $2 and shall examine the request to join the Libyan Investment Authority to the arbitral proceedings. The witnesses, if any, shall be heard and the attorneys for the Plaintiff and the Defendants shall present their arguments respectively. Both parties shall then submit their arguments on the main issue and on the request to join the Libyan Investment Authority as a party which shall include no new argument, by no later than 13/3/2013. 28. On 5/3/2013, procedural order No. (21) was issued, based on a request from Dr. Fathi Wali sent to the Arbitral Tribunal on that same date whereby a proposal was made to amend the deadlines set forth in procedural order No. (20), by virtue of which the Arbitral Tribunal has decided to extend the deadline for submission, following the hearing, to March 16, 2013. The afternoon hearing of March 9 and 10 shall commence at 5$1 $2 and proceed till 10 o'clock in the evening. The schedule of the two hearings to be held on Saturday March 9 and Sunday March 10 shall remain as it was set forth in procedural order No. (20). The proposal of Dr. Fathi Wali shall be submitted in the first hearing of Saturday March 9 for discussion between the Plaintiff and the Defendants to reach an agreement on any amendments thereto. If no consensus was found between all attorneys, the schedule of the dates set forth in procedural order No. (20) shall remain the same. 29. On 12/3/2012, procedural order No. (22) was issued whereby the Arbitral Tribunal has decided to conclude the proceedings and entrust the Counsels for the Plaintiff and the Defendants with the task of submitting a written statement via email of the argument they presented in the hearings of March 9 and 10 without making any addition by no later than March 17 of this year, following the pleading of the Counsels for both parties, the statements of the three witnesses of the Plaintiff and the reading of the provisions of Article 31 of the Arbitration Rules of the Cairo Regional Center for International Commercial Arbitration adopted by the Arbitral Tribunal for this dispute. The Tribunal shall also ask if any of the parties have any further evidence or witnesses they would like to produce. Otherwise, the Arbitral Tribunal shall decide to close the proceedings. 30. On 10/3/2013, the expert witnesses have attended the hearing, mainly Habib Khalil El-Masri, Khaled Abu El-Faraj Ahmad Fahim El-Ghannam and Salah El-din Mohamed Malek. All witnesses were questioned by the attorneys for the Plaintiff and the Defendant and they all ascertained the veracity of the content of their report. It was also determined through the testimony of the witnesses that the value of the lost profit ranged between USD 1,744,242,52 and USD 2,550,600,000, whereas experts Habib El-Masri and Khaled Abu El-Faraj Ahmad Fahim El-Ghannam testified, in response to a question by the Arbitral Tribunal, that the damages resulting from lost opportunities which are real and certain constitute lost profits, further stating that the compensation value in each report represent the minimum profits that could have been achieved under the current circumstances in Libya. 31. The minutes of the hearings held on March 9 and 10, 2013 were drawn up and signed by the members of the Arbitral Tribunal Dr. Abdel Hamid El-Ahdab, Dr. Ibrahim Fawzi, Judge Mohamed El-Hafi, and Khaled Othman, the secretary of the Arbitral Tribunal. It was also signed by attendants for the Plaintiff Company, mainly Dr. Fathi Wali, Dr. Mahmoud Samir El-Sharkawi, Dr. Rajab Bashir El- Bakhnug, Dr. Nasser El-Zaid, Dr. Mohamed El-Kalyoubi, Dr. Omar El-Dessouki, and Mr. Saad Salem, and attendants for the Defendants, mainly Dr. Hisham Sadek, Dr. Hafiza El-Haddad, Mr. Mahfouz El-Fokhi, Mr. Mustapha El-Fitouri Ahmad El- Soueih, Mr. Youssef Mohamed El-Ahrash, Mr. Abdel Majid El-Shtiwi and Mr. Abdallah El-Tebouli, following the submission of argument by the Counsels for the Plaintiff and the Defendants in front of the Arbitral Tribunal. 32. On 16/3/2013, procedural order No. (23) was issued, whereby the Arbitral Tribunal decided to close the proceedings, following the conclusion of the arguments and declared that the arbitrators shall deliberate for purposes of making an arbitral award. 33. On the evening of March 17, 2013, and following the issuance of procedural order No. (23), an argument was sent by the Plaintiff's attorney. 34. On 18/3/2013, procedural order No. (24) was issued whereby the Arbitral Tribunal decided to reject the submission presented by the Plaintiff's attorney on 17/3/2013 and refrain from introducing it in the deliberations for the purpose of making an arbitral award. The Arbitral Tribunal noted and ascertained that all the submissions pertaining to the present arbitration, whether submitted by the Defendants or the Plaintiff, were received within the dates set and agreed upon by the parties to the present arbitral dispute. PART TWO: POSITIONS OF THE TWO PARTIES: Chapter One: Facts alleged by the Plaintiff: 1. On 8/12/2005, the Plaintiff sent a letter to the Secretary of the People's Committee for Tourism Development Authority in which the Plaintiff requested preliminary approval for the establishment of a touristic project in Andalusi street, Tajura city, in the hope of receiving approval to initiate work upon the completion of administrative procedures and taking over of the project land. 2. On 8/12/2005, the Plaintiff received through the Vice President of its Board of Directors an invitation from the Secretary of the People's Committee for Tourism Development to discuss the establishment of the project. 3. On 7/6/2006, decision No. 135 of 1374 a.P. (2006 A.D.) was issued, granting investment approval to Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures represented by Mr. Omar Mohamed Helmi Dessouki; address/ Abbas El-Akkad St. – Cairo – Arab Republic of Egypt; for the execution of a tourism investment project (a five-star tourist hotel, a service commercial center, hotel apartments, restaurants, and recreational areas). The decision also included: 3.1. The rented location in Tajura, (Sidi al Andalusi), Shabiyat (administrative district) Tripoli. 3.2. Project surface area of 24 hectares. 3.3. Investment value of USD $130,000,000 (one hundred and thirty million US dollars). 3.4. Project execution period of seven and a half years. 3.5. Investment period of ninety years. 3.6. Approval is granted in accordance with the terms and conditions stipulated in Law No. (5) of 1426 a.P. (1997 A.D.) on the promotion of foreign capital investment and its executive regulations, and Law No. (7) of 1372 a.P. (2004 A.D.) regarding Tourism and its executive regulations. 3.7. The Tourism Development Authority shall register the project in the investment registry and carry out the necessary procedures in this regard. 3.8. 0.1% of the investment value shall be deposited in the Authority's account in consideration of reviewing project drawings, designs and technical studies, execution follow-up and promotion in local and international forums.  3.9. Abrogating decision No. (33) of 1374 a.P. (2006 A.D.) on the approval of investment for the execution of a tourism investment project. 3.10. Decision No. (135) of 2006 also stipulated that it shall come into force on the date of its issuance and that competent authorities shall be entrusted with its implementation. 4. On 14/6/2006, the Secretary of the People's Committee for Tourism Development Authority sent a letter to the Vice-President of the Board of Directors of the Plaintiff Company to which was enclosed the text of decision No. 135 of 1374 a.P. (2006 A.D.) on the approval of investment for the execution of the tourism investment project, subject of the lease contract signed by the lessor and the lessee (the Plaintiff Company) on 18/6/2006. 5. On 18/6/2006, the Plaintiff Company and the People's Committee for Tourism Development Authority signed the lease of the land, extending over an area of 240 000 square meters, on which the touristic project is to be established. The lease contract shall remain in force for a period of ninety-nine years, as of the date of taking over of the land in question. 5.1. The lessor – the Tourism Development Authority – acknowledged that the land is the property of the Libyan State and that the signatory of the contract is legally entitled to privatize, sign the lease, and establish that there are no in-kind rights whatsoever thereon. 5.2. The lessor undertookd to hand over to the Plaintiff Company a plot of land free of occupancies and persons, or legal and physical impediments which may prevent the initiation of project execution or operation during the usufruct period and upon signing of the contract. 5.3. The lessor (General People's Committee for Tourism) undertook to permit the lessee (the Plaintiff Company) to take possession of the land for the purpose of executing the project by virtue of decision No. 135 of 1374 a.P. issued by the Secretary of the General People's Committee for Tourism. 5.4. The lessee (the Plaintiff Company) acknowledged that it has carried out a thorough due diligence examination of the land and has accepted to conclude a contract thereon. 5.5. It was stipulated in the contract that the land usufruct value shall be of 720,000 Libyan Dinars, to be paid annually during the contract validity period to the Treasury of the lessor at the beginning of every financial year. 5.6. The lease contract provides for the right of the lessor to send a notice to the lessee (the Plaintiff Company) in the event of a delay in the payment of the usufruct value. If the lessee fails to make the payment prior to the end of the specified period, and within thirty days following the date of notice, the lessor may grant the lessee a similar period. If no payment was made after the given deadline, the lease shall be terminated without prior warning or notice and the lessor shall have the right to clear the land through administrative means. 5.7. The lessor undertook to provide, prior to the handover of the land and at its own expense, access in order to ensure the right of passage to the lessee, its vehicles and employees in accordance with tourism specifications and undertook to provide electricity, phone, water, and sanitation services up to the borders of the plot of land within a period of six months following the signature date of the contract. 5.8. The lessee company shall prepare project designs and maps, determine related specifications, material and quantities, and take into account scientific and engineering rules in accordance with the project timetable adopted by the lessor. The lessee shall commit to delivering a copy of the design and execution documents to the lessor for review within a period of one month following the date of receipt. If no observations were made during the specified period, said documents shall be deemed final. 5.9. The lease contract stipulates in article (22) that the project execution period shall be seven and a half years starting from the receipt date of the necessary building permits in accordance with the timetable adopted by the lessor. 5.10. The lessee undertook to prepare the plot of land, demolish existing buildings and remove the rubble to public landfill sites at its own expense, following the taking over of the plot of land free of occupancies, persons and impediments, whether legal or physical, which may prevent the initiation of project execution or operation. 5.11. The lease stipulated the right of the lessee to conclude agreements and contracts with third parties to execute or operate the works of the project, provided that said agreements do not include any obligations on the part of the lessor and that the lessee remains responsible for any damage to the lessor caused by a third party. 5.12. The lessee undertook to preserve the safety and security of the site and notify the competent security authorities of any disturbance by virtue of the lease. 5.13. The lease stipulated that the investment project shall enjoy the exemptions and privileges stipulated in Law No. (5) of 1426 a.P. on the promotion of foreign capital investment and its executive regulations, and Law No. (7) of 1372 a.P. regarding Tourism and its executive regulations. 5.14. Article (23) of the lease contract stipulates that the lessee shall be entitled to make any additions or amendments to project-related activities, with the approval of the lessor. 5.15. Article (24) of the lease contract stipulates that the lessor shall be entitled to terminate the lease if the lessee does not initiate project execution within three months following the date of receipt of project execution permits, unless the lessee submits a written justification acceptable to the lessor. 5.16. The lease contract stipulated that the lessee shall hand over the project fully executed at the end of the lease contract without having the right to claim any funds or compensation in exchange for any cost incurred during project execution and preparation stages. 5.17. The lessor undertook to respect the rights of the lessee and third parties ensured by the Law, including studies, drawings and technical specifications. 5.18. The lessor and the lessee undertook not to establish any in-kind rights whatsoever on the plot of land during the contract validity period, unless within the limits of its provisions. The lessor also undertook to warrant against legal disturbances, by third parties, of enjoyment of the site. 6. On 22/6/2006, the Plaintiff Company, represented by Mr. Omar Dessouki, the Vice-President of the Board of Directors, sent a letter to Mr. Ali Fares Ouaida, the Secretary of the People's Committee for Tourism Development Authority, in which it was stated that the Company transferred the amount of USD $130,000, one hundred and thirty thousand U.S. Dollars, as stipulated in article (3) of decision No. 135 of 2006 dated 7/6/2006. The Plaintiff Company also attached thereto a copy of the money transfer receipt. 7. On 9/7/2006, the Plaintiff sent a letter to Mr. Ali Fares Ouaida, the Secretary of the People's Committee for Tourism Development Authority, in which it requested an appropriate date for the taking over of the plot of land, subject of the lease contract concluded on 8/6/2006. 8. On 29/7/2006, the Plaintiff, represented by Mr. Omar Dessouki, the Vice- President of the Board of Directors, sent a letter to Mr. Ali Fares Ouaida, the Secretary of the People's Committee for Tourism Development Authority, in which it requested a suitable date to send the proposed committee to take over the plot of land free of occupancies and impediments to put in place a project timetable and an appropriate action plan for project execution. 9. On 13/9/2006, the Plaintiff asked Mr. Ali Fares, the Secretary of the People's Committee for Tourism Development Authority, to resume official procedures to hand over the land and stated that Engineer Saad Salem shall be its authorized representative for the purpose of taking over the land to initiate project execution. 10. On 1/11/2006, the Plaintiff Company, represented by Mr. Omar Dessouki, the Vice-President of the Board of Directors, requested Mr. Ali Fares Ouaida, the Secretary of the People's Committee for Tourism Development Authority, to be provided with the specified date to hand over the land on which the tourism investment project shall be established, in accordance with article (5) of the lease contract, indicating that it fulfilled its full obligations and is preparing soil studies, project engineering designs and execution timetable, at the earliest convenience as per his request. 11. On 20/2/2007, the minutes of handing over and taking over of a touristic investment site were drawn up in the presence of the site delivery committee at the Tourism Development Authority, and Engineer Saad Ahmad Salem, the designated representative of the Plaintiff Company authorized to sign on its behalf. The minutes indicated that the two parties examined the site and specified the borders, i.e. the beach on the northern side, the highway on the southern side, public property on the eastern side and public property on the western side. The committee was represented by members Engineer Ali Ramadan El-Doukali, Engineer Hassan Bashir Kaddoura, and Engineer Khadouja Mukhtar Boro. The minutes were signed by the Head of the committee Mukhtar Mohamed El-Dawass for the Defendants and Engineer Saad Ahmad Salem for the Plaintiff and were adopted by the Secretary of the Administration Committee of the Tourism Development Authority. 12. On 27/2/2007, a project registry extract was issued under number 11/2007 indicating that the name of the project is Sidi al Andalusi Tourism Complex, the location of the project is in Sidi al Andalusi – Tajura – shabiyat Tripoli (administrative district) –, the name and surname of the legal representative is Omar Mohamed Dessouki, the date of submitting the application is 12/2/2007, the project approval decision number is 135 dated 7/6/2006, the license number granted to establish investment business has not been issued yet, further indicating that the investment costs are USD $130,000,000, the financing sources are 38.47% self-financing, 46.15% loans, 15.39% other sources. The extract also specified that the project beneficiary is Mohamed Abdulmohsen Al-Kharafi Co. for General Trading and Contracting of Kuwaiti nationality, its contribution value is USD $130 million, while its contribution percentage is of 100%, referring also to the fact that the project is exempt of investment contract stamp duty, while stipulating that the exemption validity period is unspecified. Moreover, the extract also mentioned that incoming in-kind shares of capital formation are USD $70 million in buildings and constructions, USD $10 million in equipment and material, USD $800 thousand in various transportation means, USD $10 million in furniture and supplies, USD $10 million in intellectual property rights, USD $22 million in general capital (raw materials), and the overall in-kind shares are USD $130 million. The extract was issued based on a request by the project owner for use within the limits of the law, and the data stated therein reflects the reality of the project up to the issuance date. 13. On 22/4/2007, the Plaintiff Company, represented by Engineer Saad Salem, sent a letter to the Secretary of the Tourism Authority, to which was attached the minutes of handing over and taking over of the border points signed on 20/4/2007. In this letter, the Plaintiff Company requested the removal of all occupancies, persons, and all legal and physical impediments to ensure the handing over and taking possession of the land to initiate project execution. A copy of the letter was sent to the Secretary of the General Authority for Investment Promotion. The former received this letter on 23/4/2007 and the latter received this letter on 24/4/2007. 14. On 15/5/2007, the Plaintiff Company, represented by Mr. Omar Dessouki, the Vice-President of the Board of Directors, sent another letter to the Secretary of the General Authority for Investment Promotion, in which it referred to its letter dated 22/4/2007 and stated that the land remains occupied by containers, pipes and equipment belonging to the General Company for Building and Construction guarded by a group of individuals and a small cafeteria building. The Plaintiff Company also requested that all necessary measures be taken to ensure that the site is free of impediments to initiate project execution without delay. This letter was received on that exact date and a copy was sent to the Secretary of the Tourism Authority. 15. On 1/7/2007, Mr. Ammar El-Mabruk, the Secretary of the General Authority for Tourism and Traditional Industries sent a letter to the Vice-President of the Board of Directors of the Plaintiff Company, referring to the meeting held with him with regard to approval for investing in the project without entering into a national partnership with the Plaintiff Company, provided that the latter completes hotel construction to complete stage one of the project, in preparation of its opening on the occasion of the 40th anniversary of the Revolution in 2009 A.D. The Secretary of the General Authority for Tourism and Traditional Industries also requested a reply at the earliest convenience and a pledge that the hotel shall be built by the specified date, along with a detailed timetable for project execution stages and asked that project designs be submitted for approval. Mr. Ammar El- Mabruk added that all problems impeding the completion of the project by the specified date shall be resolved. 16. On 11/7/2007, Dr. Ali Fares Ouaida, the Director of the Department for the Development of Touristic Areas, sent a letter to the Director of the Plaintiff Company, Mohammed Abdulmohsen Al-Kharafi & Sons Co., in which he requested final project plans and designs on $1 $2 size paper and a 3D project CD. 17. On 22/7/2007, the Plaintiff Company inquired with the Department of Real Estate Registry about the nature of the plot of land and requested the registration of its land usufruct right and the issuance of a real estate certificate attesting said usufruct right. The employee at the Department of Real Estate Registration in Tajura indicated that it exists on the site planning No. 796 registered in the name of the Libyan State - file No. 16813, specifying further that a contract of sale of a usufruct right was deposited thereon on behalf of Umma Bank and that said property is currently registered in the name of Umma Bank. 18. On 28/7/2007, the Plaintiff Company requested the Director of the Department for the Development of Touristic Areas to be provided with the specified date to take over the land for the purpose of finalizing the project timetable, given that it is closely related to the date of handing over the plot of land free of occupancies and impediments by virtue of the contract. 19. On 1/8/2007, the Plaintiff Company, represented by Mr. Omar Dessouki, the Vice-President of the Board of Directors, requested the Secretary of the General Authority for Tourism and Traditional Industries to: 19.1. Provide proof that the land is owned by the Libyan State and is free of mortgages or occupancies of any kind in compliance with decision No. 135 of 2006. 19.2. Handover the site free of impediments during the month of August. 19.3. Provide the company with the necessary approvals and permits for the execution of project works within a period of one week following the date of submittal of said approvals and permits. 19.4. Adopt project plans by the competent authorities within a period of one week following the submittal of said plans. 19.5. Provide the company with the necessary approval for the import of equipment and material necessary for project execution upon the submittal of the necessary applications forms. 19.6. Issue work and residency permits for the technical, financial, and administrative cadres and all necessary labor for the execution of the project upon submittal of application forms. 19.7. Issue approvals for import and necessary documentary credits and money transfers for the execution of the project works within a period of five working days as of the date of application of these forms through commercial banks and the Central Bank of Libya. 19.8. Facilitate and acquire all customs exemptions and procedures in a way that does not lead to the suspension of the works. 19.9. Fully cooperate with security forces, as well as with the tourism police force and municipal guards, to assist in expediting project execution without delay. 19.10. Approve in principle the management of the hotel through a global hotel management company. The Plaintiff Company also stated that the Authority's cooperation shall provide incentives and motivations for the achievement of the project on time, adding that a timetable was being prepared based on the main points, given that a consolidation of efforts of all relevant official authorities may assist in achieving the intended goal. Said letter was received on 1/8/2007. 20. On 1/8/2007, the Secretary of the Administrative Committee at the Public Property Authority sent a letter to the General Manager of the Umma Bank, in which he stated that the Secretary General of the General People's Committee entrusted the Public Property Authority with the task of carrying out necessary procedures to annul the decision allocating the plot of land to the Umma Bank located at Sidi al Andalusi and al-Manara in Tajura and provide an alternative plot of land to the Bank or return the amount paid in exchange for the land, and requested the Bank to refer to him in order to discuss the necessary settlement. 21. On 7/8/2007, Mr. Ammar el-Mabruk El-Taif, the Secretary of the General Authority for Tourism and Traditional Industries and the Head of the Authority sent a reply to the Vice-President of the Board of Directors of Mohammed Abdulmohsen Al-Kharafi & Sons Company, stating the following: 21.1. The Company shall be provided with whatever may be needed to prove ownership of the land, along with a usufruct right certificate for the project. 21.2. Handover of the site free of any impediment can be settled and the Company may contact the Authority to determine the impediments on the site, to be later resolved and cleared. 21.3. Approvals shall be sent to the Company upon their submittal. 21.4. Issuance of the residency and work permits submitted by the Company through the Committee specifically established to expedite all procedures relevant to the projects that shall be launched on the occasion of the 40th anniversary of Al-Fateh Revolution. 21.5. Hotel management by global companies is considered an internal affair concerning the company and the remaining points shall be resolved through Law No. (5) on the promotion of foreign capital investment, and Law No. (7) regarding Tourism Investment. 22. On 22/8/2007, Engineer Hashem Mohamed Eel-Zawi, the Assistant Secretary of the Authority for Investment Promotion, replied to the request submitted by the Plaintiff Company for a permit to erect a temporary fence around the allotted investment site in Tajura, stating that there was no objection to the erection of the fence, pending the completion of the remaining procedures. 23. On 28/8/2007, the General Company for Building and Construction received a letter from the Plaintiff Company in which it requested the transfer of all its belongings located at the project site and that the Plaintiff Company wished to erect a fence around the land upon the removal of said belongings, stating that the Plaintiff Company has contracted this plot of land for the establishment of a touristic project in Tajura in compliance with contract No. (4) of 2006 concluded with the Tourism Development Authority at the General People's Committee for Tourism, entitled the Sidi al Andalusi Tourism Complex. 24. On 2/9/2007, Mr. Ali Fares Ouaida, the Director of the Department for the Development of Touristic Areas, received a letter from the Plaintiff Company, Mohamed Abdulmohsen Al-Kharafi & Sons Co., represented by Engineer Saad Salem, including the timetable specifying the project execution course up to the handover date on the occasion of the anniversary of the Revolution. The letter also stipulated that the timetable is closely linked to the handover of the project land free of all occupancies. 25. On 11/9/2007, a real estate certificate for State property was issued on behalf of Mohamed Abdulmohsen Al-Kharafi & Sons Co. for Trading and Contracting, by virtue of which the Department of Real Estate Registration and Documentation in Tajura testified that the real estate is a plot of land owned by the Libyan people extending over an area of twenty four (24) hectares in the Center of Tajura, map No. 796, bordering the Mediterranean Sea on the north, public property on the east, Shat road on the south, and the Tourist Village on the west. It further indicates that the lease contract extends over a period of ninety years and is issued by the Kariya Milad Kathoury Office for the drawing up of contracts on behalf of Mohamed Abdulmohsen Al-Kharafi & Sons Co. for Trading and Contracting. It also stipulated that the property was registered in the temporary Socialist Real Estate Registry in folder No. 1 page 24. 26. On 17/9/2007, the Director of the Department for the Development of Touristic Areas and head of the permanent working team requested that the General Manager of the General Company for Building and Construction cooperate fully and clear the site swiftly of all occupancies to enable the Plaintiff Investor Company to initiate project execution on time, given that there is specified timetable for project execution, and that the presence of some persons, storages, supplies and belongings hinders the initiation of project execution. The Director of the Department for the Development of Touristic Areas referred in a letter sent to the General Company for Building and Construction to the letter addressed by the Plaintiff Company in which it requested that the General Company removes its belongings located at the site for the purpose of erecting a fence around the land. Said letter was received by the General Company for Building and Construction on 28/8/2007. 27. On 30/9/2007, the General Authority for Tourism and Traditional Industries sent a request to the Plaintiff Company to submit architectural drawings of the Andalusi Village project in Tajura for study, based on the approvals regarding the introduction of the project among the proposed projects to be launched on the occasion of the 40th anniversary of the Revolution on 9/9/2009, in accordance with the structure specified by the technical committee, to be submitted in triplicate form, on $1 $2 size paper, along with three hard copies of the comprehensive technical report on $1 $2 size paper, and on a CD in three copies. 28. On 8/10/2007, Dr. Ali Fares Ouaida, the Director of the Department for the Development of Touristic Areas requested that the President of the Board of Directors of the Plaintiff Company and the project consultant personally attend the exhibit for tourism investment projects on 4/11/2007, and requested that the Plaintiff Company expeditiously draws up all the necessary various designs, on a minimum size of 0.7 × 1 meter, submits the designs compiled on $1 $2 size paper in triplicate form and on a CD in three copies, and prepares three-dimensional configuration of the project master plan, provided that the plans are final, approved of, and the investor is able to prepare a visual presentation of said project. 29. On 24/10/2007, the Director of the Department for the Development of Touristic Areas received three copies and three CDs detailing the designs. 30. On 30/10/2007, Engineer Saad Salem from the Plaintiff Company sent a letter to Dr. Ali Fares Ouaida, the Director of the Department for the Development of Touristic Areas, in which he informed him that during the execution of the works on the fence around the project land, some individuals prevented the contractor from proceeding on the basis of their ownership of the land, stating that works have been stopped and that this problem has caused a delay in the execution of the works. Therefore, he requested that all necessary steps be made towards radically resolving the problem and ensuring that no future confrontation takes place. 31. On 1/11/2007, Engineer Saad Salem from the Plaintiff Company sent a letter to the Director of the Department for the Development of Touristic Areas in which he informed him that the fence was found to be destroyed on the morning of that day and that a police report was filed. 32. On 12/11/2007, the Director of the Department for the Development of Touristic Areas and head of the permanent working team requested that the Vice-President of the Board of Directors of the Plaintiff Al-Kharafi Company submits the final project designs immediately to the technical committee for review and adoption, in triplicate form, size 3 and on a CD in 3 copies, as follows: 32.1. Project's technical report 32.2. Project's master plan 32.3. Project's horizontal projections 32.4. Project's architectural façade 32.5. Project's structural sections 32.6. Project's general perspectives. 33. On 12/11/2007, Engineer Saad Salem from the Plaintiff Company sent a letter to the Director of the Department for the Development of Touristic Areas to inform him that municipal guards in Tajura rejected the permit granted to the Company by the General Authority for Investment Promotion for the erection of a temporary fence, and that the sign placed on the project land in the name of Tahrir Club in Tajura for maritime sports, diving and cricket field which claims possession and ownership of the project land, was not yet removed. He further stated that for these reasons, the temporary fence was not completed with the view of initiating project execution, which may adversely affect the project timetable. 34. On 12/11/2007, Mr. Ammar El-Mabruk, the Secretary of the General Authority for Tourism and Traditional Industries sent a letter to the Assistant Secretary of Technical Affairs and the Office for the Implementation of Housing Projects and Facilities, in which he requested a swift clearance of the site assigned for the touristic project of the Kuwaiti Al-Kharafi Company, given that the project execution period is determined by an execution timetable, and that storages and supplies belonging to the Office for the Implementation of Housing Projects and Facilities hinder the work progress of the tourism investment project, which could in turn damage the interests of the investor. 35. On 18/11/2007, the Director of the Department for the Development of Touristic Areas sent a letter to the Director of the Municipal Guard Office in Tripoli, in which he indicated that the fence on the site was attacked and destroyed, and that some individuals put up a sign claiming that the land was assigned for the construction of their sports club, stating further that this is hindering the work of the Investor Company, and that it is necessary to remove the sign and send police patrols to prevent such illicit interruptions. 36. On 22/11/2007, the Plaintiff Company sent a letter to Mr. Ammar el-Mabruk El- Taif, the Secretary of the General Authority for Tourism and Traditional Industries, in which it referred to previous correspondences on the removal of occupancies, person, legal and physical impediments from the site. It also referred to the minutes of handing over and taking over of the site border points drawn up on 20/2/2007. It also informed him that the land was still occupied by containers, pipes, equipment belonging to the General Company for Building and Construction and guarded by a group of individuals, as well as a small building consisting of a cafeteria under the name of Nakhle coffee shop owned by Ibrahim Abdel Salam Abu Zahir and Abdel Raouff Ahmad Akrim who claim that they hold a twenty-five year contract of usufruct concluded with Al Tahrir Sports and Cultural Club in Tajura. Furthermore, the Plaintiff Company stated that some citizens claimed ownership of parts of that land, indicating that according to the abovementioned, it failed to initiate execution of the project works despite finishing the preliminary designs. The Plaintiff Company also expressed its hopes for an intervention to enable it to take over the site free of impediments to initiate project execution without delay, given that no positive procedures were carried out to remove said occupancies and impediments. 37. On 5/12/2007, the Plaintiff Company received a letter from the Secretary of the General Authority for Tourism and Traditional Industries in which the latter praised the distinguished participation of the Plaintiff Company in the 2009 Al-Fateh Exhibit for Tourism Investment Projects, a fact which contributed to the success of the Exhibit and received acclaim from officials and visitors alike who prized its valuable efforts in this regard. 38. On 22/12/2007, the Vice-President of the Plaintiff Company sent a letter to the Director of the Department for the Development of Touristic Areas, in which he informed him that during the erection of the fence and the storage of building material, a group of individuals attacked the contractor's workers, and forced them to stop the works and vacate the premises under the pretense that the land is owned by the Tahrir Club in Tajura. He also informed him that the Plaintiff Company hoped that the Department entrusts security forces with the task of protecting workers from violations to enable them to continue their work and make sure that the handing over timetable is not adversely affected. 39. On 31/12/2007, the Vice-President of the Plaintiff Company sent a letter to the Secretary of the General Authority for Tourism and Traditional Industries, informing him that the Company charged the contractor on 22/10/2007 with the task of erecting the fence around the land and that municipal guards stopped the works. Furthermore, he stated that two people from the Security Forces arrived at the site and requested that both the contractor and the Engineer head to the Security Forces headquarters, although they were informed that all documents were found to be correct and in order. Accordingly, works were stopped due to the fact that these accidents were recurrent following the destruction of the fence and the erection of a fence from cement and bricks. Furthermore, attacks on the contractor and workers, forcing them to stop the works, are one issue that remained unresolved. Following the interventions of the Tourism Development Authority in coordination with the tourism police, the Company commissioned the contractor again on 27/12/2007 to store material and hire workers to initiate execution of the works under the supervision of the tourism police. However, on 29/12/2007, municipal guards stopped the works, and seized the equipment and workers under the pretense that urban planning did not approve the project. After the Tourism Development Authority ordered the company to pursue the work, and following the return of the contractor to proceed with the project execution, five municipal guard cars showed up, followed by five tourism police cars. Consequently, the works were stopped until a security car arrived at the site. Afterwards, the Tourism Development Authority requested the Plaintiff Company to stop the work and remove its equipment from the site until the matter is permanently resolved. On 30/12/2007, the Plaintiff Company discovered that the fence was destroyed yet again. Therefore, an intervention was needed, given that all these factors were adversely affecting the project execution timetable and handing over date. 40. On 13/2/2008, Mr. Ammar el-Mabruk El-Taif, the Secretary of the General Authority for Tourism and Traditional Industries sent a letter to the People's Leadership Coordinator in Tajura, in which he requested the opinion of the People's Leadership in Tajura to make the proper decision towards investors with whom investment contracts were concluded and to whom land usufruct certificates were issued, such as the tourism Andalus project for the Kuwaiti Al- Kharafi Company, referring to the meeting held with the Coordinator concerning touristic projects executed on Tajura beaches, based on the decision of the People's Leadership Coordinator in Tajura of refraining from establishing such projects in the region located on the coast between Andalus village to the west and Harrouj village to the east. 41. On 19/2/2008, Dr. Ali Fares Ouaida, the Director of the Department for the Development of Touristic Areas, asked the Vice President of the Board of Directors of Mohamed Abdulmohsen Al-Kharafi & Sons Co. to participate in the presentation of the tourism company's project designs, in such a way to promote these projects in terms of investment, operational and marketing aspects. That request was reiterated on 7/10/2008. 42. On 14/5/2008, Mr. Ezz El-Din Barakat, the Director of the Technical Administration of MAK Holding Company for tourism and hotels sent a letter to the Secretary of the People's Committee for Tourism, to which he attached the mechanical, construction and architectural preliminary drawings along with the project's technical report. In his letter, the Director referred to the endeavors carried out for the execution of the project. He also indicated that the Company contracted the Holiday Inn International Company for hotel and hotel apartment management. Also, the Company contracted another distinguished company for project design to provide execution supervision and design services, as well as Hill International Company for execution work management. Contractors were also qualified for the execution of works. This letter was delivered on 15/5/2008. 43. On 15/9/2008, Mr. Ezz El-Din Barakat, the Director of the Technical Administration of MAK Holding Company for tourism and hotels sent a letter to the Secretary of the People's Committee for Tourism, in which he referred to his correspondence delivered on 15/5/2008, reiterating its content and requesting assistance to the contractor entrusted with the project execution to overcome impediments still present at the site and delaying the project execution timetable. The impediments included a workshop for the highway contractor placed inside the project land, along with an open sewer line that crosses the project land, carrying untreated sewage to the sea. This letter was received on 15/9/2008. 44. On 23/9/2008, the Director of the Technical Administration of MAK Holding Company for tourism and hotels sent a letter to the Secretary of the People's Committee for Tourism, reasserting for the third time the need for assistance to initiate project execution, in the hope of achieving it on time, reiterating what was mentioned earlier about impediments on the site, and referring to article (5) of the lease contract concluded between the Tourism Development Authority and Mohamed Abdulmohsen Al-Kharafi & Sons Co. for Trading and Contracting, which stipulates: (The first party shall be required to hand over the plot of land free of occupancies and persons to the second party, guaranteeing that there are no physical or legal impediments preventing the initiation of project execution or operation during the usufruct period). This letter was delivered on 23/9/2008. 45. On 21/1/2009, the Director of the Department for the Development of Touristic Areas and head of the permanent working team sent a letter to the Vice President of the Board of Directors of Mohamed Abdulmohsen Al-Kharafi & Sons Company, in which he referred to the reasons mentioned by the latter that hindered the initiation of project execution to be launched on the occasion of the 40th anniversary of the Revolution on 9/9/2009. Given these reasons, a suggestion was made to choose an alternative site for project execution, provided that the Company retains this site pending the resolution of all impediments. He further stated that if the Company refuses to choose an alternative site and prefers to wait for the resolution of the problems on the current site, and given that this decision is left to the Company, then the problems impeding the initiation of project execution shall be resolved, indicating that he was well aware of the importance of respecting the timetable and the reasons for the delay. 46. On 11/7/2009, Vice President of the Board of Directors of Mohamed Abdulmohsen Al-Kharafi & Sons Company sent a letter to Dr. Mahmoud Ahmad El-Foutaissy, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, in which he mentioned that the Company gained the trust of official authorities in the Great Libyan Jamahiriya to initiate the tourism investment activity by virtue of Investment Law No. 5 of 1997 and Law No. 7 of 1372 a.P. Furthermore, he stated that the Plaintiff Company concluded a contract with the General People's Committee for Tourism – Tourism Development Authority on 8/6/2006 to acquire a plot of land extending over an area of twenty four (24) hectares in Tajura in Tripoli. The land was registered and a real estate certificate was issued on behalf of the Company in exchange for the establishment of a major touristic project composed of a five-star hotel of 450 rooms, a commercial mall, in addition to 84 hotel apartments in accordance with the contract concluded with the Tourism Development Authority. He further stated that the Company immediately prepared economic feasibility studies and project technical designs in cooperation with the Tourism Development Authority. These designs were delivered and approved with the knowledge of the Authority on 24/10/2007. It was agreed that the hotel management company would be Holiday Inn which also participated in preparing the designs. The Company also contracted the company which shall carry out project building management and subcontractors. As a result, the Company incurred huge amounts of money and was surprised to find at the beginning of the project execution that the site was not free of occupancies and impediments. Accordingly, it notified all competent authorities that it was unable to take over the site and therefore was unable to meet the handing over date. It submitted an application to delay the project handover date, pending the resolution of problems and impediments on the project land. The Company was at the time awaiting assistance in resolving these problems to resume project works. A copy of this letter was sent to the Secretary of the General People's Committee, the Secretary of the General Authority for Tourism and Traditional Industries, the Secretary of the General People's Committee for Industry, Economy and Trade, the Director of the Department of the General Authority for Investment and Ownership, the Director of the Office for Committee Affairs, and the Director of the Legal Office. 47. On 1/9/2009, Engineer Saad Salem from the Mohamed Abdulmohsen Al-Kharafi & Sons Company sent a letter to the Director of the Department for Real Estate Affairs at the General Authority for Investment and Ownership, informing him that to date, no positive steps were made to remove the occupancies and impediments on the site preventing the initiation of project execution. This letter was delivered on 3/9/2009. 48. On 22/10/2009, Mr. Omar Dessouki, the President of the Board of Directors of Mohamed Abdulmohsen Al-Kharafi & Sons Company, sent a letter to Dr. Mahmoud Ahmad El-Foutaissy, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, in which he referred to the letter sent on 11/7/2009 and its content, indicating that to date, the land has not yet been cleared of impediments, thus preventing the taking over of the land in compliance with Article (5) of the contract concluded with the Tourism Development Authority at the General People's Committee for Tourism on 8/6/2006. He therefore requested that all necessary procedures are made to remove the impediments and hand over the land, referring to costs incurred by the Company for the project designs and testing, and the losses incurred from the delay, which adversely affects the Company and project execution, and prevents it from profiting from its services and deprives all concerned parties from the return on their investment. This letter was delivered on 22/10/2009. 49. On 9/1/2010, Engineer Saad Salem from the Mohamed Abdulmohsen Al-Kharafi Company asked the Secretary of the Administration Committee of the General Authority for Investment and Ownership to alert the competent authorities to stop the violations arising from some individuals who began to erect a fence around the land, subject of the contract concluded with the Tourism Development Authority at the General People's Committee for Tourism on 8/6/2006, and the provisions of article (5) therein stipulating the taking over of the land free of impediments. He also mentioned that when the Company began building the fence around the land, the works were stopped despite the fact that the Company received the proper approval from the competent authorities. A copy of this letter was sent on 10/1/2010 to the Secretary of the General People's Committee for Industry, Economy and Trade, and the Secretary of the General Authority for Tourism and Traditional Industries. 50. On 9/1/2010, Mohamed Abdulmohsen Al-Kharafi & Sons Company asked Professor Abdel Raouff Bashir El-Najjar, attorney at law, to file a police report at the police station in Tajura to verify a fact regarding the public property consisting of a plot of land extending over an area of twenty four (24) hectares in Tajura, subject of map No. 796, and authentication file No. 16813, bordering the Mediterranean Sea on the north, public property on the east, Shat road on the south, and the Tourist Village on the west where it owns a usufruct right, by virtue of the lease contract. The police report was filed on grounds that this real estate is to date occupied by a group of individuals and the Company is unable to utilize it in accordance with what was mentioned in the contract. Professor Abdel Raouff Bashir El-Najjar replied by saying that a police report was filed in this regard in the Tajura police station on 10/1/2010. 51. On 2/2/2010, Dr. Jamal El-Nouweissry El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to Mr. Omar Mohamed Dessouki, the Vice-President of the Board of Directors of Mohamed Abdulmohsen Al-Kharafi & Sons Company, in which he referred to decision No. 135 of 1374 a.P. (2006 A.D.) issued by the General People's Committee for Tourism regarding the approval for the execution of the Sidi al Andalusi Tourism Complex project in Tajura, Tripoli. He also referred to contract No. 4 of 2006 A.D. on the usufruct of said site concluded formerly with the Tourism Development Authority and requested that the Company coordinates with the Authority for the effective taking over of the site and submits all architectural drawings and designs for discussion and approval by the competent authorities. He also asked him to transfer a part of the investment project capital within a period of 30 days as of the receipt of the letter. 52. On 15/2/2010, Mohamed Abdulmohsen Al-Kharafi & Sons Company sent a reply to Dr. Jamal El-Lamoushi, the Secretary of the General Authority for Investment and Ownership dated 2/2/2010 (Nawar 1378 a.P.), to which it attached drawings containing electrical, mechanical, construction and architectural drawings of the Sidi al Andalusi Tourism Complex project in Tajura. It also mentioned that the set of drawings were submitted in triplicate form to the General People's Committee for Tourism on May 14, 2008. Given that no observations were made on the designs, the Company requested that said designs be approved, indicating that the attachments to its letter were the set of architectural drawings, construction drawings, electro-mechanical drawings, fire-resistant drawings, and a CD containing all project-related details. This letter was delivered on 16/2/2010. 53. On 11/3/2010, Engineer Saad Salem from the Mohamed Abdulmohsen Al-Kharafi & Sons Company sent a letter to Dr. Jamal El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership in reply to his letter dated 20/2/2010 on the Sidi al Andalusi Tourism Complex, in which he indicated that all necessary steps were taken by the Company to comply with the request of coordination with the competent Authority on handover procedures, and suggested two dates, 10 and 11/3/2010, for handing over and taking over, given that this process requires the presence of legal and administrative representatives as well as engineering consultants from the Company. The Company requested the specification and proposal of the appropriate date, given that the Authority has not yet replied to the proposal mentioned in its letter dated 3/3/2010. The letter dated 11/3/2010 was delivered on 11/3/2010 and a copy of this letter was sent to the Secretary of the General People's Committee for Industry, Economy and Trade, the Governor of the Central Bank in Libya and the Director of the Investment Authority. 54. On 19/4/2010, Engineer Saad Salem from the Mohamed Abdulmohsen Al-Kharafi & Sons Co. sent a letter to Dr. Jamal El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, in which he requested a meeting with him, referring to his letter dated 11/3/2010. 55. On 9/6/2010, Dr. Jamal El-Nouweissry El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures, to which he attached the Decision of the General People's Committee for Industry, Economy and Trade No. 203 of 1378 a.P. (2010 A.D.) issued on 10/5/2010 by virtue of which Decision of the General People's Committee for Tourism No. 135 of 2006 regarding the authorization for the execution of a tourism investment project (a five-star tourist hotel, a service commercial center, hotel apartments, restaurants, and recreational areas) was annulled, and requested the Company to end all the procedures adopted for the initiation of project execution. A copy of the letter was sent to the Secretary of the General People's Committee, the Secretary of the Secretary of the General People's Committee for Industry, Economy and Trade, the Governor of the Central Bank in Libya, the Secretary of the Administration Committee of the Department of Real Estate Registration and Documentation and the Department of Real Estate Affairs, the Director of the Office for Legal Affairs and the Director of the Office for Committee Affairs. 56. The Decision of the General People's Committee for Industry, Economy and Trade No. 203 of 1378 a.P. (2010 A.D.), in its first article, stipulated the following: "Approval on the investment granted to Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting and Industrial Structures by virtue of Decision No. 135 of 1374 a.P. (2006 A.D.) referred to in the decision preamble as the tourism investment project execution, shall be cancelled”. Article (2) of said decision also stipulated that the “General Authority for Investment and Ownership shall carry out all necessary legal procedures to cancel the project registration from the Investment Registry and apply the provisions of the previous article”. Furthermore, article (3) of said decision stipulated that “the decision shall come into force as of its issuance date, and all competent authorities must implement its provisions”. The decision was issued on 10/5/2010 as mentioned on the bottom of the decision page. 57. On 17/6/2010, Mr. Omar Dessouki, the Vice-President of the Board of Directors and authorized representative of the Plaintiff Company sent a letter to the Secretary of the General People's Committee for Industry, Economy and Trade, in which he stated that the Company was astonished with the decision issued by the General People’s Committee for Industry, Economy and Trade No. 230 of 2010, abrogating decision No. 135 of 2006, without providing any cause or justifications for the issuance of such a decision at a time when the Company was discussing the handover of the site to initiate project execution with the General Authority for Investment and Ownership. He further stated that the Company did not take over the land from the beginning of the contracting period and was faced with police orders to stop working on the site. Furthermore, the Company had found materials and facilities belonging to third parties on the site and discovered that the land was owned by other companies and banks, making it impossible for the Company to take over the land despite the fact that it owns the proper real estate certificate which gives it priority and precedence over third parties to take possession of the project land. He went on to say that the Company had corresponded with several competent authorities, asking them for assistance in clearing and handing over the land to enable it to initiate project execution and prevent any further delay, in which it stated that it had prepared the necessary designs and the economic feasibility study and had contracted Holiday Inn Company for hotel management to manage the project. Furthermore, the Company had sent all these documents to the General Authority for Investment and Ownership for approval and issuance of permits, had settled the percentage predetermined for the project in accordance with article (3) of decision No. 135 of 1374 a.P. and had provided all necessary assurances that it shall not fail to execute the project following the administrative expenses, losses and costs it had incurred. Mr. Dessouki stated further that the Company had opened accounts in Libyan banks and transferred the amount of USD $130,000, i.e. 1% of the investment value, adding that the project cannot have an estimated cost without the land. Mr. Dessouki also asserted that the Company had spent millions of dollars out of its foreign accounts and had agreed to join hands with any public or private Libyan partner when the Investment Authority so requested. The Company had also accepted to work with any company suggested by the Authority, which demonstrated its willingness to execute the project either solely or jointly with third parties. Furthermore, Mr. Dessouki indicated that the Company had complied with all legal formalities, determined to proceed and initiate project execution, stating that the past reasons for delay were still existent and were not caused by the Company, which remains to this day the definite aggrieved party. Moreover, Mr. Dessouki had asked that the Authority reconsiders the matter, annuls Decision No. 203 of 2010, and removes all the obstacles from the land, in preparation of the handing over of the land free of obstacles and legal impediments, stating that the Company shall accept any responsibility for any delay on its part if the annulment was based thereon, but such a delay was inexistent. Mr. Dessouki concluded by saying that he requested a meeting to discuss the reasons behind the issuance of the decision and asserted the Company's willingness to submit all necessary documents supporting its case in order to recover the land and initiate project execution. This letter was delivered on 20/6/2010. A copy was sent to the Secretary of the Administration Committee of the General Authority for Investment and Ownership, the Governor of the Central Bank in Libya, the Secretary of the Administration Committee of the Department of Real Estate Registration and Documentation and the Department of Real Estate Affairs, the Director of the Office for Legal Affairs and the Director of the Office for Committee Affairs. 58. On 8/7/2010, the Plaintiff Company sent a letter to the Secretary of the Privatization and Investment Board informing the latter of not having received an answer to its abovementioned letters and that no justification of the decision to withdraw the project has been made to it. The Plaintiff Company said that it has consequently found itself obliged to move from the phase of cooperation and joint investment to a phase of disputes and conflict, but that it trusts the Libyan Laws in this regard. The letter was delivered on 8/7/2010. A copy was sent to the Secretary of the General People’s Committee, the Governor of the Central Bank in Libya, the Secretary of the Committee of the Department of Real Estate Registration and Documentation and the Department of Real Estate Affairs, the Director of the Office for Legal Affairs and the Director of the Office for Committee Affairs. 59. On 4/8/2010 Attorney Rajab Bashir El-Bakhnug, representing the Plaintiff Company, sent a letter to the Secretary of the Committee of the General Authority for Investment and Ownership soliciting a response to the company’s letters sent on 17/6, 29/6, and 8/7/2010, in which the Company had sought to know the grounds on which the annulment stands. In the letter, the Company attributes the delay to the Authority, a fact that can be proved by the dozens of letters expressing the Company’s complaints and claims concerning the handover of the project land in order to start the execution of the project. The letter was delivered on 5/8/2010. 60. On 13/8/2010, Dr. Jamal El-Nouweissry El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to the Vice-President of the Board of Directors of the Plaintiff Company by virtue of which he informs the latter that the General Authority for Investment and Ownership has spared no effort and has provided all the possible assistance and support for the Company to execute the project, that the project execution authorization decision granted to the Company was issued in conformity with the conditions and requirements of Law No. (5) of 1997 and its executive regulations including the obligation to execute within a specific timeframe, and that the Authority had warned the Company of the need to execute its commitments under penalty of law. The Authority’s letter also mentioned that the project site is one of the best sites in Tripoli allocated to the Company based on trust in the latter’s capacity to execute this vital project, but that it is unacceptable that a 24-hectare-land located at the heart of Tripoli remains unused for four years. The letter affirms that the cancellation of the project license does not imply a rupture in ties, and that the Authority is ready to provide the necessary assistance to the Company for the execution of any investment project that the latter sees appropriate in the Great Libyan Jamahiriya. 61. On 17/8/2010, Attorney Rajab Bashir El-Bakhnug representing the Plaintiff Company replied in a letter to Dr. Jamal El-Nouweissry El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, whereby he affirms that the cancellation of the project has resulted in significant damage and financial loss to the company, which shall be borne by the party committing a violation of the law that governs the project and guarantees the right to compensation. The letter also mentioned that the Company had been unable to execute the project because the land was not handed over; knowing that the handing over of the project site is the first obligation of the General Authority for Investment and Ownership vis-à-vis the Company which shall, in turn, initiate the project execution. Therefore, the Authority’s failure, to date, to fulfill its obligation to hand over the land, is the reason of the delay and the cause of the damage and loss incurred by the Company whose right to compensation is guaranteed by the Libyan Law. El- Bakhnug added that since the Authority’s letter dated 13/7/2010 A.D. failed to provide any legal or reasonable justification allowing the General Authority for Investment and Ownership to cancel the project, he recalls his request to the Authority to present the legal grounds of cancelling the project awarded to the Company while emphasizing that the delay in execution does not incur any liability on behalf of the Company but lays the full legal liability on the General Authority for Investment and Ownership alone. 62. On 13/9/2010, Attorney Rajab Bashir El-Bakhnug representing the Plaintiff Company addressed a notice, through the bailiff, in which he mentioned that Mohamed Abdulmohsen Al-Kharafi & Sons Company has lodged a request to approve the establishment of a tourism investment project (a hotel, a commercial center, apartments, restaurants, and recreational areas) in Tripoli as per Law No. (5) of 1997, and Law No. (7) of 2004. The Company had also submitted the necessary studies, and Decision No. (135) of 2006 had been issued. On 8/6/2006, the Company signed a land lease contract with the Tourism Development Authority and paid the ensuing fees, most important of which was 1% of the project value. Consequently, a real estate certificate of the 24 hectares project site was issued with a ninety-year validity. The Company prepared the studies, drawings, and designs, sent them to the Department for the Development of Touristic Areas, and tried several times to take over the land, but third parties were occupying the site, and the municipal guard prohibited the Company from erecting a fence thereon. Correspondence in regards to the issue continued from 15/5/2007 until May 2010 without the land being evacuated nor handed over to the Company. The Company was later surprised by the issuance of Decision No. (203) by the General People’s Committee for Industry, Economy, and Trade cancelling the project without any justification thereof, while the General Authority for Investment and Ownership was violating the law by failing to perform its legal obligations as per the contract and the Law, including the obligation to hand over the project land free of occupancies and persons, and provide support to the Company during the erection of the fence and execution of the project. The letter also mentioned that the Company had already notified the General Authority for Investment and Ownership to decide, within a period of thirty days, either to annul Decision No. (203) of 2010 issued by the General People’s Committee for Industry, Economy, and Trade, and handover the project land free of persons and occupancies and provide support for the Company during the project execution, or to pay the Company a compensation of five million US dollars that only partly covers the losses incurred so far in project related expenses, and that the Company says is ready to corroborate with conclusive documents. In both cases, the Company accepts to cancel the project and terminate the contractual relationship between the two parties. Nevertheless, if the Authority does not approve any of the two options, the Plaintiff Company, Mohamed Abdulmohsen Al-Kharafi & Sons Co. preserves its right to resort to arbitration as per the Contract and agreement with the General People’s Committee for Tourism, as it also preserves its right to claim a compensation of 5.4 million and four hundred thousand US dollars covering the total of lost expenses, another fifty million US dollars covering part of its lost profits during the project life span- a right guaranteed and warranted by the Libyan Laws-, and a reasonable amount in compensation of moral damages incurred by the Company- being an international specialized Company with high reputation in terms of executing international commitments towards its clients-, as well as a compensation of all the expenses related to attorneys and arbitral proceedings, which shall take effect upon the lapse of the said thirty-day period until the final settlement of accounts between the two parties. The notice was delivered on 13/9/2012. 63. On 11/10/2010, Dr. Jamal El-Nouweissry El-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to the Vice-President of the Board of Directors of the Plaintiff Company acknowledging receipt of notice through bailiff on 28/9/1378 a.P./2010 A.D. by virtue of which the latter requested either the annulment of Decision (203) of 2010 or compensation. The Secretary further stated that the Authority has spared no effort and overcome all difficulties for the Company to execute the project in due time and suggested several solutions in this regard. He added that the cancellation decision does not intend to eliminate the Company’s role in the Libyan investment sector but was necessary in the framework of applying the applicable laws, and that, in view of the Company’s good reputation, the Authority assures once again its willingness to assist the Company in finding a location where it could establish a project that it deems appropriate. In the letter, the Authority suggested to hold a joint expert meeting tasked to find a common ground for cooperation and benefit from the Company’s investment potential in the Great Libyan Jamahiriya. According to the Authority, the suggested meeting would also serve as a platform to discuss the repercussions of Decision No. (203) of 2010 A.D. in a direct manner so as to find solutions that promote joint and mutually advantageous collaboration and investment, stressing that the Authority is keen on eliminating all obstacles and problems preventing the Company and other investors in the Great Libyan Jamahiriya from executing, managing, and operating their projects in a timely, beneficial, and profitable manner, hence achieving the goals of the Law on Investment Promotion in the Great Libyan Jamahiriya. A copy of the letter was sent to the Director General of the Inter-Arab Investment Guarantee Corporation (IAIGC). 64. On 29/10/2010, Attorney Rajab Bashir El-Bakhnug representing the Plaintiff Company replied to the letter of the Secretary of the Administration Committee of the General Authority for Investment and Ownership dated 11/10/2011 assuring that the Plaintiff Company had already prepared the studies, drawings, and designs and therefore insists on the location agreed upon in the contract and regrets that the Authority has failed, as implied in the letter, to hand over the said site. El-Bakhnug recalled his previous letter of 17/8/2010 and his notice of 13/9/2010 communicated through the bailiff and the Litigation Department. He also attached to the letter the bank statements revealing the Company’s spending on the projects amounting to USD 5,746,000 (five million seven hundred and forty six million US dollars), and finally expressed his wish to hold a meeting within one week as of the letter date in order to discuss the issue and reach an amicable solution. 65. On 12/1/2011, the Plaintiff Company sent a letter to Dr. Jamal El-Nouweissry el-Lamoushi, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, thereby confirming that it had delivered all project-related documents to a team of counsels with the intention of initiating arbitral proceedings. Nevertheless, prior to initiating the arbitral proceedings, the Company reiterates its sincere wish to work and invest in the Great Libyan Jamahiriya, and insists on the execution of the same project on the same land as all the studies and drawings were prepared accordingly upon the legal conclusion of the contract for investment on the said land. The letter also mentioned that the Company was - and still is - not wishing to dispute or initiate legal action against the Authority, and that it certainly does not seek enrichment at the expense of the latter; However, it insists to protect the funds of shareholders and execute the project related commitments to third parties, hoping that the Authority would review the decision and looking forward to being called again to start the project execution of the same land and site prior to initiating the arbitral proceedings, so as to stop and cancel the arbitration. The Company finally wished to consider its request as a matter of utmost importance and urgency. The said letter was delivered on 13/1/2011. 66. On 26/3/2011, the Vice-President of the Board of Directors of the Plaintiff Company addressed a letter to H.E. the Secretary General of the League of Arab States informing the latter that Mohamed Abdulmohsen Al-Kharafi & Sons Company L.L.C (a Kuwaiti Company) had, by virtue of Decision No. (135) of 2006, concluded a contract with the General People’s Committee for Tourism representing the Great Socialist Libyan Jamahiriya, to invest in touristic activities. The said contract No. (4) was signed on 8/6/2006 under Investment Law No. (5) of 1997 and Law No. (7) of 2004 upon the Company’s fulfillment of all administrative, financial, and legal requirements necessary for the completion of the contract. However, on 10/5/2010, the Company was surprised to know that the General People’s Committee for Industry, Economy, and Trade has issued Decision No. (203) of 2010 cancelling and withdrawing the said project. The Company failed to reach any amicable solution for the issue: the unjust decision has inflicted it with an enormous loss, not to mention the moral damages, while the Libyan authorities were unable to present any justification of the cancellation. Nevertheless, since agreements and contracts are subject to the Unified Agreement for the Investment of Arab Capital in the Arab States issued on 26 November 1980, and since Article 29 of the contract with Libyan authorities provides for the referral of disputes arising between the two parties to arbitration- unless a mutually satisfying amicable solution is reached- the Company decided to initiate arbitral proceedings against the Great Socialist People’s Libyan Jamahiriya and the concerned authorities and departments affiliated thereto, and to appoint, as arbitrator from its side, Dr. Ibrahim Fawzi, former Egyptian Minister of Industry, who accepted the appointment. 67. On 11/4/2011, the Director of the Office for Legal Affairs addressed a statement to the Vice-President of the Board of Directors of the Plaintiff Company (in Libya), signed for him by Hassan Abdel Latif, minister plenipotentiary at the Secretariat of the League of Arab States, informing the Plaintiff Company thereby that, after presenting the case to H.E the Secretary General and informing him of the Company’s decision to initiate arbitral proceedings against the Great Socialist Arab Libyan Jamahiriya and its affiliated authorities and departments as per the contract concluded with the Company, H.E. approved that the Company initiates the necessary arbitral proceedings based on the provisions stipulated in the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States. 68. On 26/5/2011, the Plaintiff Company has sent a notice, through a special bailiff of the South-Tripoli Court of First Instance, to the Secretary of the General People’s Committee, the Secretary of the General People’s Committee for Industry, Economy, and Trade, the Secretary of the General People’s Committee for Finance, and the legal representative of the General Authority for Investment and Ownership, each acting in his own capacity, and all represented by the Litigation Department at the Court Complex, El Sidi Street, Tripoli. The notice mentioned that the Company had already approached the General People’s Committee for Tourism in the Great Libyan Jamahiriya seeking its approval to invest in a touristic project in Tripoli pursuant to Law No. (5) of 1997 and Law No. (7) of 2004, and that pursuant to Decision No. 135/2006 issued by the Secretary of the General People’s Committee for Tourism on 7/6/2006, the Company signed the contract for land lease from the Tourism Development Authority on 8/6/2006, and settled all related fees, and tried several times to take over the land after having prepared all the studies and designs that are necessary for the project execution and initiated correspondence with all concerned parties to take over the site. But the Company was surprised, on 6/6/2010, by the General People’s Committee for Industry, Economy, and Trade’s Decision No. (203) of 2010 cancelling the entire project without any justification. Consequently, the Company sent letters to the legal representative of the General Authority for Investment and Ownership acting in his own capacity, on 17/6/2010 and 29/6/2010 and 8/7/2010 requesting to schedule a meeting to discuss the case, then sent other letters on 4/8/2010 and 17/8/2010 seeking the legal justification of the project cancellation. However the General Authority for Investment and Ownership replied only once to the correspondences of the company by a letter dated 13/7/2010 communicating general information about the project without mentioning any legal grounds justifying the project cancellation. Similarly, the letter mentioned that the delay is due to the shortcoming and unhelpfulness caused formerly by the Tourism Development Authority, and currently by the General Authority for Investment and Ownership that has breached the law and failed to fulfill its legal responsibilities as per the contract and the Law, including the handover of the leased land free of occupancies and persons, and supporting the Company throughout the process of building fences and executing the project. The Plaintiff Company also stated in its notice that the perusal of project related documents and correspondence proves that the delay was caused formerly by the Tourism Development Authority and currently by the General Authority for Investment and Ownership and that no shortcoming or contravention originated from the side of the Company that is still eager, willing, determined, and motivated to execute the project in the best way possible, and the shortest time frame practicable, for the benefit of both parties. The notice highlighted the fact that all efforts exerted to reach an amicable solution have failed but the Company’s rights are protected by the Libyan Law No. (5) of 1997 and Law No. (7) of 2004, as well as the Civil Libyan Law and the Unified Agreement for the Investment of Arab Capital in the Arab States, that is binding to the Great Socialist People’s Arab Libyan Jamahiriya being a signatory thereof. The Plaintiff Company also confirmed that it had notified the official Libyan authorities of the arbitration whether administratively or financially involved, appointed Dr. Ibrahim Fawzi to be a member of the arbitral Tribunal that will decide the arbitration pursuant to the provisions of the Law and the abovementioned Unified Agreement, and requested the parties to be notified to appoint their own arbitrators within a period of thirty days as of the date of receipt of the notice, otherwise the League of Arab States shall make the said appointment on their behalf pursuant to the provisions of the Law and of the Unified Agreement for the Investment of Arab Capital in the Arab States. Once the Arbitral Tribunal is complete, the Company shall submit the dispute thereto and claim the compensation of all its losses and material and moral damages incurred by the illicit cancellation of its tourist investment project in Libya, and the lost benefits of the anticipated life span and investment duration of the project. The bailiff delivered copies of the notice sent by the attorney of the Plaintiff Company Mohamed Abdulmohsen Al-Kharafi & Sons for General Trading and Contracting, and Industrial Structures, along with a copy of the notice on the decision to resort to arbitration and request to appoint an arbitrator, through Mr. Abdul Ghani Al Nasiri- in his capacity as Secretary of Administration at the Tripoli Litigation Department- who is authorized to represent the four parties to be notified in their own capacities, and to sign the acknowledgement of receipt on their behalf, which he did. The said notice sent by the Plaintiff Company along with the request to resort to arbitration and to appoint an arbitrator consists of five pages. The bailiff has notified the parties of the need to activate the agreed upon arbitration and appoint an arbitrator as per the Law and the Unified Agreement for the Investment of Arab Capital in the Arab States. Attorney Rajab Bashir El-Bakhnug signed for the Plaintiff Company and the notice was delivered on 26/5/2006. Chapter Two: Statements of the Plaintiff: 1. On the Liability of the Defendants: The Plaintiff Company stated that following the promulgation of Law No. (5) of 1997 on the Promotion of Foreign Capital Investment in Libya, it decided to submit a request to invest in a major touristic project in Libya. Accordingly, a contract was signed by and between the Plaintiff Company as foreign investor, and the Libyan State represented by the Ministry of Tourism in its capacity of the administrative authority competent in Libya to look into tourism investment requests and issue the necessary approvals and licenses thereof. Thus, by the contract signed on 8/6/2006, the Tourism Development Authority, being one of the departments of the Libyan Ministry of Tourism at the time, leased a 24-hectare state-owned land located on the seaside area of Tajura in Tripoli and categorized for tourist projects, for a period of ninety years starting from the date of taking over of the land. The Plaintiff Company added that the Tourism Development Authority undertook to hand over the land free of occupancies, and that the contract sets forth an obligation to pay the annual rent in advance, provided that the first year rent is paid within thirty days as of the date of taking over of the land. It further mentioned that the Tourism Development Authority also undertook to provide passageways, electricity, telephone, water, and sanitation within a period not exceeding six months as of the date of signature of the contract, and not to establish any in-kind rights on the land throughout the contract validity. The Plaintiff Company undertook to pay the rent in due time, to prepare the project designs and submit them to the Tourism Development Authority, not to waive its right to lease to third parties, and to complete the project within a period of seven years and a half starting from the date of issuance of the building permit. Both parties agreed that the investment project shall enjoy the exemptions and privileges set forth in Law No. (5) of 1997 and provisions of Law No. (7) of 2004 on Tourism. Moreover, the two parties to the contract agreed to act in accordance with Law No. (5) of 1997, Law No. (7) of 2004, and other relevant Libyan Laws when the contract fails to cover the situation at hand, and that any dispute arising from the interpretation or performance of the contract shall be solved amicably, or otherwise referred to arbitration as per the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States of 26/11/1980, given that the said Agreement is binding to the Libyan State in matters related to Arab Investments. The Plaintiff Company also said that the Libyan Minister of Tourism issued Decision No. (135) of 2006 after it had submitted the necessary studies and documents and received approval on the investment in a tourist project consisting of a tourist hotel, a commercial center, residential apartments, restaurants, and recreational areas in the region of Tajura, Sidi Al Andalusi in Tripoli, at a total value of 130 million USD and for a period of ninety years, as per the provisions of Law No. (5) of 1997 on the Promotion of Foreign Capital Investments and Law No. (7) of 2004. The Company also mentioned that it had paid 130 thousand USD to the Tourism Development Authority against the latter’s perusal of drawings and designs, and that the project was registered under No. 11/2006 in the Investment Registry pursuant to which a real estate certificate was issued from the Department of Real Estate Registration and Documentation on 11/9/2007 proving that the 24-hectare land is owned by the Libyan State and has been leased to the Plaintiff Company for a period of ninety years. However, the Plaintiff Company has been claiming since 29/7/2006 and until 9/6/2010 the handing over of the land free of occupancies and persons in order to start the project execution, while the Defendants have been neglecting, failing, and subsequently refraining from fulfilling their commitment to hand over the land. The third Defendant who was unable to hand over the land revealed in some of its letters that the land was actually sold to the Umma Bank. The sale was later confirmed by the Department of Real Estate Registry, and conclusively proved the ill intention of the Defendants. The Plaintiff Company attempted to save what could be saved after the delimitation of the borders of the land by trying to erect an external fence to protect the land but encountered legal disturbances, by third parties, of enjoyment of the site. The third Defendant, being called upon by the Company to intervene and stop such disturbance, failed to fulfill its obligation to provide guarantee against any disturbance of quiet possession by a third party pursuant to the contract and the Libyan Civil Law. To top it all, the Defendants added to their contractual liability by cancelling the approval granted to the Plaintiff Company by virtue of Decision No (135) of 2006, whereby the said Company was notified of Decision No (203) of 2010 issued by the Minister of Industry and Trade cancelling the former approval decision. The Defendants refused to review the cancellation decision and rejected all amicable solutions to the prejudice and damages incurred by the Plaintiff Company by reason of the cancellation. All of the abovementioned events have incurred contractual liability on the Defendants who, without any legal ground whatsoever from the applicable Libyan Law agreed upon by both parties or any other law in the world, refused to satisfy their commitments vis-à-vis the Plaintiff Company set forth in the lease contract and the Civil Law, and breached the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States. The Plaintiff Company added that all elements of contractual liability are available from the side of the Defendants and that, as is internationally known, the elements of the contractual liability are three: the contractual fault, the damages resulting therefrom, and the causal relationship between the contractual fault and the resulting damages. Based on the above, it has narrated the history of the relationship between the two disputing parties for the arbitral Tribunal to consider it when assessing the damages. The Company identifies that the contractual fault of the Defendants consists in entirely breaching the terms of the lease contract concluded on 8/6/2006 by failing to handover the leased land - knowing that the said land handing over is a major obligation of the third Defendant - and failing to warrant against any disturbances, by third party, of the enjoyment of the site, and failing to satisfy any of their contractual obligations, hence also violating Decision No (135) of 2006 issued by the Ministry of Tourism in Libya by the tourism-investment-related powers then granted thereto by virtue of Law No. (7) of 2004. The said Decision actually constitutes the contract that has granted to the Plaintiff Company the right to establish a touristic investment project and enjoy the ownership and investment of the said project for a period of ninety years along with the privileges set forth in Law No. (5) of 1997 on the Promotion of Foreign Capital Investments. Furthermore, the Defendants have intentionally refrained from handing over the land thereby breaching their obligations, and violated the provisions of Articles 570 and 573 of the Civil Libyan Law by failing to warrant against legal disturbances, by third parties, of enjoyment of the site, i.e. Umma Bank claiming ownership of the land. The Defendants also failed to guarantee the Company against legal disturbance by third parties including the General Company for Building and Construction who claimed right of lease of the land, the Tajura Club, or the Owner of the coffee shop equally claiming right of lease of the same land for 25 years. Such legal disturbance simultaneously constitutes a physical disturbance of quiet enjoyment by the Defendants having granted the said rights, and given the fact that the land is owned by the State and managed by the Ministry of Tourism for being categorized as a tourist project, by virtue of the Minister of Tourism Decision No (202) of 2005. However, the Tourism Development Authority is the Authority empowered to lease the said land to tourist investments by virtue of the Libyan Council of Ministers Decision No. (87) of 2006. The Plaintiff Company added that the abovementioned disturbances occurred during the lease period without any intervention from the part of the Defendants, which resulted in the inability of the Plaintiff Company to make profit from the leased property. The Defendants also violated the terms of the lease contract and blatantly breached the provisions of the Libyan Civil Law, particularly Articles 147, 209, 563, 570, and 573 thereof. On 10/5/2010 the General Authority for Investment and Promotion instructed the Minister of Industry, Economy, and Trade to issue Decision No (203) of 2010, cancelling the approval and license previously granted to the Plaintiff Company to conduct touristic investment projects in Libya. The said Decision consequently cancelled the registration of the project in the Investment Registry, negating thereby the legal existence of the Plaintiff Company in Libya and repulsing it therefrom. The Company believes that such a decision should have been prevented by the Ministry of Economy and confirms that, despite everything, it has paid the amount of 130 thousand US dollars to the third Defendant in fulfillment of its only obligation provided for in Article 3 of the annulled decision. The Plaintiff Company added that the Defendants’ failure to justify the cancellation constitutes an illegal act violating Article 147 of the Libyan Civil Law according to which: the contract is the law of the parties and shall be performed as indicated in its provisions and in goodwill, and a contract is not limited to its provisions but also draws on other requirements in conformity with the law, practice, and justice due to the nature of commitment as per article 148. The Defendant’s illegal act violates Articles 1 (paragraph 1), 6 (paragraphs 1, 4, 6), and 15 of Law No. (5) of 1997 and Article 2 (paragraph 7) of Law No. (7) of 2004 on Tourism. The Plaintiff Company emphasized that the said illegal act, which has caused great damages thereto, constitutes a violation of Articles 2 and 9/1 and 10/a, b, and d of the Unified Agreement for the Investment of Arab Capital in the Arab States issued on 26/11/1980. The said Agreement was ratified by Kuwait on 1/4/1982, and Libya on 4/5/1982, and the Plaintiff Company is 100% Kuwaiti, registered in Commercial Register of Kuwait under No. 53472. The contractual fault committed by the Defendants lies in the fact that the third Defendant, who is directly involved, has signed in acknowledgement of receipt of letters and documents that it had issued against the Company, while Article 40 of the Unified Agreement considers that the papers, documents, and certificates issued by the competent authorities in any State Party shall serve as sufficient evidence for invoking the rights and affirming the obligations arising from the Agreement and that the papers issued by affiliated authorities, be it the Ministry of Tourism or the Ministry of Economy, shall be considered as official and authentic as per Articles 377 and 378 of the Libyan Law. By being negligent and careless, the Defendants, namely the General Authority for Investment and Ownership and the Ministry of Economy in Libya caused financial damages to the Plaintiff Company and prejudiced the Libyan State and its Administration by their illegal act that violates the ends and essence of the Investment Law as established by the Legislator and the Libyan People, and reinforced in Article 3 of the new Libyan Law No. (9) of 2010 on the Promotion of Investment that also provides for greater guarantees and protection of the foreign investor in its Articles 23 and 24. In the light of the above, the two mentioned Defendants have prejudiced the investment and are both aware of the fact that their faulty act has caused enormous material and moral damages to the Libyan State. 2. On the Fault and Damages: The Plaintiff Company continued by describing the damages incurred and stating the elements of the contractual liability due on the part of the Defendants. According to the Plaintiff Company, the damages started on the day following the conclusion of the contract on 8/6/2006, which binds the Defendants to pay compensation pursuant to article 166 of the Libyan Civil Code which provides that: “any fault that causes damage to another person render its perpetrator liable to payment of compensation in respect thereof”. The damages are both material and moral, and the second and third Defendants have caused them by their intentional contractual fault as they refrained from fulfilling their obligation of handing over the project land and enabling the Company from executing the investment project and benefiting therefrom for a period of ninety years, in addition to having terminated the lease contract and the approval of investment, despite being whole, valid, and free of irregularities. Such fault obliges the faulty party to compensate the Plaintiff Company for direct damages, foreseeable and unforeseeable, noting that the Defendants’ fault is considered as fraud, and their liability as tort, in view of the serious fault committed. Therefore, the Plaintiff Company is entitled to claim compensation of unforeseeable damages from the Defendants, as the lost opportunity of profit from the investment extends to ninety years minus seven and a half years of execution. The Company’s deprivation of its profits is possible and expected, and Article 224/1 of the Libyan Civil Code provides that “Compensation shall cover the loss incurred by the creditor as well as his lost profit provided that this is a natural consequence of the non-fulfillment of the obligation or the delay in its fulfillment”. The Plaintiff Company added that it can claim the lost profits throughout the contract duration at the annual high profit margin that directly results from the efficiency of the Company and the situation of the market which will be prospering in Libya, deprived of foreign investments for the past fifty years. The Plaintiff Company said it cannot but approve the report of the German Company RODDLE MIDDLE EAST specialized in accounting and project management, who, after examination of all sides of the project, concluded that the Plaintiff Company’s lost profits during the contract duration are estimated at one billion and eighty nine million US dollars (USD 1,089,000,000). The Plaintiff Company enclosed a copy of the report including a breakdown of the mentioned amount based on the relevant internationally acknowledged calculation methods. It added that compensation is due for a pending requirement that constitutes at the same time a tort, and that the Company is not claiming compensation for both liabilities, but has joined them to obtain one compensation that reflects the characteristics of the two liabilities. The Plaintiff Company further mentioned that the moral damages injure the non- financial interests of the aggrieved party, and the Libyan and French laws allow the compensation of moral and material damages equally. By the same token, several scholars allow the claim of such compensation to give the aggrieved party a substitute to their moral damages and hence, the Courts and Arbitral Tribunals determine the sufficient amount of compensation. In light of the above, the Plaintiff Company pointed out that it is one of the leading international companies in the field of investment and contracting, and earning this project in Libya has added to its moral credit in the international financial and business market. However, the moral damages have undermined the Company’s trustworthiness and credibility gained by earning this investment project, noting that the value of the Company’s international moral and commercial component is estimated at one million USD. A report on the matter was also submitted. 3. On the Causal Relationship: The Plaintiff Company stated that the relationship between the contractual fault and the damages resulting therefrom is a given and cannot be proved wrong. Said relation has been established by the mere failure of the Defendants to carry out their contractual obligations, namely, the failure to handover the leased land free of impediments to the Company upon the contract signature, as provided for by article 563 of the Libyan Civil law. The causal relationship has also been confirmed by the issuance of Decision No. (203) of 2010 cancelling the investment approval and license granted to the Company three years earlier, while the Defendants did not attempt to handover the leased land. The said delictual faults constitute alone the direct cause of direct and indirect damages incurred by the Plaintiff Company hereby claiming compensation. Chapter Three: Requests of the Plaintiff Company: The Plaintiff Company requested that a decision be issued in its favor against the Libyan State, and the General Authority for Investment and Ownership that is the authority competent to manage foreign investments in Libya, and the Libyan Ministry of Economy, jointly, considering that the second and third Defendants are executive departments affiliated to the Libyan Government. The said decision is requested to be final and binding, amounting to one billion one hundred and forty four million and nine hundred and thirty thousand US dollars (USD 1,144,930.00) detailed as follows: 1. An amount of six millions five hundred and thirty nine thousand Libyan Dinars (LYD 6,539,000) or the equivalent of five million and thirty thousand US dollars (USD 5,030,000) depending on the exchange rate determined by the Central Bank of Libya at the date of the memorandum, in compensation of the value of losses and expenses incurred by the office of the Plaintiff Company starting the date of its inauguration in Libya pursuant to Decision No. (135) of 2006 until the date of its closure. A report prepared by an external auditor was submitted in this regard. 2. An amount of one billion and eighty nine million US dollars (USD 1,089,000,000) in compensation of lost profits after due consideration of the operation and management of the project for ninety years as per the report of the specialized German company RODLLE MIDDLE EAST. 3. An amount of fifty million US dollars (USD 50,000,000) in compensation of moral damages to the Company’s reputation in the financial and business market inside Kuwait and internationally. The Company hereby mentions that the amount is merely symbolic. 4. An amount of USD 420,000 to cover the arbitration expenses. 5. An amount of USD 500,000 to cover the estimated fees that the Company owes to its attorneys from the beginning of the dispute until the rendering of the final arbitral award. Chapter Four: Facts alleged by the Defendants: The Defendants exposed the following facts: 1. On 7/6/2006, the Secretary of the General People's Committee for Tourism issued decision No. (135) of 1374 a.P. (2006 A.D.) agreeing to grant investment approval to Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures for the execution of a tourism investment project (a five-star tourist hotel, a service commercial center, hotel apartments, restaurants, and recreational areas over 24 hectares in Tajura city, (Sidi al Andalusi), Shabiyat (administrative district) Tripoli). 2. The investment value of the project was determined at USD $130,000,000 (one hundred and thirty million US dollars) and the duration of the project 7 and a half years. The investment period is 90 years. 3. The terms and conditions of the project are those stipulated in Law No. (5) of 1426 a.P. (1997 A.D.) on the promotion of foreign capital investment and its executive regulations, and Law No. (7) of 1372 a.P. (2004 A.D.) regarding Tourism and its executive regulations. 4. On 8/6/2006, the Tourism Development Authority (First Party) and Mohamed Abdulmohsen Al-Kharafi & Sons Co. (Second Party) signed a contract for the lease of a land for the purpose of establishing the tourism investment project. 5. The land, subject of the contract, is a state-owned land, and the Tourism Development Authority is entrusted with the allocation of lands within the Touristic Development areas and sign their lease contracts in accordance with the General People’s Committee’s Decision N. o (87) of 1374 AH (2006 AD) in view of promoting tourism services in the region where the land, subject of the contract, is located. 6. The Secretary of the General People's Committee for Tourism had issued Decision No. 202 of 1373 AH (2005 AD) giving the land, subject of the contract, a touristic nature. 7. Article Two of the contract stipulated that the area is 240,000 $1 $2. It is delimited by the beach on the northern side, public property on the western side, the highway on the southern side, public property on the eastern side. 8. Article Two of the contract stipulated that the investment period of the land is ninety years, as of the date of taking over of the land in question. 9. The land usufruct value shall be of 720,000 Libyan Dinars, to be paid annually during the contract validity period to the Treasury of the lessor. 10. Article (14) of the contract stipulates that the contract shall not be waived, totally or partially, to other parties, unless upon written approval, otherwise the contract shall be considered null without any need whatsoever for taking any judicial procedure, notwithstanding the right to ask for damages. 11. Article (15) of the contract stipulates that the project shall be executed under the supervision of the third Defendant in line with the technical specifications of the contract, the maps, the nature of work and the professional standards, whereas the Plaintiff shall commit to using materials, equipment and tools of good quality, and providing technical staff having experience in execution, management and operation. 12. Article (16) of the contracts stipulates that the Plaintiff shall be bound by the technical observations and reports made by the First Party of the contract and related to the adopted designs for the investment project. 13. Article (24) stipulates that the first party to the contract has the right to terminate it in case the Second Party does not initiate the project execution within three months following the date of receipt of project execution permits, unless the Second Party submits a written justification acceptable to the First Party. 14. Article (30) of the contract stipulates that unless otherwise stipulated in this contract, the contract shall be governed by Law No. (5) of 1426 a.P. (1997 A.D.) and Law No. (7) of 1372 a.P. (2004 A.D.). 15. Article (29) stipulates that: “In the event of a dispute between the two parties arising from the interpretation or the performance of the provisions of this contract while in force, the dispute shall be solved amicably; failing that,, the dispute shall be referred to arbitration in accordance with the provisions stipulated in the Unified Agreement for the Investment of Arab Capital in the Arab States issued on November 26, 1980. 16. On 20/2/2007, the minutes of handing over and taking over minutes of a touristic investment site were signed, including: 16.1. Information on the investment site: The Andalusi investment site, area 24 hectares, contract No. 4, dated 8/6/2006. 16.2. Party which took over the site: Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting, and Industrial Structures. 16.3. The First Party and the investment site delivery committee at the Tourism Development Authority. The Second Party is a designated representative of the Plaintiff Company authorized to sign on its behalf. 16.4. The two parties examined the site and specified the borders, i.e. the beach on the northern side, the highway on the southern side, public property on the eastern side and public property on the western side. 17. The Tourism Development Authority (the third Defendant) gave the Plaintiff Company an extract of the Tourism Investment Registry. 18. On 27/11/2007, the Department of Real Estate Registration and Documentation under the General People’s Committee of Justice in the Arab Popular Libyan Jamahiriya issued a real estate certificate on state-owned lands, showing that the described land is owned by the Libyan state and that it is occupied by Mohamed Abdulmohsen Al-Kharafi & Sons Co. for General Trading, Contracting and Industrial Structures (The Plaintiff) by virtue of a ninety-year lease contract. 19. The First Party of the contract, i.e. the Tourism Development Authority that has been called the General Authority for Tourism and Traditional Industries by virtue of a Decision No. 87 of 1375 a.P. (2007 A.D.), started to detect slowness in the performance of obligations. The Authority sent to the Plaintiff Company on 1/7/2007 a letter asking it to present a detailed timetable of the project execution stages as well as the required designs of the project for approval, the more so as the Plaintiff had undertook to ensure completion on the 40th anniversary of the Revolution on 9/9/2009. 20. Moreover, the Director of the Department for the Development of Touristic Areas at the General Authority for Tourism and Traditional Industries sent on 11/7/2007 a letter to the Plaintiff Company asking it to provide the celebrations supervising committee with the project plans and designs in $1 $2 format and a three-dimension CD on the project. 21. The Plaintiff Company having not responded, the Director of the Department for the Development of Touristic Areas and the Director of the permanent working team at the General Authority for Tourism and Traditional Industries sent a letter referring therein to the meeting that took place on 11/9/2007 and reiterated his request about receiving the drawings before 14/11/2007 and speeding up the elaboration of the different designs of the project. He sent another letter on 12/11/2007 asking to have the final designs of the project to submit them to the Committee for review and approval, and to start immediately the execution. 22. The Plaintiff Company remained busy with the temporary problem of the fence on the project site, claiming that the lack of completion of the fence affects the project timetable, a project which final designs have not been adopted. What is worth noting here is the letter dated 30/10/2007 in which the Plaintiff Company alleged that an event would take place on 31/10/2007. 23. Two years after the contract was signed and the Plaintiff Company took over the land, subject of the contract, the head of technical management at the Plaintiff Company sent on 14/5/2008 a letter to the Head of the People’s Committee for Tourism, informing him that he had the pleasure to submit the drawings including the preliminary architectural, construction, mechanical and electrical designs along with the project’s technical report. 24. What has been achieved towards the project execution: 24.1. The Company contracted the Holiday Inn International Company for hotel and hotel apartment management. 24.2. It also contracted another distinguished company for project design to provide execution supervision and design services. 24.3. It contracted Hill International Company for project execution work management. 24.4. Candidate contractors were qualified for the execution of works. The most experienced and most competent were selected to execute the project as per the defined timetable. 25. On 11/9/2008, the Secretary of the General Authority for Investment Promotion sent a letter to the Plaintiff Company informing it therein that, based on Decision No. (135) of 1374 a.P. (2006 A.D.), and in conformity with Article 29 of the executive regulation of Law No. (5) of 1426 a.P. (1997 A.D.) on the Promotion of Foreign Capital, the most important reasons for liquidating the investment project are: 25.1. The specific period of the investment project has expired and the investor did not submit a request to extend the period, or the extension was not approved. 25.2. The project is unlikely to continue its activity, and in case a final position of the investment project has not been presented, the Authority will have to take all necessary legal procedures. 26. On 8/1/2009, instead of answering the letter of the General Authority for Investment Promotion dated 11/9/2008, the Plaintiff Company wrote to the Department for the Development of Touristic Areas asking to be exempted of the project handover on time. 27. Less than two weeks later, the Director of the Department for the Development of Touristic Areas and the Director of the permanent working team at the General Authority for Tourism and Traditional Industries sent on 21/1/2009 a letter to the Plaintiff Company, referring therein to the suggestion made to choose an alternative site for project execution, provided that the Company retains this site pending the resolution of all impediments. Yet the Plaintiff Company rejected the alternative and preferred to keep the site. 28. On 4/7/2009, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to the Plaintiff Company asking it to present the executive position of the project and the actual achievement rate, along with the needed timetable to complete the execution process. 29. On 11/7/2009, the Plaintiff Company sent a letter to the Secretary of the Administration Committee of the General Authority for Investment and Ownership, in which it concluded that it had reached a position where it cannot meet the requirement of timely handover and that it had officially submitted a request to postpone the handover of the project. 30.  On 2/2/2010, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter to the Plaintiff Company in which he asked the company to submit all the designs and drawings to be discussed and adopted by the competent authorities, and to transfer a part of the capital of the investment project within a period of 30 days. 31. On 24/2/2010, the Plaintiff Company replied to the correspondence dated 2/2/2010, saying it has delivered the project drawings and designs and that it was still waiting for the visa of Mr. Omar Mohamed Dessouki, Vice-President of the Board of Directors of the Plaintiff Company, to open up an account and supervise the handover of the site, which may lead to a delay which is not under its control. 32. The Plaintiff Company did nothing to transfer a part of the capital amounting to USD 130,000,000. Its answer to such a request came late in its letter dated 17/6/2010, while commenting on Decision No. 203 of 2010. Said decision canceled the approval given for the project. In Paragraph Seventh of this letter, the company said it opened up accounts in Libyan banks and informed the General Authority for Investment and Ownership about it. Could it then transfer 10% of the investment value totaling $13m on these accounts while the project land was still not handed over, and while the project could not even have an estimated cost with no land, knowing that the Company had spent millions of dollars out of its foreign accounts? 33. On 19/4/2010, the Administration Committee of the General Authority for investment and ownership (the 3rd Defendant) recommended to annul the investment approval decision granted to the Plaintiff Company. 34. On 26/4/2010, the Secretary of the Administration Committee of the Department of Real Estate Registration and Documentation sent a letter to the Secretary of the Administration Committee of the General Authority for Investment and Ownership (the 3rd Defendant), in which he asked him to take all legal procedures to terminate the lease contract signed with the company as the company did not start the agreed upon project execution throughout four years. 35. Upon the recommendation of the Administration Committee of the General Authority for Investment and Ownership (the 3rd Defendant) to cancel the investment approval, the General People's Committee for Industry, Economy and Trade issued on 10/5/2010 Decision No. (203) of 1378 a.P. (2010 A.D.) cancelling the approval granted by virtue of Decision No. (135) of 1374 a.P. (2006 A.D.). 36. On 3/6/2010, the Secretary of the General Authority for investment and Ownership sent a notice to the Plaintiff Company asking it to take all necessary procedures to put an end to the formalities related to the initiation of the project execution. 37. On 7/6/2010, Decision No. (213) of 1378 a.P. (2010 A.D.) decreed to give back the ownership of the land to the Libyan State, and to cancel all acts on the real estate plot, registered formerly in the name of the Promotion and Tourism Investment Department, at Tajura Shabiyat (administrative district) Tripoli (Sidi el Andalusi village), and stating that it is owned by the Libyan State. 38. On 17/6/2010, the Plaintiff Company sent a letter to the Third Defendant in which it requested a meeting to discuss the reasons behind the issuance of the decision cancelling the investment approval. It acknowledged in the letter that it did not transfer the amount equaling 10% of the investment value and that the project cannot even have an estimated cost. 39. On 13/7/2010, the Secretary of the Administrative Committee of the Third Defendant sent a letter to the Plaintiff Company in which he explained the reasons behind the decision to cancel the project, on top of which the lack of project execution and the fact that four years have passed since the site was allocated and that it was impossible to keep a 24-hectare land in the heart of Tripoli unexploited. 40. On 3/8/2010, the Plaintiff Company entrusted its counsel Rajab El-Bakhnug with the mission of communicating and corresponding with the 3rd Defendant. In case those contacts fail, it will resort to arbitration. 41. On 5/8/2010, the Company’s counsel sent a letter to the 3rd Defendant, concluding with the hope they could cooperate and reach a fast amicable solution. 42. On 11/8/2010, the Director of the Office for Legal Affairs acting for the 3rd Defendant answered back, clarifying to the Plaintiff Company’s counsel that the letters of the Plaintiff Company were answered on 23/7/2010. 43. On 8/8/2010, the Plaintiff Company’s counsel asked the Third Defendant to list the legal grounds they based themselves on to cancel the project, despite the fact that those reasons were exposed in the third Defendant’s letter on 13/7/2010. 44. On 13/9/2010, the Plaintiff Company notified the third Defendant through a bailiff to choose within thirty days one of the following: 44.1. Annul Decision No. 203/2010, clear the project site of all persons and impediments, hand over the project land and protect it so that it undertakes to execute the project. It then undertakes to immediately start execution as soon as the above is implemented. 44.2. Or pay a compensation of USD 5,000,000 (Five million US dollars), knowing that this amount is only a part of the losses incurred by the Plaintiff Company. 44.3. By implementing one of these two options, the Company agrees to cancel the project and to fully end the contractual relation between the two parties. 44.4. In case the Third Defendant did not choose any of these two options, the Plaintiff Company reserves the right to resort to arbitration and to claim an amount equaling USD 5,400,000 (Five Million Four Hundred Thousand US dollars), as overall financial losses incurred on the project, as well as USD 50,000,000 (Fifty Million US dollars) as part of the lost profits by the Plaintiff Company during the anticipated life span of the project, which is a right ensured and guaranteed by the Libyan civil law, and a fair amount representing the moral damages, lawyers’ fees and arbitration expenses, until all financial problems and issues are conclusively solved between the two parties. 45. On 29/10/2010, the Plaintiff Company’s counsel sent a letter to the Third Defendant, attaching thereto the receipts of the expenses that the company has allegedly spent on the project. 46. On 20/10/2010, the Third Defendant sent a letter to the Plaintiff Company explaining therein that the project cancellation came in accordance with the provisions of the applicable law in Libya, and that it hopes to find the appropriate solutions in a teamwork spirit. 47. On 12/1/2011, the Plaintiff Company sent a letter to the Third Defendant notifying it that all the documents have been submitted to a team of counsels to initiate arbitral proceedings. 48. On 6/2/2011, the Third Defendant sent a letter to the Plaintiff Company, as an answer to its last letter dated 12/1/2011, exposing therein that Decision 203 of 2010 cancelling the investment approval was issued in conformity with the Libyan Law, and that the Defendant was ready to hold a meeting to find an appropriate solution in a teamwork spirit. 49. On 26/5/2011, the Plaintiff Company notified the Defendant that the dispute was referred to arbitration. Chapter Five: Statements of the Defendants made in defense: First: On the jurisdiction: The Defendants state that four issues arise from the provisions of Article 29 of the contract drawn up on 8/6/2006 between the Plaintiff Company and the third Defendant: a- Issue One: Determining the dispute settlement means – the Defendant points out that the provisions of Article 29 of the contract is limited to describing the two means of dispute settlement, the amicable settlement and arbitration in case of failure of the first one. a-1- Notwithstanding the agreement to refer to amicable settlement when the interpretation of the contract’s provisions or their performance during its enforcement is at issue, the Plaintiff Company failed to follow this path although it had asked its counsel to opt for amicable correspondence. Said counsel addressed a letter to the third Defendant on 5/8/2010 with the hope of cooperating to reach an amicable and swift solution. a-2- On 13/9/2010, the Plaintiff Company notified the third Defendant through the Court bailiff to decide, within a period of no more than 30 days, whether to annul decision 203/2010 and remove occupancies and people from the site, hand over the project site land and protect the same in order to carry out the project as per what has been agreed upon; or pay the amount of USD $5 million in compensation of part of its losses in the project. The adoption of either one of these two options shall put an end to the contractual relationship between the two parties. a-3- If the third Defendant fails to pick one of these two solutions within 30 days, the Plaintiff reserves the right to resort to arbitration and claim the amount of five million and four hundred thousand US dollars (USD $5,400,000), or the equivalent of the overall financial losses invested in the touristic project which was cancelled by virtue of Decision 203/2010, in addition to USD $50 million to cover part of the profits lost during the anticipated project life span, which is a right guaranteed and warranted by the Libyan civil law, and an amount equivalent to the moral damages it has incurred being an international company with a good reputation in honoring its international obligations with its clients, as well as attorneys’ fees and arbitration costs until the final settlement of financial affairs. a-4- On 12/1/2011, the Plaintiff Company sent a letter to the third Defendant whereby it confirms having provided the attorneys’ team with the project documents to proceed with the arbitral proceedings, hence ruling out the amicable settlement before it even starts. a-5- Article (2) of the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States ratified by Libya on 4/5/1982 stipulates that if both parties fail to agree to conciliation or where the Conciliator proves unable to render his decision within the specified period or where the parties do not agree to accept the solutions proposed, they may agree to resort to arbitration. a-6- No serious effort has been made to reach a settlement. The Plaintiff Company having resorted to arbitration, the third Defendant may invoke the inadmissibility of the arbitration case due to premature filing given that the amicable settlement was precluded, whereas the contract and the Conciliation and Arbitration Annex provided for referring to amicable settlement as long as the parties had agreed on the same before resorting to arbitration. b- Issue Two: Personal scope of the Arbitration Agreement as to the parties: b-1- The Arbitration Agreement is only binding to the parties, signatory of the agreement, and therefore: b-1-1- It shall not be deemed permissible to invoke the Arbitration clause against the State of Libya, i.e. the first Defendant, for it was not part of the contract concluded on 8/6/2006. Hence, it shall not be considered party to this arbitration. It shall not also be permissible because the third Defendant is an independent juridical person, and Article 14 of the General People's Committee Decision No. 87 of 1375 a.P. (2007) on establishing the General Authority for Tourism and Traditional Industries provides for merging the Tourism Development Authority and the Traditional Industries Development Authority into the General Authority for Tourism and Traditional Industries, provided that all their assets are referred to the General Authority, which now holds their rights and carries out their obligations. b-1-2- Article 15 of Decision No. 87 of 1375 a.P. (2007) stipulates that the competencies granted to the General People's Committee for Tourism in matters related to investment pursuant to Decision No. 7 of 1372 a.P. are vested to the Authority for Investment Promotion. All the contracts, rights, and obligations that are concluded on its part in relation to tourism investment shall be referred to the Authority for Investment Promotion, which now holds their rights and carry out their obligations. b-1-3- The General Authority for Investment and Ownership was established as per Decision No. 89 of 1377 a.P. (2009). Article 1 thereof stipulates that the Authority shall have the status of an independent juridical person and enjoy financial autonomy. It shall be affiliated to the General People's Committee for Industry, Economy and Trade and hold the necessary powers to regulate and handle matters related to investment and ownership. b-1-4- Article 12 of Decision No. 89 of 1377 a.P. (2009) provides for the merger of the General Authority for Investment Promotion and the General Authority for the Ownership of Public Companies and Economic Units into the General Authority for Investment and Ownership. All their obligations and assets shall be referred to it and it shall be entrusted with their competencies and tasks, and their employees shall be moved therein in the same positions. Paragraph 2 of Article 3 of said Decision provides that the General Authority for Investment and Ownership shall implement investment legislation pursuant to the provisions of Law No. 5 of 1426, Law No. 7 of 1372 a.P., and Law No. 6 of 1375 a.P., as well as relevant regulations. Article 7 of said Decision provides that the Secretary of the Administration Committee shall represent the Authority before third parties and before the courts. Decision No. 608 of 1377 a.P. (2009) provides for the appointment of Dr. Jamal El-Nouweissry El-Lamoushi Secretary of the Administration Committee of the General Authority for Investment and Ownership. b-1-5- The First Party to the contract, the Tourism Development Authority, was replaced by a legal person of Public Law currently named ‘General Authority for Investment and Ownership ’ (the third Defendant) as revealed in the statement of facts. It has an independent juridical capacity and is independent from the State of Libya and the Ministry of Economy. It shall be exclusively considered party to the present arbitration case, provided that the Arbitral Tribunal has jurisdiction of subject matter thereon. b-2- It shall not be deemed permissible to invoke the Arbitration clause concluded in the contract drafted on 8/6/2006 against the Ministry of Economy (Second Defendant): The Ministry of Economy in Libya is not party to the contract concluded on 8/6/2006, and therefore, it shall not be admissible to invoke the Arbitration clause stipulated in the contract against it, given that, pursuant to Decision No. 89 of 1377 a.P. (2009), the third Defendant is an independent juridical person and enjoys financial autonomy and has replaced the Tourism Development Authority, the first party to said contract, and is affiliated to the General People's Committee for Industry, Economy and Trade, hence, having the competence to be in charge of investment and ownership. Consequently, the third Defendant is the sole signatory of the contract, and the Arbitration clause shall only be invoked against it, in accordance with the substantive scope of the Arbitration clause. c- Issue Three: The substantive scope of the Arbitration clause: Arbitration, being an agreement between the two parties, limits the Arbitral Tribunal to the dispute that the parties have agreed to submit thereto. c-1- Article 29 of the contract drafted on 8/6/2006 strictly determines the scope of disputes that can be submitted to arbitration after efforts to reach amicable settlement have totally failed, be it in relation to the nature of these disputes or their timetable. This Article has limited the disputes that can be arbitrated between the parties to the interpretation of the contract or its performance during its enforcement. c-2- The Plaintiff claims the equivalent of five million and thirty thousand U.S. dollars (USD $5,030,000) depending on the exchange rate determined by the Central Bank of Libya at the date of its memorandum, in compensation of the losses and expenses incurred for the opening of its office in Tripoli pursuant to Decision No. 135 of 2006. These losses are accurately reflected in the budget of the Plaintiff Company from 2006 to 2010. c-3- The Plaintiff Company requests the amount of one billion and eighty nine million US dollars (USD $1,089,000,000) in compensation of the lost profits after due consideration of the operation and management of the project for ninety years. c-4- The Plaintiff Company claims the amount of fifty million US dollars (USD $50 million) as symbolic moral damages in compensation of the Company’s reputation and international position. c-5- The Plaintiff Company requests the amount of USD $420,000 to cover arbitration costs. c-6- The Plaintiff Company seeks the amount of USD $500,000 to cover the estimated fees that will be paid to its attorney from the beginning of the dispute until the issuance of the arbitration award. c-7- The overall amount of these claims equals to one billion one hundred forty four million nine hundred and thirty thousand US dollars (USD $1,144,930,000). They are not included in the substantive scope of the Arbitration clause and are not, in any way, related to the interpretation of the contract or its performance during its validity period. In fact, they are the result of the administrative decision No. 203 of 1378 a.P. (2010) on cancelling the investment approval. c-8- The agreement for arbitration in disputes relating to the interpretation of the contract shall not extend to specific disputes over the failure to perform obligations thereof. c-9- The agreement for arbitration in issues pertaining to the performance of the contract during its enforcement does not include disputes caused by issues falling outside the scope of the contract or related to the request for termination, rescission or compensation therefrom. c-10- The interpretation of the Arbitration clause substantive scope as a basis for the jurisdiction of the Arbitral Tribunal shall respect the joint will of its parties in compatibility with the principles of good faith in contractual obligations. c-11- Decision No. 203 of 1378 a.P. (2010) is an administrative decision whereby the Authority expresses its single will to produce a final legal effect. Said decision was issued due to the breach by the Plaintiff Company of the terms and conditions laid down in law No. 51 of 1426 (1997) on the promotion of foreign capital investment and its executive regulations. It is separate from the contract drafted on 8/6/2006 where the Arbitration clause is mentioned; which supports the request of the third Defendant on the inadmissibility of the arbitration case as it falls outside the scope of the Arbitration clause. d- Issue Four: The Unified Agreement for the Investment of Arab Capital in the Arab States shall not apply, save for the arbitration rules therein. d-1- After perusing Article 29 of the contract concluded on 8/6/2006, it appears that the reference made to the said Agreement is limited to being a mechanism to settle dispute without any further rules therein, provided that the contracting parties did not expressly call for its adoption and integration in the contract, particularly if it is not possible to apply automatically the provisions of the Agreement, which is the case here. d-2- The non-application of the Agreement, barring the arbitration rules thereof, is supported by the fact that this Agreement has limited the substantive scope of its application to the Arab capital and Arab capital investment. d-3- The statement made by the Plaintiff Company in its letter dated 17/6/2010 that it cannot transfer 10% of the investment value, or the equivalent of USD $13 million US dollars, to these accounts, asserts that the substantive scope for the application of this Agreement is not fulfilled ipso facto as no transfer of Arab capital has been made from the State of Kuwait to Libya for investment. Second: On the applicable law: a- The Libyan Law shall apply to the settlement of the dispute: a-1- Article 30 of the contract dated 8/6/2006 stipulates that “unless otherwise provided for in this contract, the provisions of Law No. 5 of 1426 (1997 A.D.) on the promotion of foreign capital investment and its executive regulations, Law No. 7 of 1372 a.P. (2004 A.D.) on tourism and its executive regulations, as well as other legislation in force in Libya shall apply. The Arbitral Tribunal chose the Libyan Law to apply to the settlement of the dispute. a-2- The selection of the Libyan Law requires to identify the nature of the issue in question, and at first instance, the contractual relationship between the Plaintiff Company and the third Defendant. a-3- Even though the parties to the contract named the latter “Lease Contract”, its provisions and the legal rules that the parties chose to apply confirm that it is an administrative contact, and specifically, a contract authorizing exploitation of public funds through usufruct, rather than a lease contract. a-4- The contract is deemed to be an administrative contract if one of its parties is a legal person of Public Law with activities related to a public utility and if it includes terms and conditions that are not common in the Private Law. Upon reviewing the articles of the contract dated 8/6/2006, it appears that the contract is drafted by a legal person of Public Law, and includes terms and conditions that are not common in the Private Law, given that it determines the type of the contracted project. In other words, the contracting party is not entitled to establish any other projects. It further entails a highly unusual clause that compels the contracting party to carry out the project in a specified period, which shows the intention of the Authority to adopt the procedure of the Public Law. Another highly unusual clause is the Authority’s right to terminate the contract without taking further measures, be it at the delay in paying the fees in consideration of using and benefitting from the land on the maturity date or when the investor fails to initiate the project execution within a period of three months from the date of receiving the license pursuant to Articles 8 and 14 of the present contract. Article 14 thereof included, as well, a highly unusual clause that does not allow waiving the project or transferring the rights thereto to third parties without an express consent from the Administration. As for Articles 15 and 16, they also comprise a highly unusual clause granting technical supervision and control to the Administration during the construction and usufruct period. Articles 20 and 21 obliged the contracting party to use local necessary raw materials, tools and equipment, to employ and train local labor force, if any, otherwise employ foreign technical labor force. Article 26 of the contract imposes on the contracting party to hand over the project to the Authority at the end of the usufruct period in a good operating condition without having the right neither to claim the expenses invested in the project nor to ask for compensation. All these terms and conditions are uncommon in the Private Law. They are prescribed in the preliminary rules to issue investment approval decisions also provided for in Law No. 5 of 1426 (1997) and Law No. 7 of 1372 a.P. (2004). Therefore, the contract dated 8/6/2006 is characterized as an administrative contract. b- The contract is a contract authorizing exploitation of public funds through usufruct: b-1- The present contract falls under administrative contracts since the relationship between the third Defendant and the Plaintiff Company involve the development of the specified State-owned land aiming at enhancing the level of tourism services in the region through the establishment of a touristic project. The project, subject of this contract, has been granted to the Plaintiff Company by authorizing usufruct for a period of ninety years in return for LYD 720,000 all over the contract period. b-2- The rules to apply to this administrative contract are described in the Libyan Laws that govern such contracts, in particular, the decision of the General People’s Committee, Decision No. 138 of 1372 a.P. (2004) providing for the issuance of the executive regulations of Law No. 5 of 1426 (1997) and Decision No. 89 of 1377 a.P. (2009) on the establishment of the General Authority for Investment and Ownership. b-3- Article 27 of the People’s Committee Decision No. 138 of 1372 stipulates that the party authorized to invest shall execute the project within a period of six months from being notified of the approval to establish the project. It further states that the People’s Committee may recommend the withdrawal or cancellation of the approval decision or liquidate the whole project in the event where the execution is not completed within the set or extended deadline, if the investor fails to make serious efforts to execute the project, is physically unable to execute it, or if he breaches any of the obligations set forth in this article or any of the provisions of Law No. 5 of 1426 and its executive regulations. b-4- Article 1 of Decision No. 89 of 1377 a.P. (2009) stipulates that the third Defendant is an independent juridical person and enjoys financial autonomy, is affiliated to the General People’s Committee for Industry, Economy and Trade, and has the powers to regulate and handle matters related to investment and ownership. b-5- Article 3 of Decision No. 89 of 1377 a.P. (2009) sets domestic and foreign investment affairs as part of the third Defendant’s competencies pursuant to the provisions of Law No. 5 of 1426 and Law No. 7 1327 a.P. b-6- Article 1 of the General People’s Committee Decision No. 194 of 1377 a.P. (2009) stipulates that real estate investment shall mean undertaking building and construction operations for the purpose of building villages, hotels, resorts, recreational areas, restaurants, and tourism facilities for tourism investment purposes, hence the need for a decision from the third Defendant. As per Article 3 of the present decision, the third Defendant may terminate the usufruct contract and return the land ownership to the State if the party, to which the plots of land have been allocated by the State, fails to proceed with the execution of investment projects within a year from the completion of their registration in the Department of Socialist Real Estate Registration and Documentation. Therefore, the investor shall not claim any compensation other than the cost of the contract value. b-7- An Authority authorized to issue an approval for investment, is also authorized to cancel the same in the event of a failure to invest, given that an approval granted to an investment project shall be cancelled as the project always remains related to the purpose for which it was established. The approval shall not, hence, be final. Decision No. 203 of 1378 a.P. (2010) cancelling the investment approval is issued pursuant to the Libyan Laws. b-7-1- Even though three years have already passed since the approval decision has been issued, the Plaintiff Company failed to submit the project’s final designs yet. b-7-2- The Plaintiff Company failed to open bank accounts for the project in accordance with the provisions of Article 22 of the executive regulation of law No. 5 of 1426 on the promotion of foreign capital investment. b-7-3- The Plaintiff Company failed to transfer any funds or provide any assets or equipment for the project. b-7-4- The Plaintiff Company failed to pay any fees in consideration of using and benefitting from the land as per the contract. b-7-5- The Plaintiff Company asked to be exempted from handing over the project by the specified date. b-7-6- The Plaintiff Company refused to choose an alternative site for the project execution and retained the original site. b-7-7- When it was still holding the name of “General Authority for Investment Promotion”, the third Defendant notified the Plaintiff Company on 11/9/2008 of the expiry of the project period and that the investment project shall be liquidated in case it fails to submit a final position within a week. b-7-8- The Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter on 4/7/2009 to the Plaintiff Company whereby he asked it to provide the project’s current execution status and the exact work progress along with the timetable and the date expected to initiate project execution within a week. b-7-9- The correct characterization of the Plaintiff Company’s requests in the present statement of defense leads to the application of the appropriate legal rules of the Libyan Law governing the subject of the dispute, upon which Decision No. 203 of 1378 a.P. (2010) is based. Given that the claim is a compensation claim to obtain damages that the Plaintiff Company claim having incurred due to this decision, such characterization and the present legal rules grant this decision the legality in light of the provisions of Article 8 of the General People’s Committee No. 194 of 1377 a.P. (2009). The administrative decision cancelling the investment approval provides for the application of these legal texts. Therefore, the Plaintiff Company may not request any compensation. b-7-10- The statement of claim based on the fulfillment by the Defendants of the contractual liability elements is not legally valid. Third: On the absence of the legal and factual basis of the Plaintiff Company’s Statement of Claim: 1. The Plaintiff Company established the claim, at times, on the basis of contractual liability and, at other times, on the combination of the contractual and tort liabilities. 2. The contractual fault constituting the first element of the contractual liability is not fulfilled by the Defendant, namely as the alleged damages for which the Plaintiff Company is requesting compensation due to the issuance of the decision on cancelling the investment approval resulted from the fact that the Company breached the provisions of the Libyan Law. 3. There is no ground to what the statement of claim has mentioned regarding the serious fault made by the second and third Defendants in terms of abstaining from handing over the land. Said fault was refuted in exhibit No. 13 provided by the Plaintiff Company, proving conclusively that it has taken over the investment site, subject of the contract, on 20/2/2007 and in its letter sent to the Director of the Department for the Development of Touristic Areas whereby it acknowledges the taking over of the site. 4. It is unsubstantiated to say that the second and third Defendants refrained to warrant against legal disturbances, by third parties, of enjoyment of the site as the real estate certificate delivered to it on 27/11/2007 had set the plot herein described to be a property of the State of Libya and the Plaintiff Company shall occupy it by virtue of a contract for ninety years. 5. It is baseless for the Plaintiff Company to say that the third Defendant had recommended the issuance of Decision No. 203 of 2010 to cancel the approval and to consider such action as a contractual fault necessitating compensation as this is only a fulfillment of its obligation to control the investment. 6. Article 3 of Decision No. 89 of 1377 a.P. (2009) entrusted domestic and foreign investment affairs to the third Defendant. Article 8 of Decision No. 194 of 1377 a.P. (2009) provided for the return of the ownership to the State if the project execution works are not initiated within a period of no more than a year from the registration in the Department of Socialist Real Estate Registration and Documentation. Consequently, the third Defendant did not commit any contractual fault. 7. If Article 147 of the Libyan Civil Code stipulates that “pacta sunt servanda”, i.e. that a “contract is a binding code for contracting parties. It shall neither be rescinded nor amended unless agreed upon by both parties or for the reasons stipulated in the law”. The recommendation of the third Defendant to annul the decision on the project approval is in compliance with the Libyan Law for this is an administrative contract. 8. A party to a contract with the Authority shall not be permitted to refrain from performing its contractual obligations on time under the pretense that administrative procedures caused the Authority to fail to fulfill one of its obligations. It shall rather proceed with the execution and claim compensation. 9. The execution period of an administrative contract is fundamental and binding for the two parties to a contract. In breach thereof by the contracting party, the Authority may terminate the contract. 10. The third Defendant suggested a new site to the Plaintiff Company but the latter rejected this proposal. The Plaintiff should have taken over the new site and commenced the execution of the touristic investment project. However, knowing that it refused to do so, the fault lies with the Plaintiff. Accordingly, the Authority is entitled to cancel the investment approval and the Plaintiff Company has no reason to say that the fault lies with the third Defendant and has no grounds to request any compensation for any damages it may have incurred. 11. The third Defendant only recommended the cancellation of the approval following the failure of all efforts to urge the Plaintiff Company to execute the project. 11-1. The Authority sent a letter to the Plaintiff Company dated 11/9/2008 on the expiry of the specified project period and the failure to submit an extension request, further stating that the investment project shall be liquidated unless a final position is provided within a week. 11-2. The Plaintiff Company acknowledged in its letter dated 8/1/2009 that it failed to carry out the project according to the specified period and asked to be exempted from handing over the same at the set date. 11-3. The Authority suggested an alternative site pending the resolution of the obstacles, but the Plaintiff Company rejected such a suggestion. 11-4. The Secretary of the Committee of the third Defendant sent a letter to the Plaintiff Company on 4/7/2009, in which he requested the project’s current implementation status, the exact work progress along with the necessary timetable for project completion and the estimated date for the initiation of project execution within a week. 11-5. On 2/2/2010 the Plaintiff Company was required to present architectural drawings and designs for discussion and adoption, and transfer part of the investment capital within a period of 30 days. 11-6. On 24/2/2010 the Plaintiff Company sent a reply in which it stated that it had submitted all project drawings and was awaiting a visa to open the bank account and oversee the taking over of the project site, which resulted in a delay beyond its control. 11-7. Failure of the Plaintiff Company to open the account or transfer part of the capital is a breach of its obligations. This alone can cause the issuance of the decision to cancel the investment approval. The Plaintiff acknowledged such a breach in its correspondences whereby it questioned the logic behind transferring 10% of the project’s investment value, i.e. the equivalent of USD $13 million prior to the handing over of the project site, while knowing that the project may not even have an estimated value without the plot of land. 12. The request made by the third Defendant to cancel the investment approval falls within its competencies and complies with the Libyan Law applicable to the dispute. Hence, it cannot be considered as a contractual fault that gives the Plaintiff Company the right to claim compensation.  13. It is established by the jurisprudence that the Authority is liable for administrative decisions in the event where the decision is vitiated, causing damages, and where there is a causal relationship between the decision’s illegality, i.e. the Authority’s fault, and the damages affecting the person. The administrative decision to cancel the approval is well founded, not vitiated and such fault cannot be attributed to the Authority, but to the Plaintiff Company, given that: 13-1. More than three years have elapsed and the Plaintiff Company did not execute the project nor presented the final designs. 13-2. The Plaintiff Company failed to open bank accounts in the name of the project in Libya. 13-3. The Plaintiff Company failed to settle any payment in consideration of the usufruct right as per the contract. 13-4. The Plaintiff Company rejected the proposal to choose an alternative site. 13-5. It failed to initiate the project execution during a period of no more than a year from the completion of registration. 13-6. The Plaintiff Company lingered in the project execution, which is confirmed in the dates of conclusion of the contracts, for: 13-6-1. Just about two years following the signature of the contract on 8/6/2006, the Director of the Technical Administration in the Plaintiff Company sent a letter in which he states having submitted the architectural, construction, mechanical, and electrical preliminary drawings along with the project's technical report. 13-6-2. The Plaintiff Company has not shown serious efforts towards the execution of the project in good faith, claiming that things will happen on 31/10/2007 whereas the letter was dated 30/10/2007. 13-6-3. The Plaintiff Company’s allegation that the site chosen by the third Defendant is not free of impediments, is of no consequence. Contracts binding for both parties should be enforced according to the circumstances and cases stipulated in the contract, knowing that it has carried out a thorough due diligence examination of the plot of land, has accepted to conclude a contract thereon, and took over the plot of land on 20/2/2007. It did not make allegations that the Authority had manipulated nor vitiated its will, and stated that it had to take necessary administrative, technical, and legal measures, and failed to transfer funds or equipment for the project or initiate the project execution within a period of no more than a year from the completion of registration. 14. The Plaintiff Company lingered in the conclusion of the contracts till 14 May, 2008: 14-1. Until 13/2/2008, the Plaintiff Company had yet failed to sign the design and planning service contract agreement. 14-2. Article 22 of the contract dated 8/6/2006 calls for the completion of services within a period of 36 months from the enforcement of said agreement referred to in Article 22 of Part 1 on General Provisions. 14-3. The General Provisions make reference to the conditions prescribed in the Client-Consultant Model Services Agreement (FIDIC, Third Edition 1998). Article 21 of said Agreement stipulates that “the agreement is effective as of the date of receipt by the consultant of the client’s letter of acceptance of the consultant’s proposal or of the latest signature necessary to complete the formal agreement, whichever is he later”. In compliance with this article, the contract concluded by the Plaintiff Company is not effective yet. 14-4. Paragraph 16.1.d of the contract signed between the Plaintiff Company and the consultant provides for the compliance with the laws and regulations of the Egyptian customs. Article 17 stipulates that the liability period is equal to the contract period extending over one year from the execution of project works. The Egyptian laws shall be applicable in the event of another period. Reference to Egyptian laws is often made given that, in international contracts, the Authority shall choose the applicable law. However, the issue relating to the customs and its compliance with the Egyptian law is deemed exceptional as it falls under the matters governed by the Libyan Law. 15. The contract on the feasibility study drafted on 1/2/2008 stipulated that the work shall commence on the second week of March 2008. In other words, the feasibility study was initially inexistent until mid March 2008 whereas the project was supposed to be handed over on 9/9/2009. 16. All the aforementioned shows that the Plaintiff Company did not take serious endeavors to execute the project, and that the Defendants did not make any fault unlike the Plaintiff Company, which shall have no right to compensation. 17. The aforementioned does not prejudice the integrity of what the Plaintiff Company mentioned on page 16 of the statement of claim that it had fulfilled the only obligation to be executed in advance: paying 0.1% of the investment’s total value, i.e. USD $130 thousand, to the Treasury of the Libyan State. Saying that this is the sole obligation falling upon the Plaintiff Company is not deemed admissible given that it implies to follow a chronological order in the execution of its obligations. That said, the Company acknowledges that it has failed to execute any other obligation. 18. The documents presented by the Plaintiff Company do not include any evidence that the second and third Defendants have deliberately refrained from fulfilling their obligation to hand over the investment land as it is well established in the minutes of handing over and taking over drawn up on 20/2/2007 that the third Defendant has handed over the land, while every time it asked the Plaintiff Company to submit the drawings and designs, the latter pretended to be coping with impediments. 19. The statement of the Plaintiff Company regarding the delictual faults made by the Defendants stand groundless: 19-1. In reference to Law No. 5 of 1426 on the Promotion of Foreign Capital Investment, Article 1 (1) provides for the promotion of foreign capital investment to establish investment projects in line with the States’ general policy, and economic and social development objectives. It further provides that there is no such capital as mentioned in paragraph 6 of Article 3 of said law. Therefore, the Plaintiff Company cannot insist on applying this law in the absence of any investment project in the sense referred to in paragraph 7 of Article 3 of the law. The exceptional advantages described in Article 15 address the investor whose conduct is in compliance with the legal rules and provisions of this law. Article 1 (1) also stipulates that the project and foreign capital are not established and the provisions of said law cannot be applicable to the present dispute. Moreover, the Defendants have not breached paragraph 7 of Article 2 of Law No. 7 of 1372 a.P. (2004) on Tourism, providing that tourism aims at “encouraging Libyan and foreign investors to invest in touristic projects in order to develop the national income resources and sources”. Failing to do so asserts that the Plaintiff Company did not invest in touristic projects and breached the purposes of this article. 19-2. The Defendants did not commit any acts described as violations of the Unified Agreement for the Investment of Arab Capital, given that: 19-2-1. The State of Kuwait and the State of Libya are both members to the Unified Agreement for the Investment of Arab Capital, and the reference made in the contract dated 8/6/2006 to this agreement is limited to the inclusion of the arbitration mentioned therein as a means for dispute settlement barring any other rules thereof. The reference of the parties to arbitration prescribed therein is common and the provisions of this agreement shall not be automatically applied. 19-2-2. This Agreement has limited the substantive scope of its application to Arab capital and investment of the same, yet in this case, no capital has been transferred from Kuwait to Libya. 19-2-3. The Plaintiff Company shall have no right to any compensation by applying the provisions of this Agreement given that Article 2 thereof stipulates that States Parties shall allow capital transfer and undertake to protect the investor, safeguard the investment, and its related revenues and rights and, to the extent possible, to ensure the stability of legal provisions. This is the purpose of the Libyan Law on Investment Promotion. Therefore, the capital should achieve economic development in the State receiving it. As this failed to happen, the allegations of the Plaintiff Company on the breach of the provisions of Article 2 of said Agreement should be disregarded, along with the claim of the Plaintiff Company in Article 9 (1) and Article 10 (a, b, and d) of this Agreement given that no Arab capital was transferred from one State to another. 19-2-4. Article 14 of the Unified Agreement for the Investment of Arab Capital in Arab States imposes some obligations upon the investor. Said Article lays the foundation of international principles, such as the investor’s compliance with the legal rules of the State hosting the investment. In breach thereof, he shall be held liable. The same is reflected in this case. The Defendants are not in breach of the Libyan Law or the provisions of this Agreement, nor committed any contractual faults. The Plaintiff Company has failed to fulfill its contractual obligations as per the contract dated 8/6/2006 and breached the provisions of the Libyan Law; therefore, its claim for compensation shall be rejected. Fourth: On the absence of the legal and factual basis of the Plaintiff Company’s compensation claim: The obligation for compensation necessitates the commission of a fault that prejudices a causal relationship. 4-1. The Plaintiff Company claims compensation in the absence of a fault. It is settled that none of the Defendants have committed faults and cannot be held liable in this case. Compensation without fault is not allowed by virtue of contractual and tort liability. 4-2. The Plaintiff Company is not entitled to any compensation and the figures provided thereby shall not be taken into consideration, given that: 4-2-1. At a first stage, the request mentioned in the notice sent through the bailiff limiting the value of compensation to five millions U.S. Dollars is unsubstantiated, as: 4-2-1-1. The notice addressed to the third Defendant offered two proposals: the annulment of Decision 203/2010, the evacuation of the project site from people and occupancies, the handover of the plot of land as agreed upon, the protection of the Company which in return undertakes to initiate immediate execution; or paying the Company a compensation of five million and thirty thousand US dollars as part of the losses incurred in the project, and accepting the termination of the project and the contractual relationship between the two parties. This proposal cannot be accepted in the absence of faults committed by the third Defendant. Had the Company spent the amount, this would have revealed. Had the third Defendant agreed to annul Decision No. 203/2010, how would the Company possibly agree to end the relationship, while it should have started the business relationship all over again? 4-2-1-2. There is no proof that the amount requested by the Plaintiff in the statement of expenses dated 29/10/2010 has been spent in fact. On 8/1/2009, the Company declared that it was unable to execute the project. On 27/1/2009, it claimed having concluded a contract with Hill Company to manage the project, and the latter requested the amount of USD $215,000 to cover the fees of executed works, while the contract drafted for this purpose was not signed. The details included in the statement regarding the bonuses paid to individuals and the senior management of the project in 2010, i.e. after the cancellation of the same. These bonuses amounted to USD $250,000. The expenses paid by the Plaintiff Company to the senior management and Engineer Saad Salem for the years from 2006 to 2010 without undertaking any works in the project, except that the latter took over the plot of land on 20/2/2007; this prove these expenses to be false and the Defendants shall not to be held liable for them. 4-2-2. At a second stage, the Plaintiff Company indicated that it shall request before the Arbitral Tribunal the amount of USD $55 million, whereas the notice received through the bailiff specified that the losses allegedly incurred by the Company as a result of the touristic project amounted to USD $5.4 million. Said Company shall solely be held liable for the damages caused by its own faults. Such request on its part is baseless and shall be rejected. It should also be noted that the request made by the Plaintiff Company through the Court bailiff as mentioned in the notice on the necessity to pay the amount of USD $50 million to cover any profits lost during the anticipated life span of the project remains unsubstantiated, given that the Plaintiff Company has lost that opportunity when it failed to initiate the execution. It further acknowledged in its letter dated 17/6/2010 that it was not logical to transfer 10% of the project’s investment value or the equivalent of USD $130 million prior to the handover of the project site, while knowing that the project may not even have an estimated value without the plot of land. So how could it determine the lost profits? In the absence of a present estimated value, how can it then estimate future profits in view of the undetermined anticipated life span of a project that is yet to see the light due to its own mistake? Accordingly, any amount requested by the Plaintiff Company in the notice has no legal or factual basis and should be disregarded. 4-2-3. The Plaintiff Company’s request for the third Defendant to bear the attorneys' fees until the settlement of dispute is rejected given that the Company chose to refer to arbitration disregarding amicable settlement, whereas the arbitration clause in Article 29 of the contract dated 8/6/2006 provided for the inevitability of an amicable settlement before resorting to arbitration. Consequently, it is solely responsible for this. 4-2-4. At a third stage, the company mentioned in the statement of claim submitted to the Arbitral Tribunal the requested compensation which increased from USD $55 million to USD $1,144,930,000, of which five million and thirty thousand US dollars (USD $5,030,000) cover the losses and expenses incurred by the Company’s office in Tripoli, pursuant to the issuance of approval Decision No. 135 of 2006. These are material damages that are accurately reflected in the budgets from 2006 to 2010 that were prepared by the Libyan independent auditor Salah Eddin Turki. In addition, the Plaintiff Company requests the amount of one billion and eighty nine million US dollars (USD $1,089,000,000) to cover the profits it had lost as per the report of the German Specialized Company, Rodle Middle East, the symbolic amount of USD $50 million in compensation of moral damages to the Company’s reputation in the financial and business market inside Kuwait and internationally, as well as the amount of USD $420,000 to cover arbitration costs and USD $500,000 to cover the reasonable estimated fees that will be paid to the Company’s attorney since the beginning of the dispute until the issuance of the final arbitration award. The Plaintiff Company shall not bear these amounts given that: 4-2-4-1. It is confirmed that the Company is not entitled to the amount of USD $5,030,000 in view of the report of the independent auditor Salah Eddin Turki, who prepared the budgets, where it appears that the Plaintiff Company’s account at the Libyan First Gulf Bank has zero balance. The report also shows that these expenses have been covered in cash through bank transfers from abroad to the account of the project manager. These transfers were made and processed to a current account for the Company. This act is in breach of financial legislation and makes all the statements of expenses void. 4-2-4-2. Regarding the amount of one billion and eighty nine million U.S. Dollars (USD $1,089,000,000) representing the profits lost by the Company, and after reviewing the report of the German Company, Rodle Middle East, we find out that page 4 thereof pointed out that these results were achieved only after carrying out certain procedures relating to the contract agreement and after due discussion with the client who stated that the Libyan Government has failed to perform the provisions of the contract by refraining handing over the land. However, the contract concluded on 8/6/2006 confirms that the Libyan Government is not a party to the contract nor is it bound to any of the obligations of this contract. Furthermore, the plot of land was not handed over as confirmed by the minutes of handing over and taking over along with the Plaintiff Company’s acknowledgment. The report further mentioned that the Plaintiff has recorded the legal fees of the contract agreement amounting to USD $130,000 or 1% of the expected investment value estimated at USD $130,000,000. However, Article 3 of the decision of the Secretary of the People's Committee for Tourism No. 135 of 1374 a.P. (2006) sets this ratio is at 0.1%. In light of these observations, the report should be disregarded. This expertise report did not take into consideration the political circumstances in the State of Libya since 17 February, 2011, thus affecting the figures included in said report, which are unlikely to be achieved. The Plaintiff Company has taken over the project land and allegedly indicated the presence of factors impeding its execution of the project at the specified period. Having turned down the third Defendant’s proposal for an alternative project site makes its claims of lost profits unsubstantiated as it has missed the opportunity to carry out the project and make the expected profits. 4-2-4-3. Regarding the amount of USD $50 million in compensation of moral damages that the Plaintiff Company claims having incurred, it should be noted that no such moral damages have occurred. Furthermore, the issuance of Decision No. 203 of 2010 on the cancellation of the investment approval pursuant to the Libyan Law shall not be considered as a cause of such damages for the Plaintiff Company breached the rules and procedures of this law. The third Defendant did not claim that the Plaintiff Company appalling qualities; which excludes any moral damages. The Plaintiff Company’s statements that it will look like it had failed to honor its obligations are groundless. Moral damages require the provision of evidence and proof. Failing that, the Plaintiff Company is not entitled to any compensation of moral damages. 4-2-4-4. Defendants should not bear the arbitration costs since the Plaintiff Company chose to resort to premature arbitration. Same applies to the amount of USD $ 500,000 to cover the attorneys’ fees since the beginning of the dispute until the rendering of the arbitral award given that this is the responsibility of the Plaintiff Company and it shall solely bear such costs. Chapter Six: Requests of the Defendants: First- On the jurisdiction: The Defendants invoke the inadmissibility of the arbitration case due to premature filing, as well as the inadmissibility of invoking the Arbitration clause provided for in Article 29 of the contract drafted on 8/6/2006 against the State of Libya, first Defendant, and the Ministry of Economy in Libya, second Defendant. They also invoke the inadmissibility of the case as it breaches the substantive scope of the arbitration clause set forth in Article 29 of the contract drafted on 8/6/2006, and the fact that the Unified Agreement for the Investment of Arab Capital in the Arab States is not applicable to the present dispute. Second- On the merits: Reject the case for absence of the legal and factual grounds. Chapter Seven: On the statements of the Plaintiff in its replication submitted on 5/1/2013 by Dr. Fathi Wali and Mahmoud Samir El-Sharkawi in response to the Statement of Defense submitted by the Defendants on November 23, 2012. In addition to the statement of claim, as Dr. Wali and Dr. Sharkawi stated on behalf of the Plaintiff, they refer the subject matter of the claim to what is mentioned therein, adding that the Defendants have stated the facts in their statement of defense so as to serve their own viewpoints in terms of the jurisdiction or the merits of the case. 7-A- In response to the Defendants’ Pleas: 7-A-1. In response to the Defendants’ pleas, Dr. Wali and Dr. Sharkawi stated, on behalf of the Plaintiff, that with regards to the inadmissibility of the arbitration case for having been raised prematurely, the statement of defense did not distinguish between an amicable settlement and a conciliation process which are two different processes. Conciliation is a process where two parties ask a third party to assist them in reaching a settlement and to reconcile them. Article 29 of the contract signed by both parties did not encompass any clause of conciliation. Therefore, no referral may be made to the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States. Furthermore, any agreement on conciliation does not lead to the inadmissibility of the arbitration case as long as the conciliation did not succeed. Article 29 stipulates that, in the event an amicable settlement for interpreting and performing the Unified Agreement terms could not be reached, any referral to the Unified Agreement shall be made for the purposes of arbitration, while the Annex of the Unified Agreement may not apply to an amicable settlement before resorting to arbitration. 7-A-1-1. In seeking to resolve the matter independently from the Unified Agreement and its Annex, the Plaintiff stated that documents appended to the statement of claim prove that the Defendants’ violation began immediately following the contract signing on 8/6/2006, and that the Plaintiff never ceased to communicate letters to the Defendants in the hope of overcoming any difficulties. The Plaintiff did not envisage any amicable settlement as proven by the three consecutive letters sent on 17/6/2010, 29/6/2010 and 8/7/2010 where it requested an amicable solution but received a reply sent by the General Authority for Investment and Ownership on 3/8/2010 ignoring the request for an amicable solution. The Plaintiff replied four days later and denied any responsibility and requested an amicable solution. It did not, however, receive any reply from the General Authority for Investment and Ownership. The Plaintiff then sent the latter on 13/9/2010 a notice offering two alternatives for an amicable solution, to which the General Authority for Investment and Ownership replied on 11/10/2010 in a letter stating its willingness to offer a new plot of land for the establishment of the project, which meant that the Plaintiff would have to bear all the costs already spent to build the project on the original plot of land mentioned in the contract dated 8/6/2006. The Plaintiff sent a statement to the general Authority for Investment and Ownership on 29/10/2010 requesting a meeting to reach an amicable solution. The meeting was held on 9/11/2010, and the General Authority for investment and Ownership showed no flexibility in this regard. The five-month long attempts to reach an amicable settlement came to no avail, which led the Plaintiff to resort to arbitration. The Plaintiff finds it surprising after this presentation of facts to hear that no efforts to reach an amicable settlement were made. 7-A-1-2. The Plaintiff stated that, in any case, should an agreement be reached over an amicable settlement before resorting to arbitration, failing to seek an amicable settlement before resorting to arbitration shall not invalidate the arbitral award. The Plaintiff referred to what is established by the Court of Appeal in Cairo in this regard, and concluded that the facts mentioned in the Statement of Defense stating that the Plaintiff did not attempt to reach an amicable settlement are erroneous, and argued that should no attempt for an amicable settlement be made, this alone shall not be considered as a ground for the inadmissibility of the arbitration case. 7-A-2. In its reply to the plea of the non-invocation of the arbitration clause set forth in the contract dated 8/6/2006 against the Libyan State and the Libyan Ministry of Economy, the Plaintiff stated: 7-A-2-1. This plea has no factual or legal grounds, as it has been established that the arbitration clause shall apply to all parties involved in concluding or performing the contract, and that any party involved in discussing or clearly performing the contract comprising the arbitration clause shall therefore immediately be bound by the arbitration clause in line with the Prima Facie theory. The Plaintiff supported its statement with reference to some judicial decisions and arbitral awards. 7-A-2-2. With regards to the contract which is the subject matter of the dispute and comprises the arbitration clause and its performance phases, it has been concluded that no distinction was made between the Libyan State and the Libyan Ministry of Economy, not only in concluding the contract but also in its performance phase. In fact, in concluding the contract dated 8/6/2006, the plot of land which is the property of the State is not owned by the Tourism Development Authority which is solely entrusted with signing the contract and which has signed the contract by virtue of the General People’s Committee’s Decision No. 87 of 1374 a.P. which is the Council of Ministers and represents the Libyan State. Thus, the State would have contributed to the execution of the project on a land that is the State’s property. The contract stipulated that the project shall enjoy the exemptions and privileges set in Law No. 5 of 1426 on the Promotion of Foreign Capital Investment and its executive regulation and Law No. 7 of 1372 a.P. on Tourism and its executive regulation, and these commitments fall upon the Libyan State and therefore make the Libyan State a party to the contract including the arbitration clause. With regards to the performance of the contract, the land allocated for the project is registered in the Libyan Real Estate Registry with an indication that Urban Planning No. 796 will be carried out thereon on behalf of the Libyan State. An ownership and usufruct contract was submitted to the interest of the Bank of Libya, and the real estate is currently registered to the ownership of the Bank of Libya. Therefore, we conclude that the Libyan State had established rights on the real estate it owns through the Public Property Authority to the interest of the Umma Bank contrary to the provisions of the contract subject of the dispute stipulating the allocation of the land to the Plaintiff Company. This is deemed to be a measure relevant to the performance of the contract. Furthermore, following the affiliation of the General Authority for Investment and Ownership concerned with foreign investments to the Ministry of Industry, Economy and Trade, the Libyan Minister of Industry, Economy and Trade issued Decision No. 203 of 2010 to annul Decision No. 135 of 2006 that authorized the Plaintiff to establish the project. Such is another measure relevant to the contract performance. Therefore, it seems obvious that the Libyan State and the Libyan Ministry of Economy have both taken part in the conclusion of the contract and in the procedures relevant to the performance of the contract, and that the Libyan State established rights on the land to the interest of the Umma Bank and thereby prevented the Plaintiff from establishing the project. Consequently, the arbitration clause shall apply to both parties, the Libyan State and the Libyan Ministry of Economy, and each of them shall become a party to the present arbitration. Moreover, the Defendants’ plea to the inadmissibility of the arbitration case against the Libyan State and the Ministry of Economy shall have no grounds and shall be rejected. 7-A-2-3. Article 29 of the disputed contract refers any dispute to arbitration in line with the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States, and article 10 of the Unified Agreement stipulates that the Arab investor shall be entitled to compensation for damages which he sustains due to the violation by a State Party, or one of its public or local authorities or institutions, of any of the Arab investor’s rights, or the violation of any decision issued by a competent authority pursuant to the provisions of the Unified Agreement. The Unified Agreement was concluded between States that included Kuwait and Libya. In the event of a violation of a contract concluded between the investor and the State’s public or local authorities or any public institution, provided the contract includes an arbitration clause, the contract, in line with the provisions of the Unified Agreement, stipulates that compensation be paid not only by the public or local Authority or the institution that concluded the contract, but also by the State or relevant ministry that issued a decision violating any of the investor’s rights as per the Unified Agreement, in view of their commitment to the said agreement. 7-A-3. In its reply to the plea of inadmissibility of the arbitration case as it falls outside the substantive scope of the arbitration clause, the Plaintiff stated: 7-A-3-1. This plea is invalid since the interpretation of the arbitration agreement falls under certain principles, among which a principle stipulating that should the agreement text be understood as having two meanings, the meaning that more likely confirms the validity of the arbitration agreement and its applicability on the current dispute as per the arbitration agreement shall be adopted; and that determining the scope of the arbitration agreement in view of the text of the clause does not dismiss what the parties to the contract intended to submit to the arbitral proceedings; and that a narrow interpretation of the arbitration agreement may only apply to domestic arbitration, while international arbitration shall always follow a wider interpretation of the arbitration agreement; and it is established by the jurisprudence, doctrine and the arbitral awards that an agreement to arbitrate in disputes over contract performance shall also apply to disputes over the contract nullity, termination, failure to perform any contractual obligations or compensation therefore; and that the arbitration clause in the present dispute which limits its scope to all matters related to the interpretation or performance of the contract during its validity period, shall apply to this arbitration case related to the non- performance of the contract by the Defendants, especially that this is an international commercial arbitration; and that it has been decided that the arbitration clause stipulated in a contract applies not only to the litigation arising from a contractual fault but also to any litigation arising from the promulgation of a law or issuance of an administrative decision related to the contract that comprises the arbitration clause. 7-B. Defense on the merits in response to the Statement of Defense submitted by the Defendants: 7-B-1. On 13/6/2012, the arbitral Tribunal decided that the Libyan Law shall be the law applicable to the dispute, and this applies by default to national legislation and regulations, and also to international conventions in force in Libya, among which the Unified Agreement for the Investment of Arab Capital in the Arab States, as it is a part of the legislation referred to in clause 30 of the lease contract. Article 24 of Law No. 5 of 1997 on the Promotion of Foreign Capital Investment stipulates that international conventions in force in Libya shall prevail over any national legislation. 7-B-2. It is inadmissible to state that Article 29 of the lease contract is limited to referral to arbitration provided for in the Unified Agreement and its regulation excluding other rules therein as this is deemed an attempt to narrow the interpretation of a general clause. This clause is clearly interpreted as the agreement of both parties to the contract to settle the dispute through arbitration in line with the provisions of the agreement. 7-B-3. The Plaintiff has transferred part of its funds to Libya and has paid the contracted companies as part of its implementation of the investment project in Libya. 7-B-4. The contract subject of the dispute is interpreted as being a lease contract as mentioned in the contract title and in Articles 2 and 26 thereof. 7-B-5. The State has private ownership right with regard to State private property and not administrative ownership right. These properties fall under the provisions of ownership of private property alike the properties owned by individuals. 7-B-6. The preamble of the lease contract stipulated that the first party to the contract was entrusted with allocating lands located in the regions designated for tourism development and owned by the State and signing the lease contracts thereof. This proves that the land forms part of the Libyan State’s private property that the Libyan State may establish rights thereon at its own discretion without violating any legislation or regulation, including the lease set forth in the preamble to the contract. Article fifteen of Law No. 5 of 1997 is final and conclusive in stating that the land allocated to the project is a private property of the Libyan State. Furthermore, Article 2 of Decision No. 87 of 2006 issued by the General People’s Committee (the Council of Ministers) stipulated that the Tourism Development Authority shall handle the task of allocating lands for tourism development projects and sign lease contracts with investors. 7-B-7. The disputed contract is not an administrative contract since the relevant project does not provide a public service, but rather a private service to whomever is seeking it for a price charged in consideration of this service, depending on the conditions of supply and demand in a largely global market, i.e. the tourism market. Therefore, the price charged does not represent a fee determined by the State. The Plaintiff is thus liable before the State solely for paying the agreed upon rent and respecting the public policy and public morality of the State, since the project may not be described as a public utility. 7-B-8. It is false to state that determining the type of the project and losing the right to establish various projects is deemed a highly unusual clause in Private Law contracts. It is also not true to state that commitment to a project’s execution within a set timeline reveals the Authority’s intention to adopt the procedure of the Public Law since such a clause is set out in contracts for works between persons of Private Law. It is untrue that the clause stipulating the Authority’s right to terminate the contract upon delay of rent payment without any prior notice is a highly unusual clause since it represents an explicit terminating clause that is listed in almost every lease contract governed by the civil law. This also applies to the clause setting forth that no party is entitled to waive the contract as a whole or a part thereof to third parties. It is not true as well to state that the Authority’s power to supervise and control is a highly unusual clause in administrative contracts, since all special contracts for works are usually subject to continuous control and supervision by the consulting engineer or the employer. It is untrue that Articles 20 and 21 of the contract comprise a highly unusual clause since Article 20 institutes a commitment in favor of both parties, and Article 21 has similar equivalents in all Private Law contracts which provides for the transfer of know-how. 7-B-9. The Defendants rely on abrogated legislation and on the Decision of cancellation which is void, since referring to Law No. 5 of 1997 on the Promotion of Foreign Capital Investment, and to Decision No. 194 of 1377 a.P. (2009) issued by the General People’s Committee is reference to laws that were abrogated as per Law No. 9 of 1378 a.P. (2010) in which Article 30 cancelled Law No. 5 of 1426. Decision No. 203 of 1378 a.P. (2010) issued by the General People’s Committee for Industry, Economy and Trade stipulating the cancellation of the investment approval granted to the Plaintiff as per Decision No. 135 of 1374 a.P. (2006) was issued on 10/5/2006, that is following the entry into force of Law No. 6 of 2010. Article 19 of said law stipulated that in case of a violation by the investor, the Authority shall notice the latter for rectification under penalty of invalidating any exemptions and benefits that the project may enjoy, or withdraw the project or refer the case to competent judicial authorities to settle any previous exemptions. Article 20 of this law also stipulated that any approvals and authorizations be withdrawn in the event the project was not commenced or was not completed within the specified period without any valid justification. 7-B-10. The Decision of the General People’s Committee for Industry, Economy and Trade No. 203 of 2010 issued on 10/5/2010 and cancelling the investment approval shall be considered as void since it violated Article 23 of Law No. 9 of 2010 on the Promotion of Investment. Said Article provides that projects may not be nationalized or submitted to procedures having the same effect unless by virtue of a law or a judicial decision and in return for compensation, which is not the case in Decision No. 203 of 2010. Consequently, Decision No. 203 is considered as null and vitiated for being issued by non-competent authorities exceeding their powers. 7-B-11. The contract and the dispute are subject first to the agreed upon by the two parties and to the Unified Agreement, second to the Libyan Civil Code and third to the Libyan legislation on promoting foreign capital investments and regulating tourism. 7-B-11-1. Defendants have breached their commitment to good faith stipulated in Article 148 paragraph (1) of the Libyan Civil Code; in fact, commitment to good faith is not limited to the performance of the contract but is also applied during the conclusion of the contract through error, fraud and coercion as it justifies any request made by the party whose will was vitiated to request the nullification of the contract and claim for compensation, or request that both the contract and the compensation remain applicable. The reason behind this clause may be attributed to the fact that the other party to the contract knew, or could have easily noted, that the party whose will has been vitiated, only accepted signing the contract due to an error, coercion or fraud. This means that the party who signed a contract with the aggrieved party proved to be of bad faith, and that commitment to good faith supersedes the enjoyment of the due right, while the violation of that commitment forms the basis of the theory of abuse of that right. Article 124 of the Libyan Civil Code is an additional and conclusive proof that the abuse of the right is a violation of the commitment to good faith. It is needless to say that Public Law entities entrusted with the use of public power to serve the public interest shall commit to the rule of law and the duties and functions they are tasked with by issuing decisions and concluding contracts in good faith. 7-B-12. The Defendants violated their commitments since the Plaintiff repeatedly required over four years that the project land be handed over thereto in line with the project approval decision and the lease contract, but to no avail. The Plaintiff fulfilled its commitment to transfer 130 thousand US dollars pursuant to Article 3 of the approval decision. 7-B-12-1. The third Defendant has answered the requests made by the Plaintiff company in a non-substantive manner after the elapse of more than eight months after the contract was concluded, i.e. on 20/2/2007. The answer was limited to visiting the site and identifying its borders. 7-B-12-2. The reason why the delivery committee’s work was limited to examination, is that the plot of land is occupied with a number of containers, pipes and equipment belonging to the General Company for Building and Construction, and was sold to the Umma Bank; furthermore, the land contained the Tahrir Club in Tajura for maritime sports as well as a restaurant and a cafeteria. All these issues were well known to the Defendants before concluding the lease contract of the plot of land. 7-B-12-3. In-kind rights were established on the land. And despite the request of the Plaintiff sent in its two letters on 22/4/2007 and 15/5/2007 to the Secretary of the Tourism Authority and the Secretary of the General Authority for Investment Promotion complaining about the failure to solve the issue, the Authority chose not to reply, until 1/7/2007 when the Secretary of the General Authority for Tourism and Traditional Industries, who was previously the minister who issued the investment approval decision, replied, recognizing in his letter the hindrances that the Plaintiff had repeatedly complained about, and stating that he will address all the obstacles delaying the project execution within the timeline. The Libyan Administration would have thereby postponed the fulfillment of its obligation to hand over the land free of any occupancy, persons and in-kind rights established in favor of third parties. 7-B-12-4. On 1/8/2007, the Plaintiff once again sent a letter to the Secretary of the General Authority for Tourism and Traditional Industries requesting to obtain any documented proof that the State owns this plot of land and that the land does not bear any occupancy and that the State shall hand over the site free of any impediments. The General Authority for Tourism and Traditional Industries replied in a letter dated 7/8/2007 stating that the Plaintiff will be provided with a proof of the land ownership and a real estate certificate verifying the project’s usufruct. The letter added that in terms of handing over the land free of any impediments, this can be worked out and difficulties may be overcome if any, and the Plaintiff may contact the General Authority for Tourism and Traditional Industries to identify the impediments. This points out to the deliberate attempt by the General Authority for Tourism and Traditional Industries to ignore the information communicated through the Plaintiff Company’s letters, and this was not done in good faith since the Defendants knew that the project land was the subject of a contract of sale of ownership and usufruct rights to the interest of the Umma Bank as per a decision by the Council of Ministers. The proof thereto is the letter sent by the Secretary of the Administrative Committee at the Public Property Authority to the General Manager of the Umma Bank dated 1/8/2007 requesting that the Administrative Committee at the Public Property Authority take all the necessary measures to annul the decision to allocate a plot of land to the interest of the Umma Bank. 7-B-12-5. The Plaintiff asked the General Authority for Investment Promotion on 1/8/2007 to grant it an authorization to build a temporary fence around the land. The General Authority for Investment Promotion replied twenty one days later that the authorization will be granted after the remaining procedures are finalized. However, the Plaintiff was subjected to many violations from different persons and informed the General Authority for Investment Promotion thereof, yet the latter did not allow it to take possession of the land. After long correspondence, the General Authority for Investment Promotion required the Tourism Police to protect the site, but the Municipal guards stopped the works and seized the equipment. After consulting once more with the General Authority for Investment Promotion, the Plaintiff received an order from the Department for the Development of Touristic Areas to stop all works and withdraw all the equipment from the site. 7-B-12-6. On 3/2/2008, the Secretary of the General Authority for Tourism sent a letter to the People's Leadership Coordinator in Tajura requesting him to explain his decision not to allow the establishment of any of the touristic projects already begun along the coast and to inform him of the opinion of the People’s leadership in Tajura, for the Secretary of the General Authority for Tourism to take the necessary decision with regards to the investors who signed investment contracts with the Authority and to whom real estate certificates have already been issued to allow them to use these lands and sites. All these measures prove that authorities in Libya were disputing jurisdiction, and that they still failed to fulfill their obligation set forth in Article 5 of the lease contract and requiring them to hand over the plot of land to the Plaintiff free of any occupancy and people, to guarantee the absence of any physical and legal impediments that prevent the project’s execution or operation throughout the usufruct period, and to allow the Plaintiff to take possession of the land to establish the project upon the signing of the contract. 7-B-12-7. Accordingly, the Plaintiff sent a letter to the Director of the Department for the Development of Touristic Areas on 8/1/2009, requesting to be exempted from the project handing over within the set deadline and to remain under the supervision of the General Authority for Tourism as this status would help expedite the execution of the project once resumed upon the removal of all impediments. The Director of the Department for the Development of Touristic Areas replied on 21/9/2009 and stated that the issue is left to the discretion of the Plaintiff, and that he will endeavor to solve all the problems that stand in the way of the project execution, that he appreciates the necessity of expediting things and understands the reasons of the delay. This is another proof of the Tourism authorities’ failure in fulfilling their obligation to remove all physical and legal impediments from the project land, and their violation of their substantial obligation to hand over the land to the Plaintiff for more than thirty nine months. 7-B-12-8. Due to the failure of the Libyan Authority to hand over the land, and adhering to the principle of good faith, the Plaintiff once again sent three letters dated 3/3/2010, 10 and 11/2010 to the Secretary of the General Authority for Investment and Ownership, after informing him in its letter dated 15/2/2010 of having submitted to the General People's Committee for Tourism on 14/5/2008 three copies of the project’s architectural, construction, mechanical and electrical designs, and suggested that the effective handing over of the project land be carried out as per the contract terms, yet the Plaintiff did not receive any replies. Furthermore, instead of remedying the violation of its obligation, the General Authority for Investment and Ownership issued Decision No. 203 of 2010 to cancel the investment approval. 7-C. Legal Grounds for the Defendant’s liability: In studying the legal grounds for the Defendants' liability, the Plaintiff claimes the following: 7-C-1. Article 563 of the Libyan Civil Code binds the lessor to hand over the leased premises and any annexes thereto in a state that allows it to be used for the purpose declared in the agreement or in accordance with the nature of the premises itself. Under Article 570 of the Libyan Civil Code, the lessor shall refrain from any practice that may prevent the lessee from disposing of the leased premises; that the lessor may not introduce any amendments to the premises that may undermine the purpose of use; that the lessor’s guarantee of all the above shall not be limited to guaranteeing his own conduct or that of his successors, but shall also apply to every violation based on legal grounds that may be committed by any other lessee or person to whom the lessor transferred the relevant right. 7-C-2. Handing over the premises is the lessor’s prime obligation. And contrary to the facts, the Defendants have recognized that the land is free of any in-kind rights, then deliberately refrained from handing over the said land to the Plaintiff. 7-C-3. The Defendants have breached Law No. 5 of 1997 on Foreign Capital Investment and specifically Articles 1, 12 , 13, 15, 16 and 23 thereof. 7-C-4. In line with Article 1 of Law No. 7 of 2004 on Tourism, tourism seeks to attract Libyan and foreign investors in order to develop all sources and resources of national income. Article 4 of this law vested in the Ministry of Tourism the authority and duty of determining the areas of tourism development, while Article 8 of the same law granted certain exemptions to touristic projects. Article ten entrusted the Ministry of Tourism and the Minister of Tourism with the decision-making authorities of the General Authority for Investment in all that relates to touristic projects, and, pursuant to Article six of the decision issued by the Council of Ministers No. 73 of 2006 dated 11/4/2006, all rights, obligations and concluded contracts were transferred to the Ministry of Tourism whether performed or under performance, and vested in this Ministry the power to take all necessary measures for the performance of what have been transferred in coordination with the Ministry of Planning and the Ministry of Finance. In line with article two of the Council of Ministers No. 87 dated 20/4/2006, the Tourism Development Authority shall allocate lands to touristic projects and sign their lease contracts with investors. 7-C-5. On 28/1/2010, Law No. 9 of 2010 was promulgated and Article 10 thereof abrogated Law No. 5 of 1997 and its amendments, and article 23 thereof stipulated that the provisions of this law shall govern all investment projects and all related facts and acts set by virtue of the laws aforementioned in this article upon the promulgation of this law, without any prejudice to the exemptions and benefits granted prior to its promulgation. The Defendants’ failure to hand over the project land to the Plaintiff in line with the agreement and by virtue of the Defendants’ obligations is to be deemed in the least a serious fault on their part, if not an act of deceit, as they violated the obligations entrusted to them pursuant to Law No. 5 of 1977, Law No. 7 of 2004 and its amendments and Law No. 9 of 2010. 7-C-6. In stating the second Defendant’s illicit decision to cancel the Plaintiff’s project, the Plaintiff stated: 7-C-6-1. The second Defendant’s Decision No. 203 of 2010 to cancel the project was notified to the Plaintiff on 9/6/2010 following its issuance on 10/5/2010, i.e. after Law No. 9 of 2010 entered into force on 28 January 2010, and assuming the Plaintiff made a mistake, the second and third Defendants ought to have acted in accordance to Article 9 of this law requiring that the investor be notified to rectify the violation he committed within a proper time limit to be determined in the notice, yet the second and third Defendants failed to do so. The cancellation decision is a breach of Article 20 of this law that allows and does not impose the withdrawal of authorizations when the failure to carry out or to complete the project in the set time is unjustified. Furthermore, Article 42 of the executive regulation of Law No. 9 of 2010 issued pursuant to Decision No. 499 of 2010 of the Council of Ministers stipulates that the General Authority for Tourism retains the right to terminate the contract for land allocation and return the land to the property of the State in the event the party to which the land was allocated failed to begin the project execution phase within six months and failed to finalize the registration of the land as free of all occupancy or rights. It is obvious that the Defendants did not fulfill their obligation to hand over the land free of any occupancy to the Plaintiff; accordingly, the Plaintiff’s failure to begin the execution phase is duly justified while the decision to cancel the project is unjustified and groundless. 7-C-6-2. The Defendants’ bad faith is demonstrated in the letter sent on 26/4/2010 by the Secretary of the Department of Real Estate Registration and Documentation to the Secretary of the General Authority for Investment and Ownership whereby he expressed his wish that the latter takes all necessary measures to terminate the lease contract concluded with the Plaintiff for the Department of Real Estate Registration and Documentation to allow the Libyan Local Investment and Development Fund to use this real estate property that was allocated to it. This is evidenced in exhibit No. (20) of the exhibits submitted by the Defendants, which indicates that the Libyan Council of Ministers decided on 30/12/2009 to annul the decision to allocate the land for the Plaintiff. This decision would have been notified to the Secretary of the General Authority for Investment and Ownership; nevertheless, the latter sent a letter to the Plaintiff company on 2/2/2010 requesting the Plaintiff Company to coordinate with the General Authority for investment and Ownership about the actual handover of the project site and to submit all architectural designs and drawings for discussion and adoption by competent authorities, and to transfer a part of the investment project capital. This points out to the bad faith of the Secretary of the General Authority for Investment and Ownership when sending his letter to the Plaintiff, as his letter contradicts the recognition made by the Libyan authorities responsible for Tourism, before and after the letter sent by the Secretary of the Department of Real Estate Registration, that they have not handed over the project land to the Plaintiff. Accordingly, Decision No. 203of 2010 made by the Minister of Industry, Economy and Trade to cancel the Plaintiff’s project and referred to in the minutes of the fourth meeting held by the Administration Committee of the General Authority for Investment and Ownership was illicit. 7-C-7 . The Plaintiff stated that the Defendants have breached Articles two, three, and four, paragraph one of Article nine and Article ten of the Unified Agreement for the Investment of Arab Capital in the Arab States. The Plaintiff added that honoring the contracts concluded is one of the most important common principles adhered to by the League of Arab States and recognized by the international law, as set forth in Articles 147 and 148 of the Libyan Civil Code. The contract is not limited to binding the parties thereto to the terms stipulated therein, but also sets forth the parties’ obligations. However, the Defendants violated this principle in a deliberate and serious manner, since the People’s Leadership Coordinator in Tripoli prevented the establishment of the Plaintiff’s project as shown in exhibit 41 appended to the statement of claim, and the municipal guards repeatedly prevented the Plaintiff from building the fence that was authorized by the Assistant Secretary of the General Authority for Investment Promotion as shown in documents 28, 23 and 39 submitted by the Plaintiff. The Libyan authorities did not prevent the destruction of the constructed part of the fence as shown in documents 30 and 39 submitted by the Plaintiff. The third Defendant did not take any serious and positive measure towards the Plaintiff to prevent the violation of the Plaintiff’s right by the Umma bank, the General Company for Building and Construction and Al-Tahrir Club. Such is a violation of their obligation set forth in Article 9 of the agreement which in turn breaches substantially the Plaintiff’s right, in its capacity as investor, to take peaceful possession of the most important of its assets, that is the land. The order issued by the Tourism Development Authority for the Plaintiff to stop the work and withdraw its equipment from the site on 29/12/2012 until a final settlement is reached is one of the measures taken that have prevented the Plaintiff from the full use of its rights and the fulfillment of its obligations, knowing that the Plaintiff has not breached any of its obligations, and has therefore the right to plead the non-performance thereof. 7-C-7-1. The Plaintiff has not violated its obligations and has fulfilled the due obligations. Although Article 3 of Decision No. 135 of 2006 stipulates that the Plaintiff shall deposit 0.1% of the value of the investment in consideration of reviewing the project’s designs, drawings, and technical studies, the follow-up on its execution and the promotion thereof at both the local and international levels, and although this text of law did not set a date for the Plaintiff to fulfill this obligation, the Plaintiff took the initiative upon the signature of the lease contract on 8/6/2006 of making the payment of this sum on 22/6/2006 although it could have exercised its right to retain the sum by refusing to pay. 7-C-7-2. Article 7 of the contract prescribes that the Plaintiff shall pay an annual sum of 720 thousand Libyan Dinars in consideration of the usufruct right. The Defendants refrained from handing over the said land, and accordingly, the Plaintiff’s failure to pay is based on its legitimate right to plead the non-fulfillment of their obligations. 7-C-7-3. Article 11 of the contract did not set a date for the Plaintiff’s obligation to deliver to the third Defendant a copy of the design and execution documents. It is well known by the second and third Defendants that this is only feasible after the handing over of the land. 7-C-7-4. The real estate certificate was issued on 27/11/2007, one year five months and twenty one days after the lease contract was concluded, and indicates that the land is under the occupancy of the Plaintiff. This statement is extracted from the lease contract but is irrelevant since the Plaintiff did not take over the land and did not make any use thereof in view of the legal and physical impediments therein. Letter No. 6/6/451 sent by the Director of the Department for the Development of Touristic Areas to the Plaintiff on 21/1/2009 lists the reasons mentioned by the Plaintiff as impeding the commencement of the project execution, and suggests that the Plaintiff selects an alternative site, which inevitably means that the Plaintiff did not take possession of the site mentioned in the contract. 7-C-7-5. The request made by the Secretary of the General Authority for Tourism in his letter dated 1/7/2007 to submit the project timetable and designs for approval, expresses the wish of the Authority to display the Plaintiff’s project among other projects on display in the Exhibition of touristic projects to be inaugurated on the fortieth anniversary of the Revolution, as confirmed by the Secretary of the General Authority for Tourism in his letter dated 5/12/2007. This shows that the Defendants’ request for submission of the project timetable and designs was not for the purpose of performing the terms of Article 11 of the contract, but for the purpose of taking part in the exhibition. It is to note that the Plaintiff submitted the project timetable and designs in the letter dated 2/9/2007. 7-C-7-6. The letter sent by the Secretary of the General Authority for Investment Promotion on 11/9/2008 and which has been submitted by the Defendants as exhibit 11, and which stated that the Plaintiff Company until the date of this letter has not fulfilled any of its obligations and is therefore subject to Article 29 of the executive regulation of Law No. 5 of 1997, was interpreted by the Defendants in a way that makes Article 29 applicable to the Plaintiff since the project’s validity came to an end, the Plaintiff failed to apply for a renewal or the renewal request was rejected, and the project could no longer proceed. The letter of the Secretary deliberately ignored all previous letters sent by the Holding Company for tourism and hotels on 14/5/2008, 15/9/2008, and 23/9/2008 and referring to the non-handing over of the land and to the impediments therein. It is to note that said Company falls under the powers of the Libyan General Authority for Tourism. 7-C-7-7. The statements made by the Defendants about the fact that the Plaintiff is not serious in the fulfillment of its obligations are refuted as they are based on the letters of the Defendants who concluded from the letter sent by the Director of the Department for the Development of Touristic Areas on 21/1/2009 that the third Defendant tried to overcome the difficulties preventing the Plaintiff from taking over the project land. In line with Article 147 of the Libyan Civil Code, a contract is the law of the contracting parties and may not be revoked or amended unless with mutual consent or for reasons stipulated by the law. Although the Plaintiff rejected the alternative site, it used its right in good faith since it drafted designs for the building of the facilities on the land subject of the contract, and signed the timetable thereof. Furthermore, the Plaintiff contracted the Holiday Inn International Company for hotel and hotel apartment management and determined all the details for the building of the facilities. Also, the Company contracted a consultant and Hill International Company for execution work management and contractors were qualified. The investment return of any given project increases or decreases according to its location, and this principle was taken into account upon concluding the contract, and the letter sent by the Plaintiff and dated 17/6/2010 is proof thereof. 7-C-7-8. The Plaintiff did not breach its obligation to transfer 10% of the project’s value as the Defendants are claiming. In fact, this obligation was not mentioned in the investment approval Decision No. 135 of 2006, and the Defendants only requested that the Plaintiff transfers the sum in the letter sent by the Secretary of the General Authority for Investment and Ownership dated 2/2/2010, i.e. following the issuance of the Decision by the Council of Ministers in 2009 to cancel the project and allocate the land thereof to the Libyan Local Investment and Development Fund, and following the request made by the Council of Ministers to the Department of Real Estate Registration to enforce the Decision. It is therefore only sensible and righteous that the Plaintiff pleads non- performance, which adds legality to the Plaintiff’s conduct expressed in clause 7 of its letters dated 17/6/2010 to the Minister of Economy, the Secretary of the General Authority for Investment Promotion, the Governor of the Libyan Central Bank and the Secretary of the Department of Real Estate Registration, asking whether it was logical to transfer 10% of the project’s investment value, i.e. 13 million US dollars, while the project land has not yet been handed over. 7-D. In presenting the grounds of its right to compensation, the Plaintiff said: 7-D-1. The claim for compensation of the material and moral damages and which the amount is indicated in the statement of claim was re-evaluated pursuant to three reports issued by three international accounting offices, which the Plaintiff appended in its replication as an estimate of the damages to be added to what had been already mentioned in the statement of claim. 7-D-2. The Plaintiff’s right to compensation is based on Article 244 of the Libyan Civil Code stating that compensation shall comprise the creditor’s incurred losses and lost profits, and that the Defendants’ violation of their obligations includes at least a serious fault by deliberately failing to fulfill their obligations, and should therefore pay the Plaintiff compensation for the direct damages, foreseeable and unforeseeable, the latter incurred. The Plaintiff has also the right to claim compensation for the moral damages. 7-D-3. The Plaintiff’s right against the first and second Defendants relies on the illegality of the Council of Minister’s Decision of 2009 to annul the decision of the project land allocation, and to the illegality of the second Defendant’s Decision to cancel the investment approval. The Administration is therefore liable for the damages arising from its illegal decisions, and the Plaintiff’s right to claim compensation from the first Defendant is in line with Articles (6) and (10) of the Unified Agreement for the Investment of Arab Capital in the Arab States since it is unequivocal that the Plaintiff made an investment in Libya by transferring 130 thousand US Dollars, relied on a significant number of employees and workers in Libya, contracted with companies to manage the hotel and apartments, and provide services related to project design and execution supervision. 7-E. At the end of its replication in reply to the statement of defense, the Plaintiff requested a final and binding award that guarantees joint liability, considering that the second and third Defendants represent executive administrations that form an integral part of the Libyan government, by ordering a final and binding sum amounting to 2,055,530,000 US dollars (two billion, fifty five million, five hundred and thirty thousand US dollars), to be paid in solidum, detailed as follows: 6,539,000 Libyan Dinars equivalent to 5,030,000 US Dollars as per the exchange rate traded on the same day at the Central Bank of Libya, representing the value of the losses and expenses of the office it opened in Tripoli; 2,000,000,000 US Dollars (two billion US Dollars) representing the lost profits, knowing that this sum is an amendment to its previous request and is justified as per technical reports; 50,000,000 US Dollars (fifty million US Dollars) as a compensation of moral damages; 500,000 US Dollars (five hundred thousand US Dollars) as estimated fees to be paid to the Plaintiff’s counsels; and a sum of money to be decided by the Arbitral Tribunal that is equivalent to the arbitration costs and expenses paid in this arbitration case. Chapter Eight: On the statements of the Plaintiff in its replication submitted on 7/1/2013 by Counsel Rajab EL-Bakhnug in response to the Statement of Defense submitted by the Defendants on November 23, 2012. 8-1. The Plaintiff company began its reply to the Defendants’ statement of defense by declaring that pursuant to Decision No. 364 of 2010 of the Council of Ministers, the third Defendant shall be the General Authority for Investment Promotion and Privatization Affairs instead of the General Authority for Investment and Ownership, considering that the Decision by the Council of Ministers stipulated the amendment of the previous government Decision No. 89 which established the General Authority for Investment and Ownership. 8-2. The Plaintiff requested that the Ministry of Finance in Libya be joined as a party to the arbitration case as it is also entrusted with the enforcement of judicial judgments issued domestically and outside Libya against Libyan public entities funded by the Libyan State Treasury. 8-3. The Defendants submitted their statement of defense within the set time limit, and did not present any document of support or reference. They based their statement on the documents submitted by the Plaintiff but misinterpreted their content. They stated that the lease contract is an administrative contract and that the Plaintiff was handed over the land but did not transfer any money and did not commence the project execution. 8-4. The Plaintiff’s plea by virtue of which it states that the arbitration case was prematurely submitted to the Arbitral Tribunal because no effort was made to reach an amicable solution is unfounded, since the Plaintiff acted in line with Article 29 of the contract and tried to solve the dispute amicably before resorting to arbitration. In fact, the Plaintiff did the following: 8-4-1. The Plaintiff was not handed over the land free of obstacles, although it paid its dues and opened bank accounts. It also addressed a letter to the Authority requesting a meeting to discuss the issue and reach amicable and satisfactory solutions. Exhibit 61 annexed to the docket confirms the good relationship and proves that the third Defendant’s way of dealing with the case was the reason behind this friendly and amicable relationship turning into a dispute. The letter is considered a request for an amicable solution. 8-4-2. The Plaintiff issued a power of attorney to its counsel allowing him to act on its behalf and reach amicable solutions. The counsel sent a letter to the third Defendant on 4/8/2010, a copy of which has been annexed to the docket and bears number 62, requesting a fast amicable solution. 8-4-3. The third Defendant replied in a letter dated 13/7/2010, exhibit 63 annexed to the docket submitted by the Plaintiff, stating that the land has not been handed over in line with the contract without any reference to the meeting required by the Plaintiff to discuss an amicable solution. 8-4-4. The Plaintiff notified the third Defendant through bailiff by virtue of a letter sent by its counsel. The letter gave the third Defendant the option to take a decision within thirty days to annul the decision cancelling the investment project and handing over the land, or to pay five million dollars as part of the expenses spent. Such is an offer and an invitation to adopt an amicable solution as a first means for dispute resolution as stipulated in the contract. This has been proven in exhibit 65 annexed to the docket submitted. 8-4-5. On 11/10/2010, the third Defendant suggested an alternative investment site in replacement of the one agreed upon in the contract, which represents an explicit decline of the amicable solution. 8-5. The Defendants’ plea stating that the arbitration clause stated in the contract shall not be invoked against the government of Libya is baseless and has no legal grounds. The Tourism Development Authority that contracted with the Plaintiff and whose powers have been transferred to the General Authority for Investment and Ownership by virtue of Decision No. 89 of 2009 issued by the General People’s Committee (Council of Ministers) is the third Defendant. The Plaintiff relied on the following reasons: 8-5-1. The General Authority for Investment and Ownership is not vested with decision-making authority and any measure it may take is of a procedural nature. The decision making authority is vested in the ministry, which was the reason why the contract was signed by the Tourism Development Authority. The approval Decision No. 135 was issued one day later by the Ministry of Tourism. According to Article 1 of the General People’s Committee’s Decision No. 89 of 2009 for the regulation of investment, the General Authority for Investment and Ownership falls under the Ministry of Economy. In line with Article 14 of this decision, the budget of the General Authority begins and ends with the State Budget, and the Court of Accounts reviews and examines its financial records just as it examines the records of the government. 8-5-2. The third Defendant is an integral part of the Ministry of Economy and falls under its power. The Ministry of Economy falls under the government’s authority which is a Defendant in this arbitration case; consequently, the arbitration clause stipulated in the contract can be invoked against the third Defendant and also against the Libyan government since the third Defendant falls under the government’s authority. 8-5-3. The second Defendant is a sovereign ministry and forms a part of the Libyan government which is the highest Authority. Decision No. 322 of 2007 of the General People’s Committee (Council of Ministers) on the amendment of the State Budget and accounts stipulates in Article 1 that the Ministry of Finance shall undertake the allocation of due sums for the purpose of the execution of final judicial decisions issued inside and outside Libya against public entities funded by the State Treasury. The party that contracted with the Plaintiff as well as the third Defendant that replaced it in terms of competence and responsibility are both funded through the State Budget in line with their establishment decision; therefore the Ministry and the government are both responsible for the enforcement of decisions.  8-6. In response to the statement of defense on the merits that the arbitration clause shall be applied solely to the interpretation of the contract during its validity period, the Plaintiff said: 8-6-1. Upon its signature, the contract became binding and enforceable to the contracting parties, was registered in the Tax department, and duly entered into force. Any dispute thereon afterwards shall be an issue of total or partial performance or interpretation. 8-6-2. The allegation of the Defendants that the cancellation Decision No. 203 of 2010 by virtue of which they allege that said decision is not related to the contract and any challenge thereto shall therefore be made separately as it is an administrative contract, is erroneous since the contract is not an administrative contract but a primary legal procedure that is necessary. The provisions of the contract comprise preparatory and enforcement measures in the form of obligations for the enforcement of Decision 135 on establishing the rights and obligations of every party. 8-7. The Plaintiff agrees with the Defendants that the Libyan Law is the applicable law. The legal jurisprudence and international dealings all state that the party whose grievance is caused by a State shall therefore receive compensation. The internationally recognized compensation principle shall cover all the damages as well as the profits lost, which complies with the Libyan Law. 8-7-1. The contract signed by the Plaintiff and the third Defendant is not an administrative contract despite the fact that one of the parties thereto is a Libyan administrative authority. The contract is a civil law contract since its subject lies in what is set forth in Articles one and ten of Law No. 5 of 1997 on Arab capital investment in Arab States. Therefore, the nature of the contract is different from that of administrative contracts. The project is to remain the property of the Plaintiff, in terms of its management, operation, and profits for ninety years. The main element of an administrative contract lies in the subject of the contract and does emanate from the status of the contractor. 8-7-2. The contract subject of the dispute is not related to a public utility. The privileges provided to the Plaintiff are incompatible with the public interest that the Libyan State will obtain as set forth in Articles one and seven of Law No. 5 of 1997. 8-7-3. The cancelled project subject of the arbitration case is not a project intended to serve the public interest, but rather an investment by a foreign person in the State of Libya. The project’s services and facilities do not serve the general public since the project’s aim is to make financial gains, while a public utility is concerned with providing the citizens with their basic needs without making profits. 8-7-4. The contract does not encompass highly unusual clauses. Its terms serve the interest of the Plaintiff Company, and it does not include terms that allow the Administration to impose of its own single will any commitments to the Plaintiff Company as it is the case in administrative contracts. The contract does not include any article that refers to the regulation on administrative contracts which is part of the Libyan Law. This regulation, issued as per Decision No. 563 dated 5/7/2007 of the General People’s Committee and which was in force upon the conclusion of the contract, confirms that the contract is not an administrative contract, as no reference was made to the said regulation upon the signing of the lease contract as is usual in administrative contracts in Libya. 8-7-5. The contract concluded with the third Defendant was not made with prior authorization from the Council of Ministers (formerly the General People’s Committee) as is required in administrative contracts concluded by Libyan administrative entities in line with Article 3 of the regulation on administrative contracts, knowing that no administrative contract is concluded in Libya without the prior authorization of the Council of Ministers. 8-8. The minutes of delimitation of the borders was drafted on 20/2/2007 and shall not be deemed as a handover of the land free of all impediments and occupancy. 8-9. The Plaintiff Company presented the timetable and all designs on 15/2/2010 after having been presented on 24/10/2007 and 14/2/2008. 8-10. The Plaintiff Company holds a bank account in the Trade & Development Bank, and sums of money were transferred in hard currency and amount to 404,000 US Dollars, other than the sums in hard currency brought by the Director of the Plaintiff Company and exchanged into Libyan currency in local banks and amounting to 6,539,000 Libyan Dinars. Moreover, the Plaintiff Company opened a bank account in the First Gulf Bank and notified the third Defendant thereof on 11/3/2010. 8-11. In response to what the Defendants stated about the failure to pay the land rent, the Plaintiff stated that it requested the handing over of the land but the Authority failed to make the handing over despite the multiple letters sent by the Plaintiff, and asked whether the third Defendant would have failed to demand payment had it handed over the land. 8-12. The Plaintiff Company requested that the actual handing over of the land in its status quo then be postponed until the third Defendant removed all occupancies therein. And since the actual handing over date is essential, it shall therefore be held accountable for execution. 8-13. The Defendants’ statement about the Plaintiff’s decline of the alternative site is true, and exhibit 13 referred to by the Defendants proves the Plaintiff’s statement as it recognizes the third Defendant’s inability to hand over the contracted land, and the impediments that caused the Plaintiff Company to request an extended period of time for its lost time. The offer of an alternative site is proof of the Defendant’s bad faith and does not exempt the third Defendant of liability for its delictual fault. 8-14. The Plaintiff Company referred in paragraph two of page 12 of the arbitration case to the exhibits that amount to 13 and include a recognition that the project land has not been handed over and was sold to the Umma Bank, with the Department of Real Estate registry having confirmed it. The Plaintiff Company submitted exhibit No. 77 confirming the sale operation, while the Plaintiff also presented exhibits 78 and 79 conclusively confirming that the land was allocated to the Umma Bank, a fact also verified as per exhibit 80. Therefore, all the said exhibits verify the failure to hand over the project land to the Plaintiff. 8-15. In response to the Defendants’ statement that Decision No. 203 of 2010 issued by the Ministry of Industry, Economy and Trade complied with the Libyan Laws, the Plaintiff Company stated that it had presented the final designs, and opened a bank account in the First Gulf Bank and the Trade & Development Bank, and has carried out a number of financial transfers where foreign currency was transferred to Libyan Dinars that were spent in Libya. It is to note that these said transfers represented part of the losses incurred by the Plaintiff, as the money transfer is undertaken gradually according to the execution terms, and that the Plaintiff company also paid to the contractors. 8-16. The Defendants, particularly the second and third Defendants, violated the law. The second and third Defendants breached Articles 1 and 6 of Law No. 5 of 1997 and paragraph 7 of Article 2 of Law No. 7 of 2004 as they have not promoted investments but rather drove them away. 8-17. With regards to the Defendants’ statement that the Unified Agreement for the Investment of Arab Capital in the Arab States does not apply to this dispute, the Plaintiff stated that economic growth has not been achieved in the interest of the Libyan State due to the actions of the second and third Defendants, because, had the land been handed over, the money would have gradually been injected in line with the project execution and timetable, thereby fulfilling the interest of the Libyan State. The two said Defendants have in fact violated Article 19/1 of the Unified Agreement that sought to establish the highest protection and support for the security and sustainability of the Arab capitals invested in Libya or any other Arab state. 8-18. In discussing its claim for compensation, the Plaintiff said that the Defendants’ interpretation of Article 10/1/B of the Unified Agreement is erroneous as the Plaintiff has the right to claim compensation for the damages it incurred in its quality as an Arab investor in the State of Libya for the following reasons: 8-18-1. Decision No. 203 of 2010 issued by the second Defendant violates the Plaintiff Company’s rights, and the second Defendant is one of the Libyan State’s public authorities, i.e. the government. 8-18-2. The Libyan State breached its obligations towards the Plaintiff Company as it did not safeguard its investment; the State cancelled the investment project and drove the Plaintiff Company away from Libya. 8-18-3. The Libyan government is liable for the damages incurred by the Plaintiff due to the government’s fulfillment of the unlawful request made by the third Defendant and due to its cancellation through the second Defendant of the investment project. 8-18-4. The Plaintiff Company did not violate any of Libya’s laws and regulations by violating Article 14 of the Unified Agreement for the Investment of Arab Capital in the Arab States, and insisted on cooperating and showing good faith. 8-19. The Defendants’ statement that none of them committed any fault to be sufficient cause for compensation is not true, since the decision to cancel the project and the approval thereof is a fault that calls for compensation, knowing that the Plaintiff suggested amicable solutions to which it received no reply. 8-20. The Plaintiff Company was forced to resort to arbitration and has requested a total of 1,144,930,000 US Dollars as compensation for the losses it incurred and profits it lost due to the project cancellation. The Plaintiff Company had in this regard consulted with experts as well as the German company that gave an estimate of the lost profits, and also with other companies which stated in their reports the value of the lost profits and appended financial reports thereto. The first report was carried out by Ernst & Young and estimated the lost profits at 2,606,695,000 US Dollars. The second report was carried out by Prime Global and put the lost profits at 2,242,451,000 US Dollars. The third report done by expert Habib Khalil EL-Masri gave an estimate of lost profits amounting to 1,744,242,000 US Dollars. Another report written by the Libyan expert Ahmad Ghatour &Partners estimated the lost profits at 2,550,660,000 US Dollars. 8-21. The moral damages are real since the Plaintiff’s case is soon to be known and shall have a negative influence on the global financial and business markets as the company was driven out of Libya and had its investment project cancelled. 8-22. The Plaintiff Company concluded by insisting on what it stated in its replication in response to the statement of defense. It invoked the admissibility of the arbitration case against the Libyan Government, the Ministry of Economy in Libya, and the General Autority for Investment Promotion and Privatization Affairs in Libya as well as the Ministry of Finance in Libya. Furthermore, the Plaintiff raised its right to invoke the arbitration clause included in the contract dated 8/6/2006 concluded between the Plaintiff and the third Defendant, and that the Unified Agreement for the Investment of Arab Capital in the Arab States should be applied. The Plaintiff requested that the Defendants be jointly sentenced to pay the sum of 2.055,530,000 US Dollars (two billion fifty five million five hundred and thirty thousand US Dollars) after increasing the total of lost profits to two billion US Dollars as an average estimate of the amounts detailed in the experts’ reports. Chapter Nine: On the statements of the Plaintiff in its replication dated 3/1/2013 submitted by counsel Dr. Nasser EL-Zaid in response to the statement of defense submitted by the Defendants on November 23, 2012: On 3/1/2013, the Plaintiff submitted a replication in response to the Statement of Defense, and appended documents thereto in support thereof. The Plaintiff began by making observations on the increase in the compensation value to cover the lost profits up to two billion US Dollars, and reiterated its other demands, and claimed that the final binding arbitral award be immediately enforced. The Plaintiff added that the third Defendant is now called the General Authority for Investment Promotion and Privatization Affairs as per Decision No. 364 of 2012, and that the Ministry of Finance in Libya shall be joined as fourth Defendant as it is bound to enforce final judicial decisions rendered inside and outside of Libya in line with the Law on the State Financial System and the Decision of the General People’s Committee (Council of Ministers) No. 322 of 2007. The Plaintiff added that its request to increase the compensation value to two billion fifty five million five hundred and thirty US Dollars is based on four accounting reports, and had the Plaintiff signed a settlement for the value of fifty five million Dollars, it would have been annulled before the Libyan courts for lack of consent, fault and fraud, as it had submitted the case file before Libyan counsels and international audit offices that thoroughly analyzed the investment of each touristic site in every touristic resort, and concluded the value of lost profits, thereby driving the Plaintiff’s claim to increase the compensation value in line with the Libyan law. The Plaintiff stated that this claim is not filed against Libya but against the corruption and oppressive conduct that undermined a touristic project without having the State pay any compensation, as the administration abused its power and cancelled the license to invest in a touristic project. The Plaintiff stated that it communicates this replication within the time limit that ends on 7/1/2013 as set in procedural order No. 10 issued by the Arbitral Tribunal on 17/11/2012. 9-A- In correcting the facts, the Plaintiff stated: 9-A-1. That it had responded to the letter sent by the Secretary of the General Authority for Tourism and Traditional Industries dated 1/7/2007 in a letter dated 1/8/2007, and requested to be notified that the land ownership is held by the State free of any constraints, to be handed over the land free of all impediments, obtain all necessary authorizations, approve the designs, have work permits issued, see all customs exemptions and procedures facilitated, receive cooperation and primary approval to allow a professional global company to run the hotel; and that the Defendant’s lack of cooperation was the main reason behind the failure to execute the project. 9-A-2. That what has been stated in the correspondence of the Director of the Department for the Development of Touristic Areas dated 11/7/2007 is untrue, as the Plaintiff had responded to all previous correspondence and sent a letter dated 29/7/2007 requesting to expedite the setting of the land handing over date to allow the Plaintiff to set the timetable, as this is directly linked to the effective handing over of the land free of all impediments in line with the contract. The timetable clarifies the project execution plan and is linked to the handover of the land free of all impediments. 9-A-3. That the letter sent by the Director of the Department for the Development of Touristic Areas on 11/9/2007 on the handing over of the drawings prior to 4/11/2007 is not accurate, and that the Plaintiff’s technical director responded thereto in a letter dated 24/10/2007 stating that he appends three copies of all the designs and three copies of a CD therein. 9-A-4. That it had responded to the letter sent by Director of the Department for the Development of Touristic Areas and the head of the permanent working team at the General Authority for Tourism and Traditional Industries on 12/11/2007, noting that the minutes dated 20/2/2007 are solely drafted for the purpose of handing over the border points of the site, reiterating that the land is still riddled with physical and legal impediments and occupied by a third party, and that the Plaintiff was unable to commence its project execution work despite having finalized the primary designs and drawings, hoping to receive some assistance to be handed over the site free of any impediments. 9-A-5. The letter drafted on 30/10/2007 where the Plaintiff speaks of an incident that will happen o 31/10/2007 may be attributed to a typing mistake, as the letter refers to preventing the contractor from pursuing work on the fence and calls for a radical solution to this problem. This is confirmed in the letter of 30/10/2007 stating that on that day, 31/10/2007, violations were perpetrated against the land and the fence. 9-A-6. That the reason behind requesting in its letter dated 8/1/2009 to the Director of the Department for the Development of Touristic Areas that it be exempted from handing over the project in the set time was the impediments in the project land, the unlawful occupancy by third parties and the continuous violations thereof, and the interruption of the work therein by the municipal guards. In the said letter, the Plaintiff requests the assistance and intervention of the government authorities to expedite the execution of works. 9-A-7. The suggestion made by the Director of the Department for the Development of Touristic Areas and the head of the permanent working team at the General Authority for Tourism and Traditional Industries dated 21/1/2009 to choose an alternative site is based on the Plaintiff’s request to be informed of the State’s ownership of the land, following its finding that the land was allocated to the Umma Bank, after the Administration had recognized the difficulties hindering the commencement of the project execution and its inability to solve them. The Authority’s suggestion to allocate an alternative site is attributed to a pressuring intervention by the Department for the Development of Touristic Areas. The Administration failed to determine the alternative plot of land, while all drawings and designs cover the plot of land agreed upon in the contract. 9-A-8. After fulfilling the request made by the Secretary of the Administration Committee of the General Authority for Investment and Ownership in his letter dated 2/2/2010, and coordinating with the General Authority for Investment and Ownership on the effective handover of the site, and after submitting drawings and designs, it is unacceptable that the Plaintiff transfers ten per cent of the project investment value prior to taking possession of the allocated plot of land that should be free of any impediments. And in reference to Decision 135 of 1374 AH, i.e. 7/6/2006, it appears that the investment approval decision did not stipulate the transfer of part of the capital prior to the project land handing over. In any event, the estimated value is linked to the plot of land that was agreed upon, that is allocated to the project and that the Plaintiff did not take control of, noting that the estimated value varies from one plot of land to another. 9-A-9. The letter sent by the Secretary of the Department of Socialist Real Estate Registration and Documentation to the Secretary of the Administration Committee of the General Authority for Investment and Ownership where he requested taking measures to terminate the lease contract is due to the fact that the competent Administrative Authority failed to vacate the site and to hand it over free of all impediments, and to the fact that the plot of land had already been allocated to AL Umma Bank, and the dispute was not settled, although the Plaintiff had registered its right to the plot of land in the Investment Registry. 9-A-10. The reason why the work and execution of the project did not commence is due to the fact that the Plaintiff did not take possession of the land in line with the contract and the Administration’s obligation thereto. The letters sent by the Plaintiff on 22/4/2007, 15/5/2007, 22/7/2007, 30/10/2007 and 22/11/2007 all state that the Plaintiff was unable to commence the project execution despite having finalized the primary design phase, and express its wish that the Administration would intervene to expedite the land handing over to the Plaintiff free of all impediments. The Administration failed to take any positive measures to remove all legal and physical impediments. Article 163 of the Libyan Civil Code states the right to refrain from performance in binding contracts, should the corresponding obligations be due and should the other party to the contract fail to fulfill his own obligations. 9-A-11. The minutes of handing over and taking over dated 20/2/2007, in which the Plaintiff states that the land has been handed over and taken over, are untrue as they only determine the land border points and include that the land was examined, as confirmed by the letter sent by the Plaintiff on 28/7/2007 requesting to be informed of the effective handover date in order to set the proper project timetable. 9-A-12. The purpose of the minutes of handing over and taking over of an Investment Land is a mere inspection and delimitation of the land borders. The Libyan legislator, in Article 90 of the Libyan Civil Code, relies on the real will, not on the apparent will. The real will is what binds the parties to the contract, not the apparent will mentioned in the title of the said minutes. 9-A-13. The suggestion by the Defendant of an alternative site to the agreed upon project land breaches the principle “pacta sunt sernanda” as set forth in Article 147 of the Libyan Civil Code; furthermore, Article 148 of this law stipulated the contract performance in accordance with its terms and in line with the requirements of good faith. The Defendant has violated the principle of good faith, and in misinterpreting the content of the minutes of handing over and taking over of an Investment Land, breached Article 152 of the Libyan Civil Code. 9-B. In responding to the statement made by the Defendant on the lack of jurisdiction of the Arbitral Tribunal to decide the dispute considering that the decision rendered by the Administration is independent and not related to the contract encompassing the arbitration clause, and on the fact that arbitration shall not be claimed prior to amicable endeavors to settle the dispute, and that arbitration clause shall not be invoked against the State of Libya and the General Authority for Investment and Ownership, the Plaintiff stated the following: 9-B-1. The decision rendered by the Administration to terminate the disputed contract that comprises the arbitration clause is not disassociated from the contract concluded on 8/6/2006 and may be challenged along with the contract before the Arbitral Tribunal. The Libyan law did not prevent the resort to arbitration, and that according to the Libyan case law, it is established that arbitration shall settle disputes arising from an administrative contract that the ministry is party thereto, and has jurisdiction to examine the decision of terminating the contract concluded by the Administration. 9-B-2. The Plaintiff stated having initiated a number of amicable endeavors as alternative solutions aiming at settling the dispute, and having made multiple efforts to solve the dispute with the Defendant through a number of letters among which a letter dated 17/6/2010 in which it requested a meeting to discuss the reasons behind Decision 203 cancelling the project and the means to free the plot of land of any impediments and the handing over the said plot of land free of occupancies. The Plaintiff received no reply to its request, yet sent another letter on 29/6/2010 in which it reiterated its request made on 8/7/2010 to the general Authority for Investment and Ownership and the Central Bank of Libya to identify the reasons behind the project cancellation, so it avoids any disputes and disagreements and maintains a relationship of cooperation and investment. The Plaintiff’s Counsel sent a letter on 4/8/2010 in which he expressed his wish for further cooperation to reach an amicable solution expeditiously. The Plaintiff’s counsel sent another letter dated 29/10/2010 in which he requested a meeting to discuss an amicable solution within one week. The Plaintiff’s previous requests to find an amicable solution remained unanswered by the Administration. All these initiatives made by the Plaintiff prove that it sought an amicable solution and a settlement without referring the case to competent persons. 9-B-3. The Libyan Administration, i.e. the Defendants, is the party that made it impossible for an amicable settlement to be reached, considering that the letter sent by the Secretary of the Administration Committee of the General Authority for Investment and Ownership dated 11/10/2010, and not 20/10/2010 as mentioned in the statement of defense, stated the willingness of said Authority to assist the Plaintiff once again in finding an investment site. This proves that the Libyan Administration had already made its decision not to endeavor for an amicable solution. Accordingly, the Defendants can no longer invoke the inadmissibility of the arbitration case because it had been filed prematurely before resorting to an amicable settlement. In such a situation, arbitral proceedings set forth in Article 29 of the lease contract dated 8/6/2006 have been respected, and it is the Plaintiff’s right to resort to arbitration that starts with its referral of the case to His Excellency the Secretary General of the League of Arab States. 9-B-4. All the Administrative Authorities that are Defendants in the case are governmental entities that represent the Libyan State from a legal point of view, and form a part thereof. All the public properties are registered under the name of the Libyan State, while the parties contracting with the Plaintiff are governmental institutions falling under the authority of the Libyan State. Had the party contracting with the Plaintiff not been a governmental institution, it would have been unable to dispose of the State’s assets and lands, as provided for in decisions issued by the General People's Committee No. 73 of 2006 and No. 87 of 2006 specifically in Articles 2, 9, and 15, No. 88 of 2007 , No. 150 of 2007 stating in Article two the establishment of the General Authority for Tourism and Traditional Industries and in Article 4 the competences of the General Authority for Investment Promotion, No. 234 of 2007 issued based on the Decision of the People's Committee No. 150 of 2007. All these decisions governing the structuring and jurisdiction of the General Authority for Tourism and Traditional Industries prove that the General Authority for Investment Promotion is the Libyan State. In fact, as per Decision No. 364 of 2012 amending Article one of Decision No. 89 of 2009, the General Authority for Investment and Ownership is now called the General Authority for Investment Promotion and Privatization Affairs, and is the third Defendant in this arbitration. The tasks entrusted to the General Authority for Investment and Ownership comprised the issuance of authorizations and allocation of lands owned by the State, concluding usufruct contracts and collecting taxes thereon as stipulated in Article six of Decision No. 194 of 2009. Furthermore, the General Authority for Tourism and Traditional Industries is funded by the Libyan State Budget, as is set forth in Article one of Decision No. 322 of 2007 issued by the General People's Committee. This proves that the Defendant is a governmental entity that forms the Libyan State within the legal meaning. The Plaintiff stated similarly that the Libyan arbitral jurisprudence and doctrine as well as the international jurisprudence and doctrine have established that the arbitration clause may be extended to other parties that are not signatories of the arbitration agreement. The Plaintiff has concluded that according to the Libyan jurisprudence and doctrine, unlike the Defendants’ allegations, that an arbitral claim can be filed against the Libyan state, the Ministry of Economy and the General Authority for Investment and Ownership. Hence, the Libyan state is a party to the claim since the contracting parties are governmental institutions that form part of the Libyan State. 9-B-5. In responding to the Defendants which stated that the substantive scope of the arbitration clause does not cover the subject matter of this claim, the Plaintiff declared that the subject of the arbitration clause is the interpretation of the contract and its performance, knowing that the term performance definitely covers the failure to perform, i.e. the duty of resorting to arbitration in the event of a failure to perform the obligations, as well as the effects of that failure to perform the obligations among which is the claim for compensation, and therefore the resort to arbitration in this matter, should no amicable solution be reached. 9-C. In responding to the statement of defense about the law governing the arbitration clause, the Plaintiff stated: 9-C-1. By signing the Unified Agreement for the Investment of Arab Capital in the Arab States, Libya has incorporated the said Agreement into its legal system, and the Agreement is hence an integral part of the Libyan law. The Agreement shall therefore prevail over any other Libyan law in line with Article 3 (2) of this Agreement. 9-C-1-1. The two parties have agreed to apply the Libyan law. Applying the Libyan law means that the Agreement shall automatically apply and only the Libyan laws that are mentioned in the contract and are related to a subject raised during the settlement of the dispute shall apply. The investment law shall apply on foreign investments, while the real estate law shall apply on real estate matters; the administrative law applies in the administrative field, while the civil law shall apply in civil matters. Article 30 of the contract made a reference to the application of the Libyan Code, while the contracting parties clearly expressed in Article 29 of the contract their will to apply the entirety of the Unified Agreement including the arbitral proceedings to settle the dispute. This Agreement shall supersede regardless of whether the contract or the arbitration clause had made reference thereto. 9-C-1-2. Article ten of the Unified Agreement stipulates that should the violation of any of the investor’s rights or obligations be proven, or should there be confirmation of any damage sustained by the investor, the latter shall be entitled to compensation for the damage sustained. The Libyan Civil Code provides in Article 224 that compensation shall cover the losses incurred and the profits lost, hence the due compensation in line with the Agreement shall cover the losses incurred and the profits lost. 9-C-2. The text of the arbitration clause in Article 29 of the contract provides that the parties to the contract expressed their will to apply the provisions of the Unified Agreement to settle any dispute about the contract arising from its interpretation or performance, not only the arbitration provisions contained therein. In fact, Article 26 of the Agreement stipulates that arbitration and conciliation shall be governed by the rules and procedures set in the Annex to the Unified Agreement which forms an integral part thereof, and that Article six of the Annex confers to the Arbitral Tribunal the authority to determine the arbitral proceedings. The Tribunal determined the arbitral proceedings before it, i.e. the proceedings of the Cairo Regional Center for International Commercial Arbitration (CRCICA), except for peremptory rules of the Agreement which are not in conflict with the proceedings of the Cairo Regional Center. 9-D. On the law applicable to the contract, the Plaintiff stated the following: 9-D-1. The contract signed by the parties is not an administrative contract from a legal point of view for the following reasons: 9-D-1-1. An administrative contract is one that is concluded by a legal person of Public Law with the intent of managing or operating a public utility. Article 3 of the regulation on Administrative Contracts in the Libyan Law stipulates that the contract must fulfill 3 essential rules in order to be characterized as an administrative contract: an administrative authority must be a signatory of the contract; the contract must include highly unusual clauses; and the contract must revolve around an activity of a public utility. Should any of the aforementioned rules be unfulfilled, the contract shall not be considered an administrative contract. In the current case, and although the first rule is fulfilled, the other two are not, seeing as the contract does not include highly unusual clauses and is not linked to a public utility. The contract signed by the Administration does not include highly unusual clauses. In fact, the Administration acted in the capacity of a normal person, while the judiciary and jurisprudence gave no definition for “highly unusual clauses”. Several scholars agree that highly unusual clauses are not enclosed in contracts concluded between individuals as they are uncommon, meaning that they are not agreed upon freely, and that the contract encompasses Administration-specific privileges that are not enjoyed by the other contracting party, or a provision attributing the jurisdiction to the administrative judiciary to settle the dispute. The lease contract signed by the Administration does not include such clauses; it comprises terms and texts that are inherent to lease contracts. In fact, the terms of technical control and supervision by the Administration, along with the use of local materials, tools, and labor, as well as timely handover of the project in an operationally sound state, are all conventional terms among parties to agreements governed by the Civil or Commercial Code, and in the field of contracting and work execution. Additionally, the contract that was signed with the Administration is not linked to activities relating to a public utility, the latter being a project that seeks to fulfill needs of a public interest, which cannot be achieved through individual projects in a way that fulfills citizens’ needs, offers public services, and meets objectives other than profit. Therefore, not every project that is established or supervised by the State is a public utility, and the touristic project subject of the contract signed between the Plaintiff and the Administration is not linked to the concept of a public utility, seeing as it is not related to the citizens’ daily public life, therefore, its suspension shall not disturb their daily lives or the continuity of services that the State must provide. Moreover, the Administration sought material profit from the project, considering the large amount of money it will be receiving over ninety years; besides, the Administration’s supervision of the project is effective throughout the execution phase and does not extend to the usufruct period. All conflicts are to be settled by ordinary courts with the exception of those mentioned in special texts as per Article 14 of the Judiciary Law No. 51 of 1976. According to the Libyan Legislator, conflicts strictly relating to contracting agreements, procurement contracts and contracts of supply are settled by administrative courts only, and the lease contract signed by the Plaintiff and the Administration does not fall within that category. Furthermore, in line with Article 99 of the Libyan regulation on administrative contracts, the Administration reserves the right to exclude Libyan Judiciary from conflicts on administrative contracts in cases involving foreign parties by stating the right to resort to arbitration, which is currently the case. 9-D-1-2. Should the Arbitral Tribunal consider the contract as an administrative contract, it shall therefore be considered an international administrative contract. This is due to the fact that arbitration is a form of private contractual justice which complies with Private Law and is likely to reverse the concept of Administrative Law. This allows for applying the Civil Law along with the Administrative Law, particularly since this private arbitral nature emanates from the parties’ will and is integral to the Private Law. Since the parties willingly chose the Unified Agreement for the Investment of Arab Capital in the Arab States to settle the conflict, the contract shall be deemed an international administrative contract, where neither the Administrative Law nor the Private Law of a State shall be applied independently. 9-D-1-3. According to Article 14 of the Libyan Foreign Investment Law No. 5 of 1997 and Law No. 7 of 2004, as well as Article 9 of its executive regulation, investment projects are not bound by either the Administrative Law or the Civil Law; in other words, they do not fall under the Administrative Law, and they are not viewed as civil law contracts falling under the Civil Law; they are viewed as contracts of a special nature governed by the general principles of the Libyan Law, be they civil or administrative. The Plaintiff adds that Article 30 of the contract provides that in the absence of an express provision mentioned in the contract to apply a specific law, the Libyan Law shall apply- namely Law No. 5 of 1997 and Law No. 7 of 2004. This means that, contrary to what the Defendants had stated, the Law that governs any of the contract clauses shall supersede other Libyan laws, and that since Article 29 stipulates that the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States shall apply, then the Unified Agreement supersedes other Libyan Legal Texts, seeing as the principle of the autonomy of will is the one applicable to the conflict, and the agreement is part of the Libyan Law, and assuming that the contract is an administrative contract, thus it shall be considered an international administrative contract to which both the Administrative Law and the Civil Law shall apply. 9-E. In discussing the legal and factual grounds pertaining to the Defendant’s liability upon which the compensation claim was based, the Plaintiff stated the following: 9-E-1. The Defendants committed a contractual fault by refraining from handing over the land free of all impediments as per the contract; moreover, the Defendants violated their obligations to allow the Plaintiff to take possession of the land free of any occupancy and persons, which constitutes a contractual liability on the government part. 9-E-2. The Defendants committed a delictual fault as well as a contractual fault, which can be presented as follows: 9-E-2-1. The Defendants acted against a legal obligation to perform the contract in good faith, a principle according to which the Libyan Government shall abide by the rules of International Public Law and international agreements in particular; additionally, the majority of Arab Laws state that the principle of good faith shall be honored in the performance of the contract. However, the decision issued by the Minister of Economy superseded the one allowing for the execution of the investment project, a clear deviation from the principle of good faith. 9-E-2-2. The Defendant, i.e. the Administrative Authority has acted against the Unified Agreement for the Investment of Arab Capital in the Arab States, where Article 9 prevents subjecting the Arab investor to any measures leading to the freezing or sequestration. In fact, Decision No. 203 of 2010 issued by the Minister of Economy led to the unlawful confiscation of the project, which is detrimental to the investor’s rights and guaranties agreed upon in the Agreement, and gives him the right to claim compensation for the damage that was sustained as a result of prejudice to his contractual and legal rights as well as the guaranties set forth by the contract and the Investment Law. Additionally, the Defendant has violated Article 16 of the Agreement, which stipulates that the investor shall be given investment privileges, while the Plaintiff was unable to take possession of the land. These measures are forbidden by Decision No. 5 of 2007 and Decision No. 7 of 2004 of the Libyan Investment Law, since these measures bear the same impact as the freezing and confiscation of the project, which also allows the Plaintiff to claim compensation in line with Article 10 (1) of the Unified Agreement. 9-F. In detailing the elements constituting the claimed compensation, the Plaintiff stated the following: 9-F-1. Compensation in terms of contractual liability and tort involving serious fault and fraud, is limited to direct damages; and, in the case of serious fault, compensation shall cover both foreseeable and unforeseeable damages. Article 166 of the Libyan Civil Code provides that faults causing damages require both material and moral compensation in accordance with Article 225 of the Libyan Civil Code, keeping in mind that the Plaintiff is one of the largest global companies in the field of investment and contracting, with a substantial commercial and moral value estimated roughly at 1 Billion US dollars in 2009. 9-F-2. In addition to compensation for the direct damages that were sustained, the Plaintiff required compensation for the loss of the project’s anticipated profits, in accordance with Article 224 of the Libyan Civil Code, seeing as the lost profits and the sustained damages are major components of the compensation resulting from contract termination or serious fault. This applies in both the Civil Law and Administrative Law, and the Libyan case law has established this compensation for lost profits, as did the case law of the Cairo Regional Center for International Commercial Arbitration. The Judge evaluates the damages sustained by the creditor as a result of the debtor non-performance of his obligation, then he evaluates the creditor’s lost profits; the compensation is the total of both evaluations. In administrative contracts, the Administration shall provide full compensation for the contracting party once it is proven that the damages are due to an act of the Administration “fait du prince”; in this case, the compensation encompasses the loss incurred by the creditor as well as the profits that were lost as a result of an act of the Administration “fait du prince”, i.e. the expected profits by the creditor had no disproportionate financial inequality in the terms of the contract had happened; moreover, compensation for the loss of certain profits is mandatory, when the loss has been established and confirmed, as is the case in this arbitration. 9-F-3. Compensation for lost profits is estimated in the State’s General Principles governing international arbitration. Arbitral jurisprudence has established the principle of full compensation for actual damages and lost profits, while certain international jurisprudence views that lost profits must not necessarily be substantiated, and that compensation claims must not be dismissed just because it is difficult to determine their value; they also view that compensation that is ruled as a result of the non-performance of the obligation equals the performance of the said obligation, and that the judge reserves the discretion to estimate the value of lost profits and should based himself on substantive grounds and realistic elements that are collected and verified by an expert in the event that the profits were unclear. Additionally, the manner in which lost profits are calculated differs from that in which material losses are. In the same manner that international arbitral jurisprudence established compensation for material damages and lost profits, it also outlined compensation for damages to reputation and image (moral damages), taking into account that we currently live in a world led by Media institutions and social networking websites, where any rumor could damage the Plaintiff’s status within its international scope of work. 9-G. In calculating the size and value of the damages sustained and the elements of lost profits, the Plaintiff relied on financial reports drawn by financial experts. The reports calculated the total net profit after adding the total basic investment cost, taxes, and the total subsequent investment cost and subtracting the total subsequent exceptional cost, and after having estimated the financial value of the Plaintiff’s lost profits for the total elements of the touristic project as shown in the financial reports drawn up by Experts from ERNST & YOUNG, PRIME GLOBAL, Ahmad Ghatour & Partners, and Habib El-Masri, which helped estimate the value of lost profits claimed by the Plaintiff. 9-H.  In discussing the power and finality of the arbitral award, the Plaintiff called for a final arbitral award to be immediately enforceable based on Article 34 of the Unified Agreement for the Investment of Arab Capital in the Arab States which establishes the final aspect of the arbitral award that shall be immediately enforced without the need for a leave for enforcement. Enforcement cannot be stayed in the event of a challenge to the arbitral award or of any means of recourse as it shall be final, binding and not subject to any means of recourse. Moreover, international arbitration centers, including the Cairo Regional Center for International Commercial Arbitration, as well as arbitral jurisprudence, have decided that arbitrators enjoy discretionary powers enabling them to order that the arbitral award be immediately enforced. In addition, laws in several Arab countries, such as Article 194 of the Kuwaiti Law and Articles 290(4) et seq. of the Egyptian law as well as Articles 382(3) et seq. of the Libyan Civil and Commercial Code state that the arbitral award shall be immediately enforced. Furthermore, Article 34 of the Unified Agreement for the Investment of Arab Capital in the Arab States, which shall prevail over the laws of States Parties, is not inconsistent with the provisions providing for immediate enforcement in Libyan law in accordance with Article 379 et seq. of the Civil and Commercial code. 9-I. the Plaintiff concluded its replication submitted in response to the statement of defense, by requesting that the final arbitral award be considered as immediately enforceable, and that the Defendants be compelled, in solidum , to pay two billion, fifty five million, five hundred and thirty thousand US Dollars with interest according to the current rates from the date of the final and binding arbitral award until payment date, after having demanded in its replication that the Libyan Ministry of Finance be joined as a party to the current arbitration case. Chapter Ten: On the Legal opinion written by Dr. Burhan Amrallah concerning the Statement of Defense submitted by the Defendants: Beside the replication submitted by the Plaintiff, in response to the statement of defense submitted by the Defendants, the Plaintiff submitted a legal opinion prepared by Dr. Burhan Amrallah upon the Plaintiff’s request, followed by an addendum in which he listed the documents and papers submitted to him by the Plaintiff and also listed the content of the said documents on which he based his legal opinion: Dr. Amrallah began his legal report by declaring his independence vis-à-vis the parties to the arbitration case, mentioning his experience and his multiple judicial and legal positions, as well as his participation in a number of Arab and European arbitral positions, and his position as an international arbitrator. He also stated having relied solely on the Libyan law in preparing the legal report that comprised a summary of the facts that led him to conclude the main issue of the dispute between the parties to the contract dated 8/6/2006 until the Plaintiff filed the arbitration case before the Arbitral Tribunal. After stating the facts, Dr. Amrallah expressed his legal opinion as follows: 10-1. The plea to the inadmissibility of the arbitration case as it was filed prematurely is irrelevant. However, Article 29 of the disputed contract stipulates that the two parties agreed to refer any dispute that may arise between them to arbitration in the event where no amicable solution could be reached. The two parties, however, did not determine the means or the schedule to reach this amicable solution. The documents submitted by the two parties to the dispute show that the Plaintiff endeavored towards resolving the dispute amicably before filing the arbitration case. The letter issued by the Department of Real Estate Registration dated 27/4/2010 indicates that the land allocated to the project had been the subject of a letter issued by the General People’s Committee dated 30/12/2009 to entrust the Department of Real Estate Registration to cancel any rights established thereon. The date of this request precedes the Decision issued by the General People's Committee for Industry, Economy and Trade No. 203/2010 dated 10/5/2010. Therefore, the amicable solution became impossible and pointless. According to the established in international arbitration, fulfilling the procedural requirements of the arbitration agreement shall not be deemed a binding clause for the competence of the Arbitral Tribunal, and reference to Article two of the Conciliation and Arbitration Annex of Unified Agreement for the Investment of Arab Capital in the Arab States is irrelevant since the two parties to the contract had not agreed on resorting to conciliation and arbitration prior to the commencement of the arbitral proceedings. 10-2. Although the arbitration clause originally binds solely the parties to the contract comprising the arbitration clause, it applies to the State of Libya and to the Libyan Ministry of Economy. This relies on the fact that the parties are well aware of the existence and scope of the arbitration clause and have implicitly agreed on enforcing it, as was established in international arbitration on the extension of the arbitration clause to those parties. The extension of the arbitration clause and the fact that non-signatories of the contract are parties thereto arise from the role they played in concluding, performing or terminating the contract comprising the arbitration clause. The legal opinion added in this context that the Libyan government represented by the General people’s Committee (Council of Ministers) and the General People's Committee for Industry, Economy and Trade (Ministry of Economy) have both taken part in the performance and termination of the contract, which suffices to consider them as parties to the contract, considering that the first party to the contract signed on 8/6/2006 is the Tourism Development Authority falling under the authority of the General People's Committee for Tourism back then (Ministry of Tourism) which stated in the preamble of the contract that it is vested with allocating lands located in the regions of touristic development owned by the State and signing the contracts thereon. This Committee authorized the conclusion of the contract and set the terms thereto in its Decision No. 135 of 2006. The project enjoyed exemptions and privileges set forth in Laws No. 5/1997 and 7/2004. In entrusting the Department of Socialist Real Estate Registration and Documentation with cancelling any disposal of the disputed land, the Committee took part in the contract. The Department requested the General Authority for Investment and Ownership to terminate the contract, and the latter took part in the contract by drafting a memorandum and suggesting the annulment of the decision granting approval for the project No. 135/2006, then the General People's Committee for Industry, Economy and Trade also took part in the contract in its Decision No. 203/2010 dated 10/5/2010 by cancelling the investment approval granted to the Plaintiff, which leads to the termination of the contract dated 8/6/2006. Then the General People’s Committee (Council of Ministers) issued its Decision No. 213/2010 on 7/6/2010 to cancel any disposal of the plot of land subject to dispute and to return its ownership to the Libyan State. The legal opinion added that it is not sufficient for the Tourism Development Authority and then the General Authority for Investment and Ownership to be an independent juridical person since they both are totally subject to the authority of the Ministry of Economy (General People's Committee for Industry, Economy and Trade) and the higher authority of the General People's Committee. All these authorities dealt with the Plaintiff regarding the disputed contract in their quality as instruments of the Libyan State and enforcers of the State’s will. On certain occasions, the independent juridical personality of units and entities falling under the State’s authority may be overlooked, and the State is therefore bound by the terms of the contract concluded by one of these administrative units. 10-3. In discussing the substantive scope of the arbitration clause mentioned in Article 29 of the disputed contract, the legal opinion stated that when interpreting the arbitration clause, one must not interpret its wording literally. When faced with any ambiguity, one must find the real will of the contracting parties and dismiss any literal interpretation. The court of merits shall have the absolute authority to interpret documents and contract terms and provisions as it deems satisfactory to the contract without abiding by the literal text thereof. When interpreting the arbitration clause in good faith, the real common will of the contracting parties shall supersede. Stating that the scope of the arbitration clause does only apply to the interpretation of the contract and its performance during its validity period, and does not extend to the disputes arising from the non-performance, or to the request to annul or terminate the contract violates the choice made by the contracting parties to resort to arbitration as an effective means to solve any dispute arising or that may arise in the future. The parties’ agreement to settle their disputes through arbitration means that they wished to grant the Arbitral Tribunal a wide competence, as was established by Arab and international jurisprudence. It is worth noting that a narrow interpretation of the arbitration clause shall not be accepted by international arbitration as it has become the globally adopted means of settling international trade disputes, and shall be interpreted in a way that is deemed closest to the real will of the parties. 10-4. After the Legal Opinion reviewed the articles of the disputed contract signed by the Defendant and the Plaintiff, it concluded that the contract is of a complex nature, and may be considered as a BOT contract deemed by some as administrative contracts and by others as Private Law contracts, while a third opinion states that each contract shall be examined separately in light of its own terms and conditions. The legal opinion stated that BOT contracts concluded by the State with the investor are not of a single nature and are not governed by one legal system. The contract dated 8/6/2006, even if one of the parties thereto was an administrative party and the contract revolved around a touristic investment that seeks to promote touristic services, however this project shall not be deemed a public utility as set forth in administrative contracts, since it is a profitable project for both parties thereto. The terms set in the contract and documents prior to the conclusion of the contract clearly reveal the two parties’ will to submit the contract to the provisions of the Private Law and not to consider it as an administrative contract. The terms encompassed in the contract place it under the Libyan Commercial Code and bind the parties by equivalent and mutual obligations that bear no resemblance to the elements of the Public Law. The explicit termination clause enclosed in Articles 8 and 14 of the contract is one that is usually enclosed in Private Law contracts. Article 20 is an explicit termination clause specific to the Private Law contracts, while the arbitration clause in Article 29 of the contract established equity between the two parties thereto and confirmed the commercial aspect thereof. The legal opinion concluded that the disputed contract is a Private Law contract and is not deemed an administrative contract, nor does it fall under the provisions of administrative contracts. 10-5. With regards to the Defendant’s contractual liability, the legal opinion states that the relationship between conflicting parties is originally a contractual relationship governed by the provisions of the contract dated 8/6/2006; that in the absence of a provision in the said contract, Law No. 5/1997 and its executive regulation and Law No. 7/2004 and its executive regulation shall prevail, as well as other legislation in force in the Great Jamahiriya; that Article 147 of the Libyan Civil Code stipulates that the contract is the law of the contracting parties; that Article 148 of said Code sets forth the contract performance in good faith, and provides that the contracting party shall commit to the contract and the requirements therein, while Article 159/1 of the same Code provides that the contracting party may, after accepting that the debtor, the other contracting party, has not fulfilled its obligation, require the performance of the contract or its termination with compensation in both cases if appropriate. The debtors failure to fulfill its contractual obligation is deemed a fault from which arises a liability where the debtor remains liable for non-performance until the failure to perform the contract was proven to have been attributed to a force majeure or foreign reason or to the fault of the other contracting party. Proving the fault is left to the discretion of the court of merits. Article five of the disputed contract binds the Defendants to specific obligations and failure to fulfill is deemed a violation by said party of its contractual obligations vis-à-vis the Plaintiff, through the failure to hand over the project land as stipulated in Article five of this contract. Furthermore, the party that contracted with the Plaintiff failed to hand over the plot of land subject of the contract. The Plaintiff required in multiple letters to be handed over the relevant land, to prevent any attempts to stop its work and to remove all occupancies and impediments. The party that contracted with the Plaintiff recognized and did not deny the failure to hand over the land, while the General People's Committee for Industry, Economy and Trade (Ministry of Economy) cancelled on 10/5/2010 the project subject of the contract as per its Decision No. 203/2010 dated 7/6/2010 stating that all works on the project land be cancelled and the project land ownership be returned to the State. The General Authority for Investment and Ownership stated that the cancellation of the approval granted to the project was due to the Plaintiff’s four-year delay in executing the project, a statement which is erroneous and unfounded. This is in harmony with the fault according to which the contractual liability of the Defendants is established, and therefore the Defendants shall be held accountable to compensation to be paid to the Plaintiff in line with Article 218 of the Libyan Civil Code. The contractual fault committed by the Defendants is deemed a serious fault and does not require an intentional element to be deemed as such. It also falls within the scope of discretion of the court of merits. A serious fault arises from a major recklessness in fulfilling contractual relations, or reveals a major failure in fulfilling obligations. A fault is deemed serious in the event the party committing it perceived the damage caused to the aggrieved party as a potential consequence of his act. Evaluating the damages relies on an objective criterion, i.e. the criterion of the reasonable person, and not on the debtor’s will. The party that contracted with the Plaintiff has committed a serious fault, and shall compensate the damages caused to the Plaintiff in line with paragraph one of Article 224 of the Libyan Civil Code. The compensation shall comprise the loss sustained by the creditor and the lost profits. The law does not prevent from including into the lost profits the profit that the aggrieved party anticipated making within reasonable limits. Wherever a potential opportunity for making profits is proven, then the loss of said opportunity shall be real and compensated. Compensation shall also cover the moral damages in line with article 225/1 of the Civil Code. The Plaintiff deserves the compensation decided by the Arbitral Tribunal for the material damages it sustained, the profits it lost, and the moral damages caused to it. Dr Amrallah concluded his legal opinion by saying that he only stated what he thought was right in line with the information and documents submitted to him, after declaring that this report was drafted specifically to be communicated to the Arbitral Tribunal and the two disputing parties, and shall not be disclosed to third parties nor used by any party without his written prior approval. Chapter Eleven: On the Statements made by the Defendants in their memorandum made on 6/2/2013 in reply to the memoranda and Legal Opinion submitted by the Plaintiff on 4/1/2013: On 6/2/2013, the Defendants submitted a rejoinder in reply to the Plaintiff’s memoranda and legal opinion dated 4/1/2013, before 7/2/2013, the date set in the procedural Order No. 10 dated 17/11/2012 by the Arbitral Tribunal. The Defendants stated that their rejoinder completes the numerical order of the statement of defense submitted by them on 22/11/2012, in terms of either the pages or paragraphs. The Defendants have made reference to what they had previously submitted in their memorandum dated 22/11/2012 and responded to the statements of the Plaintiff made in its memorandum and in the legal opinion. The Defendants have voiced their position on the jurisdiction of the Arbitral Tribunal and the subject matter of the dispute, as well as their position on the four reports submitted by the Plaintiff and appended to the replication submitted on 4/1/2013. In conclusion, they reiterated their requests that were previously included in the statement of defense submitted on 22/11/2012, and added to those demands, with regards to jurisdiction, that the arbitration clause included in Article 29 of the contract drafted on 8/6/2006 may not be invoked against the Ministry of Finance in Libya. The Defendants stated the following: 11-1. The Plaintiff’s allegations about the invalidity of the pleas raised by the Defendants on the jurisdiction of the Tribunal are unfounded. The Defendants adhere to the pleas they had already raised. 11-1-1. The Defendants’ adherence to the inadmissibility of the arbitration case is invalid as it is prematurely filed is well founded. The Defendants did not confuse the concept of amicable settlement and conciliation stipulated in the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States. The parties’ opting for an amicable settlement which is binding by virtue of the contract is a means of expressing an alternative mechanism of dispute settlement other than arbitration. Article 29 of the contract drafted on 8/6/2006 is an amicable settlement mechanism considered as an alternative dispute settlement mechanism, the other mechanism being arbitration should the amicable settlement fail to achieve the sough objective. 11-1-2. No serious attempt was made to reach an amicable settlement. The Defendants may choose to adhere to the plea of inadmissibility of the arbitration case due to premature filing. The Conciliation and Arbitration Annex stipulates that an attempt to reach an amicable settlement is necessary as long as the parties have agreed thereon prior to resorting to arbitration. 11-1-3. The legal opinion submitted by Dr. Amrallah indicated that Article 29 of the contract signed on 8/6/2006 did not specify the means and schedule for a settlement, and the two parties did not set any procedures to follow to reach a settlement. The legal opinion interpreted the article as a mere primary expression of the parties’ will to make the effort for an amicable settlement before arbitration and did not consider it a binding article. This interpretation does not agree with the parties’ real intention, since the expression “to be settled amicably” is a proof of the binding nature of the article. Only when the parties fail to reach an amicable settlement can they resort to arbitration. 11-1-4. A month after the Plaintiff requested Counsel Mr. Rajab EL-Bakhnug to commence amicable settlement procedures, the Defendants received a notice through bailiff putting an end to any amicable settlement before allowing such a settlement to bear any success. 11-1-5. The letter sent by the third Defendant to the Plaintiff o 20/10/2010 confirms the Defendants’ wish to settle the dispute amicably. 11-1-6. Among the legal principles agreed upon to interpret contractual clauses is a principle stating that a clause is always preferable to be applied than neglected. Article 29 of the contract dated 8/6/2006 stipulates that amicable settlement shall be deemed obligatory prior to resorting to arbitration, in view of its explicit terms and practicality. 11-1-7. The Defendants’ adherence to the plea of inadmissibility of the arbitration case does not aim to challenge the upcoming arbitral award since this award may not be challenged because the arbitral awards rendered in any arbitration governed by the Unified Agreement for the Investment of Arab Capital in the Arab States may not be challenged. Such plea forms a procedural plea before international arbitral Tribunals and is related to public policy and shall be raised ex officio by the Arbitral Tribunal. 11-2. The plea raised by the Defendants by virtue of which they stated that the arbitration clause stipulated in the contract drafted on 8/6/2006 may not be invoked against the State of Libya and the Ministry of Economy is well founded. 11-2-1. The State of Libya was not a party to the contract. The Tourism Development Authority, the third Defendant, which name was changed to General Authority for Investment Promotion and Privatization Affairs is a juridical person independent from the State of Libya and the Ministry of Economy. The arbitration agreement is a civil law contract governed by the principle of the privity of contracts and the General Authority for Investment Promotion and Privatization Affairs may solely be a party to this arbitration and is not totally subject to the authority of the Minister of Economy since every minister represents his own ministry. The legislator may entrust the head of one administrative unit to represent it, and the head of said unit, not the Minister, shall therefore have the capacity to represent it. 11-2-2. As the arbitration clause may not be invoked against the State of Libya, it may also not be invoked against the Ministry of Finance in Libya, since the memoranda submitted by the Plaintiff on 4/1/2013 stated that the Ministry of Finance shall be joined as a fourth Defendant in this arbitration. 11-2-3. The Arbitral Tribunal issued on 16/1/2013 its procedural order No. 13 in which it considered that the request to join the Libyan Ministry of Finance to this arbitration has been approved in form as it reserved its right to defense and due process, after the Arbitral Tribunal received a copy of the writ of summons to join the Ministry of Finance as a party to the arbitration case, with the writ of summons requiring that the Ministry of Finance be notified thereof. 11-2-4. Stating that the General Authority for Investment Promotion and Privatization Affairs is one of the parties funded by the public budget of the Libyan State to justify the joinder of the Ministry of Finance as a party to the arbitration case is rejected since the Ministry of Finance is not party to the claim and therefore the arbitration clause shall not apply thereto. 11-2-5. The Law on the Financial System in Libya applies to all ministries and departments. When drafting this law, the legislator decided that the State’s public budgets shall include all activities undertaken by the said ministries and departments. However, this does not apply to the budgets of economic public bodies, among which the General Authority for Investment Promotion and Privatization Affairs which has an independent juridical capacity and enjoys financial autonomy. The relationship between the General Authority for Investment Promotion and Privatization Affairs and the State Treasury is limited to the surplus that is referred to the State. The General Authority does not figure among the public entities funded by the State Treasury. The Ministry of Finance is not concerned with the enforcement of final judicial rulings rendered against the General Authority, and the third Defendant is the sole signatory of the contract, therefore, the arbitration clause may only be invoked against it. Filing the arbitration case against the State of Libya, the Ministry of Economy and the Ministry of Finance is irrelevant in line with the personal scope of the arbitration clause as to the parties. 11-2-6. Alleging that the arbitration clause is extended to the Libyan State and the Ministry of Economy since they have both contributed not only in the conclusion of the contract but also in its performance is rejected. The contract stipulated that the plot of land is a state owned property, which does not entail that the State is a party to the contract since the Tourism Development Authority is entrusted with allocating the lands situated in touristic areas and signing the contracts thereof with investors, and shall therefore be the sole party bound by the arbitration clause. The guarantee made by the Administrative Authority (third Defendant) on the Plaintiff’s enjoyment of exemptions and privileges shall not mean that the State contributed to the conclusion of the contract, but shall remain a commitment made by the Tourism Development Authority to the mandatory rules of law related to public policy and adopted as per Law No. 5 of 1426 Heg. and Law No. 7 of 1372 a.P. Therefore, stating that the arbitration clause is extended to the State is irrelevant. 11-2-7. The Libyan State has no role in the performance of the contract. Therefore, no reference shall be made to Decision No. 203 of 1378 a.P. to cancel the investment project approval as per Decision No. 135 of 2006 to confirm that the arbitration clause applies to the Ministry of Economy, since it is an administrative decision unrelated to the contract. The Libyan State has not taken part neither in the conclusion nor in the performance of the contract, and stating that the arbitration clause is extended thereto goes against the practices of international arbitration laws and jurisprudence. 11-2-8. Alleging that the extension of the scope of the arbitration clause can be concluded from Article 10 of the Unified Agreement for the Investment of Arab Capital in the Arab States is irrelevant since the said article determines the parties liable for compensation, and which shall not be confused with parties submitted to arbitration. 11-2-9. The legal opinion presented by the Plaintiff regarding the extension of the arbitration agreement to non-signatories, stipulates the necessity of identifying the true intent. This criterion leads to a different result compared to what has been concluded regarding the scope of the arbitration clause and the reliance thereon to file an arbitration case against the State of Libya and the Ministry of Economy. When examining the arbitration clause, it is noted that Article 29 of the contract clearly states “when a dispute arises between both parties”, whereas the State and the Ministry are not parties to the contract. Maintaining that the scope of the arbitration clause extends to the State of Libya and the Ministry of Economy is in violation with Article 152 and Article 154 of the Libyan Civil Code stating that the contract does not entail a third party obligation. 11-3. The plea to the inadmissibility of the arbitration case as it falls outside the substantive scope of the arbitration clause is justified. 11-3-1. Article 29 of the contract drafted on 8/6/2006 established the jurisdiction of the Arbitral Tribunal in any dispute arising between both parties on the interpretation or performance of the contract during its period of validity. It excluded therefore anything arising after its expiry and any disputes related to compensation claims for any damages. Since arbitration is a special judicial system arising from the will of the parties to resort thereto, and since the national or international aspect does not affect the interpretation of the will of both parties, this leads to conclude that the present claim does not fall within the jurisdiction of the arbitration Tribunal. 11-3-2. Article 29 of the contract drafted on 8/6/2006 refers exclusively to the rules of the Unified Agreement for the Investment of Arab Capital in the Arab States notwithstanding the substantive rules stipulated therein. Therefore, the submissions presented by the Plaintiff stating the contrary are unfounded. 11-3-2-1. Article 30 of the contract drafted on 8/6/2006 stipulates that the contract is subject to its own provisions and to the Libyan Code in case its own provisions proved to be insufficient. The Arbitral Tribunal decided, during the first procedural hearing, to adopt the Libyan law as the applicable law to settle the issue. 11-3-2-2. It has been established that the Libyan law applicable to the dispute includes as well the ratified conventions. However, these only apply in cases where they should naturally apply and the Unified Agreement for the Investment of Arab Capital in the Arab States limited the scope of its substantive application to Arab capital and investment of Arab capital. Article 1 of the Agreement identified the investment of Arab capital as investing in an economic development field with a view to obtaining return in the territory of a state Party other than the State of which the Arab investor is a national or its transfer to a State Party for such purpose. However, since the Plaintiff Company did not provide the State of Libya with any funds, the Unified Agreement provisions shall not apply. 11-3-2-3. The interpretation of Article 24 of Law No. 5 of 1427 Heg. as mentioned in the replication submitted by the Plaintiff, did not distinguish the fact that international conventions prevail over national legislation and that this prevalence is concluded from Article 24. This interpretation shall not be deemed admissible when establishing that international conventions prevail over the Libyan law, since Article 24 is only limited to identifying parties that are competent in settling disputes arising between the foreign investor and the State of Libya. Furthermore, claiming that this article establishes the prevalence of international conventions over Libyan legislation means that prevalence could be concluded from the parties’ will and consent, which is not the case. 11-3-2-4. The grievance of the Plaintiff against the Defendants, in its interpretation of Article 29 of the contract drafted on 8/6/2006 claiming non-enforcement of the substantive rules of the Unified Agreement, is unfounded. In fact, according to Article 152 of the applicable Libyan Civil Code, one shall not deviate from contract provisions when they are clear, and the provision in Article 29 is clear in adopting arbitral proceedings stipulated in the Unified Agreement for the Investment of Arab Capital in the Arab States, without reference to its substantive rules. 11-4. In its response to the memoranda and Legal Opinion submitted by the Plaintiff with regard to the merits, the Defendants stated the following: 11-4-1. The Libyan law is the law applicable to settle the dispute, and it shall identify the legal nature of the contract drafted on 8/6/2006. This contract is a typically administrative contract since it meets the conditions required by Libyan law to be characterized as such. It is clear from Article 3 of the Decision issued by the People’s Committee No. 573 of 1375 a.P. (2007 A.D.) that the Libyan law defined administrative contracts based on a set of criteria, all of which are met in the contract drafted on 8/6/2006. The third Defendant that concluded the contract with the Plaintiff is a legal person and aimed at executing one of the development plan projects and achieving public interest. While an administrative contract is similar to a civil law contract with regard to the basic elements for its establishment, it is characterized by the fact that the administration has rights and privileges to advance public benefit or interest, and by the fact that the public figure relies in its conclusion and performance on Public Law provisions whether stipulated in the contract or in laws and regulations. It is possible to amend the contract by virtue of the Administration’s sole decision, without applying the rule that provides for “Pacta sunt servanda” . The said contract drafted on 8/6/2006, included nine highly unusual clauses: (1) Identifying the project nature so as to prevent any alteration thereto, (2) Commitment to project execution within a set time limit, (3) The Administration’s right to terminate the contract without any measures, (4) The inadmissibility of waiver without the Administration’s authorization, (5) The Administration’s authority in technical monitoring and oversight, (6) Compelling the contracting party to use locally manufactured materials and machines and employ and train national labor force, (7) Handing over the project to the Administration at the end of the usufruct period, (8) Refraining from making any additions to activities without the consent of the Administration, (9) The agreement of the parties to apply the provisions of Law No. (5) of 1426 on the Promotion of Foreign Capital Investment and its executive regulation, Law No. (7) of 1372 a.P. on Tourism and its executive regulation, and other Libyan laws in matters that are not stipulated in the provisions of the contract. The memoranda and legal opinion submitted by the Plaintiff diverge with regards to the statement of defense on the contract characterization, despite its proven administrative nature. 11-4-1-1. When referring to Articles 557, 562 and 563 of the Libyan Civil Code on the lease contracts, it is clear that they do not apply to the contract drafted on 8/6/2006. The said contract is not a lease contract but rather an administrative contract as concluded from its preamble (state-owned plot, promoting touristic services), Article 8 of the contract (clearing the plot through administrative means, respecting urban planning requirements), Article 12 (an adopted timetable), Article 14 (inadmissibility of waiver without the Administration’s authorization), Article 15 (execution of the project under the Administration’s supervision), Article 16 (notes and reports on the investment project), Article 20 (use of local materials and equipment), Article 21 (employment and training of national labor force), Article 24 (cancelling the project if execution is not initiated within three months from obtaining the license) and Article 30 (applying investment and tourism laws). In light of all of the above, the characterization of the contract as a lease contract would be erroneous. The fact that contracting parties described this contract as a lease contract does not change its nature as an administrative contract. Therefore the claims in the Plaintiff’s memoranda to apply provisions from the Civil Code do not apply to the contract drafted on 8/6/2006, and characterizing the contract as an administrative contract is justified. 11-4-1-2. Classifying the contract as a B.O.T. contract confirms its administrative nature and the fact that it is not a Private Law contract. Administrative jurisprudence and laws have established that B.O.T. contracts include highly unusual clauses such as: granting the Administration monitoring and oversight capacities, the right to unilaterally terminate the contract and the inadmissibility of waiver of the project by the company or of B.O.T. contracts without the explicit consent of the Administration. Therefore, the characterization of the contract drafted on 8/6/2006, does not occult its administrative nature. Regardless of the contract characterization as a B.O.T., it has an administrative nature and the Plaintiff’s attempt to conceal it is unfounded. 11-4-2. The submissions in response and the Legal Opinion denying that the contract drafted on 8/6/2006 is considered as a contract having the same characteristics of an administrative contract, on the grounds that it includes clauses proving its private law nature and that it does not encompass highly unusual clauses unfamiliar in the Private Law are factually unfounded. Referring to the Commercial Law in the preamble of Decision No. 135 (of 2006) granting approval for the investment does not define the legal nature of the contract. This confirms the provisions of Article 2 of that decision stating that the Tourism Development Authority is responsible for listing the project in the Commercial Register and taking the necessary measures in that regard. The Plaintiff’s request to obtain an official recent extract of the Commercial Register shall not confirm or deny the administrative nature of the contract, since it aims at confirming the financial status of the contracting company. The claim of the Plaintiff’s counsel, Mr. Rajab Bashir El-Bakhnug, in his submission that the lack of referral to the regulation on administrative contracts at the time of contracting with the Plaintiff Company renders this contract a civil law contract, is unfounded. In fact, not referring to the administrative regulation in the contract does not void it of this nature. Article 3 of the regulation on administrative contracts defines administrative contracts as: contracts concluded by the Administration to execute one of the approved projects in the development plan including highly unusual clauses uncommon in civil law contracts and aiming at advancing public interest. Stating that Article 3 requires a prior authorization from the Council of Ministers before concluding such contracts does not change this fact, since said article does not stipulate such authorization. And even if the prior authorization is required, failure to obtain it does not alter the administrative nature of the contract, and would be considered as an administrative fault. The provisions of the contract drafted on 8/6/2006 do not give it the characteristics of a Private Law contract and it shall not be characterized as a lease contract. Characterizing it as a B.O.T. contract also does not deprive it of having the same characteristics of an administrative contract. The Plaintiff’s allegations that the clauses of this contract confirm the fact of considering it as having the same characteristics of a Private Law contract and which do not figure in administrative contracts, do not concur with the facts or the law. 11-4-3. The Plaintiff’s claim that the Decision of the General People's Committee for Industry, Economy and Trade No. 203 of 1378 a.P. (2010 A.D.) on cancelling the project approval violated Articles 19, 20 and 21 of Law No. 9 of 1378 a.P. (2010 A.D.) is unfounded. By stating that the violation of these articles nullifies the contract, the Plaintiff seems to confuse between the administrative decision being non-existent or null. Violating Decision No. 203 does not render the decision void but rather null, and when a decision is not nullified and withdrawn, its legal effects remain in force. It is therefore unacceptable to say that the administrative dispute over the legality of administrative decisions or compensation can concur with arbitration. It is also to be mentioned that the absolute jurisdiction ratione materia to decide the compensation resulting from the issuance of an administrative decisions remains reserved to administrative courts. The decision to cancel the authorization is separate and independent from the contract drafted on 8/6/2006 as mentioned in the arbitration clause. The Plaintiff can therefore raise an appeal against it independently as it falls outside the substantive scope of the arbitration clause mentioned in this contract. Stating that Decision No. 203 of 1378 a.P. (2010 A.D.) is illicit does not coincide with the law, since Article 19 of Law No. 9 of 1378 a.P. (2010 A.D.) similar to Article 18 of the old Law No. 5 of 1426 stipulated the possibility of denying the project some privileges and withdrawing the granted license if it has been proven that the investor violated any of the provisions of this law. This right granted to the Administration was not stipulated in Article 18 of Law No. 5 of 1426. Moreover, Article 19 of this law and Article 20 of Law No. 9 of 1378 a.P. (2010 A.D.) point out to the fact that failure to begin or complete the execution of the project by the set deadline leads to withdrawing the license. Article 21 of this law as well as Article 20 of Law No. 5 of 1426 stipulate that appeal against any decision should be addressed to the instance defined in the executive regulation of each of both laws. In case failure to begin or complete the execution of the project by the set deadline is justified, the license shall not be withdrawn in line with Article 19 of Law No. 5 of 1426 and Article 20 of Law No. 9 of 1378 a.P. (2010 A.D.) both including the verb “may”. The Plaintiff stated in its memorandum that the decision cancelling the approval should be considered void given that it violated Article 23 of Law No. 9 of 1378 a.P. (2010 A.D.) on Investment Promotion. This statement is irrelevant given that Article 23 stipulates as a condition the existence of the project in the sense specified by the aforementioned law. Article (1) of said law in its seventh paragraph defined the investment project as an investment activity that meets the terms and conditions set out in this law irrespective of their legal form. The project was not granted a license to establish an investment business given that the requirements set out in Article (23) of Law No. 9 of 1378 a.P. (2010 A.D.) were not met. Furthermore, Article (52) of the executive regulation of Law No. 9 of 1378 a.P. (2010 A.D.) stipulates that the Administration Committee of the Authority may present a recommendation to the Secretary of the competent sector to cancel the approval for the establishment of the project in the event of the failure to initiate the registration procedures in the Investment Registry and to acquire a license for the execution of an investment project within six months as of the date of issuance of the approval decision, and in the event the Authority deems that the investor has not shown serious willingness to execute the investment project. Granting approval to an investment project by the Concerned Authority does not entail the transformation of this project into a project independent from the purpose for which it was established, i.e. the common good of the national economy and the investor. Decision No. 203 of 1373 a.P. (2010 A.D.) on cancelling the investment approval was issued in compliance with Libyan laws and in light of the violations committed by the Plaintiff. The third Defendant, formerly called the Authority for Investment Promotion, notified the Plaintiff on 11/9/2008 that the project deadline had expired and that the investment project shall be liquidated in the event of the failure to submit a final position within one week. On 4/7/2009, Dr. Mahmoud Ahmad El-Foutaiss, the Secretary of the Administration Committee of the General Authority for Investment and Ownership, delivered the same notice in his correspondence to the Plaintiff in order to determine the percentage of the work accomplished at the time. Furthermore, the same notice was sent by Dr. Jamal El-Nouweisry El-Lamoushi in his correspondence dated 2/2/2010, further proving that Decision No. 203 of 1378 a.P. (2010 A.D.) on the cancellation of the investment approval granted to the Plaintiff is in compliance with the old Law No. 5 of 1426 Heg. on the Promotion of Foreign Capital Investment and the new Law No. 9 of 1378 a.P. (2010 A.D.) on Investment Promotion, thus ensuring that the claim has no legal grounds.   11-5. The legal grounds of the arbitration case are null and void. The Plaintiff company initiated the arbitration case based on the Defendants' violation of the provisions of the lease contract, the provisions of Law No. 5 of 1426 on the Promotion of Foreign Capital Investment, the provisions of Law No. 9 of 1378 a.P. (2010 A.D.) on Investment Promotion, and the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States. The Plaintiff also maintained its right to plead non-performance of the contract. However, maintaining that right is irrelevant, for the following reasons: 11-5-1. The Defendants fulfilled the obligations arising from the contract concluded on 8/6/2006. The minutes of handing over and taking over of the plot of land were signed on 20/2/2007, mentioning the name of the site recipient, the inspection date and place, and the delimitation of the borders. Additionally, the Plaintiff's letter dated 13/9/2006, in which it requested the initiation of official procedures for land handing over and designated an authorized representative for the purpose of taking over the land to commence project execution, ascertains land take over. Article 6 of the contract concluded on 8/6/2006 whereby the Plaintiff acknowledged that it carried out a thorough due diligence examination of the plot of land, establishes that these minutes were minutes of handing over and taking over and not minutes of inspection. Moreover, the minutes made no mention of any occupancy or impediment. In other words, the Plaintiff had taken over the plot of land free of any occupancies or impediments, and made no serious effort to initiate project execution. The Plaintiff Company did not submit the necessary timetable for project execution. The absence of the project resulted in the failure to obtain a license to operate a touristic project. The Plaintiff has made-up the fact that it was not handed over the plot of land, contrary to what was mentioned in the minutes of handing over and taking over. The Plaintiff's statement that in-kind rights were established on the plot of land, subject of the contract concluded on 8/6/2006, is erroneous, given that the real estate certificate for State property ascertains that the plot of land was occupied by the Plaintiff and the disposal of the land was not cancelled. Furthermore, the property was not transferred back to the State until 7/6/2010, i.e. following the issuance of Decision No. 203 of 1378 a.P. dated 10/5/2010. 11-5-2. The Defendants did not violate Law No. 5 of 1426 Heg. on the Promotion of Foreign Capital Investment. The decision cancelling the investment approval was issued as a result of the Plaintiff company's violation of all the conditions set out in Article 1 of this Law. The Plaintiff considered that it was unreasonable to transfer 10% of the project investment value and delayed using and benefitting from the land for a period of over four years. Article 6 of this Law stipulates that the legislator entrusted the Authority, the third Defendant, with the task of safeguarding the investment. However, such a task entails the existence of the investment in the sense determined by the Law, whereby paragraph 6 and 7 of Article 3 determined the scope of application of the provisions stipulated therein, in other words, to have a capital and a project. The Plaintiff did neither transfer any funds to Libya nor did it provide any service in the absence of any investment project. The privileges maintained by the Plaintiff and set out in Article 15 of this Law are extended to the investor that complies with the rules and conditions stipulated in the Law. The fact remains that the foreign capital and the project were not executed. Furthermore, paragraph 2 of Article 7 of Law No. 7 of 1372 a.P. on Tourism referred to by the Plaintiff stipulates encouraging Libyan and foreign investors to invest in touristic projects and develop resources and income sources. The Plaintiff received 240 thousand square meters which remained under its control and it failed to execute the touristic project, which proves it was working against investment in touristic projects. The Defendants did not commit any violation by virtue of Law No. 5 of 1426 Heg. on the Promotion of Foreign Capital Investment, Law No. 7 of 1372 a.P. on Tourism and Law No. 9 of 1378 a.P. (2010 A.D.) on Investment Promotion. 11-5-3. The Defendants did not violate the provisions of Law No. 9 of 1378 a.P. (2010 A.D.) on Investment Promotion, given the absence of the foreign capital referred to in paragraph 5 of Article 1 of the Law. The Plaintiff's statement that it transferred USD $130,000 is irrelevant, given that this amount was in consideration of the work carried out by the third Defendant in reviewing the technical drawings, designs, studies and promotion of the project. 11-5-4. The Defendants did not violate the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States given that the conditions of applicability of said agreement were not met. The referral in Article 29 of the contract concluded on 8/6/2006 to this Agreement is only limited to the introduction of the arbitration as a dispute resolution mechanism excluding all other rules mentioned therein, given that the contracting parties thereto did not expressly stipulate the adoption and integration of the same in the contract. This Agreement determined the scope of its substantive application with the notion of Arab capital and investment of Arab capital. No compensation is due to the Plaintiff company in accordance with the text of this Agreement which stipulates in Article 2 therein that the States Parties to this Agreement shall be permitted to transfer capital freely between them and to promote and facilitate its investment, as stipulated also in the Libyan Law. The Plaintiff failed to transfer any capital, no economic development or benefit was achieved and therefore, there was no violation of Article 2 of this Agreement as the Plaintiff stated. Furthermore, there was no violation of Article 9 of this Agreement which stipulates that Arab capital shall not be subject to any specific measures which lead to confiscation or liquidation given the absence of the capital of the Arab investor. Article 10 (a), (b) and (d) of this Agreement stipulate that the Arab investor shall be entitled to compensation for damages which he sustains due to any action by a State Party to undermine any of the rights provided for the Arab investor, to breach any of the obligations binding on the State Party or to cause any damage, whether by deed or prevention. The Plaintiff failed to show that the Defendants violated the Libyan law or any international obligations or undertakings binding on the Libyan State. The referral of the Plaintiff to the text of this article is therefore irrelevant. Furthermore, this article does not apply given the absence of capital transfer. The Defendants did not make any contractual faults or violations as stipulated in the Libyan law or the Unified Agreement for the Investment of Arab Capital in the Arab States. For that reason, the right of retention and to plead non-performance as invoked by the Plaintiff is irrelevant and should be rejected. 11-5-5. The principle of the Plaintiff's right of retention and of pleading non- performance is considered as a proof that it failed to fulfill its obligations by virtue of the contract concluded on 8/6/2006 or by virtue of Libyan investment laws, which ascertains the validity of the reasons provided by the Defendants for the issuance of Decision No. 203 of 2010. Pleading non-performance requires specific conditions, mainly the fulfillment of obligations. Failing that, the principle of good faith in fulfilling obligations prevents said party from making such a pleading. It has been established that the contracting party with the Administration is not permitted to stop the fulfillment of its obligations and shall not be entitled to plead non-performance given that said plea does not apply to administrative contracts. Work on a s should not be stopped for any reason whatsoever, irrespective of whether the reason is a fault or negligence on the part of the Administration. The Plaintiff Company ceased to fulfill its obligations and has thus committed a contractual fault, which justifies the application, by the Administration, of Article 28 of Law No. 9 of 1983 on tenders and bids. Therefore, the Authority's decision to withdraw the works from the Plaintiff Company and execute the same at its own expenses is in compliance with the facts and the law. 11-6. The request submitted by the Plaintiff Company for compensation is legally and factually unfounded, given that compensation entails the commitment of a fault by the debtor that causes damages to the aggrieved party. Furthermore, a causal relationship needs to be established between the fault that was committed and the damage that occurred. 11-6-1. The Defendants committed no fault given that the third Defendant has handed over the plot of land. Moreover, it was not proven that the Defendants violated any Libyan law or the Unified Agreement for the Investment of Arab Capital in the Arab States. Pursuant to the provisions of Article 168 of the Libyan Civil Law, the Defendants shall not be liable for any damages that the Plaintiff claims to have incurred and for which it is requesting reparation given that such damages resulted from the fact that the Plaintiff failed to fulfill its obligations contrary to the provisions of Article 148 of the Libyan Civil Law which stipulates the performance of the contract in accordance with its contents and in compliance with the requirements of good faith. 11-6-2 . The Plaintiff made a fault when it failed to submit the project's final designs. The Secretary of the General Authority for Tourism and Traditional Industries requested in his letter dated 1/7/2007 that the company submits a timetable for project execution stages in addition to the necessary project designs. The Director of the Department for the Development of Touristic Areas at the General Authority for Tourism and Traditional Industries also requested in his letter dated 11/7/2007 final project plans and designs, whereas the Director of the Department for the Development of Touristic Areas and the head of the permanent working team at the General Authority for Tourism and Traditional Industries requested in his correspondence the project's architectural drawings. Furthermore, he reiterated this request in his correspondence dated 8/10/2007. The Plaintiff Company replied in its letter dated 24/10/2007 and sent only three copies of the designs and three copies of a CD. However, it failed to send what was requested in letter dated 8/10/2007, i.e. a three-dimensional configuration of the project's master plan, given that the designs were not final. Therefore, another letter was sent on 12/11/2007 requesting the immediate submission of the final designs. Six months following the Authority's approval to exempt the Plaintiff from handing over the project by the specified date, the Secretary of the Administration Committee of the General Authority for Investment and Ownership sent a letter dated 4/7/2009 to the Plaintiff, in which he requested the project’s current execution status and the exact work progress along with the timetable for the completion of the execution process and the date expected to launch the project. In its reply, the Plaintiff stated that economic feasibility studies were made and project technical designs were prepared in cooperation with the Tourism Development Authority, and the designs were submitted and approved with the knowledge of the Authority on 24/10/2007. This statement is erroneous, given that the Plaintiff would have obtained a project execution license had this was true. The Plaintiff Company did not obtain a license to execute the investment project and a license to operate the project, given that requirements stipulated in Article 22 of the executive regulation of the Law on Investment Promotion which provides for the submission of necessary documents, and in Article 23 of the executive regulation which provides for the submission of the investment project's opening budget and other financial affairs were not met The Plaintiff also failed to pay fees to obtain a work permit, proving yet again that the Plaintiff Company did not obtain a license to execute the project. The Plaintiff did not obtain a license to build a touristic project given that it is established through the exhibits submitted that it failed to submit the project's final designs. It also did not obtain a building permit and a license to conduct an investment activity, and it is therefore difficult to talk about physical impediments hindering the execution of the project or delaying the execution timetable. The Plaintiff Company did not open a bank account in the name of the project in Libyan banks and did not attempt for several years to submit an application to the Libyan Central Bank for approval to open a bank account in the name of the project up until 14/3/2010, while knowing that said account was a private investment account. The Plaintiff Company further acknowledged that it did not transfer any amount for the execution of the investment activity, in other words, it did not transfer any funds to Libya. Paragraph 6 of Article 3 of Law No. 5 of 1426 Heg. stipulates that the capital shall be the overall financial value that enters the Great Jamahiriya and the Plaintiff stated that it cannot transfer 10% of the investment value given that the plot of land was not yet handed over. Additionally, the Plaintiff failed to pay any fee in consideration of using and benefitting from the land according to the provisions of Article 7 of the contract concluded on 8/6/2006. The Plaintiff decided solely to permanently discontinue the execution of the project without the approval of the third Defendant on 22/1/2009. It further failed to commit to the timetable it submitted to the Authority on 2/9/2007. The Counsels of the Plaintiff Company felt embarrassed and mentioned in their memorandum reasons that are inconsistent with the facts. They stated that the Plaintiff, in its letter dated 8/1/2009 to the Director of the Department for the Development of Touristic Areas, complained of conditions beyond its control that prevented the opening of the project on time and asked to be exempt from handing over the project by the specified date. The purpose of this letter was to conceal the fact that the company has ceased working on the investment project, and showed no serious inclination towards fulfilling its obligations and honoring the timetable it has submitted. It was obvious that the Plaintiff Company was not serious about fulfilling its obligations from the slow pace of signing project-related contracts, given that the Plaintiff signed the design and planning service contract agreement after 13/2/2008, and reached an agreement with United Engineering Management to perform the necessary testing of the soil's hydrologic and engineering characteristics and determine its border points on 2/7/2008. Article 5 of the Libyan Civil Code indicated the cases where the exercise of a right is considered unlawful. However, the company refrained from executing the project and has thus committed a serious fault by causing considerable damages to the third Defendant by retaining the plot of land extending over 240 thousand square meters despite the urgent need for this plot of land for projects, and therefore the Plaintiff Company has no right to claim compensation. As for the impediments, if any, that the company had claimed were the reasons that prevented project execution, they do not represent an obstacle that could prevent the effective initiation of project execution. Its negligence is considered a flagrant misuse of its right and a violation of the principle of good faith in fulfilling contractual obligations. Administrative Decision No. 203 of 2010 would not have been issued had the Plaintiff Company fulfilled its obligations. The underlying causes of this decision are corroborated by the decision itself. The Plaintiff committed a fault and incurred damages, if any, due to its own faults. In other words, the Defendants are not liable pursuant to Article 168 of the Libyan Civil Law and Article 165 of the Egyptian Civil Law. 11-6-3. The grounds on which the Plaintiff Company based its claim for compensation are characterized by corruption. The Defendants are not liable to make reparation for any damages given that they have not committed any faults requiring compensation pursuant to Article 168 of the Libyan Civil Law. The figures in terms of compensation indicated by the Plaintiff, along with the amount of money it is requesting, have passed through three stages. In its memorandum, the Plaintiff has mentioned a fourth stage: 11-6-3-1. During the first stage, the value of compensation amounted to five million US Dollars. In the notice sent by the Plaintiff to the third Defendant, it suggested either to annul Decision No. 203 of 2010 on cancelling the approval or to provide compensation in the amount of USD $5,030,000 for the overall costs incurred. The bank statements submitted to the third Defendant detailing the amounts of money spent by the Plaintiff revealed that the amount of USD $250,000, paid as fees to Hill Company (the company managing the project), resulted from a contract that was not signed with the company, given that on 27/9/2009 the Plaintiff had declared its inability to execute the project, then how is it possible that the Plaintiff have disbursed bonuses to persons and to the management for the year 2010, i.e. following the cancellation of the project. Furthermore, expenses were paid to the management for the years 2006 to 2010 and to Engineer Saad Salem, although no work had been done on the project by the management or the Engineer except for receiving the plot of land, which asserts the invalidity of the expenses and further proves that the Defendants are not responsible for their reimbursement. 11-6-3-2. The second stage lies in the notice sent through bailiff to the third Defendant, in which the Plaintiff requested the payment of 50 million US Dollars under the pretense of profits lost by the Plaintiff Company during the anticipated project life span, which remains unsubstantiated. The Plaintiff Company knowingly missed the opportunity to initiate project execution, so how can it determine profits lost while acknowledging that no amounts were transferred for the project and no estimated costs were determined in without the land. How can the Plaintiff Company possibly have an estimated cost for the future in light of a project life span? Concerning the request that the third Defendant shall bear the attorneys’ fees until the final settlement of the dispute, it should be noted that said request should be rejected given that the Plaintiff resorted to arbitration without attempting to reach an amicable settlement first. 11-6-3-3. During the third stage, the Plaintiff requested in its statement of claim that the Defendants pay the sum of one billion, one hundred forty four million, nine hundred and thirty thousand US Dollars of which the sum of USD $5,030,000 representing the value of material losses. According to the budget prepared by the independent auditor Salah Eddin El-Turki, the report shows that the expenses were covered by bank transfers to the account of the manager in charge of the project, which is a procedure that violates the financial legislation in force, and all documents relating to expenses and costs should therefore be disregarded. The same applies to the account of the State Treasury, given that the financial management implemented by the Plaintiff does not comply with the basic principles of project financial management. The report of the specialized financial company, Rodle Middle East relating to the loss of profits which amounted to the sum of USD $1,089,000,000 was based on the Plaintiff Company's claim that the Libyan Government failed to perform the provisions of the contract regarding the handover of the plot of land. However, any profits lost by the Plaintiff came as a result of its own refusal to take over an alternative plot of land. The report also encompassed mathematical errors, and therefore should not be given due consideration. Additionally, it did not take into account the political circumstances in the State of Libya since February 17, 2011, which affected the figures mentioned in the report, while knowing that no project could possibly achieve such figures. Concerning the fifty million US Dollars in moral damages, there is no proof in the exhibits submitted that the Plaintiff Company incurred any moral damage. Furthermore, the Defendants are not obligated to pay attorneys’ fees estimated by the Plaintiff at five hundred thousand US Dollars. Only the Plaintiff is concerned with such fees and not the Defendants. 11-6-3-4. During the fourth stage, the value of compensation was increased to two billion, fifty five million, five hundred and thirty thousand US Dollars according to the memoranda submitted by the Plaintiff. The Defendants responded to the new claim, by stating that it remains unverified until one of the two parties, the Plaintiff or the Defendant, disburses the amount mentioned in the procedural order No. 12 issued by the Arbitral Tribunal on 4/1/2011, given that the payment date occurs after the specified date for responding to the Plaintiff Company. Furthermore, the Plaintiff has increased its relief sought based on four reports submitted to the Arbitral Tribunal. The Defendants stated that these reports should not be taken into consideration. 11-6-3-4-1. The report submitted by Khaled El-Ghannam and Partners mentioned that the estimates relied on assumptions, data and information provided by the Plaintiff Company, while knowing that said assumptions, data and information were not reviewed by the company. This invalidated the report, given that it was based on erroneous assumptions and data and should thus be disregarded. The report further stated that it is unnecessary for future financial results to completely match the findings of the financial forecasting study. The report estimated the loss of profits sustained by the Plaintiff during the usufruct period at 2,242,451,000 US Dollars, without deducting the financial value of these amounts as mentioned in the report. The report considered that the project was established and had achieved a surplus in terms of accumulated cash flows. This does not apply because the project was not established to begin with. The conclusions of the report only relied on erroneous assumptions provided by the Plaintiff and were not reviewed for verification purposes. The Defendants are entitled to disregard this report. 11-6-3-4-2. The report carried out by Ernst & Young – Egypt calculated the revenues of Sidi al Andalusi project in Tripoli pursuant to the instructions of the Plaintiff Company. The objective of the report was to assist in calculating the revenues projections and evaluating profits and losses during the projection period. The report provided guidance and not recommendations for future steps and only favored the client. Information related to financial projections was essentially based on client assumptions. The report did not take into account the nature of the relationship between the Plaintiff Company and the third Defendant, in other words the report did not examine the most important document that determines the nature of the relationship. The report also mentioned that the information provided by the client were not reviewed or audited. Furthermore, no procedures were carried out to verify the accuracy of the information. The report relied on explanations and factors which were provided by the client and its consultants, and the experts who drafted the report are therefore not responsible for its content. This report was drawn up by experts that did not verify the accuracy of the information. 11-6-3-4-3. The report submitted by expert Habib Khalil El-Masri began by tackling a question of law that does not fall within his competence, stating that any material damages incurred by the Plaintiff came as a result of the termination by the Libyan Government of the contract signed in June 2006 without any legal or contractual justification. The report made significant errors in figures and information, by indicating in page 3 that the plot of land was for the establishment of a touristic investment project, while page 9, 11, and 13 mentioned erroneous dates, number of a law and designation of another law. The report also featured erroneous information, stating that the Libyan authorities approved the studies and designs. It also mentioned that work began on the project's infrastructure along with the initiation of the works and building of the hotel during the fourth quarter of 2007. How can it mention such works while the Plaintiff did not obtain a project building permit or a license to operate the project? This clearly indicates that the report was talking about a different project. Furthermore, it is inconceivable to conclude a contract for hotel and hotel apartment management with I.H.G. and Holiday Inn, while knowing that the Plaintiff Company did not submit the final designs. The report also indicated that expenses were paid during the pre-execution period, which further proves that the execution stage did not commence at all. The report made the same error as the specialized German company regarding contract expenses, including the amount of USD $130,000, whereas it referred to the 1% of the investment cost as a lease contract fee as well as designs review and authentication fee. It should be noted the Plaintiff did not pay 1%; it only deposited 0.1% in the account of the third Defendant in consideration of reviewing promotion issues, designs and drawings. The inability to mathematically distinguish between 1 and 0.1% makes the report unreliable. Moreover, the report mentioned the period during which the work was stopped and which extended over nine months in 2011, and a 20% drop in the percentage of the works due to the events that took place in that period, but was there a hotel to talk about works? 11-6-3-4-4. The report prepared by expert Ahmad Ghatour & Partners relied on a number of assumptions and data provided by the Plaintiff Company that were not subject to any review on their part. It revealed a partiality in favor of the Plaintiff. It also tackled a question of law on the legality of Decision No. 203 of 2010 cancelling the approval granted to the project. The report also indicated that the Plaintiff concluded a contract with the United Engineering Management Company in Benghazi valued at 254,100 US Dollars. The report did not specify whether this company provided consultancy on soil works, for whom, and whether or not the contract value was settled. The report referred to the contract on the economic feasibility study of the project signed on 1/2/2008. Such a contract cannot be signed, while knowing that based on the timetable, the inauguration of the first part of the project was supposed to take place on 9/9/2009. As for the design and planning service contract agreement concluded on 13/2/2008, were these designs submitted to the competent authorities in Libya for approval? The service execution agreement contract was signed prior to the management contracts on 13/12/2007, i.e. prior to the economic feasibility study, while knowing that management contracts are not concluded prior to the establishment and existence of the project. The planning illustrates the lack of credibility of these contracts and of the report that came up with a compensation sum based on fictitious assumptions. The same applies to the international management agreement with Intercontinental Hotel Group, given that the Plaintiff failed to obtain a project execution license and a license to establish an investment business. These are nonexistent contracts to falsely claim that the Plaintiff spent money on the project, when in reality, it did no such thing. These reports violated professional principles and the Defendants are entitled to disregard them since they do not help to uncover the truth and should thus be ignored. 11-6-4. The Plaintiff violated its obligation when it failed to prevent the aggravation of damages pursuant to Article 224 of the Libyan Civil Code, given that the damage is a natural consequence whenever the creditor fails to exert reasonable efforts to avert it. It follows that the creditor deserves no compensation if the damages could have been averted by exerting reasonable efforts. The standard is the same that applies to a reasonable person being in the same legal position as the aggrieved party. Pursuant to that principle, the Plaintiff violated its obligations by failing to prevent the aggravation of the damages alleging it have sustained. The ordinary option would have been to terminate the contract concluded between the Plaintiff and the third Defendant and resort to the Courts or to arbitration for compensation. Delaying the termination of the contract constitutes a violation on the Plaintiff's part that led to the aggravation of the damages. The Plaintiff also violated its obligation by rejecting the alternative plot of land for the establishment of its investment project, and therefore is not entitled to compensation. The Defendants did not violate their obligations pursuant to the contract concluded on 8/6/2006. They also did not violate the laws on investment promotion in force in Libya or the Unified Agreement for the Investment of Arab Capital in the Arab States. On the other hand, the Plaintiff Company has violated its obligations, which led to the issuance of Decision No. 203 of 2010 cancelling the approval granted to the project. It also failed to exert reasonable efforts to avert the damages pursuant to the Libyan law. The Plaintiff's claim for compensation is unfounded and should be dismissed. The Defendant concluded its response to the memoranda and the legal opinion submitted by the Plaintiff, by reiterating its requests in terms of competence, and pleading that the arbitration clause set out in the contract concluded on 8/6/2006 may not be invoked against the Ministry of Finance, and further adding on the merits that the claim should be dismissed given the lack of legal and factual grounds. Chapter Twelve: On the Statements of the Plaintiff in its final submission submitted by Dr. Fathi Wali and Dr. Mahmoud Samir El-Sharkawi on 20/2/2013 in response to the rejoinder submitted by the Defendants on 6/2/2013: 1. The Plaintiff reiterated its claims set out in the statement of claim and in its previous memorandum as well as what was stated in the Legal Opinion submitted by Dr. Burhan Amrallah, adding that it would like to join to the present arbitration case the Libyan Investment Authority, given that pursuant to the decision of its establishment, it is entrusted with investing and developing funds allocated by the General People's Committee in a way that supports the State Treasury resources annually to limit the impact of oil revenues and income in accordance with article 4 of the establishment decision. It also addresses all aspects of the investment (article 7 of its establishment decision). The present dispute concerns an investment subject to the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States, and this Authority is entrusted with managing the investments of the Libyan State, and therefore should be joined as a Defendant. 2. On the response provided by the Defendants regarding the plea to the inadmissibility of the arbitration case for premature filing, the Plaintiff stated that: 2-1. The Defendants denied that they confused in their defense between reaching an amicable settlement as stipulated in the disputed contract, and conciliation as stipulated in the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States. 2-2. The third Defendant stated that no attempt was made to reach an amicable settlement as stipulated in the contract. This statement should be rejected since it contradicts the interpretation of Article 29 given by Dr. Burhan Amrallah which do not differ from the interpretation provided by the Defendants for the same article. The two opinions agreed that efforts should be exerted to reach an amicable settlement without having to commit to reaching such settlement. If a settlement had been reached, the dispute would have ended and the arbitration case would have been dismissed. The commitment is limited to an attempt to reach a settlement and not to complete such settlement. The Plaintiff Company made several attempts to reach an amicable settlement but to no avail and the Defendants ascertained their refusal in their letter to the Plaintiff dated 26/2/2011 (exhibit No. 26 of the statement of claim). According to the established case law, the failure to resort to an amicable settlement prior to arbitration does not lead to the annulment of the arbitral award. Therefore, the Defendants may not plead the inadmissibility of the arbitration case. 2-3. On the Defendants' final submission regarding their defense relating to the plea by virtue of which they stated that the arbitration clause may not be invoked against the Libyan State and the Ministry of Economy, the Plaintiff referred to its previous memorandum (page 7 et seq.). In their final submission regarding their defense relating to the plea above mentioned, the Defendants relied on the procedural order issued by the Arbitral Tribunal on the approval to join the Ministry of Finance as a party to the arbitration case; consequently, the Plaintiff sees no reason why the Defendants would maintain that the arbitration clause may not be invoked against the Ministry of Finance and does not perceive the correlation between the two. The Plaintiff added that the Defendants did not deny the fact that the contract, as it already mentioned, was only signed by the Tourism Development Authority pursuant to a decision issued by the Council of Ministers of the Libyan Jamahiriya, and that the Libyan State disposed of the plot of land, subject of the dispute, thus hindering the execution of the contract. This confirms that the Libyan State was involved in the preparation of the contract and in its performance. The Plaintiff did not indicate that the State allocated the plot of land; it only said that the State owned the land, in other words the contract, subject of the dispute, would not have been concluded without the approval of the Libyan State, owner of the plot of land. The disposal of the land in favor of the Bank of Libya by the Libyan state is the main reason why the project was not completed. It cannot be said that the cancellation of the investment project license was not issued during the validity period of the contract relating to the project, or to state that it was an administrative decision that did not involve any intervention in the execution of the project, since said decision was behind the cancellation of the project, subject of the contract. 2-4. Regarding the response of the Defendants submitted in reply to the Plaintiff's defense pertaining to the substantive scope of the arbitration clause, the latter stated that the Defendants' memorandum did not include any response in this regard. The Defendants stated that the Arbitral Tribunal does not have jurisdiction to decide on compensation for damages resulting from the issuance of an administrative decision, given that said compensation cannot coexist with the rules of arbitration. However, this statement should be rejected since arbitration in matters relating to financial rights resulting from this decision is permissible, given that financial rights can be submitted to conciliation and subsequently to arbitration, as set out in the arbitral award recently issued in the Cairo Regional Center for International Commercial Arbitration on 29/2/2012 in the arbitration case No. 704/2010 published in the Journal of Arab Arbitration – Issue 18 – June 2012, p. 243. 3. In its defense on the merits, the Plaintiff stated that it will only comment on the new statements mentioned in the Defendants' statement of defense, p.119 et seq., as follows: 3-A. The allegations of the Defendants pertaining to the law relating to the subject matter of the dispute and to the characterization of the contract, should be rejected. It should be noted that: 3-A-1. Article 29 of the contract referred to the substantive rules of the Unified Agreement for the Investment of Arab Capital in the Arab States. The Plaintiff transferred the amount of one hundred and thirty thousand US Dollars, established an investment company, contracted a hotel and tourism facilities management company, paid the salaries of employees, contracted supervisors and engineering consultancy companies, and incurred expenses to erect a fence, while knowing that the works relating to the fence were stopped by the third Defendant. This is validated by the definition of Article one of the Unified Agreement for the Investment of Arab Capital in the Arab States, given that it fulfills the meaning of Arab capital investment. The statements of the Defendants on the Plaintiff’s reliance on Article 24 of Law No. 5 of 1997 is under examination, given that the Plaintiff included in page 62 of its replication that shall be submitted on 7/1/2013, the provisions of Article 3 of this Agreement that expressly indicate that the Agreement shall prevail over the legislation of the States Parties. The Defendants further indicated that the referral in Article 29 of the contract concluded on 8/6/2006 is limited to the arbitration rules in that Agreement without its substantive rules, but that statement should be rejected given that the Plaintiff invested money in Libya and Article 29 of the contract refers to all the provisions of the Agreement. Had the two parties intended to limit the referral in the contract concluded on 8/6/2006 to the arbitration rules of the Unified Agreement, they would have referred to the Annex of the Agreement. However, they expressly referred to the Agreement itself that encompasses the substantive provisions set out therein and then to its annexes. 3-A-2. The Defendants characterized the contract, subject of the dispute, as an administrative contract that fulfills all the requirements of an administrative contract, given that one of the parties thereto is a legal person and the contract encompasses highly unusual clauses deemed uncommon in Private Law contracts. This is inaccurate for the following reasons: 3-A-2-1. The Defendants stated that the contract is a contract authorizing the use and benefit from land and public funds on the basis that the relationship is founded on the development ofa land owned by the State and the use of public funds, but it should be noted that this is a wrong characterization, given that the plot of land, subject of the contract, is a private property and not a public property owned by the Libyan State as specified by the Plaintiff in its replication submitted on January 2013, pages 22-27. The Defendants failed to make any response in this regard in their rejoinder submitted on 6/2/2013. 3-A-2-2. The contract, subject of the dispute, was concluded on 8/6/2006 and the regulation on administrative contracts was issued by virtue of the decision of the Libyan Council of Ministers No. 563/2007, which implies that the contract was concluded at a time when the regulation was not part of the Libyan Law, and the reliance of the Defendants on the regulation of 2007 relating to administrative contracts would be considered as applying the regulation with retroactive effect. The legislator did not provide for such application in the constitutional terms and conditions given that a decision issued by the executive authority is not sufficient for said retroactive effect. The contract concluded on 8/6/2006 does not fall within the definition of administrative contracts set out in Article three of the regulation on administrative contracts, although one of the two parties is a legal person, given that the regulation on administrative contracts regulates the relationship between a legal person and the other contracting party for the establishment, development and construction of a public utility, while the subject of the contract concluded on 8/6/2006 is the lease of a plot of land to the Plaintiff as an investor in a touristic project where it solely manages, makes profits and withstands losses. The Plaintiff is only required to pay the fees in consideration of the annual usufruct right and to respect public policy. The preamble of the contract ascertains that it is not an administrative contract, but a Private Law contract, whereby the Plaintiff committed to invest its own funds. The contract rightfully indicated to the Law on the Promotion of Foreign Capital Investment, and the Law on Tourism, mainly the texts of Articles 12, 13, 15, and 17 of the Law No. 5 of 1997. Furthermore, the text of Law No. 9 of 2010 on the Promotion of Investment and its executive regulation confirm more so than the Articles of Law No. 5 of 1997 that the investment project is a private project. This is further confirmed in the texts of Articles 28, 12 and 46 of the executive regulation of Law No. 9 of 2010 on the Promotion of Investment. This project cannot be characterized as a public utility project and no argument supports the statements made by the Defendants in their statement of defense pages 130 to 134 on highly unusual clauses set out in the contract concluded on 8/6/2006. The Plaintiff indicated in pages 27 to 29 of its previous memorandum that these clauses set out in the contract, subject of the dispute, are common in Private Law contracts. Additionally, the Defendants stated in page 129 of their statement of defense that the Tourism Development Authority concluded the contract with the Plaintiff for the purpose of executing a touristic project among the projects accredited in the development plan; this statement is unfounded and should be rejected. The Defendants further stated that the plot of land is a public property owned by the State and that public funds cannot be subject to any rights established thereon, but are merely licensed for usufruct by virtue of an administrative decision. This statement is also incorrect. The Defendants did not respond to the arguments of the Plaintiff used to refute their statements and substantiated by the jurisprudence of the scholar Sanhouri. The Defendants cannot argue that the contract ensured the right of the first party to the contract to clear the plot of land through administrative means, given that this is not related to the characterization of the contract, since there is a difference between the nature of the right and the means of enforcing it and since the State is entitled to use administrative means to suppress any aggression or remove any facilities established in violation of the laws regulating buildings. 3-A-2-3. The contract is a lease contract and meets the requirements of the law pursuant to the provisions of Articles 577 and 563 of the Libyan Civil Code. This is not only confirmed in the title of the contract concluded on 8/6/2006, but also in its preamble which indicates that the first party is entitled to allocate the lands located within the touristic development areas owned by the state, and to sign the lease contracts thereof. This is also ascertained in Article two of the contract which provides that the first party leased to the second party, and Article four which stipulates that the first party is legally entitled to allocate the lands, to sign the lease contracts and collect revenues. Furthermore, Articles five and seven determined the fees in consideration of using and benefitting from the land by the Plaintiff during the contract validity period. The Defendants cannot refer to Article 562 of the Libyan Civil Code because Article two of the contract concluded on 8/6/2006 determined that the land usufruct period shall be for ninety years and because the description provided in Article 557 of the Libyan Civil Code is applicable to this plot of land. 3-A-2-4. Characterizing the contract as a B.O.T. contract entails that it is not an administrative contract, contrary to the Defendants' statements based on the publication of Dr. Mohamed Rubi. On the other hand, Dr. Hani Salah Sarie-Eldin presented in his publication "Legal and Contractual Organization for Infrastructure Projects Financed by the Private Sector" the forms of private sector involvement in providing infrastructure services, stating that some contracts fall under administrative contracts such as the public utility contracting agreements, services contracts, and management contracts while other contracts fall under Private Law contracts. The same applies to the regulation relating to construction, ownership, operation and property transfer. The designation in itself is not important after a thorough analysis of the content of the Agreement. Furthermore, the investor owns the assets of the project during the license validity period, and undertakes to transfer the property to the State at the end of the period. The investor will thus have the authority to operate and manage the project while the State will retain the role of controlling said project. This role does not entail having any part in the operation or supervision process or services pricing, except within the limits specified in the contract. Dr. Salah Sarie-Eldin further stated that in accordance to the established International Practice, these agreements do not include highly unusual clauses in the meaning set forth by administrative jurisprudence and doctrine, but do include contractual clauses similar to the clauses commonly agreed upon in the Private Law field. The fact that the project is not the property of the public sector, in the absence of the public authority and hegemony of the latter, and in the absence of highly unusual clauses in the contract, result in the contracts falling outside of the scope of public policy. Dr. Sarie-Eldin mentioned in footnote (1) of page 17 of his publication that "The Administration may resort to contracts for the use of tourism facilities such as tourism hotels and restaurants owned by the Administration. These contracts are not considered administrative contracts given that their subject is the management of a private property owned by the State, and they are therefore – duly – considered as Private Law contracts". 3-A-2-5. The Defendants stated in page 160 of their statement of defense that the Plaintiff confused between two things, the fact that the administrative decision is nonexistent and the fact that it is null. They further indicated that the violation does not make the decision as nonexistent, rather it makes it null, and that cancelling one of the four elements of the decision does not make it void but rather vitiated or subject to annulment or cancellation. This statement is erroneous, given that the illegality of the decision may be significant enough to make it void, therefore its prima facie existence is not a legal impediment but a mere physical impediment to be ignored by the judge. This has been established in the jurisprudence and the doctrine". The cancellation decision imposes more burden than receivership, formulation of reservations or freezing of an investment project in accordance with the provisions of Article 23 of Law No. 9 of 2010 on the Promotion of Investment. A cancellation decision is only issued by virtue of a law or a judicial ruling. The decision issued by the Ministry to cancel the approval granted to the investment encroached on the prerogative of the legislator and the courts. 3-A-2-6. The Defendants did not respond to the Plaintiff's statement regarding the irrelevance of their invocation of Article 8 of Decision No. 194 of 2009 issued by the Council of Ministers. They only mentioned in pages 163 and 164 of their statement of defense the provisions of Article 19 of Law No. 5 of 1997 and Article 20 of Law No. 9 of 2010 to prove the absence of disparity between the two texts. This is an erroneous statement given that clause 1 of Article 19 of Law No. 5 of 1997 authorizes the withdrawal of the license if "the execution of the project was not initiated or the project was not completed in accordance with the terms and conditions set out in the executive regulation", while clause 1 of Article 20 of Law No. 9 of 2010 provides for the possibility of withdrawing the license if "the execution of the project was not initiated or the project was not completed by the specified date and without just cause”. This last text imposes an important restriction on the Administration not imposed by the previous text, i.e. the violation made by the investor should be unjustified. Therefore, the decision of cancelling the investment approval was vitiated for illegitimacy reasons due to the flagrant violation of Law No. 9 of 2010. Referring to the minutes of the meeting of the Administration Committee of the General Authority for Investment and Ownership dated 19/4/2010 indicates that this Committee based its recommendation for the cancellation of the approval on facts not related to the real reason behind the impossibility of project execution. Legally, the recommendation was based on Law No. 5 of 1997 amended by Law No. 7 of 2004 and its executive regulation, while Law No. 5 of 1997 was abrogated by Law No. 9 of 2010. Decision No. 203 of 2010 issued by the General People's Committee for Industry, Economy and Trade on the cancellation of the investment approval did not refer to Law No. 9 of 2010. The decision, as the recommendation, were based on an abrogated law, and disregarded the text of paragraph 1of Article 20 of Law No. 9 of 2010 providing that the approval shall not be cancelled unless the project execution was not initiated or the project was not completed by the specified date for unjustified reasons. Therefore, the cancellation decision was based on erroneous reasons and on an abrogated law, making this decision void and a mere physical impediment and not a legal impediment to be ignored by the arbitral Tribunal. 3-A-3. The non-characterization of the contract, subject of the dispute, as an administrative contract which is a lease contract, result in the contract and the subject matter of the dispute being subject to the Unified Agreement for the Investment of Arab Capital in the Arab States, the Libyan Civil Law and the Libyan legislation relating to the promotion of foreign capital. 3-B. The Defendants violated their contractual and legal obligations as well as the legal basis of their liability. The Plaintiff did not violate any of its obligations and is legally entitled to request compensation for the material and moral damages it incurred as stated in pages 32 to 82 of its response to the Defendants' statement of defense. At the end of its replication, the Plaintiff referred to the Defendants' allegations pertaining to the lack of credibility of the technical and accounting reports that included the statement of losses and lost profits and an estimation of the amount of compensation for material damages and moral damages, and indicated that there is a presumption of the credibility of the research and findings of these expertise firms. The Defendants are entitled to challenge these reports by submitting counter-experts' reports, which they did not do. The Arbitral Tribunal is the highest expert and has the authority to accept or refuse experts' reports in its estimation of the due compensation for material and moral damages sustained by the Plaintiff. The Plaintiff concluded by seeking the rendition of an award in its favor on the requests set out at the end of its replication that is scheduled to be filed on 7/1/2013. Chapter Thirteen: On the Statements of the Plaintiff in its final submission submitted by Counsel Rajab El-Bakhnug dated 20/2/2013 in response to the rejoinder submitted by the Defendants on 6/2/2013: 13-1. The Plaintiff declared that it was notified of the Defendants' memorandum and responded consequently, beginning with what they raised in their defense on the jurisdiction. The Plaintiff indicated that what was stated in the Defendants' memorandum concerning the fact that the Plaintiff closed the door on an amicable settlement is erroneous, given that the notice sent by the Plaintiff to the third Defendant aimed to binding it to settle the dispute amicably, but the responses of the latter were merely rhetoric and the conclusion reached by the Defendants that the claim was filed prematurely, is erroneous. 13-2. The General Authority for Investment Promotion and Privatization Affairs, and, before it, the Tourism Development Authority, are two legal entities funded by the State Treasury. Article 9 of Decision No. 150 of 2007 issued by the General People's Committee stipulated that its funding shall be provided by which is allocated in the State Budget . 13-3. The General Authority for Tourism and Traditional Industries that substituted the Tourism Development Authority which contracted the Plaintiff Company is also funded by the State Treasury. 13-4. The Defendants' statement that the Libyan State and the Ministry of Economy did not interfere in the conclusion of the contract is erroneous, given that the State has established rights on the project land, and the Director of the Department of Real Estate Registry sent a letter to the Director of the Department of Real Estate Registration, referring to the sale of the same plot of land from the Public Property Authority to the Umma Bank which refused to cancel the sale and recover the amount paid. 13-5. The authority to decide at the time of the conclusion of the contract lied with the Ministry of Tourism which issued Decision No. 135 of 2006. And after this Ministry ceased to exist, the authority to issue or to annul such decision became the prerogative of the Ministry of Economy based on the recommendation of the third Defendant. 13-6. The Libyan law shall be the law applicable to the dispute and the Libyan Supreme Court ruled in Civil Appeal No. 123/43 J dated 18/12/2000 that some administrative units, even if they enjoy legal personality, are not deemed fully independent from the State. 13-7. The third Defendant is a public legal entity affiliated to the Ministry of Economy. The State and the Ministry interfered in the conclusion of the contract and the issuance of the cancellation Decision No. 203 of 2010, and therefore the arbitration clause shall be extended to third parties. 13-8. The plea to the inadmissibility of the arbitration case raised by the Defendants on the grounds that it does not fall within the substantive scope of the arbitration clause is groundless. 13-9. The contract concluded on 8/6/2006 between the Plaintiff and the third Defendant is not an administrative contract. It did not stipulate that the provisions of the regulation on administrative contracts are a part thereof. The touristic project is not a project of public interest. Both parties intended it to be a lease contract as well as the administrative entity, which according to the contract, exercised its leasing authority by virtue of the law that provided for its establishment. 13-10. It is within the jurisdiction of the Arbitral Tribunal to characterize the contract. This contract is a lease contract given that administrative contracts require an authorization from the Council of Ministers for their conclusion, which is not the case with regard to the contract dated 8/6/2006. The clauses included in the contract granting rights to the Administration are common clauses in Private Law contracts. This does not change the fact that the Administration is entitled to provide observations on studies and drawings, given that project execution must comply with the requirements of tourism, culture and architectural history implemented in Libya, and public interest is not being given priority. 13-11. The Defendants' allegation that the third Defendant terminated the contract pursuant to Article 103 of the regulation on Administrative Contracts, does not apply to the case. The discussion carried out by the Defendants on a non-existent decision and a null decision is unfounded. The Plaintiff replied this issue in its memorandum submitted by Dr. Fathi Wali and Dr. Mahmoud Sharkawi. 13-12. All memoranda of the Defendants are founded on an invalid legal basis, i.e., that the Plaintiff took over the plot of land free of occupancies and persons, which is an erroneous statement. 13-13. The execution license requires the taking over of the land. The license to operate the project is issued at the beginning of project operation, and tax exemptions begin as of the date of receipt of said license. 13-14. In its response to the Defendants' allegations in page 176 under the title ‘absence of legal basis’, the Plaintiff referred to page 12 of the statement of claim and to page 16 of its replication. 13-15. The Plaintiff was unable to take judicial measures, given that it was dealing with the State and requested the latter to refrain from bringing a legal action or disturbing the quiet enjoyment. Therefore, the Plaintiff filed a criminal complaint and requested assistance from the administrative authority to enable it to take over the plot of land. 13-16. The Plaintiff's right to apply the arbitration clause was not extinguished by prescription. 13-17. The contracts were concluded by the Plaintiff to gain time, given that the land area and borders were known and the Plaintiff was waiting for taking over the land. 13-18. The Defendants' statement that the Plaintiff violated Law No. 5 of 1997 on Investment and Law No. 7 of 2004 on Tourism, is erroneous. Furthermore, their statement that the requirements for applying the Unified Agreement for the Investment of Arab Capital in the Arab States were not met, is also erroneous, given that the Plaintiff invested funds in Libya and the contract did not stipulate the need to resort to conciliation prior to arbitration. However, the Plaintiff attempted to reach an amicable settlement prior to resorting to arbitration. 13-19. The Plaintiff is entitled to seek compensation for the damages it incurred, given that it submitted the designs, studies, timetable and drawings several times, and its position is in conformity with good faith. 13-20. The Plaintiff exerted serious efforts to execute the project. It did not stop project execution willingly and has spent amounts of money in preparation for project execution. 13-21. During the first stage, the Plaintiff claimed compensation for losses in the amount of five million US Dollars. The Administration refused this offer which did not encompass the lost profits for the loss of the project. Following the refusal of the Administration, the Plaintiff resorted to arbitration. The expenses referred to by the Plaintiff following the cancellation of the project, were spent in return for commitments made prior to the cancellation. The administrative expenses for the years 2006 and 2007 are established by the records which are still existent. 13-22. The Plaintiff then claimed compensation in the amount of fifty million US Dollars for lost profits as estimated by the administration of the company and not in accordance with a professional accounting estimation made by experts. The Plaintiff claimed compensation for legal fees given that it resorted to arbitration following the refusal of the Defendants to reach an amicable settlement. 13-23. Concerning the third stage of compensation value estimation, the Plaintiff referred in this regard to its previous responses in pages 26 and 27 and to its statements provided in the statement of claim. 13-24. Regarding the Defendants’ allegations with regard to the claim for compensation, at the fourth stage, estimated at two billion fifty five million five hundred and thirty thousand US Dollars, the Plaintiff's claim for compensation was based on four reports and not on assumptions as alleged by the Defendants. 13-25. The reports that deduced the value of compensation for lost profits calculated the net profits for eighty two and a half years. The reports built on hypothesis linked to market rules on supply, demand, security and legislation, therefore: 13-25-1. The report submitted by expert Habib El-Masri stated that the Libyan authorities terminated the contract without any just cause. The report does not show partiality, but the truth. It built honestly and truthfully on the data provided by the Plaintiff. The statements made by the Defendants are erroneous and merely aimed at discrediting the report. 13-25-2. It is pointless for the Defendants to argue that the report submitted by Ernst & Young indicated that the latter was not fully aware of the agreement on the relationship with the Tourism Authority given that all the exhibits as well as the relationship, with respect to the factual and legal aspects, were fully presented to this expertise firm. The report covered all these facts. The Defendants further stated that the firm mistakenly assumed that there was another contractual relationship and that there was an important document determining the true nature of the relationship that the firm of Ernst & Young was not made aware of. No such document exists; the Defendants would have introduced it in the hearing. The notions and principles set out by every specialized professional firm are based on the financial statements that are submitted to it. 13-25-3. The attempt made by the Defendants to discredit the report submitted by expert Ahmad Ghatour & Partners is baseless, given that its indication to the Plaintiff distinguished international position is fact and does not show any partiality. 13-26. The Defendants' allegations regarding the expenses mentioned in all the reports are erroneous, given that the amounts spent by the company fall within losses incurred, including the amount of 130 thousand US Dollars spent on service fees. All these amounts spent have turned into losses incurred as a result of the cancellation of the project without just cause. 13-27. Concerning the report submitted by Khaled El-Ghannam from Prime Global, the Defendants indicated that the Plaintiff failed to submit statements on investment financial contributions and that the report was drawn up despite the absence of a project that achieved financial surplus and accumulated cash flows. This is erroneous, given that there was a project which was cancelled and the surplus in the form of accumulated cash flows has been assumed on the basis of the whole period of existence of the project throughout the agreed upon period, in order to estimate the lost profits incurred by the Plaintiff Company in accordance with the Libyan law. 13-28. In conclusion, the Plaintiff stated that the allegations made by the Defendants were all erroneous and contrary to the law and the facts. It further reiterated its previous requests seeking the rendition of an award in its favor requiring the Defendants to pay the amount of /$2,055,530,000/ two billion, fifty five million, five hundred and thirty thousand US Dollars as compensation for financial losses, lost profits, moral damages, arbitration costs and attorneys’ fees. Chapter Fourteen: On the Complementary Legal Opinion submitted by the Plaintiff on 20/2/2013 and prepared by Dr. Burhan Amrallah regarding the rejoinder submitted by the Defendants on 6/2/2013: Concerning the facts of the dispute, the Complementary Legal Opinion referred to the Legal Opinion in the original Report dated 3/1/2013 and added, with regard to the arguments made by the Defendants, the following: 14-1. The rejoinder submitted by the Defendants on 6/2/2013 failed to bring anything new regarding the opinion on the Defendants' plea to the inadmissibility of the arbitration case for premature filing. In this regard, the Complementary Report on the Legal Opinion referred to the original Report on the Legal Opinion on pages 7 to 11, adding that: 14-1-1. Given that the provisions of Article 29 of the contract dated 8/6/2006, stipulated as a condition for the referral of the dispute to arbitration the impossibility of reaching an amicable settlement, they should be interpreted in good faith and the impossibility of reaching an amicable settlement would be the refusal by one of the parties of the solution deemed acceptable by the second party. 14-1-2. The exhibits of the claim prove that the Plaintiff sought to reach an amicable settlement while the third Defendant maintained its refusal of the terms and conditions of the amicable settlement brought forth by the Plaintiff. The Plaintiff also refused to take over an alternative investment site and asserted its request to be handed over the plot of land specified in the contract, subject of the dispute. Therefore, both parties refused the conditions brought forth by the other party for an amicable settlement, thus rendering such settlement impossible. Accordingly, pleading for the inadmissibility of the arbitration case for being filed prior to exhausting the routes to an amicable settlement is irrelevant. 14-2. Pleading that the arbitration clause may not be invoked against the State of Libya and the Ministry of Economy is unfounded given that the scope of the arbitration clause may be extended to the State and the Ministry, as stated in the grounds set out in pages 11 to 14 of the Report on the Legal Opinion dated 3/1/2013. The Complementary Report on the Legal Opinion added that: 14-2-1. As a rule, the scope of the arbitration clause is extended to the parties that intervened or participated directly in the conclusion, performance or termination of the contract that encompasses the arbitration clause. This is the case with the Libyan State and the Ministry of Industry, Economy and Trade concerning the Decision No. 203/2010 cancelling the investment approval, given that this decision is not independent from the contract and was issued within the supervisory prerogatives of the Secretary of the People's Committee for Industry, Economy and Trade over the application of laws, said decision was issued to enforce the decision issued by the General People's Committee (Council of Ministers) dated 30/12/2009. The State of Libya, represented by the Council of Ministers, authorized the People's Committee for Tourism (Ministry of Tourism) to allocate the lands and sign the lease contracts thereof. 14-3. Regarding the applicability of the substantive provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States, the Complementary Report on the Legal Opinion considered that the substantive provisions of this Unified Agreement apply to the current arbitration dispute, given that the subject of the contract is an investment project using the funds of an Arab investor. The Complementary Report further indicated that the refusal to transfer a part of the project's investment value came as a result of the dispute arising from the failure to hand over the plot of land and nothing in the contract or the law requires the Plaintiff to transfer the project's investment value or a part thereof without the handing over of the plot of land free of occupancies and persons. The letter of the third Defendant dated 2/2/2010 on coordinating between the parties regarding the effective taking over of the plot of land was irrelevant in terms of the effective taking over of the plot of land given its inability to hand over the land following the issuance of the decision of the General People's Committee (Council of Ministers) on the cancellation of all rights established on this plot of land. 14-3-1. The Defendants stated that the contract only referred to the rules related to the arbitral proceedings in the Unified Agreement for the Investment of Arab Capital in the Arab States and not to the substantive rules. The Complementary Report disagreed with the Defendants on this point given that Article 30 of the contract concluded on 8/6/2006 provided for the legal rules applicable to the subject matter of the dispute, including the legislation in force in the Jamahiriya and the conventions ratified by the Libyan State. This article determined the rules applicable to the subject matter of the dispute. 14-4. The legal nature of contract No. 4 dated 8/6/2006 is a complex nature; said contract falls within the category of B.O.T. contracts. The Defendants' argumentation does not contribute in changing the perspective of the author of the Complementary Report. The latter concluded in the Report dated 3/1/2013 that the B.O.T. contract is a Private Law contract, even if the Administration was party thereto, given that said contract is not related to an activity of a public utility in terms of organization and operation and does not include highly unusual clauses uncommon in Private Law contracts. 14-4-1. The subject of the contract is the establishment of a touristic project not intended to serve the public interest or meeting public needs. 14-4-2. Characterizing the contract as a B.O.T. contract does not necessarily imply to be characterized as an administrative contract, given that the contracts concluded by the State with the investor are not all of one nature, and are not subject to one legal system. Some are administrative contracts, while others are Private Law contracts similar to the contract subject of the dispute given that said contract is not related to a public utility and does not include highly unusual clauses uncommon in Private Law contracts. 14-4-3. The International Law does not necessarily consider the contract concluded by the State as an administrative contract. The fact that the State is a party thereto does not characterize it as an administrative contract. International Law does not distinguish between administrative contracts and other types of contracts. There are no international legal rules specific to contracts deemed administrative according to the criteria of internal or national law. Furthermore, there are no international judicial authorities specialized in looking into disputes related to such contracts. 14-4-4. The contract dated 8/6/2006 can be characterized as an administrative contract, either because it is a Private Law contract or an international contract related to international trade. This contract was concluded as per the methods followed in Private Law contracts. The Administration did not resort to a call for bids or to public bids. This contract also included an arbitration clause and did not provide for the jurisdiction of the Administrative Courts to settle any dispute that might arise therefrom. The provision of Article 8 therein which provides that the third Defendant may clear the plot of land by way of administrative means is a reiteration of the provision of the law on the Protection of the State Property in the event of its occupancy without any legal basis. This provision only applies following the termination of the contract, subject of the dispute. The provision of Article 11 of the contract on consideration given to the designs and general planning adopted for the region, is a reiteration of the conditions set out in the laws and regulations of the State on building permits irrespective of their owner. The arbitration clause set out in Article 29 of the contract reveals the parties’ will to ensure that these permits are subject to Private Law rules. The arbitration clause further ensures equality between the two parties to the contract and ascertains that any disputes arising therefrom would fall outside the jurisdiction of the State courts. 14-5. On the contractual liability of the Defendants, the Complementary Report referred to the Report dated 3/1/2013, while stating its disagreement with the rejoinder submitted by the Defendants on 6/2/2013 which indicated that the minutes of handing over and taking over of the touristic investment site dated 20/2/2007 released the third Defendant of its obligation to hand over the project site, given that the contract aimed to enable the Plaintiff to control the site without any physical or legal impediments, a requirement which was not met. The letter of the third Defendant sent to the Plaintiff dated 2/2/2010, in which it requested coordination for the effective taking over of the site clearly proves that effective handing over did not take place prior to this date. 14-5-1. Article 7 of the contract, subject of the dispute, stipulated that the rent shall be due thirty days following the date of taking over of the plot of land. It was proven without any doubt that no effective handing over took place and therefore the rent cannot be considered due. The exhibits of the case do not indicate that the third Defendant requested the Plaintiff, prior to the dispute, to pay any amount of money in consideration of the alleged usufruct. Therefore, the Complementary Report disagrees with the position of the Defendants asserting that the Plaintiff failed to fulfill its obligation of paying the fees in consideration of the usufruct right. In conclusion, the Complementary Report stated that the opinions mentioned therein reflect the views of the author of the Report, relying solely on his own knowledge and on documents provided to him. Chapter Fifteen: On the statements of the Plaintiff in its final submission dated 20/2/2013 submitted by its counsel, Dr. Nasser El-Zaid in response to the rejoinder submitted by the Defendants on 6/2/2013: The Plaintiff started its final submission with a series of observations: First Observation: The Libyan Investment Authority is the fifth Defendant to be joined as a party. Second Observation: The rejoinder submitted on 7/2/2013 by the Defendants is similar to the “minutes of handing over and taking over” which title has been found inconsistent with their content. Third Observation: The rejoinder submitted on 7/2/2013 is actually a repetition of the Defendants’ statement of defense submitted on 22/11/2012. Fourth Observation: The final submission completely ignores all the evidence and exhibits submitted by the Plaintiff concerning the assaults against its workers when they attempted to enter the land, and of all the obstacles imposed by the Defendants to prevent the taking over of the project site. Fifth Observation: The final submission is based on the “minutes of handing over and taking over of an investment site” and on which are founded 175 pages to say that the Defendants had handed over the land but the Plaintiff did not start the works, and therefore they are legally entitled to cancel the license, while they could have summarized their statements in two pages. Sixth Observation: The Plaintiff considers that the Defendants are citing laws in dozens of pages pursuant to which they are allowed to cancel the license if the investor fails to execute the works on time, while completely ignoring replies with supporting evidence confirming its liability vis-à-vis the non-handing over of the land, which has delayed the execution. Seventh Observation: Instead of answering the arguments raised by the Plaintiff, the final submission continues in affirming that the recreational touristic resorts of the project, including hotels, restaurants, movie theatres, etc… are public utilities established for the public interest. Eighth Observation: The dozens of pages that list laws fail to answer the Plaintiff’s arguments stated in its replication of 3/1/2013. Ninth Observation: The Defendants have ignored the four experts’ reports on the lost profits and only attacked the four experts, distorted some of their sayings, and attributed to them words that they have not said, without answering the expertise by any other expertise. 15-1. On the jurisdiction: 15-1-1. The Plaintiff has initiated a number of amicable endeavors over a period of five months aiming at settling the dispute with the Libyan Government, the Ministry of Economy and The General Authority for Investment and Ownership; however, all attempts have failed and consequently led to the application of the arbitration clause. This can be proved by the number of letters sent by the Plaintiff calling for a meeting with the Defendants to discuss the circumstances and reasons behind Decision 203 cancelling the project and the means for reaching a solution. All these initiatives made by the Plaintiff cannot be described but as attempts to settle the dispute amicably. Nevertheless, the Libyan Administration, i.e. the Defendants, has from the very beginning, closed the door on any amicable settlement that could possibly be successful and applicable. Accordingly, the Defendants can no longer plead the inadmissibility of the arbitration case because it had been filed prematurely before resorting to an amicable settlement; knowing that the Defendants themselves had closed the door on these initiatives despite the Plaintiff’s numerous endeavors in this regard. In such a situation, the arbitral proceedings set forth in Article 29 of the lease contract dated 8/6/2006 have been respected. The Administration did not reply the letters sent by the Plaintiff about the reasons for issuing the decision cancelling the investment approval relating to the project; and despite the notice sent to the Defendants through the court bailiff dated 13/9/2010, the Plaintiff kept the door open for negotiating and finding an amicable settlement. On 9/11/2010 a meeting between the Head of the Administration Committee of the General Authority for Investment and Ownership and the Company’s attorney was held but did not reach any solution as the Defendants admitted that it had lost control over the land and thus declared its inability to hand over the land. In light of all the established and accurate facts, it becomes clear that the Defendants did not originally want any settlement, let alone an amicable settlement of the dispute, and that all the efforts and endeavors initiated by the Plaintiff seeking an amicable settlement have been in vain due to the extreme indifference of the Defendants. Therefore, the current case has been filed in due time pursuant to the procedures set forth in the arbitration clause and shall not be considered premature as claimed by the Defendants. And accordingly, the Defendants’ plea to the inadmissibility of the arbitration case due to its premature filing and their request to stay the proceedings pending the initiation of the valid procedures relating to the amicable settlement of the dispute are, therefore, to be rejected since said procedures for amicable settlement have actually been carried out but never reached a solution and the arbitration case has been filed in due time. 15-1-2. The Plaintiff also confirms that the scope of the arbitration clause is extended to the Libyan Government, the Ministry of Economy, the General Authority for Investment Promotion and Privatization Affairs and the Ministry of Finance. The Plaintiff also requests in its final submission to join the Libyan Investment Authority as a fifth Defendant. The Plaintiff Company does not deny that the Tourism Development Authority, signatory of the contract, enjoys the status of a legal person, yet it remains a governmental institution affiliated to the Libyan State, empowered by virtue of Article 2 of the General People’s Committee Decision No.87 of 2006, to allocate the Libyan State properties registered in the name of the Libyan State as touristic regions to establish investment projects and conclude lease contracts with investors in accordance with general planning. This Institution constitutes an extension of the Libyan State and is totally subject to the direct control of the Minister. The General People’s Committee Decision No. 87 of 1375 a.P. (2007), establishing the General Authority for Tourism and Traditional Industries as a result of a merger of the Tourism Development Authority and the Traditional Industries Development Authority into the General Authority for Tourism and Traditional Industries, explicitly determines in Article 1 the nature of “the General Authority for Tourism and Traditional Industries” as having the status of a legal person and enjoying financial autonomy affiliated to the General People’s Committee, which actually means the Libyan State. This is also confirmed in Article 9 of Decision No. 87/2007 which provides that the financial resources of the General Authority for Tourism and Traditional Industries include its share of financial allocations in the State Budget, which in itself is conclusive evidence that the General Authority for Tourism and Traditional Industries is the Libyan State. The Plaintiff continues its analysis by saying that pursuant to Article 15 of Decision No.87/2007,the powers delegated to the General People’s Committee for Tourism related to investment and set forth in the aforementioned Law No. (7) of 1372 a.P. shall be transferred to the General Authority for Investment Promotion, and all contracts, rights, and obligations concluded in the touristic investment field by the General People’s Committee for Tourism and the Tourism Development Authority shall be transferred to the General Authority for Investment Promotion, and the latter shall replace them in their rights and obligations alike. The General People’s Committee Decision No. 150 of 2007 “on the reorganization of the General Authority for Investment Promotion” which was issued based on Decision No.87 of 2007 “on the establishment of the General Authority for Tourism and Traditional Industries”, provides in Article 2 that the General Authority for Investment Promotion is a public authority having the status of a legal person and enjoying financial autonomy and is affiliated to the General People’s Committee for Economy and Investment. Article 4 of Decision No. 150/2007 provides that the General Authority for Investment Promotion is competent, inter alia, in implementing the general investment policy in the Great Jamahiriya. By virtue of the Decision of the Council of Ministers No. 364/2012 amending Article 1 of Decision No. 89/2009 Heg. on the establishment of the General Authority for Investment and Ownership, the latter’s name has become the “General Authority for Investment Promotion and Privatization Affairs” which is a legal person enjoying financial autonomy but affiliated to the Ministry of Economy, and is competent to organize and control investment and privatization affairs. The principle of privity of the arbitration agreement is offset by the principle of the extension of the arbitration clause to third parties other than the signatory parties in order to maintain the effectiveness of arbitration. In a recent decision rendered by the Court of Appeal in Paris on 17 February 2011 in Dallah case, the court considered that the arbitration clause extends to a third party that did not sign the contract based on the alter ego concept. And even if the Legislator vested the head of one administrative unit with the authority to represent it, it shall be in the framework of the internal organization of the administrative unit and the distribution of functions therein. The head of the unit shall remain subject to the authority of the Minister, his hierarchical superior, and shall work under his supervision. Accordingly, despite the representation of the General Authority for Investment Promotion and Privatization Affairs by the Secretary of the Administration Committee before the courts, and in its relations with third parties, known as “procedural capacity”, the Authority remains affiliated to the Ministry of Economy, as explicitly set forth in Article 1 of the Council of Ministers’ Decision No.364 of 2012. In light of the above, the Libyan State is a party to the arbitral proceeding whether it is mentioned that the plot of land is a public property or not, because the parties contracting with the Plaintiff Company are governmental institutions and constitute parts of the Libyan State. Moreover, by virtue of Article 1 of the General People’s Committee Decision No. 322/2007 amending a provision of the Regulation on the Budget, Accounts, and financial organizations and establishing other provisions, the State Budget shall include financial allocations for the enforcement of final judicial decisions rendered against the state-funded public entities. Among these entities funded by the Libyan State Budget is the General Authority for Tourism and Traditional Industries. Therefore, it is conclusively proved that the General Authority for Tourism and Traditional Industries is the Libyan State. The Libyan Ministry of Finance is bound by virtue of the Law on the State Financial System and the General People’s Committee Decision No. 322/2007 to enforce the final judicial decisions rendered, inside and outside the country, against Libyan public entities funded by the Libyan State Treasury, hence the Plaintiff deems it right to join the Libyan Ministry of Finance as a fourth Defendant to the current case. In addition, the Plaintiff would like to clarify to the Arbitral Tribunal that it is necessary to join the Libyan Investment Authority to the case as a fifth Defendant. The Plaintiff had indicated the reasons of the said requested joinder in the introduction of its final submission (first observation). The Libyan Investment Authority is a financial investment institution having the status of a legal person and enjoying financial autonomy; it is affiliated to the Secretariat of the General People’s Committee, i.e. the Libyan State. The General People’s Committee shall decide, on the proposal of the Council of Secretaries, to increase or decrease its capital. The said institution seeks to invest the funds allocated to it by the Secretariat of the General People’s Committee, to ensure the development of these funds, achieve appropriate financial revenues, diversify the sources of national income, and consequently, and to support the State Treasury resources on an annual basis and curb the effect of income and oil returns fluctuations. The Libyan Investment Authority is responsible for managing and investing the funds of entities affiliated to the Libyan state, i.e. the funds of the Libyan State itself, and is empowered to amend the fundamental laws and decisions organizing the work of the entities managed by it as per Article 5 of Decision 205/2006. 15-1-3. The Plaintiff continues by emphasizing Article 29 of the contract stating that said article has been made in accordance and conformity with the express will and common intention of the parties. The subject of the arbitration clause is the interpretation and performance of the contract. And as the term “performance” necessarily covers the “non-performance”, i.e. the obligation to resort to arbitration in the event of non-fulfillment of an obligation, similarly, said clause necessarily covers the effects of the non-performance, among which is the claim for compensation, and therefore conferring jurisdiction on Arbitral Tribunals in this matter, should no amicable solution be reached. International public policy forbids legal persons to have recourse to internal legal texts in force, whether in the positive law or the law governing the contract, to evade the arbitration clause. The arbitration clause shall therefore be considered valid and all the assertions of the Defendants on the need to annul the administrative Decision No. 203 before resorting to arbitration are null and as they contradict the principle of good faith and should be rejected. Decision No. 203 of 1378 a.P. cancelling the investment approval granted to the Plaintiff Company is an administrative decision that is not separate from the contract setting forth the arbitration clause and may be challenged before the Arbitral Tribunal. The Libyan Supreme Court has established in a ruling issued on 5/4/1970 to empower the arbitrator to look into the reasons of terminating the contract in order to balance out the Administration’s power to terminate the contract and the Contracting party’s right to compensation. The principle of autonomy of the arbitration clause makes this clause applicable regardless of the termination or not of the contract stipulating it as a result of an administrative decision. Moreover, Decision No. 203 of 1378 a.P. (2010 A.D.) is illegal as it contradicts the provision of Article 23 of Law No. 9/2010 on the Promotion of Investment, and the provision of Article 23 of Law No. 5/1426 Heg. (1997) on the Promotion of Foreign Capital Investment. By taking this arbitrary decision, The Defendants have initiated procedures that have the same effect of freezing and confiscating the investment project, in violation of an explicit provision of the Law on Investment prohibiting them from initiating such procedures unless by virtue of the law or judicial ruling, and against an immediate equitable compensation. Therefore, the Defendants have failed to meet their obligation to enable the Plaintiff from taking over the project site free of occupancies and impediments. By taking said decision to initiate procedures that have the same effect of confiscating and freezing the project, the Defendants have also violated the Libyan Law on Investment through submitting the project to procedures that have the same effects of freezing and confiscation. Decision No. 203 of 1378 a.P. (2010 A.D.) is also illegal as it builds on Law No. 5 which was at the time abrogated, i.e. non-existent instead of building on the applicable Law No. 9. 15-1-4. The dispute is governed by the Libyan Law because both parties have agreed to apply this law and because Libya, by adhering to the Unified Agreement for the Investment of Arab Capital in the Arab States and signing it, has incorporated the said Agreement into the Libyan Legal System as an integral part of the Libyan Law, whether the international or regional conventions prevail over the laws or the Libyan legal system itself. Article 3(2) of the Unified Agreement for the Investment of Arab Capital in the Arab States provides that the provisions of the Agreement shall have priority of application in instances where they conflict with the laws and regulations in the State Parties. Consequently, Libya’s ratification of the Unified Agreement for the Investment of Arab Capital in the Arab States has made the Agreement binding and enjoying the force of any Libyan law. The Unified Agreement for the Investment of Arab Capital in the Arab States shall totally apply to this arbitration whether its application is stipulated or not in the contract or in the arbitration clause; by applying the Libyan Law, the said Agreement shall be automatically applied. The will of the parties stated in the arbitration clause in Article 29 of the contract expressly requires the application of the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States issued on 26 November 1980, including the provisions on the arbitral proceedings for the settlement of the dispute between the parties. Therefore, the Unified Agreement for the Investment of Arab Capital in the Arab States shall prevail in issues relating to Arab capital investment, whether the contract or the arbitration clause provides, or not, for referral to the Unified Agreement. The compensation due to the investor shall be made in accordance with Article 10 of the Unified Agreement for the Investment of Arab Capital in the Arab States which provides that the Arab investor is entitled to compensation for damages which he sustains because of a State party or one of its public or local authorities or institutions, and in accordance with Article 224 of the Libyan Civil Code which provides for the evaluation of the damages that include the losses incurred by the creditor as well as his lost profits. Consequently, all the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States shall apply to settle the dispute. 15-1-5. Concerning the legal characterization of the contract, The Libyan Supreme Court has established three conditions that should be fulfilled in order to consider the contract as an administrative contract. The first condition requires one of the contracting parties to be a person of the Public Law; the second relates to the organization or operation of a public utility, while the third requires that the contract includes highly unusual clauses that are not common in Private Law contracts. The first condition is satisfied since the Defendant is a legal person of Public Law. However, the Administrative court ruled in Challenge No. 870/5 J, dated December 9, 1956 that not every contract concluded by the Administration is automatically considered an administrative contract. The administration often chooses to enter into contracts governed by Private Law. Contrariwise, the second condition is not satisfied: the project of building a hotel and other lucrative recreational areas does not involve serving any public interest or performing any public service. Therefore, the public interest does not apply in this context. As for the third condition requiring highly unusual clauses, it is also not satisfied. The preamble of the contract does not set forth any restriction prohibiting the Plaintiff from establishing other projects. The specific timeframe for the project execution cannot be considered as a highly unusual clause because the project is not related to one operation only, and this clause is found in the majority of civil law contracts for the purpose of expediting the execution. The prohibition of waiving or transferring rights and obligations to third parties without the approval of the Administration is nothing but an implementation of the intuitu personae whereby consideration is given to the person when choosing the contracting party based on his technical qualifications, financial capacity, and good reputation, which means that the contract is concluded intuitu personae, a characteristic found in Private Law contracts. Moreover, Article 8 of the contract requires the Administration to address a notice to the second party to pay within 30 days in case the latter fails to pay the fees in consideration of the usufruct in due time; Yet it did not empower it to terminate the contract without prior notice unless the second party fails to pay within the thirty day period. Also, Article 24 does not grant the Administration the right to terminate the contract unless the second party fails to start the project execution within three months following the receipt of the license to execute the project, and does not submit a written justification to avoid the termination of the contract. The same applies to the other highly unusual clauses mentioned in the Defendants’ statement of defense, including establishing a project on a state-owned land, the technical control and supervision by the Administration, the use of local materials, tools, employment of national labor force, and the timely handing over of the project in an operational state without the possibility of claiming compensation against the amounts spent for the execution. None of the mentioned clauses may be categorized as highly unusual clauses, which pursuant to the doctrine, burden the contracting parties with obligations unlike those freely agreed upon by the contracting parties under the civil and commercial laws, or those usually not found in contracts concluded by individuals, considered null for violating the public policy, or considered null in the Private Law and which individuals cannot incorporate in their contracts. The disputed contract does not set forth but common clauses, freely agreed upon by the contracting parties under the civil and commercial laws. Although a legal person of Public Law is a party to the contract, the contract neither involves a public interest nor includes highly unusual clauses as per the jurisprudence and doctrine position vis-à-vis the highly unusual clauses submitted in the Plaintiff’s final submission. Thus, the contract is a Private Law contract concluded between parties of equal will and where the Libyan Administration has abandoned its privileges and powers, hence the equal standing of Defendants and Plaintiff; consequently, the contract-related-disputes shall be subject to Private Law. The Defendants claim the administrative nature of the contract in view of its Article 30 referring to the provisions of Law No. 5 amended by Law No. 7 on the Promotion of Foreign Capital Investment. However the Plaintiff reiterates that Article 30 of the contract mentions the application of the Libyan law, including Law No. 5/1997 on the Promotion of Foreign Capital Investment and its executive regulations or Law No. 7/2004 on Tourism, along with its executive regulations, and other legislation in force, for issues not explicitly regulated by the contract. Law No. 5 amended by Law No. 7 on the Promotion of Foreign Capital Investment has empowered the investor with rights that the laws in force have failed to grant, especially in terms of the investor’s exemption from the income taxes for a period of 5 years and from the material import tax throughout the project execution and during the first five years of operation. Thus this law has given the foreign investor a number of guarantees and privileges. By simply submitting the contract signed by and between the Plaintiff and Defendants to Law No. 5 on Investment, it becomes even more evident that the disputed contract is not an administrative contract. In fact, the contract is a BOT contract of special nature for the Plaintiff considers that the project does not serve a public interest, the disputed investment contract is not related to a public utility and is does not include any highly unusual clauses, its clauses being balanced and common. The project starts with a funding from the investor who leases a state-owned plot of land located in Tajura for a 90-year- usufruct period for the purpose of establishing the investment project and exploiting it for 83 years. The contracting Department shall, at its own expense and prior to the handing over of the land, help in providing access and services mentioned within a period not exceeding 6 months as of the contract date. Similarly, the Department shall help the Plaintiff Company in searching for the appropriate locations to accommodate its workers and store its equipment and guarantee the non-disturbance of possession throughout the contract period. The Plaintiff undertakes to hand over the project in its entirety to the Defendants in an operationally sound state at the end of the lease period. 15-1-6. Article 30 of Law No. 9/1378 a.P. (2010 A.D.) on the Promotion of Investment is by itself sufficient to consider that the guarantees decided for the project by virtue of Law No. 5/1426 Heg. are still valid; said Article provides that the executive regulations and decisions issued under the mentioned laws remain applicable without violating the provisions of this law. 15-2.   On the legal grounds of the arbitral proceedings initiated by the Plaintiff: 15-2-1. The Defendant relies on the “minutes of handing over and taking over of an investment site” dated 20/2/2007 to assert that the Plaintiff Company has taken over the land. However, the title of the document is not consistent with the content thereof and is not even related thereto. The said minutes present information on the investment site and its delimitation. The Egyptian Court of Cassation has decided in two rulings issued on 22/6/1977 (Cassation, 28th year, page 1470 et seq.) and on 28/12/1971 (Cassation, 22nd year, page 1115) that “the criterion in characterizing the contracts relies in what the parties to these contracts have wished to express and not in the title they have attributed to them or in the terms they have included therein, if these titles or terms are found to be violating the reality inherent to the contract and the underlying intention of the contracting parties”... “The rule in characterizing a contract is the real intention of the parties to the contract which shall be determined by the court of merits, and whenever this court determines the true intention of the contracting parties, it shall be required to give the said intention the appropriate legal characterization independently from the characterization given by the contracting parties”. Thus, the Defendants have only considered the apparent intention of the minutes signatories (title of the minutes: “minutes of handing over and taking over of a touristic investment site”) without trying to seek their real intention (minutes of site inspection and borders delimitation). 15-2-2. The Defendants have failed to fulfill their obligation set forth in the contract concluded on 8/6/2006. They have not only failed to hand over the land, but also established in-kind rights thereon. The land was occupied by a number of containers, pipes, and equipment belonging to the Company for Building and Construction guarded by a group of individuals, in addition to a building consisting of a cafeteria under the name of Nakhle coffee shop owned by Ibrahim Abdel Salam Abu Zahir and Abdel Raouff Ahmad Akrim who claim that they hold a twenty-five year contract of usufruct concluded with Al Tahrir Sports and Cultural Club in Tajura. Furthermore, other citizens were claiming ownership of parts of the land. Therefore, the Defendants’ cynical question “Is it possible that a small cafeteria and a number of pipes and containers prevent a high caliber company such as the Plaintiff Company renowned for its high professional expertise in the field from executing a touristic investment project including a five-star tourist hotel, a commercial center, residential units, restaurants, and recreational areas of an investment value amounting to USD 130 million, on a 240 000 sq m plot” cannot be but positively answered. The existence of the building, described by the Defendants as “small” is a blatant violation of its obligation to hand over the land free of occupancies. This statement confirms by the very words of the Defendants themselves that the Defendants have failed to perform their contractual obligations to hand over the land; they have instead imposed obstacles to prevent the Plaintiff from executing the project and remained passive towards these obstacles. It became evident to the Plaintiff, through the Department of Real Estate Registry records that a contract of sale of the land ownership and usufruct right had been deposited therein to the benefit of the Umma bank and that the plot is registered in the name of the said bank. The municipal guards also stopped the erection of a fence around the land despite that the license was valid, and the workers were assaulted and obliged to stop the erection of the temporary fence. The Defendants had even admitted (through the General Authority of Tourism) in its letter dated 12/11/2007 to the Office for the Implementation of Housing Projects and Facilities that the plot of land allocated to the Plaintiff Company contains special equipment for paving, illumination, and rain water draining projects... Hence, all of the above facts cannot but indicate the bad faith of the Defendants and their violation of the contract and of their obligation to hand over the land free of impediments. 15-2-3. In an attempt to disprove its violation of Law No. 5/1426 Heg. on the Promotion of Foreign Capital Investment (replaced by Law No. 9/1378 a.P. (2010 A.D.) on the Promotion of Investment), the Defendants relied on Article 1 (or Article 3 in Law No. 9/2010 A.D.) and Article 6 (or Article 6 in Law No. 9/2010 A.D.) of this law. After careful perusal of the content of the two-abovementioned articles, the Plaintiff wonders how the Defendants have relied thereon to defend their illegal act of cancelling the investment approval after being granted to the Plaintiff, especially that these articles are intended to promote foreign capital investment for the purpose of establishing investment projects and to provide all possible means of attracting foreign capital. The Defendants also referred to Article 3 of the law (or Article 1 in Law No. 9/2010 A.D.) to deny the presence of foreign capital. However, its analysis is erroneous because the purpose of Article 3 defining foreign capital and investment project is to clarify the meaning of the two terms and to establish the difference between them and local capital and non-investment projects. The capital that the Plaintiff will invest in throughout the contract period is, as per the definition of Article 3 of the law, a foreign capital, whether transferred to the country or pending its transfer thereto. 15-2-4. The plea to the non-performance maintained by the Plaintiff is attributed to the Defendants’ failure to fulfill their contractual or non-contractual obligations; it does not, in any way whatsoever, constitute an acknowledgement by the Plaintiff of the non-performance of its own obligations. 15-3. On the legal and factual grounds of the Plaintiff’s claim for compensation: The Defendants stated that it did not commit any fault that causes damages to the Plaintiff, and that it did not contradict any of the Libyan laws, especially Law No. 5/1426 Heg. on the Promotion of Foreign Capital Investment, Law No. 7/1372 a.P. on Tourism and its executive regulations, and law No. 9/1378 a.P. (2010 A.D.) on the Promotion of Investment. As for Decision No. 203/1378 a.P. (2010 A.D.) cancelling the investment approval granted to the Plaintiff, the Defendants have stated that it has been issued in accordance with the Libyan laws applicable to the investment. 15-3-1.   On the contractual fault: The Plaintiff ascertains that the Defendants have committed a contractual fault by violating Article 5 of the contract which provides for the first party’s (the governmental entity) obligation to hand over the investor a plot of land free of any occupancies and persons. 15-3-2.   On the delictual fault: 15-3-2-1.   On the violation of the Libyan legal obligation to perform the contract in good faith: The Libyan Civil Code upholds, in Article 148, the principle of good faith in the performance of contracts. The doctrine and jurisprudence also underline the need for good faith in the fulfillment of the obligations arising from bilateral contracts, and consequently in the performance of the entire contract. Indeed, in the current case, the principle of good faith shall direct the Libyan State to abide by the provisions of the Public International Law, especially the international agreements, and particularly the provisions of the UN charter and the principles set out in Article 2 thereof: sovereign equality, fulfillment of obligations in good faith, develop friendly relations among nations based on economic, social, political, and cultural cooperation. Therefore, the Defendants have violated this legal obligation by failing to enable the Plaintiff to take over the land free of occupancies, not to mention that the police and municipal guards have assaulted the Plaintiff’s workers and prevented them from taking over the land and accessing it to initiate and expedite the execution of works. The Decision of the Minister of Economy annulling the decision granting approval to establish the investment project on the grounds that the Plaintiff did not initiate project execution, does not also reflect any observance of the principle of good faith but rather reveal a flagrant bad faith. 15-3-2-2.    On the violation of the Unified Agreement for the Investment of Arab Capital in the Arab States: By issuing the arbitrary decision cancelling the investment project license, the Defendants have violated the provisions of the Unified Agreement for the Investment of Arab Capital in the Arab States, particularly Article 2 thereof. The said arbitrary decision that is legally nonexistent, as it is based on a law cancelling the contract and which is also based on a contractual and delictual fault as it violates the Law on Investment, violates as well the Unified Agreement by failing to grant the necessary facilitations and guarantees to the investor (the Plaintiff in this case)... It has actually done the opposite by imposing obstacles and creating impediments that even the police and the municipal guards have assaulted the Plaintiff’s workers when they attempted to enter the site to duly and legally prepare its taking over prior to the commencement of the works. 15-3-2-3.    On the violation of the Foreign Investment Law No. 5/1997 (replaced by Law No. 9/1378 a.P. (2010 A.D.) on the Promotion of Investment): The withdrawal of the license is subject to conditions (Article 19 of Law No. 5/1426 Heg. Corresponding to Article 20 of Law No. 9/1378 (2010 A.D.)). Therefore, the Libyan State is not free at all of it acts. There are conditions that govern the withdrawal of licenses and these conditions have not been satisfied, as the land was not even handed over at the first place to start the project execution. By issuing Decision No. 203/2010, the Defendants have also violated Article 23 of the said law (corresponding to Article 23 of Law 9/1378 a.P. (2010 A.D.) on the Promotion of Investment), as they have adopted measures having the same effects of confiscating and freezing the investment project, which contradicts an explicit text of the Law on the Promotion of Investment prohibiting the adoption of such measures. Thus, the Defendant – the governmental entity – has committed a delictual fault by breaching the law in addition to the contractual fault by breaching the contract. 15-4. On the Plaintiff’s position vis-à-vis the submission of the project final designs: 15-4-1. In response to the letter of the Secretary of the General Authority for Tourism and Traditional Industries dated 1/7/2007, in which he underlines the requirement to submit a detailed timetable for the stages of the project execution in addition to the designs required for the project at the soonest possible, the Plaintiff has requested, on 1/8/2007, to be informed about a number of issues. It explains that the very short timeframe given for the project execution necessitates the concerted efforts of all relevant official authorities. Yet, the lack of cooperation from the side of the Defendants was the main reason behind the non-execution of the project. 15-4-2. In response to the letter of the Director of the Department for the Development of Touristic Areas at the General Authority for Tourism and Traditional Industries dated 11/7/2007, the Plaintiff has requested on 29/7/2007 from the Director of the Department for the Development of Touristic Areas to promptly inform it of the actual date of taking over the land in order to incorporate the date in the project timetable, and on 2/9/2007 the Plaintiff submitted the timetable explaining the course of the project execution and mentioning that it is contingent upon the handing over of the project land free of all occupancies. 15-4-3. In response to the letter of the Director of the Department for the Development of Touristic Areas and Head of the permanent working team at the General Authority for Tourism and Traditional Industries in which he mentions the meeting of 11/9/2007 and reiterates his request for the Plaintiff to submit the designs prior to 4/11/2007, the Plaintiff said that Paragraph 3 of the letter sets forth the requirement of preparing a scale model of the project only if the designs are final and approved. Consequently, and since the designs were yet to be finalized and approved for the above stated reasons, the Plaintiff has not violated the requirement set out in Paragraph 3 as alleged by the Defendants trying to mislead the Arbitral Tribunal. It is also worth noting in this context that the Plaintiff has completed whatever had been requested in all the other paragraphs of the letter. 15-4-4. In response to the letter of the Director of the Department for the Development of Touristic Areas and Head of the permanent working team at the General Authority for Tourism and Traditional Industries dated 12/11/2007 requesting the Plaintiff to submit the project designs in order to present them to the Technical Committee, the Plaintiff answered by addressing a letter to the Secretary of the General Authority for Tourism and Traditional Industries in which it informs him that the land is still occupied by a number of containers, pipes, and equipment, belonging to the Company for Building and Construction and guarded by a group of individuals, in addition to a small building consisting of a cafeteria under the name of Nakhle coffee shop owned by Ibrahim Abdel Salam Abu Zahir and Abdel Raouff Ahmad Akrim who claim that they hold a twenty-five year contract of usufruct concluded with Al Tahrir Sports and Cultural Club in Tajura. Furthermore, other citizens were claiming ownership of parts of the land. The Plaintiff Company mentioned that although the initial designs were ready, it has been unable to commence the execution of the project due to the above stated reasons, thus voicing its wish for intervention so as to enable it to take over the site free of all occupancies and start the project execution without delay since no positive measures were taken to remove the occupancies and impediments. 15-4-5. Concerning the license to execute the investment project, the license to operate the investment project and the establishment of the investment project, the Plaintiff considered the Defendants’ allegation pertaining to the non-existence of the investment project due to the failure to satisfy the conditions of Article 7 of Law No. 9/1378 a.P. (2010 A.D.) and the failure to obtain a license to execute and to operate the project, as rejected; exhibit No.1 of the statement of defense confirms the approval of the Secretary of the General People’s Committee for Tourism of the investment by Al-Kharafi Company to execute a touristic investment project, and the registration of the project in the Investment Registry (Decision No. 135/1374 a.P. (2006 A.D.) on the approval of the investment). This approval has generated a number of expectations in the favor of the investor that that law shall uphold; the conditions set forth in Article 7 of Law No. 9/1378 a.P. (2010 A.D.) and that are supposed to be either totally or partially satisfied have been actually satisfied: the project transfers the knowledge, modern techniques, and technical expertise to the country, uses the local raw materials, contributes to the development and improvement of remote areas, serves the needs of the national economy, and provides job opportunities for the Libyan citizens. 15-4-6. Concerning the issue of opening accounts in Libyan banks, the Plaintiff stated that the Defendants had personally declared that on 26/8/2006, the Vice President of the board of directors of the Plaintiff Company has opened an account in his name at the Trade and Development Bank due to the existence of certain procedures requiring some time to get the approval of the Central Bank of Libya. The Defendants did not mention the fact that the bank account, opened in the name of the Vice President of the board of directors of the Plaintiff Company, was at the disposal of the latter, in order not to impede the process of transferring the funds necessary for the project execution. It should be noted here that the delay in opening the account in the name of the Plaintiff Company is strictly linked to the lengthy procedures required by the Central Bank of Libya, without the Plaintiff having any relation to this delay. 15-4-7. Concerning the transfer of the investment capital, it is indicated in Article 3 (6) of Law No. 5/1426 Heg. on the Promotion of Foreign Capital Investment and in Article 1 (5) of Law No. 9/1378 a.P. (2010 A.D.) on the Promotion of Investment, that the capital to be invested by the Plaintiff throughout the period of the contract is, according to Articles 1 and 3, a foreign capital whether it is already transferred to the country or pending its transfer thereto. Therefore, the non- existence of a foreign capital cannot be invoked. 15-4-8. Concerning the payment of fees in consideration of land usufruct, the Plaintiff stated that since it did not enjoy the use of the land by reason of the Defendants’ violations and non-fulfillment of their contractual obligations, it shall be exempt from paying any fee in consideration of using and benefitting from the land that was never materialized. The Plaintiff had proved its good faith as it fulfilled its initial obligations required prior to the execution of the project, by paying 0.1% of the investment value, equivalent to USD 130 thousand, to the Treasury of the Libyan State. 15-4-9. Undoubtedly, the reasons that have prevented the Plaintiff from executing the project and starting the works are related to the violations committed by the Defendants especially after its own acknowledgement of all the issues preventing the initiation of the project execution (letter of the Director of the Department for the Development of Touristic Areas and Head of the permanent working team at the General Authority for Tourism and Traditional Industries dated 12/1/2009), the importance of the time factor, the reasons delaying the execution, and the duty of seeking a solution thereto. 15-5. On compensation for direct damages: 15-5-1. The Plaintiff requests compensation for material damages it had suffered. Material damages are the direct damages that actually and entirely occurred due to the Defendants’ deliberate and blatant contractual fault. The Defendants are liable by refraining from performing their obligations to achieve a certain result, i.e. handing over the land and enabling the Plaintiff Company to execute and manage its investment project and use it for 83 years as of the date of conclusion of the contract. Instead, the Defendants refrained from handing over the land, terminated the lease contract and canceled the investment approval despite the fact that the contract and the decision granting the investment approval were valid. The company was ready to execute and carry out all its subsequent obligations after performing the only obligation to be fulfilled in advance, i.e. paying 0.1% of the investment value (130 thousand US Dollars) to the Treasury of the Libyan State. The Defendants’ deliberate refraining from performing their obligations shall be considered a contractual fault that requires compensation to the Plaintiff Company for the direct damages it had suffered, given that the Defendants’ fault was intentional, serious and tantamount to fraud, which grants the Plaintiff Company the right to claim compensation for direct damages. The Defendants’ obligation is not only an obligation arising from a contract, but is also an obligation arising from tort because of this intentional fault, and that pursuant to Article 224 of the Libyan Civil Code which provides: “Compensation shall cover the loss incurred by the creditor as well as his lost profit provided that this is a natural consequence of the non-fulfillment of the obligation or the delay in its fulfillment”. 15-5-2. The Plaintiff also requests compensation for moral damages it had suffered. Moral damages are the damages to the reputation and image of the trader. Any positive or negative rumor can affect the company’s image and consequently its position in the commercial markets either for the worse or for the better. 15-6. The Plaintiff claims as well compensation for the lost profit as the lost profit is the profit that the creditor would have usually achieved if allowed to properly perform the contract. Lost profit ( lucrum cessans ) and actual damages ( damnum emergens ) are the two elements of compensation caused either by an offense or by the termination of the contract. This point of view is applied in both civil and administrative laws. International trade rules have recognized the creditor’s right to obtain full and complete compensation for the damages suffered as a result of non-performance (Article 82 of the Uniform Law on the international sale of movable goods and Article 74 of the Vienna Convention on the International Sale of Goods in addition to Article 4.2.2 (1) of the Principles of International Commercial Contracts of the International Institute for the Unification of Private Law ( Unidroit ) and Article 4.502 of the Principles of European Contract Law prepared by the Commission on European Contract Law). Compensation includes the loss incurred by the creditor and the profit lost. The Libyan Civil Code (Article 224) as well as a number of legal scholars and many Libyan and international jurisprudence recognize the right to compensation for the lost profit. 15-7. On the payment of arbitration expenses and attorneys’ fees: The Plaintiff considers that the Defendants are bound to pay arbitration expenses and attorneys’ fees and that the Defendants' failure to pay their share of the arbitration expenses constitutes a violation of the contract, especially that the Plaintiff has already paid its share of the expenses. The Plaintiff has also stated that the Defendants have a history of violating the law and the contract, and they should not have mentioned this matter. 15-8. On the reports submitted by accounting experts: The Plaintiff states that the Defendant claimed that these reports were based on assumptions, data and information provided by the Plaintiff Company, inferring that these information and data are not true and based on the client’s assumptions, which leads to the invalidity of these reports. The Defendants also claimed that there was no investment project at first especially that the Plaintiff Company did not obtain a building permit, an execution license or a license to operate the project. The Plaintiff deems it necessary to reject all the allegations raised by the Defendants regarding the invalidity of the reports, and to consider the four reports submitted by international accounting experts to be fully valid. These four reports were submitted by internationally renowned expertise offices that analyze the lost profit through numbers and shall only be challenged by other experts who are able to discuss the exact numbers and figures contained in the reports and which the Defendants did not do. 15-9. On the non-violation, by the Plaintiff, of Article 224 of the Libyan Civil Code relating to the obligation of preventing the aggravation of damages: The Plaintiff did not breach any of its contractual or legal obligations, including its obligation to exert reasonable efforts to prevent the damages. The various letters sent to the Defendants, in an attempt to reach an amicable solution to the issue of the impediments that have hindered the completion of the project, were to prevent direct, indirect or future damages, including material and moral damages and lost profit, for which the Plaintiff is seeking compensation in the current case. The element of damages is the same whether the contract is terminated now or after several years as it is calculated on the basis of incurred loss and lost profit of the creditor for a period of 83 years of using and benefiting from the land. 15-10. On the request to issue a summary final arbitral award to be immediately enforced: Due to the urgent nature of the present case that started nearly three years ago and the Plaintiff’s rights still being ignored to date, the latter refers to Article 2 paragraph 8 of the Conciliation and Arbitration Annex of the Unified Agreement for the Investment of Arab Capital in the Arab States and Article 34 of the said Agreement which establish the final and binding nature of the arbitral award and of being immediately enforced. Thus, the final arbitral award shall be in accordance with the Unified Agreement for the Investment of Arab Capital in the Arab States. The final arbitral award shall: a- Not be subject to any means of recourse and therefore to annulment. b- Be immediately enforced, i.e. it does not require a leave for enforcement but is enforceable in itself. This arbitral award which is immediately enforceable does not require a leave for enforcement and any challenge thereto shall not stay the enforcement as long as the final award is final and not subject to any means of recourse. The Libyan Code of Civil and Commercial Procedure established the principle of summary enforcement but limited it to the terms set out in Articles 379 et seq. Also, the Kuwaiti Code of Procedure established the principle of summary enforcement but limited it to the terms set out in Articles 195 to 198. The Plaintiff reiterates that Libya and Kuwait are parties to the Unified Agreement for the Investment of Arab Capital in the Arab States, and said Agreement shall prevail when conflicting with the laws and regulations of the States Parties (Article 3, paragraph 2). Since Article 34 of the Unified Agreement for the Investment of Arab Capital in the Arab States does not conflict with the provisions of summary enforcement set out in the Libyan law (Articles 379 et seq. of the Code of Civil and Commercial Procedure) and in the Kuwaiti law (Articles 195 to 198 of the Code of Procedure). In case the abovementioned laws would conflict with the provisions of the Unified Agreement, priority shall be given to the provisions of the Agreement. Therefore, the arbitral award shall be issued as a summary award to be immediately enforced. 15-11. On the requests of the Plaintiff: At the end of its submission, the Plaintiff requested that the five Defendants be compelled, in solidum , to pay by virtue of a summary final arbitral award immediately enforceable, the following: 1. An amount of 6.539.000 (six million five hundred and thirty-nine thousand Dinars) equivalent to 5.03.000 (five million and thirty thousand U.S. Dollars) according to the exchange rate traded on the same day at the Central Bank of Libya, representing the value of losses and expenses of the Plaintiff Company’s office that was opened in Tripoli following the issuance of Decision No. 135/2006. These losses are material damages reflected accurately through the budgets of the Plaintiff Company until the date of closing the office after more than four years, i.e. during 2006, 2007, 2008, 2009, 2010 as indicated in the statement of claim (exhibit 73 of the statement of claim). 2. An amount of 2,000,000,000 (two billion U.S. Dollars), representing an average of the lost profit of the company after taking into consideration the operation and management of the project during 83 years, according to the four financial reports annexed to the replication in response to the statement of defense (exhibits 30 – 31 – 32 – 33). 3. An amount of 50,000,000 (fifty million U.S. Dollars) in compensation of moral damages suffered by the Plaintiff Company for its reputation in the financial and business market in Kuwait and abroad. This amount is only symbolic given the reputation of the Plaintiff Company which is globally renowned, as indicated in the statement of claim (exhibit 72 of the statement of claim). 4. An amount of 500 thousand U.S. Dollars as reasonable estimated fees paid to the company’s counsel since the start of the dispute and until the issuance of the arbitral award. 5. An amount determined by the Arbitral Tribunal equivalent to the arbitration costs and expenses paid by the Plaintiff in the present arbitral proceedings, especially that the Plaintiff had paid its share of the arbitration costs and expenses as well as the share of the Defendants that refrained from paying contrary to the requirements of the applicable rules of arbitration. Thus, the total amount which the Plaintiff Company requests to be paid by virtue of a summary, final and binding arbitral award to be rendered against the five Defendants in solidum , shall be of 2,055,530,000 (two billion and fifty-five million five hundred and thirty thousand U.S. Dollars) as described previously. 6. Interests of these amounts at the applicable rate as of the date of the final and binding arbitral award until the date of payment and settlement. 7. The Plaintiff further requested the Tribunal to order the summary and immediate enforcement of the final and binding arbitral award in view of the urgent nature of the case and the gravity of the damage. Chapter Sixteen: On the Statements of the Defendants in their final submission dated 5/3/2013 to be submitted on 6/3/2013, in response to the Legal Opinion and memoranda submitted by the Plaintiff: The Defendants have submitted their final submission, in which they have stated that the Libyan Investment Authority was not a signatory party to the contract drafted on 8/6/2006 and therefore the arbitration clause may not be invoked against it in line with the personal scope of the arbitration clause as to the parties. Moreover, the Libyan Investment Authority did not directly contribute or participate in the conclusion or performance of the contract. It is an independent legal person and its functions are limited to investments outside Libya. The attempt to join the Authority as a party to the present arbitration case is unsubstantiated. The Defendants reiterated its previous statements. Below is a summary of their final submission: 16-1. Concerning the Jurisdiction: 16-1-1. The Plea to the inadmissibility of the arbitration case raised by the Defendants for being prematurely filed is founded. The arguments presented in the Plaintiff’s memoranda are unfounded, given that they confused between an amicable settlement and conciliation. The arguments made by the Defendants’ Counsels are factually and legally founded, as well as the right interpretation given to the provision of Article (29) of the contract dated 8/6/2006 on the binding nature of this article relating to the amicable settlement, given that the use of this term is conclusive proof of the obligation of reaching an amicable settlement prior to arbitration which should only be the final recourse, following the impossibility of reaching an amicable settlement. The Complementary Report ascertains the obligation of reaching an amicable settlement and the documents referred to by the same are not related to any attempt to reach an amicable settlement. These documents do not include any conditions that have been submitted to the third Defendant for amicable settlement. The Defendants have established that the Plaintiff Company retained the services of Counsel Rajab el-Bakhnug and sent a notice on 13/9/2010 to the third Defendant, thus ending all means to reach an amicable settlement. Furthermore, an amicable settlement is not reached by sending a notice, but through understanding and negotiations. Exhibits No. (59), (61), (62) and (30) of the docket submitted by the Plaintiff along with its statement of claim did not include any proof of any attempt to reach an amicable settlement. The third Defendant had 187 even suggested holding a meeting with its specialists to ensure the continuity of joint cooperation and investment. In light of the above, the plea raised by the Defendants’ Counsels regarding the inadmissibility of the arbitration case for being prematurely filed, is founded and based on factual and legal grounds. Article (29) of the contract provides for the intention of both parties to the dispute to seek an amicable settlement before resorting to arbitration. The will of both parties should not be violated in compliance with the principle of “Pacta Sunt Servanda”. The Defendants maintained this plea yet again. 16-1-2. The Defendants’ Counsels asserted that the arbitration clause stipulated in the contract dated 8/6/2006 may not be invoked vis-à-vis the State of Libya, the Ministry of Economy and the Ministry of Finance; this plea is well founded. Furthermore, this arbitration clause may not be invoked vis-à-vis the Libyan Investment Authority, given that it was not party to the contract. What is stated in the Complementary Legal Opinion on applying the rules of law governing all companies to administrative authorities enjoying the status of a legal person independent from the State is inadmissible. The present arbitration clause does not extend to the State given that it did not sign, contribute to the conclusion or termination of the contract dated 8/6/2006. The decision on cancelling the investment approval granted to the Plaintiff Company was not built on letter No. 11752. The said decision was issued in compliance with the Libyan Law on Investment which the Plaintiff Company had violated. Stating otherwise to invoke the arbitration clause mentioned in the contract dated 8/6/2006 against the Libyan State is in contradiction with the facts and the law, and aims to lay down an exception to a constant general rule without justification, i.e. the rule of the inadmissibility of extending the scope of the arbitration clause to the State in contracts concluded by a public administrative authority. Furthermore, it may not be said that the decision cancelling the approval issued by the Ministry of Economy is a decision related to the investment approval decision No. 135/2006, to conclude that the arbitration clause extends to the Ministry of Economy as well. The contract and the arbitration clause stipulated therein are subject to the principle of the privity of contracts; i.e. the terms and conditions of the contract are only binding to the parties thereto. The decision cancelling the investment approval issued upon recommendation from the third Defendant ascertains that said decision is an administrative decision separate from the original contract and the arbitration clause stipulated therein. Stating that the arbitration clause extends to the Libyan State and the Ministry of Economy in Libya contradicts with the provisions of Article (152) of the Libyan Civil Code which provides that in the event the wording of the contract is clear, it is inadmissible to deviate from its meaning by way of interpretation to identify the intention of the parties to the contract. Article (154) of the Libyan Civil Code also provides that the contract shall not impose obligations on third parties. Furthermore, not only does the arbitration clause not extend to the Libyan State and the Ministry of Economy, it also does not extend to the Ministry of Finance, given that it was not party to the contract in line with the personal scope of the arbitration clause as to the parties. Moreover, the General Authority for Investment and Ownership is not a public authority financed by the State Treasury and the Ministry of Finance is not concerned with the enforcement of final judicial judgments that might be issued against this authority. Additionally, the Libyan Investment Authority is not a signatory party to the contract drafted on 8/6/2006 and therefore, the arbitration clause may not be invoked against it. The Authority’s functions are limited to the investment of funds in varied economic fields in a way that contributes to the development of national economy resources and achieves optimal financial returns in support of the resources of the Treasury. 16-1-3. On the substantive scope of the arbitration clause, the Defendants stated that the Complementary Legal Opinion failed to present any new argument on the matter, given that the arbitration clause concerns the interpretation and execution of any dispute arising between the two contracting parties during the validity period of the contract. The present dispute is related to compensation for damages resulting from the issuance of an administrative decision and this request cannot be settled without first addressing the issue of the legality of the decision, its review and evaluation, while knowing that this implies an action for annulment. The administrative decision was not annulled or withdrawn. Thus, the settlement of the dispute arising therefrom does not fall within the jurisdiction of the Arbitral Tribunal, knowing that in such cases, the Tribunal shall only have jurisdiction in the event of the annulment or withdrawal of the administrative decision. 16-1-4. Article (29) of the contract dated 8/6/2006 only refers to the arbitration rules in the Unified Agreement for the Investment of Arab Capital in the Arab States without referring to the substantive rules stated therein. This Agreement determined the substantive scope of its application with the notion of Arab capital and its investment. The Plaintiff did not transfer any capital to Libya, and there is no point in claiming that it did not transfer a part of the capital due to the dispute between the two contracting parties concerning the non-handing over of the plot of land. How can the Plaintiff claim to have spent sums of money to be invested in the field of economic development while it failed to even open a bank account in the name of the investment project and did not apply for getting approval from the Central Bank of Libya to open an account before 14/3/2010? The Unified Agreement has a specific and precise definition for the invested capital and the terms of this definition were not fulfilled. Therefore, the Agreement does not apply to the present dispute. The non-applicability of the Unified Agreement to the dispute makes the prevalence of said Agreement over laws and regulations in Libya and the application of its provisions irrelevant. The fact that the contracting parties adopted the rules of the Unified Agreement in Article (29) of the contract dated 8/6/2006 does not entail the application of the substantive rules set out in this Agreement, given that the subsequent article, i.e. Article (30), adopted the legislation in force in Libya as the applicable law, given the inapplicability of any international convention, even if it was in force in Libya, unless in such instances where said convention is automatically applicable. 16-2. In its response and commentary pertaining to the memoranda and the Legal Opinion submitted by the Plaintiff on the merits, the Defendants stated: 16-2-1. The Libyan law is the applicable law for settling the dispute in compliance with procedural order No. 1 issued by the Arbitral Tribunal. The Defendants characterized the contract as an administrative contract, as established in their statement of defense submitted on 22/11/2012. 16-2-2. The Defendants’ characterization of the contract drafted on 8/6/2006 as being an administrative contract par excellence according to the Libyan law, is sound. Concerning the Complementary Legal Opinion and the memoranda submitted by the Plaintiff, the Defendants refer to their rejoinder submitted on 7/2/2013. They ascertain that the contract is an administrative contract according to the Libyan law which has a wider definition of this term than the one adopted in the French and Egyptian law, while knowing that the Libyan law is the only applicable law. The contract drafted on 8/6/2006 combines all the elements required by the regulation on administrative contracts in force in Libya to be characterized as an administrative contract. Claiming that this contract is not an administrative contract is an unsubstantiated claim given that it violates the Libyan law applicable to the settlement of the dispute and to the characterization of all legal matters that arise during the settlement of this dispute. Stating that all administrative contracts concluded by Libyan departments require prior approval from the Council of Ministers does not change the fact that this contract is characterized as an administrative contract. 16-2-3. Characterizing the contract drafted on 8/6/2006 as a B.O.T. contract ascertains that the contract has the same characteristics of an administrative contract in accordance with the rules mentioned in the regulation on administrative contracts in force in Libya. The legal Opinion pointed out that the contract drafted on 8/6/2006 is a B.O.T. contract, which further confirms that the contract has the same characteristics of an administrative contract. The Characterization of the contract as a Public or Private Law contract made according to the doctrine is unsubstantiated given that the doctrinal characterization of the nature of B.O.T. contracts is not binding to the judge or to the arbitrator who shall be bound, when characterizing such contracts, by the law applicable to the settlement of the dispute. It is evident, according to the regulation on administrative contracts No. 153 of 1375 a.P. (2007 A.D.) and to its classification of the projects not funded by the State, that the Libyan legislator concluded that B.O.T. contracts are characterized as administrative contracts, i.e. Public Law contracts and not Private Law contracts. 16-2-5. Stating that the contract was concluded in a way similar to the conclusion of a Private Law contract has no effect on the fact that it is characterized as an administrative contract. An administrative contract is not only concluded by way of bids, but may also be concluded by mutual agreement. Conferring jurisdiction upon Administrative Courts does not require inserting a clause to that effect in the contract concluded between the parties. Furthermore, submitting the administrative contract to arbitration, as per the agreement of the contracting parties, does not deprive the contract of its administrative nature. When the State accepts the arbitration clause, this does not entail that the State is considered as an ordinary person. 16-2-6. Cancelling the investment approval granted to the Plaintiff was in conformity with the Libyan law which according to it the project, as defined by this law, does not exist. Cancelling this project is also in line with the provisions of Article (20) of the new Law No. (9) of 2010 on the Promotion of Investment and the provisions of Article (19) of Law No. (5) of 1426 on the Promotion of Foreign Capital Investment, given that there is no difference between the two articles, because the failure to initiate or complete project execution shall lead to the withdrawal of the project license. In both instances, failure to initiate project execution or a delay in project execution must be justified to avoid the cancellation of the project, given that both articles include the verb “may”. The difference between the two articles is thus in the wording. Therefore, the cancellation of the approval granted to the touristic investment project is legitimate and the present case lacks legal and factual grounds. 16-3. Given that the present case lacks legal and factual grounds, as established by the Defendants in their rejoinder submitted on 7/2/2013, the Plaintiff shall not have the right to plead the non-performance in order to justify the non-fulfillment of its obligations by stating that it is one of the principles of the legislation of the Member States of the Arab League and of the recognized principles in international law, i.e. the principle of the right of retention specified in paragraph (1) of Article (246) and article (161) of the Egyptian Civil Law not applicable to the present case. The Libyan law does not recognize the plea to the non-performance or the right of retention. The Plaintiff did not refer to the provisions of the Libyan law in this regard. Furthermore, asserting non-performance is considered as an acknowledgment from the Plaintiff Company that it did not fulfill its obligations. The principle of good faith in the performance of contractual obligations prevents the Plaintiff from raising this plea. Additionally, the Plaintiff cannot plead non-performance under the pretense of facing physical impediments. The Plaintiff should have carried out the necessary procedures to fulfill its obligations whether on the administrative, technical, and legal levels. Had it fulfilled its obligations, it would have been released of any negligence related to the establishment of the touristic project and would have been able to raise the plea to the non- performance, given that physical impediments do not prevent the initiation of project execution, and they only represent a small part of the land area. Furthermore, the contracting party with the Administration may not cease to fulfill its obligations or plead non-performance, given that said plea does not apply with regard to administrative contracts. It is established that the Plaintiff had ceased to fulfill its obligations and has thus committed a contractual fault, which justifies the implementation by the Administration of Article (28) of Law No. (9) of 1983 on tenders and bids granting said Administration the right to terminate or perform the contract at the expense of the contracting party. Given that the Plaintiff violated its contractual obligations, its request for compensation for any alleged damages incurred should be disregarded and rejected. 16-4. On the absence of legal and factual grounds for the Plaintiff’s request for compensation, the Defendants stated that it had handed over the investment site given that the minutes dated 20/2/2007 did not cover the examination of the borders. The correspondence of the Plaintiff Company, in which it stated that Engineer Saad Salem shall be its authorized representative for the purpose of taking over the plot of land to enable it to initiate project execution, ascertains that the handing over took place in accordance with Article (5) of the contract drafted on 8/6/2006. The Plaintiff’s statement that it has requested the handing over of the project land for four years to no avail is legally and factually unfounded. The Plaintiff may not state that the Libyan State allocated the land to the Umma Bank and that the third Defendant has violated Article (28) of the contract dated 8/6/2006, given that the real estate certificate for State property confirms that the plot of land was occupied by the Plaintiff and that the rights established thereon were not annulled until the issuance of the decision cancelling the investment approval. Considering that the third Defendant and the other Defendants committed no fault, they are therefore not obligated to compensate for any damages incurred. 16-4-1. The Plaintiff had violated its contractual obligations, and that was the fault of the aggrieved party, given that it failed to submit the project’s final plans. The documents to which it referred to claim that it submitted final plans conclusively prove the contrary. 16-4-1-1. The Plaintiff Company failed to obtain a license to execute the investment project or a license to operate the project. It failed to submit a timetable, technical approvals, project drawings, project financial evaluation or an opening budget and has admitted that it failed to obtain a license. The memorandum submitted by the Plaintiff through its Counsel, Dr. Nasser el-Ghanim, mentioned that Decision No. (135) of 2006 on the investment approval granted the Plaintiff a license to execute the project and a license to operate said project in accordance with the provisions of Articles (22) and (23) of the executive regulation of the Law on the Promotion of Investment. This is an inaccurate statement, given that the approval granted to the investment project was issued in accordance with the terms and conditions stated in Law No. (5) of 1997. 16-4-1-2. The Plaintiff failed to obtain an investment project building permit. It failed to submit the necessary applications, which prompted municipal guards to stop the work of the contractor and seize the equipment, following the erection of a cement fence, given that said fence is considered as part of the building works and requires a building permit. 16-4-1-3. The Plaintiff Company failed to open a bank account in the name of the project and claimed that the Vice President of the Board of Directors did not obtain a visa to open an account and that the delay was due to circumstances outside its control. 16-4-1-4. The Plaintiff Company failed to transfer any amounts of money to state that there was an investment capital within the meaning specified by Libyan Law No. (5) of 1997. It alleged in the memorandum submitted by its Counsel Dr. el-Ghanim that the failure to transfer the capital came as a result of the annulment of the investment approval decision and of the violation by the Defendants of Law No. (9) of 2010 on the Promotion of Investment. The Defendants refuse to comment on such allegations. 16-4-1-5. The Plaintiff Company failed to pay any fees in consideration of using and benefitting from land and there is no significance in asserting that the third Defendant did not request the collection of these fees. 16-4-1-6. The Plaintiff Company unilaterally ended project works without the approval of the third Defendant. 16-4-1-7. The Plaintiff failed to submit the timetable clarifying the course of project execution by the specified date, and finally submitted it on 2/9/2007, thus violating the provisions of Article (110) of the regulation on administrative contracts which stipulates that the contractor shall submit a timetable for project execution within fifteen days following the date of contract signature. 16-4-1-8. The Plaintiff Company has not taken any serious steps towards fulfilling its contractual obligations, as established by the slow pace in concluding contracts relating to the project. Up until 13/2/2008, it had not yet signed the design and planning service contract agreement and the feasibility study contract had only been drawn up on 1/2/2008, whereas the necessary testing of the soil’s hydrologic and engineering characteristics and the determination of the border points took place on 2/7/2008. 16-4-2. The grounds set forth by the Plaintiff Company to claim compensation are false. The Defendants highlighted the shortcomings of the report submitted by the specialized German company Rodle Middle East as well as the shortcomings of other reports submitted by the Plaintiff Company. 16-4-2-1. The Allegations of the Plaintiff are worthless, i.e. that the reports were issued by specialized expertise firms, given that most material presumptions may be refuted by contrary evidence, as established in the rejoinder submitted by the Defendants on 7/2/2013. Given that the reports submitted by the Plaintiff to cover lost profits lack credibility, the Defendants saw no need to resort to specialized experts to study the apparent shortcomings of these reports. 16-4-2-2. The Plaintiff Company is not entitled to any compensation, valued at fifty million US dollars, for moral damages incurred given the lack of evidence. The third Defendant did not attribute any malicious trait to the Plaintiff such as fraud, deceit or manipulation, which negates the occurrence of moral damages. The allegations of the Plaintiff are worthless, i.e. that it will appear to the outside world as if it had failed to fulfill its contractual obligations. 16-4-2-3. The Defendants are not obligated to pay arbitration costs, given that the Plaintiff chose to prematurely resort to arbitration and should therefore cover its expenses. The Defendants are not obligated to pay said fees estimated by the Plaintiff at 500,000 US Dollars. 16-4-2-4. The Plaintiff Company failed to prove its right for compensation. Furthermore, the Plaintiff is not entitled to compensation in compliance with the rules of law adopted in the Libyan law, mainly the principle of preventing the aggravation of damages. 16-4-3. The Plaintiff Company violated its contractual obligation by failing to prevent the aggravation of damages. Article (224) of the Libyan Civil Code provides that the creditor shall not be entitled to compensation if the damage was incurred as a result of the failure to exert reasonable efforts to avert it. The standard is the same that applies to a reasonable person being in the same legal position as the aggrieved party. The Plaintiff has violated its obligation by failing to prevent the aggravation of the damages it claims it has sustained. The Plaintiff also failed to exercise due diligence as stipulated by the Libyan law. Accordingly, the legal basis of the Plaintiff Company’s request for compensation is non- existent and the case should thus be dismissed. 16-4-3-1. The Plaintiff’s invokes in its defense regarding compensation for lost profits, the potential damages that did not occur. The Plaintiff asserted its right to compensation for hypothetical potential damages. This request is unsubstantiated according to the Libyan law. The case should thus be dismissed for lack of legal and factual grounds. 16-5. At the conclusion of its final submission, the Defendants reiterated their previous requests concerning jurisdiction, adding the inadmissibility of invoking the arbitration clause stipulated in Article (29) of the contract drafted on 8/6/2006 against the Libyan Investment Authority and requested, on the merits, the dismissal of the case for lack of legal and factual grounds. Chapter Seventeen: on the statements of the Plaintiff in its oral argument during the two hearings dated 9 and 10 of March 2013, and submitted by its Counsel Mr. Rajab El-Bakhnug on 13/3/2013 and due to be submitted in writing on 17/3/2013 as per the procedural order No. 22. Following the oral argument of the Plaintiff’s Counsel Mr. Rajab El-Bakhnug on the hearings set on 9 and 10 of March 2013, Mr. Bakhnug submitted a written submission of the oral argument, reiterating the allegations of the Plaintiff set out in the statement of claim and the memoranda in reply to the memoranda submitted by the Defendants, adding what can be summarized as follows: 17-1.
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