CLAIMANTS

Mr Nigel Blackaby
Mr Noah D. Rubins
Mr Lluís Paradell
Ms Caroline Richard
Mr Jeffery Commission
Mr Francisco Abriani
Ms Belinda McRae
Freshfields Bruckhaus Deringer US LLP

RESPONDENT

Dr Hugo Raúl Montero Lara, Attorney General
Ms Elizabeth Arismendi Chumacero, Deputy Defense Attorney and Legal Counsel to the State
Office of the Attorney General

Mr Eduardo Silva Romero
Mr José-Manuel García Represa
Mr Álvaro Galindo Cardona
Mr Juan Felipe Merizalde
Ms Ana Carolina Silva
Dechert LLP 59
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in this case would run contrary to the principles of stability, certainty and good faith, as Bolivia (i) required the establishment of GAI, (ii) was aware of its investment since day one, (iii) included such investment in the Nationalisation Decree, and (iv) now that arbitration proceedings have been initiated and having received all the returns on the investment, purports to deny the benefits of BIT protection to the investment holders. For the foregoing reasons, the Tribunal cannot accept the retroactive application of Article XII of the US-Bolivia BIT.202 

217. In addition, the Claimants consider that Bolivia cannot deny the benefits of Article XII of the US-Bolivia BIT because the conditions set forth therein have not been met, especially the absence of “substantial business activities” in the United States. The Claimants stress that the US-Bolivia BIT does not provide a definition of “substantial business activities”. If the VCLT were applied, the term “substantial” would not be a synonym of “large”, as the decisive question would be the materiality and not the magnitude of the business activity. This is the interpretation provided by arbitral case law. Therefore, GAI has indeed conducted substantial commercial activities in the United States, since it maintains offices in said territory, holds shareholders’ meetings in Ohio as well as Board of Directors’ meetings, prepares the minutes of said meetings, etc., thereby fulfilling the conditions described in arbitral case law.203 

218. In addition to the allegations on the prospective application of the denial of benefits,204 the Claimants consider that such provision cannot be understood as “[a] plea that the arbitral tribunal does not have jurisdiction shall be raised no later than in the statement of defense,” as pointed out by the Respondent pursuant to Article 23(2) of the UNCITRAL Rules.205 Instead, it is an act that forms the basis for such a plea. The UNCITRAL Rules set out the procedural deadline beyond which an existing jurisdictional obstacle will be waived, but the deadline for creating such an obstacle is a matter of substance, governed by international law.206 In this regard, it is a well-established principle that “jurisdiction is to be determined in light of the situation as it exists on the date the judicial proceedings are instituted.”
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Moreover, “once established, jurisdiction cannot be defeated. It simply is not affected by subsequent events.”207

219. In the Claimants’ opinion, the denial-of-benefits clause may affect an investor’s claims in two different ways, neither of which can operate retroactively:

(a)  The State deprives the claimant of all substantive protections of the treaty, and that measure is in line with the treaty. All claims would thus be inadmissible. But if the State has not denied benefits at the moment it takes measures on the grounds that the treaty has been violated, then all protections are at that moment in place, and a breach of the treaty can occur. By later denying the benefits of the treaty, the State cannot undo the legal reality of a treaty breach —it can only prevent its subsequent actions from violating the treaty.

(b)  The State deprives the claimant of the benefit of its consent to arbitration as set forth in the treaty, preventing claims from being adjudicated by an arbitral tribunal. But if the State has not denied benefits at the moment when the claimant initiates arbitration, then the State’s consent is still in place, and the offer to arbitrate is accepted by the investor and transformed into an irrevocable agreement. By later denying the benefits of the treaty, the State cannot withdraw a consent that has already been accepted —it can only prevent the investor from initiating arbitrations with respect to future disputes.208 

220. In this case, the disputed events took place in May 2010. At that time, the Respondent had not invoked the denial-of-benefits clause. Therefore, the full range of substantive protections of the US-Bolivia BIT applied to the Claimants and their investment. Moreover, to the extent that Bolivia’s conduct was contrary to the terms of the Treaty, GAI immediately acquired a right to compensation. Similarly, the Claimants initiated this arbitration in November 2010, two years before Bolivia sought to withdraw its treaty benefits. However, Bolivia accepted the offer to arbitrate and, in turn, GAI had long since availed itself of the benefit of the arbitration clause of the US-Bolivia BIT. Additionally, the Respondent was at all times aware of the Claimants’ investment in Bolivia.209

221. In any case, unlike the Respondent’s arguments,210 the Claimants state that it is the Respondent who must prove the fulfilment of all necessary conditions to deny the benefits of
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the Treaty in accordance with Article 27(1) of the UNCITRAL Rules.211 Since Bolivia has failed to show that GAI is not engaged in any substantial economic activities, the denial-of-benefits clause cannot apply.

D. ALLEGED PRESENTATION OF NEW CLAIMS NOT PROTECTED BY THE TREATIES

The Respondent’s Arguments

222. According to the Respondent, the Claimants have filed New Claims in the Statement of Claim, which had not been included in the Notice of Dispute or in the Notice of Arbitration. The New Claims refer to violations of the Treaties on the part of Bolivia in connection with: (i) electricity spot prices; (ii) capacity payments; and (iii) the two Worthington engines. The Respondent alleges that, by way of this submission it describes as “untimely”, the Treaties were violated in two respects (Article IX of the US-Bolivia BIT and Article 8 of the UK- Bolivia BIT):

(a)  The conditions necessary for the notice of New Claims have not been fulfilled. The term “dispute” in the Notice of Arbitration and the term “dispute” in the Statement of Claim are used differently, and the New Claims are included in the latter, despite not being included in the former (neither in the Notices dated 13 May 2010 nor in those invoked in the same document).212 

(b)  The cooling-off period established in the Treaties for the possible amicable settlement of the dispute was not fulfilled. This breach would have occurred even if the New Claims had been included in the Notice of Arbitration, since the Respondent had no opportunity to use the period of amicable consultations in any case. Furthermore, during the meetings held between July 2010 and March 2011, the compensation that had to be granted to the Claimants after nationalisation was discussed, but not the New Claims.213

223. According to the Respondent, the Claimants intend the Tribunal to hear new claims, forcing Bolivia to respond to them in a short period of time, considering the associated costs and complexity. Pursuant to recent case law, these New Claims should be rejected by the Tribunal, which lacks jurisdiction to hear them because the conditions established by the Treaties for such purposes have not been met.214
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237. Therefore, it would be unreasonable to deprive the Tribunal of its jurisdiction to hear three claims based on a purportedly defective notification, especially given that they are part of a wider claim, with respect to which negotiations were not successful and Bolivia has shown no intention to settle. In any event, and as previously explained by the Claimants,251 there would be no use in requiring negotiations concerning claims connected to the spot prices, PBP and Worthington engines, considering the attitude and the statements made by Bolivia in the course of the proceedings.252 

238. Hence, the Claimants’ efforts to settle their dispute with the Respondent have been both lengthy and unsuccesful. Under these circumstances, the Treaties do not impose additional requirements, and the Tribunal shall accept its jurisdiction on the claims at issue. In any event, the Claimants consider that they have complied with the notification and amicable consultation requirements. Thus, based on the Respondent’s own arguments, since the measures related to the spot prices, PBP and Worthington engines were implemented in the context of the nationalisation of the electricity sector, there would be no need for a separate notification of such claims, since these would be included within the nationalisation itself.253 

E. PURPORTED DOMESTIC NATURE OF THE NEW CLAIMS

The Respondent’s Arguments

239. According to the Respondent, the New Claims fall within the exclusive scope of Bolivian law, and cannot be considered international disputes under the Treaties. Thus, the Tribunal should find that, as per the VCLT rules of interpretation and Articles IX(1) and 8(1) of the US-Bolivia BIT and the UK-Bolivia BIT, respectively, the Respondent has not given its consent so that such domestic claims be subject to dispute in the context of these proceedings.254

240. On the basis of Iberdrola v. Guatemala,255 Bolivia states that it has only given its consent to arbitrate disputes “concerning an obligation [of Bolivia] pursuant to this Agreement” [Tribunal’s translation] in accordance with Article 8(1) of the UK-Bolivia BIT, but not for
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G. ALLEGED PREMATURE NATURE OF THE CLAIMS RELATING TO THE SPOT PRICE AND WORTHINGTON ENGINES

The Respondent’s Arguments

269. In the Respondent’s view, should the Tribunal decide to hear the New Claims relating to the spot price and the Worthington engines, these should be declared inadmissible due to the prematurity thereof, since Bolivia has had no chance to review its conduct and, that being the case, to correct it. In similar situations, arbitral case law has considered the claims are premature,308 since the investor has not made reasonable efforts to achieve the revocation of the act he/she deems illegal before the domestic instances, that being different from the requirement of exhaustion of local remedies alleged by the Claimants.309 Thus, the investment host State cannot be held liable for an international wrongful act, absent the opportunity to remedy its conduct.

270. The Respondent submits, on the basis of the elaboration provided by Dr Carlos Quispe, that the Claimants have failed to exhaust the different administrative and judicial channels to challenge the decisions relating to the spot price modification.310

271. In its Reply, the Respondent holds that the Claimants made “no effort whatsoever” to oppose the measure invoked on spot prices, and that the efforts made in order to obtain the restitution of the engines have not been reasonable.311 Additionally, the Respondent considers that the Claimants mistake this objection with the exhaustion of local remedies requirement. In any event, the premature nature of the claims is not a procedural requirement, but an element affecting the international wrongful act.312

272. In turn, the Claimants have not denied not having made use of the administrative and judicial remedies available to challenge the measures relating to the spot price and the Worthington engines. In Bolivia’s view, this opportunity is of substantive nature and, therefore, it shall not be mistaken with the exhaustion of local remedies.313
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273. In addition, the Respondent considers that the Claimants’ interpretation of the Jan de Nul and Loewen cases is erroneous.314 First, the Loewen Tribunal,315 in spite of hearing a denial of justice claim, set forth the rule that “the State should be afforded the opportunity of redressing, through its legal system, the inchoate breach of international law”. Such rule, according to the Respondent, should not only be applied to denial of justice cases, but also to national treatment, minimum level of treatment and expropriation claims. Second, the Jan de Nul Tribunal,316 making no distinction whatsoever regarding the disputed measure, determined that there is a “clear trend of cases requiring an attempt to seek redress in domestic courts before bringing a claim for violation of BIT standards, irrespective of any obligation to exhaust local remedies.”

274. Lastly, the Respondent deems the Claimants’ critics to the Generation Ukraine case unwise when making reference to the Helnan annulment,317 since although the Helnan committee318 asserted that the tribunal’s decision in any event319 stands “somewhat outside the jurisprudence constante”, it also explained that “on its facts, the decision of the Generation Ukraine Tribunal is understandable”.320

275. In Bolivia’s view, it cannot be ignored that both in the Generation Ukraine case as well as in this arbitration, the alleged wrongful acts were decisions of first instance authorities, thus, the Tribunal cannot omit this detail, as neither the Helnan committee nor the Helnan Tribunal did omit it in the Generation Ukraine case.321 

The Claimants’ Arguments

276. According to the Claimants, the claims are neither premature nor inadmissible. In any event, the Treaties do not require that a dispute be heard by domestic or administrative courts before a party may resort to an arbitration tribunal. In addition, exhaustion of local remedies is unnecessary in the investment treaty context, except in connection with denial of justice
92claims.322 This view is consistent with the case law submitted by the Claimants, unlike that contributed by Bolivia, which cannot apply to this case, as it refers to: (i) denial of justice claims (which do require exhaustion of local remedies),323 and (ii) the Generation Ukraine case, which was later criticized by the Helnan arbitration tribunal.324 expropriation process as a whole, including the calculation of compensation. Therefore, they believe that violation takes place whenever the government exercises its powers to deny proper compensation or to unduly delay the process.335

282. Despite the foregoing requirements, the Claimants assert that Bolivia offered them no compensation following the nationalisation. To the contrary, the Claimants argue that Bolivia took a series of “fundamentally unfair measures to ensure that the Claimants would receive no compensation for their assets.”336 They assert the lack of due process for the following reasons:

(a)  The Nationalisation Decree provided for a non-transparent valuation process, unilaterally performed by the Government, without the Claimants’ participation. The result of the valuation, in the Claimants’ view, was clearly predetermined if the good financial situation of EGSA at the moment of the nationalisation is taken into consideration;

(b)  The Claimants were merely informed that some companies had been requested to perform the analysis, without any further explanation;

(c)  The audits ordered by the Government a posteriori reflect the use of unconventional accounting criteria with the sole purpose of reducing EGSA’s apparent value;

(d)  The Respondent did not submit to the Claimants any report on the valuation process performed, or a formal conclusion on the amount of the compensation;

(e)  Finally, no compensation whatsoever was offered.337 

(ii) Claimants are Entitled to Compensation for the Nationalisation
283. The Claimants affirm that the Respondent committed an internationally wrongful act, and therefore, must redress the damage caused to the Claimants’ investment in Bolivia. The Claimants argue that they are entitled to receive adequate compensation so as to restore them to the situation, in economic terms, before the expropriation, as described in the two
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Compass Lexecon Valuation Reports prepared by Dr Abdala (hereinafter, the “Compass Lexecon”).

284. The Claimants affirm that both Treaties embody a special legal regime on compensation in case of expropriation, which follow the main elements of customary international law and the “Hull Formula” of prompt, adequate and effective compensation for expropriation that reflects the FMV of the expropriated asset. Therefore, given that no compensation has been paid and the expropriation was unlawful, the applicable standard is now that under customary international law, which imposes a broader compensation standard, including full compensation and lost profits, to the extent they are verified in accordance with the case law.338 Moreover, a standard of proof to be applied to all claimed damages is that of “balance of probabilities”. Thus, a respondent State cannot “invoke the burden of the proof as to the amount of compensation for such loss to the extent that it would compound the respondent’s wrongs and unfairly defeat the claimant’s claim for compensation.”339

285. In addition, the Claimants consider that compensation must be assessed using the FMV as of the date of the deprivation of rights (1 May 2010), taking into account future profitability given that it was a company with income generating assets (a “going concern”) and, ultimately, this is the formula used by market players to calculate the value of companies.340 The Claimants further consider that the most appropriate form to calculate FMV is by using Discounted Cash Flow (hereinafter, “DCF”), pursuant to international law and case law. Claimants note that they have used the Weighted Average Cost of Capital (hereinafter, “WACC”) as the discount rate.341 

286. The Claimants clarify that Compass Lexecon, in determining this FMV, failed to address the losses sustained upon modification of the regulatory framework as regards spot prices and PBP. According to the Claimants, this means that its estimate of EGSA’s FMV as of 1 May
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2010 does not reflect the losses caused to the Claimants by the aforementioned measures and, consequently, the losses sustained in connection with those measures must be calculated separately.342 For that purpose, a DCF model was created for EGSA as of May 2010, based on the assumption that the measures before nationalisation would remain effective until the completion of the valuation period.343

287.Below, the Claimants list and explain the key assumptions made by Compass Lexecon to calculate the compensation owed:344 

(a)  Timeframe: The DCF projection is based on the fact that EGSA’s Generation Licenses are effective until 2038. Thus, cash flows are projected (on an annual basis) from May 2010 through December 2038.345 

(b)  Revenue Forecasts:

(i) Revenues for Sale of Electricity: Using the information available to a potential buyer on the day of the nationalisation, with support of the independent firm specialized in engineering, Mercados Energéticos Consultores (hereinafter, “MEC”), Compass Lexecon developed a simulation of the amount of electricity dispatched by EGSA and the electricity spot prices based on the evolution of the supply and demand of electric energy in Bolivia over time. Thus, by means of the same software used by CNDC, known as Stochastic Dual Dynamic Programming (hereinafter, “SDDP”), two different periods are projected: one between May 2010 and December 2018 (using the dispatch simulation created by MEC), and a second period from 2019 through 2038, using the spot prices projected by MEC for 2018 and, from that date, remaining constant in real terms and adjusting in nominal terms by the U.S. Producer Price Index (hereinafter, “PPI”).346 

(ii)  Revenues for capacity: Compass Lexecon utilized MEC’s electricity dispatch calculations and corroborated that all of EGSA’s units could have continued to perceive PBP given the great increase foreseen in the electricity demand. With
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288. In their Statement of Claim, the Claimants determined the FMV of its participation in EGSA as of 1 May 2010 at USD 80.9 million, which amount they reduced to USD 77.5 million in their Reply on the Merits. In said Reply, the Claimants added to this amount USD 15.8 million in interest from the date of nationalisation to 29 February 2012, date of the filing of the Claim, resulting in a compensation of USD 93.3 million for damages and losses from the nationalisation.355

289. In sum, for the Claimants, unless the Tribunal considers that a potential buyer would have paid nothing for EGSA prior to the nationalisation, the expropriation made by Bolivia should be considered unlawful and in violation of the Treaties, given that it did not respect due process and offered no compensation.356 

2. The Respondent’s Arguments

(i) Bolivia Did Not Effect An Unlawful Expropriation

290. The Respondent states that the alleged illegality of the nationalisation is merely a matter of quantum.357 With an equity interest of zero dollars held by the Claimants in EGSA as of the nationalisation date, Bolivia has no duty to compensate given that the Treaties do not provide for payment of compensation in the event of nationalisation of assets with no value.358 The Respondent has never denied (nor denies) that compensation should be paid following nationalisation, but only in an amount equivalent to the FMV of the investment and nothing else.359

291. As regards the requirements considered by the Claimants, the Respondent submits as follows:

(a) With respect to the “promptness”, the Respondent asserts having met such condition, as the valuation process of the equity interest was conducted within the 120 business days
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specified under the Nationalisation Decree. Moreover, Bolivia took the necessary measures towards computing the FMV without any delay, while informing the Claimants of the negative value of their investment.360 

(b)  Determining what amounts to “fair” and “adequate” compensation under the Treaties depends on the economic and financial calculation set by the FMV of the investment, that is, what PROFIN did —according to the Respondent— pursuant to the Nationalisation Decree and later through the Econ One Valuation Reports in this arbitration. Therefore, upon calculation of such amount, payment must be made without delay. However, if the FMV is negative, the State has no obligation to pay such compensation, and the nationalisation is not thereby rendered unlawful.361

(c)  Bolivia did comply with due process given that: (i) the condition of due process refers to the expropriation measure but not to the subsequent investment valuation process;362 (ii) the Claimants themselves failed to allege that the Nationalisation Decree had violated due process;363 (iii) there is no provision in the Treaties requiring the Claimants’ participation in the valuation process for the expropriation to be lawful, and thus Bolivia is being held liable for an obligation that does not exist;364 and (iv) the Claimants fail to specify which provisions of the Treaties have been allegedly violated.365 

In any event, (i) the call for the consulting services was published by ENDE in June 2010, clearly defining the process to be followed; (ii) there were clear rules on how to perform the valuation pursuant to such call; (iii) indeed, said rules were consistent with the methodology specified by the Treaties and followed by both valuation experts, this is, by means of the DCF; (iv) Claimants were informed of the publication of the call, with the retention of PROFIN also having been
103published in the media; and (v) the Respondent did inform the Claimants that EGSA’s FMV was negative, and thus there was no obligation to compensate.366 108
297. Lastly, the interest rate. The Respondent considers that the use of WACC as the rate of interest accrued by the compensation owed by virtue of the expropriation is not in conformity with the standard provided for in the Treaties.397 First, WACC is not a “commercial interest rate”, which is the criterion followed by the Treaties to determine the type of interest. Moreover, it incorporates various risk premiums that compensate the risk inherent to the future cash flows of EGSA, until 2038, which discount determines its market value. Now, to the extent in which the expropriation of its participation in EGSA eliminated for the Claimants such risks, they should not be compensated for a risk that they are no longer facing since May 2010. The Respondent considers that a commercial interest rate should be, at the most, equal to LIBOR + 2%, and that the Tribunal should apply a simple interest rate, rather than a compound rate, pursuant to the case law invoked and to Bolivian law.398 In any case, the fact that there are arbitral precedents that support the application of compound rates does not mean that such solution should always be applied. A compound interest rate may not be applied if inappropriate, as in the instant case.399 

298. By virtue of the foregoing considerations, the Respondent considers that, once the mistakes made by Compass Lexecon in its report are corrected, the VJM of the shareholding claimed by the Claimants in this arbitration is nil.400 Therefore, Bolivia is not obligated to compensate the Claimants.

B. CLAIM FOR BREACH OF THE STANDARDS PROVIDED FOR IN THE TREATIES

299. The Claimants consider that the two following measures prior to 1 May 2010 have led to the reduction of their investment: (i) the amendment to the regulatory framework in terms of the spot price; and (ii) the amendment concerning the PBP. Both measures have breached the Treaties and, thus, compensation should be paid.401
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1. Fair and Equitable Treatment Standard

The Claimants’ Arguments

300. According to the Claimants, the fair and equitable treatment standard is recognized as a flexible concept, affording protection when State action is considered unfair.402 The investor is entitled to require justice in its relations with the host State. Furthermore, according to the case law invoked by the Claimants, both bad faith and malicious intent are a precondition to determine the breach of the fair and equitable treatment standard, which coincides with the goals of the Treaties: to promote and protect the investments, the Tribunal being responsible for having regard to all relevant circumstances.403 

301. Thus, the Claimants hold that such standard requires that investors be accorded a stable and foreseeable investment environment, in accordance with the case law the Claimants invoke.404 In this regard, the tribunal in CME v. Czech Republic405 found that regulatory and legislative amendments adopted by respondent had wrongfully damaged CME’s investment; the tribunal in Azurix v. Argentina406 as well as the tribunal in Siemens v. Argentina407 affirmed that a chief element of the breach of the fair and equitable treatment standard is the frustration of the legitimate expectations of the investor at the time the investment is made. This standard is breached when fundamental conditions considered by investors at the time of making an investment are altered.408
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302. The Claimants invested in Bolivia taking as a reference a series of fundamental principles that were paramount for the economic feasibility of the investment, and which were envisaged in the regulatory framework governing the spot price in effect at that time. Nonetheless, these fundamental principles were modified in 2008, undermining the stability and foreseeability of the legal framework, and thus frustrating the legitimate expectations of the Claimants. The Claimants explain that, before 2008, all thermal units could be selected as marginal units. However, Resolution SSDE No. 283 excluded liquid fuel units as potential marginal units. This change meant that spot prices were artificially reduced when these turbines were dispatched, and the most efficient companies (such as EGSA) lost a considerable part of their margin.409 

303. Moreover, although the existence of a stabilization commitment is not necessary to consider that there has been a breach of this standard, the Claimants allege that Article 5 of the Dignity Tariff Agreement is a clear indication of the commitment of Bolivia to alter the spot price regime only after consultation with the shareholders, and subject to maintaining sustainable income levels. In any case, investors are entitled to fair and equitable treatment throughout the life of the investment, from the year 2006 onwards. Hence, the Claimants could in fact have a legitimate expectation based on such provision. Furthermore, Claimants did not show acceptance when signing the 2010 Dignity Tariff Agreement; on the contrary, EGSA refused to execute the Agreement despite the threats of Governmental officials. Finally, EGSA gave in and executed the agreement in an attempt to avoid nationalisation. 410

304. On the other hand, it is irrelevant whether the regulatory modification of the spot price was reasonable and justified. When a protected investor has based its actions on a regulatory framework, the alteration of the rules need not be arbitrary or unreasonable in order to be unfair.411 In any case, Compass Lexecon has demonstrated that the decision to exclude liquid fuel units from the composition of the spot price does not create a more efficient market, but rather the opposite. In addition, the Claimants consider that using the regulatory amendment to reduce the value of a company that the Government was pursuing to acquire was convenient for the latter, but barely “rational” from a political perspective.412 
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The Respondent’s Arguments

305. According to Bolivia, the Claimants interpret this standard too broadly. The object of the protection accorded by such standard is the legitimate expectations of the foreign investor, but to a limited extent. Thus, in the absence of a previous commitment by the State, the investor may not have the legitimate expectation that the State will not exercise its power in order to modify the legal framework applicable to the investment, and therefore, such standard may not be deemed as violated.413 

306. The absence of such commitment is evident in the instant case, since, in the Respondent’s opinion and in accordance with the international case law it has invoked: (i) policy statements create no legitimate expectation whatsoever; (ii) general statements included in a treaty or law, which, by nature, can evolve, may not be regarded as commitments undertaken vis-à-vis the investor; and (iii) a commitment may be specific in nature if “its very purpose was to offer the investor an actual stability guarantee”414 [Tribunal’s Translation]. Bolivia considers that the Claimants have failed to show the existence of such commitment because such commitment does not exist. What is more, in the Respondent’s view, the laws, Licenses and Agreements between the Parties confirm the absence thereof.415 Moreover, the Claimants should demonstrate the reason why excluding diesel turbines from the calculation of the spot price is a measure that may entail a breach of the fair and equitable treatment standard as set forth in the Treaties.

307. The Respondent argues that the alleged commitment executed in 2006 to which the Claimants make reference, cannot have led the Claimants to invest in Bolivia in 1995 and 2006. It is absurd to believe that, had the foregoing clause never existed, the Claimants would have contributed no capital or other assets (to which the Claimants refer as “investment”) to EGSA after March 2006, or that any statutory amendment must always be more favorable to the investor. In any case, the guarantees offered by a State in its regulatory framework can only play a persuasive or dissuasive role in the investor’s decision to invest in a country or not. Furthermore, the Respondent denies that the Claimants were unwilling to sign the 2010 Dignity Tariff Agreement or that they did so against their will. Considering
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that a total of 19 companies from the electricity sector executed such Agreement, it would be impossible to explain how Bolivia could have forced all of them to do so.416 

308. On the other hand, to find a breach of the fair and equitable treatment standard under the Treaties and International Law, the Claimants must show that Bolivia adopted drastic, unreasonable, unjustified or discriminatory measures.417 Nevertheless, the Claimants mention no such characteristics. In addition, Respondent believes that asserting (as the Claimants do) that a reasonable and justifiable modification of the “rules of the game” [Tribunal’s Translation] by the State is an unfair measure contrary to the Treaties is a ridiculous position from a legal standpoint. The Tribunal may not replace the State in its regulatory task and determine whether or not such measure observed the Electricity Law and the efficiency principle. Besides, Econ One demonstrated that such measure had promoted efficiency and such efficiency had not been curtailed.418 Nor is it true that Operating Norm No. 3/2008 was aimed at reducing EGSA’s value; moreover, such Norm is still in force and currently continues to produce effect in relation to EGSA. If the purpose of such Norm were that stated by the Claimants, it would have already been repealed by Bolivia.419 

2. Full Protection and Security Standard

The Claimants’ Arguments

309. According to the Claimants, the full protection and security standard consists in exercising reasonable care and actively protecting the Claimants’ investments, that is to say, it is an “objective” standard of “vigilance” which is violated by the “mere lack or want of diligence”.420 Likewise, it is a standard requiring the active conduct of the host State in taking “all measure of precaution to protect the investments.” Moreover, the Claimants believe that the withdrawal by the host State of the legal protection and security previously granted to an investment constitutes a violation of such standard, as so has been recognized in international case law.421
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310. Therefore, in the Claimants’ view, such standard includes Bolivia’s duty to actively protect the investments that the Claimants had made, while applying the legal, regulatory and contractual framework that had been established so as to ensure the viability and legal and economic protection of the Claimants’ investments, without limiting such protection to mere physical security.422 However, the Respondent did the exact opposite, altering the regulatory framework, in disregard of the full protection and security standard provided for in the Treaties, and the reasonableness or justification of the modification, are irrelevant. In any case, this modification was not based on rational policy motives.423 

The Respondent’s Arguments

311. In the Respondent’s opinion, a modification of the regulatory framework may not give rise to a violation of the full protection and security standard in accordance with the case law quoted by the Claimants themselves, especially as it was a change introduced pursuant to the regulatory framework applicable to the investment. It was a reasonable and justified measure.424 Hence, Bolivia considers that, by adopting the view of the cases presented by the Claimants, this standard is compared to the fair and equitable treatment standard, which means that, were the Tribunal to confirm that Bolivia did not breach the fair and equitable treatment standard, it also could not have violated the standard of full protection and security.425 The Respondent highlights that these are “minority” [Tribunal’s Translation] cases that have been criticized by case law, which understands that the full protection and security standard is intended to ensure the physical protection and integrity of the investor and its property within the territory of the host State, thus entailing a duty of due diligence rather than an obligation of result.426 

312. The Respondent insists that it never agreed not to alter the regulatory framework. In fact, the opposite can be inferred. Anyway, such modification neither exerted a significant impact nor curtailed the investment made by the Claimants. Therefore, such statutory amendment
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cannot be deemed to have violated the full protection and security standard provided for in the Treaties.427 

3. Adoption of Unreasonable Measures

The Claimants’ Arguments

313. The Claimants maintain that, as with the two standards described above, the standard of reasonableness of the conduct of the host State is also construed as flexible and broad and the analysis of the foregoing standards should be applied thereto. Hence, the Claimants state that Respondent cannot be said to have acted reasonably when it altered a key aspect of the regulatory framework, such as that concerning spot prices. This is not a behaviour that the Parties to a treaty could have anticipated or expected in light of the provisions and goals of such instruments to promote and protect investments.428 

314. In addition, the Claimants argue that the standard applicable to the provisions of both Treaties is identical, though their drafting may differ: an unreasonable measure is illegal regardless of whether it is also discriminatory. Despite the lack of an express reference to the term “arbitrary”, the terms “arbitrary” and “unreasonable” are used interchangeably in investment treaties, and arbitral tribunals have drawn no distinction between them. Lastly, on the basis of all the evidence furnished, such measure was neither reasonable nor justified.429 

315. In view of all the allegations made as to the spot price measure adopted in violation of the standards presented so far, the Claimants assert that a significant portion of EGSA’s profit margin was eliminated, since such measure “affected [ ] revenues and resulted in financially assessable damage” by excluding liquid fuel units from the calculation.430 Besides, the spot price was EGSA’s first source of income. The Claimants also affirm that EGSA was obliged, in circumstances of high spot prices, to deposit a proportion of its revenues in the stabilization fund. Such revenues were recorded as accounts receivable that were accessible (with interest) when spot prices decreased. In any case, such revenues continued to belong to EGSA.431 
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316. The damages calculated as of 29 February 2012, based on data published by the CNDC, for the “actual scenario” (EGSA’s actual revenues as a result of the spot price modification) and the calculations made by MEC for the so-called “but-for scenario” (the revenues that EGSA would have obtained had the foregoing modification not been adopted), using the average WACC of 10.63% in relation to the Claimants’ stake in EGSA (50.001%), amount to USD 5.1 million. According to the Claimants, the calculation made by Econ One is incorrect for the following reasons: (a) the CNDC study produces a much less accurate estimate than that carried out by MEC, because the CNDC study did not use actual dispatch conditions from September 2008 to May 2010, but rather simulated conditions according to mid-2008 estimates; (b) Econ One’s failure to use a “but-for” dispatch simulation to calculate post- nationalisation spot-price revenues has the effect that demand growth and capacity additions are excluded from its calculations.432 

The Respondent’s Arguments

317. The Respondent believes that the articles relied upon should be interpreted pursuant to Article 31 of the VCLT. Then, it goes on to state what, in its opinion, would be the correct interpretation of such articles in accordance with the case law offered, concluding that, in order to regard such standard as breached, the measure disputed must be both unreasonable and discriminatory (in the terms of the US-Bolivia BIT) or both arbitrary and discriminatory (in the terms of the UK-Bolivia BIT).433 

318. However, the Claimants have not alleged that the measure is either discriminatory or arbitrary, but only unreasonable. Consequently, in the absence of such categories, the standard of non-impairment of the investment cannot be deemed to have been breached.434 In fact, the Claimants argued that Operating Norm No. 3/2008 had been unreasonable from an economic standpoint but failed to describe it as arbitrary, requesting that the Tribunal consider both terms (unreasonable and arbitrary) as interchangeable and, thus, that the meaning of the term “arbitrary” contained in the UK-Bolivia BIT be replaced by a different notion. Nevertheless, the term “arbitrary” is not a synonym of “unreasonable”.
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319. By virtue of the foregoing analysis of the relevant standards, the Respondent considers that the Claimants have failed to demonstrate that the spot price modification has had any effect on their investment. On the contrary, as far as the Respondent is concerned, it provided sufficient evidence that such measure was not unreasonable and that the alleged economic impact thereof upon the Claimants is inaccurate and, in any case, excessive, since, according to Econ One, EGSA’s losses amounted to USD 2.2 million.435 Nor have the Claimants taken into consideration the impact of the tariff stabilization in force and effect in Bolivia since 2003. In Econ One’s opinion, this circumstance renders the situation invoked by the Claimants impossible.436

320. The Respondent points out that the funds mentioned by the Claimants are deposited indefinitely and only recovered in the event of reduction of spot prices, as a consequence of which they do not have the same value as if they were EGSA’s available assets. Even if stabilization funds were EGSA’s accounts receivable, the damage would be prospective and subject to the relevant discount. Moreover, the accounts of EGSA and other electricity generators in the stabilization fund have been historically rated in crescendo, which is why they may be predicted to continue rising in the future.437 

4. Ineffective Means Available to the Claimants

The Claimants’ Arguments

321. As the Claimants explain, and in accordance with the case law presented, the effective means clause requires that the host State’s legal and judicial system work effectively. Unjustified delay by the host State’s courts dealing with an investor’s claim may amount to a breach of such standard. The Claimants draw attention to the fact that Article II(4) of the US-Bolivia BIT makes no reference whatsoever to denial of justice. Nor does the provision refer to customary international law or link “effective means” with denial of justice. Therefore, the standard applicable in the instant case is not one that prohibits particularly onerous conduct only. The applicable standard is nothing but what the Treaty itself establishes: Bolivia must provide effective means of asserting claims and enforcing rights. Furthermore, the Claimants argue that this standard may be imported into the UK-Bolivia BIT by way of the MFN clause
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without giving rise to an abuse, since, as confirmed by case law, this clause is specially designed to harmonize all the standards for protection of investments.438 

322. In light of the foregoing, the Claimants believe that the Bolivian judicial system has not worked effectively, since their claims in connection with the modification of the PBP are still pending, in breach of the effective means standard, and thus, in violation of the Treaties.439 This conclusion is reached regardless of the comparison the Bolivian judicial system with other legal systems in terms of delays, as it is irrelevant whether Bolivian courts are equally slow for everyone or whether other countries also lack effective means. The obligation to ensure effective means is objective. In any event, the delays that the Claimants have faced have mostly been caused by institutional defects.440 

323. Likewise, the Claimants argue that it is up to Respondent to demonstrate that the situation would have been mitigated if certain domestic remedies been used. Nonetheless, application for preliminary measures is only available in civil proceedings, and not in contentious- administrative cases. In any event, the Supreme Court was dormant, and there is consequently no basis to conclude that such application could have given rise to an interim relief that would have protected EGSA. Nor would such measures have been effective, given that the nationalisation nullified the Claimants’ interest in May 2010. Lastly, the fact that the Claimants’ litigation before the Supreme Court could have been unsuccessful should not affect the Tribunal’s consideration as to whether or not Bolivia complied with the Treaties. In any event, the causal link has been duly evidenced in accordance with the balance of probabilities standard, as it may be conclude that EGSA’s appeal was more likely than not to have succeeded if the Bolivian court system had worked properly.441 
324. With regard to the compensation due on account of the PBP measure, Compass Lexecon once again draws a distinction between an “actual scenario” (EGSA’s actual revenues as a result of the modification) and a “but-for scenario” (the revenues EGSA would have
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obtained had the PBP never been modified). In addition, the period from May 2007 to 2038 was divided between the pre- and post-nationalisation Decree periods for the sake of clarity, as different data are used for these two periods (CNDC’s information for the pre- nationalisation period and MEC studies for the post-nationalisation period). Thus, by correcting the mistakes made by Econ One in relation to the application of a very high discount rate as well as other technical errors, the Claimants’ expert concluded that the compensation due amounts to a total of USD 38 million as of 29 February 2012.442 

The Respondent’s Arguments

325. From Bolivia’s viewpoint, this is the one claim brought by the Claimants with respect to the PBP, an obligation enshrined in the US-Bolivia BIT only. Accordingly, and together with the arguments already put forward in the jurisdictional objections, the Respondent points out that it was EGSA that lodged the appeals and that it is not a party to this arbitration, as a consequence of which the Claimants’ assertion of a legal action not filed thereby does nothing but confirm that the Claimants have already chosen domestic courts to settle the PBP dispute. As a result, were the Tribunal to reject the application of the choice of forum clause, it would be making a distinction between the Claimants and EGSA, which is why, in that case, the Tribunal should also consider whether the Claimants have standing to bring a claim on account of a court delay in the context of a proceeding in which they have not participated.443 

326. Second, the Respondent opines that the effective means standard may not be imported into the United-Kingdom-Bolivia BIT by way of the MFN clause, as this would call for the relevant negotiation process to be incorporated and later applied to investors from the United Kingdom. Therefore, the importance of negotiation may not be overlooked merely by resorting to the MFN clause, especially where the purpose of such clause is to avert discriminatory treatment by reason of investors’ nationality.444 

327. In the event that the Tribunal were not to take into account the foregoing, the Respondent argues that the Claimants err where establishing the relevant periods, as they ceased to hold an interest in EGSA’s operations on 1 May 2010, which means that, as from such date, the alleged delay would be two years in relation to the appeal lodged against SSDE Resolution
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No. 40 and two years and one month with respect to that lodged against CNDE Resolution No. 209/2007.445 

328. In addition, according to Bolivia’s interpretation, for a breach of the standard to exist, the Claimants must show the following:

(a)  The existence of a particularly gross conduct on the part of the Bolivian judiciary, also considering that, in order to prove that such international offence exists, all domestic remedies must have been previously exhausted, which has not occurred in the case at issue, given that the Claimants could have indeed requested the provisional suspension of the action in the contentious-administrative forum. Hence, they have also contributed to the delay.446

(b)  The undue or unjustified nature of the periods during which the claims brought before the Supreme Court were pending, in view of the reasonable amount of time that a State courts could take in order to settle the dispute.447 In this sense, the duration of the legal proceedings before the Supreme Court does not entail a denial of effective means in accordance with the international case law invoked by both Parties.448 They are usual periods even in comparison with other States, as the Claimants’ witnesses acknowledged.449 It is also not true that the reforms of the organization of the court system have delayed contentious-administrative matters, but quite the opposite. Besides, the statistics of cases admitted and adjudicated by the Supreme Court show more cases admitted than adjudicated, which explains the delay accrued.450 

329. Further, there is no causal link between the duration of the legal proceedings and EGSA’s alleged loss of profits. The Respondent argues that, even if the Supreme Court decided to compensate EGSA as the Claimants anticipate, such compensation would not benefit them, since they no longer hold any interest whatsoever in EGSA’s operations, as they have
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admitted themselves. Moreover, there is no point in predicting the favorable ruling of a judgment, where there are signs indicating otherwise. In any case, speculative damages are not subject to compensation; therefore, it is not sufficient to establish the likelihood of the damage to be subject to compensation.451 By virtue of the foregoing, Respondent maintains that the Claimants’ claim arises from a fact that they have not disputed: the Operating Norm’s consistency with Bolivian law. Therefore, this aspect not having been questioned, the Claimants may not request that the Tribunal award compensation on the basis of hypothetical claims.452 

330. Once again, the compensation requested by the Claimants is excessive, since apart from resorting to Operating Norm No. 19/2007 in order to calculate the FMV, they also ignored the impact of the tariff stabilization in force and effect in Bolivia since 2003. Accordingly, the study prepared by Compass Lexecon corresponds to that conducted by Econ One as regards the effect quantified for the first period, i.e., from May 2007 to April 2010. Nevertheless, they differ in relation to the second period, i.e., from May 2010 onwards. According to Compass Lexecon, the Claimants should receive USD 27.9 million, whereas Econ One estimates that the Claimants should be awarded USD 12 million. Compass Lexecon presents a calculation inflated by the impact of the projections made by MEC/EdI and applies the wrong interest rate of 10.63%, while that used by Econ One is in the region of 20%.453
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CHAPTER VIII – THE PARTIES’ RELIEF SOUGHT ON THE MERITS

A. THE CLAIMANTS’ RELIEF SOUGHT

331. The Claimants request that the Tribunal:

(a)  Declare that Bolivia has breached the Treaties and international law, and in particular, that it has:

(i)  expropriated the Claimants’ investments without prompt, just, adequate and effective compensation, in violation of Article III of the US-Bolivia BIT, Article 5 of the UK-Bolivia BIT, and international law;

(ii)  failed to accord the Claimants’ investments fair and equitable treatment and full protection and security, and impaired them through unreasonable and discriminatory measures, in violation of Article II.3 of the US-Bolivia BIT and Article 2(2) of the UK-Bolivia BIT; and

(iii)  failed to provide the Claimants with effective means of asserting claims and enforcing rights with respect to covered investments, in violation of Article II.4 of the US-Bolivia BIT and Article 3 of the UK-Bolivia BIT.

(b)  Order Bolivia to compensate the Claimants for Bolivia’s breaches of the Treaties and international law in the amount of USD 136.4 million,454 plus interest until full payment of the award is made;

(c)  Award such other relief as the Tribunal considers appropriate; and

(d)  Order Bolivia to pay the costs of these arbitration proceedings, including the fees and expenses of the Tribunal, the fees and expenses of the institution which is selected to provide appointing and administrative services and assistance to this arbitration, the fees and expenses relating to the Claimants’ legal representation, and the fees and expenses of any expert appointed by the Claimants or the Tribunal, plus interest.455 

B. THE RESPONDENT’S RELIEF SOUGHT

332. In turn, the Respondent requests that the Tribunal:
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(a)  Declare that Bolivia’s conduct has been in compliance with its obligations under the Treaties and international law;

(b)  Reject each and every claim and petition made by the Claimants;

(c)  Order that the Claimants reimburse Bolivia in full for the costs in which it may have incurred in order to defend its interests in the context of this arbitration, plus interest accrued at a commercial rate reasonable to the Tribunal, from the date on which the State incurred such costs to the date of actual payment thereof; and

(d)  Order any such other measure to the satisfaction of the State as the Tribunal may deem fit.456
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CHAPTER IX – DECISION ON JURISDICTION

333. The Tribunal will now proceed to examine the Respondent’s objections to its jurisdiction as follows:

(a)  Whether joinder or consolidation of distinct claims may be allowed in the absence of specific consent from the Respondent;

(b)  Whether Rurelec is an investor and holds a protected investment;

(c)  Whether Bolivia is entitled to exercise the right of denial of benefits against GAI;

(d)  Whether the Tribunal has jurisdiction in respect of the alleged New Claims;

(e)  Whether the alleged New Claims are domestic in nature;

(f)  Whether the alleged exercise of the fork-in-the-road clause bars the New Claims; and

(g)  Whether the claims regarding the spot price and Worthington engines are premature.

A. JOINDER OR CONSOLIDATION OF DISTINCT CLAIMS IN THE ABSENCE OF SPECIFIC CONSENT FROM THE RESPONDENT

334. The Tribunal considers that the submission by the Claimants of identical claims based on the alleged violation of two different BITs in a single arbitration proceeding is not subject to the qualified express consent of the Respondent.

335. It is undisputed that, in the BITs concluded by Bolivia with the United Kingdom and United States, the Respondent gave its consent to the arbitration of investment disputes with investors from the UK and the US. Following a widespread treaty practice, this consent was given through an open offer to submit to arbitration, expressed in Article 8 of the UK- Bolivia BIT and in Article IX of the US-Bolivia BIT. It is also undisputed that each of the Claimants duly accepted this offer of arbitration made by the Respondent in the Treaties, giving rise to the “matching of consents” indispensable for the Tribunal’s jurisdiction rationae voluntatis over these disputes.

336. The offers of arbitration contained in the BITs were not subject to any condition or limitation in their scope that would prevent the two Claimants from submitting a single, joint arbitration case against the Respondent. Nor were they subject to any condition that claimants in arbitration proceedings must ground their claims in just one BIT. Each of the
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Claimants accepted the offer of arbitration in the precise terms in which it was given by the Respondent, notably, providing consent by the Respondent that disputes over the application of the Treaties were to be settled by recourse to arbitration.

337. One cannot therefore interpret the Treaties—using the well-known rules of treaty interpretation of Article 31 of the VCLT—as if they contained some limitation of scope preventing a claimant from submitting an arbitral claim together with another claimant when both claims are based on the same alleged facts and on the same alleged breaches although brought under different BITs, provided that each claimant provides its own independent matching consent to arbitration.

338. In the Tribunal’s view, the issue raised by the Respondent of whether express consent regarding the form of the present arbitration is required is also not an issue of “consolidation of proceedings”. Indeed, in the instant case, the Claimants did not commence two separate arbitrations in respect of two independent arbitral claims that have subsequently been consolidated. The Claimants submitted, ab initio and in the same arbitration, two claims by two claimants against one respondent, regarding the same dispute and involving the same set of facts, albeit allegedly in violation of two different BITs concluded by the Respondent with the UK and the US, respectively. It is clear that the object of both claims is the same, since the allegedly unlawful action by Bolivia was also a single one, notwithstanding the fact that, in practice, the present case concerns two identical and overlapping claims by two claimants against the same respondent in the same arbitration proceeding.

339. On the other hand, in cases of consolidation of proceedings, the matching of consents with respect to each of the arbitrations has already occurred. As such, the case law and literature hold—as both Parties in this proceeding have also affirmed—that consent is required from all parties involved in order to allow the merger of the two arbitrations into one. The Tribunal considers that there is, therefore, no valid analogy to be made between this case and cases of consolidation of proceedings.

340. The Tribunal therefore considers that, even if it would have been possible for the Claimants to submit separate arbitral proceedings, nothing precludes them—given the obvious link between both Claimants and the identity of the facts alleged—from deciding to jointly submit a single arbitration case, albeit invoking different BITs.

341. The Tribunal disagrees with Respondent’s interpretation of the silence of the Treaties concerning the possibility of multi-party arbitration. In the Tribunal’s opinion, this is not a case where jurisdiction is being granted without the explicit consent of the parties. On the contrary, the consent given by the Respondent is explicit and covers disputes involving
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investors from each of those two States. The parties to the Treaties could have limited such consent and, by extension, the jurisdiction of the Tribunal; but they did not do so. In this case, the Tribunal considers that the silence in the Treaties concerning the explicit possibility of joint arbitrations plays against the Respondent’s point of view, since one cannot use silence to limit the scope of the consent given.

342. The argument that there must be a specific consent in each of the BITs to the possibility of joining different claims in the same arbitral proceeding ultimately goes too far. Were such specific consent necessary, it would be impossible to accept, as the Respondent has argued, that all prior multi-party arbitrations that were allowed to proceed were based on implicit consent by the respondent States through their failure to raise any jurisdictional objection in this regard.

343. The Tribunal fully agrees with the opinion expressed by the tribunal in Ambiente Ufficio v. Argentina,457 holding that “it is evident that multi-party arbitration is a generally accepted practice in ICSID arbitration, and in the arbitral practice beyond that, and that the institution of multi-party proceedings therefore does not require any consent on the part of the respondent Government beyond the general requirements of consent to arbitration.”458 

344. With respect to the Claimants’ argument that the Tribunal’s discretion over the conduct of the proceedings should be exercised to avoid unnecessary delay and expense (Article 17(1) of the UNCITRAL Rules), the Tribunal finds that this is a rule governing questions of procedure and is not (necessarily) applicable to the determination of the existence or not of its jurisdiction.

345. The Tribunal, while cognisant of the differences between the present case and Noble Energy v. Ecuador (in which there was more than one claimant but alleging different disputes and more than one cause of action—even though based on the same facts), agrees with that tribunal’s statement that “[i]n the further course of this arbitration, the parties and the Tribunal will have to distinguish each dispute under its own applicable rules, even though facts, evidence and arguments may be common to all or some of them.”we459 Hence, the Respondent’s assertion that differences exist between both BITs is irrelevant, given that the Tribunal is prepared to analyse each Claimant’s claims—which are in essence one and the same claim—in accordance with the applicable BIT invoked by each Claimant. The same rationale would also apply to any possible counter-claims brought by the Respondent. There
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is no fundamental incompatibility between the consents to arbitration in the two BITs that would result in one or the other consent being violated by the mere fact of the claims being heard together.

346. Thus, on the grounds that the consent to arbitration provided by the Respondent in the Treaties contains no limitation that would preclude the joint submission by two or more Claimants of identical claims under different BITs, the Tribunal finds that the Respondent has given its consent to the jurisdiction of this Tribunal to hear the claims submitted jointly by GAI and Rurelec in accordance with Article IX of the US-Bolivia BIT and Article 8 of the UK-Bolivia BIT.

347. Consequently, the Tribunal will proceed to analyse the remainder of the objections to its jurisdiction raised by the Respondent in relation to each of the Claimants and in accordance with the Treaties invoked by each of them.

B. RURELEC’S STATUS AS AN INVESTOR AND ITS OWNERSHIP OF A PROTECTED INVESTMENT

348. In regard to the Respondent’s objection that Rurelec is not a protected investor under the UK-Bolivia BIT, the Tribunal considers that Rurelec has provided sufficient evidence that it has acquired GAI and has therefore made an indirect investment in Bolivia—even though it has not provided any documentary evidence to prove that the payment for that acquisition was made.

349. Evidence has been provided of the purchase of BIE on 12 December 2005 and that Rurelec therefore indirectly owns shares in EGSA.460 High-level Bolivian entities have consistently accepted and recognized that Rurelec is the ultimate owner of these shares.

350. The Respondent cited the case of Quiborax v. Bolivia461 in support of the contention that no investment exists through a shareholding if there is no payment for those shares. The Tribunal notes, however, that Quiborax v. Bolivia was an ICSID case where the tribunal decided to analyse whether the “investor” had an investment under Article 25 of the Washington Convention. In fact, as regards the applicable BIT, the Quiborax tribunal concluded without further elaboration that “Bolivia does not contest that the Claimants have made an ‘investment’ within the meaning of the BIT”.462 
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351. Furthermore, the Tribunal need not decide if the indirect acquisition of the shares of EGSA took place in 2006 or 2009 since the critical date is the date of the nationalisation, and the Tribunal is convinced that the indirect acquisition of EGSA’s shares took place before the date of the nationalisation. By acquiring the shares previously owned by other entities, Rurelec also acquired and benefits from protection for investments made prior to said acquisition. Therefore, the Tribunal considers that Rurelec effectively acquired the shares of BIE through Birdsong and thereby made an indirect investment in Bolivia.

352. As regards the Respondent’s argument that indirect investments are not protected under the UK-Bolivia BIT, the Tribunal notes that Article 1 contains—as the majority of BITs do—a very broad definition of “investment”. Article 1 defines “investment” as “every kind of asset which is capable of producing returns,” which would naturally include “indirect investments” through the acquisition of shares in a company. In addition, the non-exhaustive list of protected investments described in the BIT explicitly includes the example of “shares in and stock and debentures of a company and any other form of participation in a company”. Finally, in its broadest example, Article 1(a)(iii) of the BIT provides that any “claims to Money or to any performance under contract having a financial value” are considered to be protected investments under the BIT.

353. In the Tribunal’s opinion, all of the above mentioned examples contribute to the conclusion that indirect investments were intended to be protected by the UK-Bolivia BIT. Moreover, given that the purpose of the BIT is to promote and protect foreign investment, the Tribunal considers that the BIT would require clear language in order to exclude coverage of indirect investments—language that the BIT does not contain.

354. According to the Tribunal, the fact, invoked by the Respondent, that other BITs concluded by Bolivia explicitly include indirect investments, is insufficient to support an a contrario sensu interpretation that only those BITs containing such an explicit reference cover indirect investments, since it is well accepted that this kind of argument is not on its own strong enough to justify a particular interpretation of a rule of law. The mere absence of an explicit mention of the different categories of investment (direct and indirect) cannot be interpreted as narrowing the definition of investment under the BIT to only direct investment.

355. The Tribunal therefore agrees with the Claimants and concludes that terms employed in the UK-Bolivia BIT are broad enough on their own to include indirect investments, even without employing further qualifications that would only reinforce what is already clear from the text of the BIT.
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356. The Tribunal has also considered the case law cited by both Parties on this issue and agrees with the decision in Cemex v. Venezuela,463 whose rationale the Tribunal finds to be also applicable to the present case:

“The Tribunal further notes that, when the BIT mentions investments ‘of’ nationals of the other Contracting Party, it means that those investments must belong to such nationals in order to be covered by the Treaty. But this does not imply that they must be ‘directly’ owned by those nationals. Similarly, when the BIT mentions investments made ‘in’ the territory of a Contracting Party, all it requires is that the investment itself be situated in that territory. It does not imply that those investments must be ‘directly’ made in such territory.

Thus, as recognized by several arbitral tribunals in comparable cases, the Claimants have jus standi in the present case. The Respondent’s objection to the Tribunal jurisdiction under the BIT cannot be upheld.”464 

The line of comparable cases cited by the Cemex tribunal includes Siemens v. Argentina,465 Ioannis Kardassopoulos v. Georgia,466 Tza Yap Shum v. Peru,467 and Mobil v. Venezuela.468 

357. The Tribunal notes that the UK-Bolivia BIT was (according to its preamble) designed to “create favourable conditions for greater investment by nationals and companies of one State in the territory of the other State”. Furthermore, the parties agreed in Article 2 of the said BIT that “each contracting party shall encourage and create favourable conditions for nationals or companies of the other Contracting party to invest in its territory, and, subject to its right to exercise powers conferred by its laws, shall admit such capital.”
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358. As for the Respondent’s argument that Rurelec’s investment was not made in the territory of Bolivia, the Tribunal considers that the reference in the BIT to the territory of a Contracting Party (as found, for example, in Article 2) cannot be interpreted in such a manner to exclude indirect investments, as long as the ultimate investment that was allegedly expropriated is located in the territory of a Contracting Party, in this case Bolivia.

359. The eligibility of indirect investments under the BIT is shown inter alia by the Contracting Parties’ express agreement in Article 1(a)(ii) that “shares in and stock and debentures of a company and any other form of participation in a company” constitute protected investments. Hence, it must follow that the acquisition of said shares may also take place outside the territory of the Contracting Party.

360. The Tribunal thus concludes that the best interpretation of Article 2(2) of the BIT, when it refers to “investments of nationals”, is the one that considers that the investments may belong to nationals of one Contracting Party, both directly or indirectly through equity ownership of the companies that own the ultimate investment in Bolivia, in this case EGSA. The Tribunal consequently finds itself in agreement with the decision in the case of Quiborax v. Bolivia where it was held that “the evidence shows that Quiborax paid for 51% of the shares of NMM. Regardless of where the payment was made, this qualifies as a contribution of Money because the object of the payment and raison d’être of the transaction –the mining concessions– were located in Bolivia.”469 

361. The Tribunal rejects the argument put forward by the Respondent restricting the application of Article 5(2) of the BIT to direct investments in a company that is incorporated or constituted under the laws in force in the territory of the host State. If one accepts that the ownership of shares can be direct or indirect through the ownership of other shares in other companies, the fact that Rurelec does not directly own the shares of EGSA does not mean that it does not own those shares within the meaning of the BIT, indirectly through intermediate companies such as Birdsong, BIE, and GAI.

362.The Tribunal further considers that the fact that the companies Birdsong and BIE are incorporated in the British Virgin Islands—in whose territory the BIT is not applicable—is not relevant, since none of them is a claimant in this arbitration and, according to the BIT, only the Claimants need to be nationals of a Contracting Party.

363. The Tribunal does not deem it necessary to carry out a comparative interpretation between the Spanish and the English versions of the BIT concerning the definition of “returns” as
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necessarily coming from an investment of capital. The Tribunal considers that the acquisition of EGSA’s shares, directly or indirectly, represents per se an investment of capital in the territory of Bolivia and is consequently protected by both versions of the BIT.

364. The Tribunal also considers that it is not appropriate to import “objective” definitions of investment created by doctrine and case law in order to interpret Article 25 of the ICSID Convention when in the context of a non-ICSID arbitration such as the present case. On the contrary, the definition of protected investment, at least in non-ICSID arbitrations, is to be obtained only from the (very broad) definition contained in the BIT concluded by Bolivia and the United Kingdom. The Tribunal agrees with the Claimants that Romak470 and Alps Finance471 are very “fact-specific” cases that can partially explain their reasoning, which remains exceptional in the case law outside the ICSID system.

365. For all the above reasons, and based on the proper textual interpretation of the UK- Bolivia BIT, the Tribunal concludes that Rurelec’s indirect investments in EGSA should be considered as “investments” within the meaning of that term as defined in Article 1 of the UK-Bolivia BIT.

C. BOLIVIA’S RIGHT OF DENIAL OF BENEFITS AGAINST GAI

366. In accordance with Article XII of the US-Bolivia BIT, “[e]ach party reserves the right to deny to a company of the other Party the benefits of this Treaty if nationals of a third country own or control the company and [...] (b) the company has no substantial business activities in the territory of the Party under whose laws it is constituted or organized.”

367. Considering the requirements of Article XII, the Tribunal must determine whether the denial is valid rationae materiae, which requires that the Tribunal be convinced that GAI is owned or controlled by a national of a third country (other than the US) and that GAI has no substantial business activities in the US. Further, the Tribunal must also determine whether the denial of benefits is valid rationae temporis, which requires that the Tribunal be convinced as to the timeliness of the denial of benefits.

368. The Claimants stated that Bolivia had required the establishment of a single purpose vehicle (“SPV”) as a condition for the public tender of EGSA, which allegation is disputed by the Respondent. The Claimants also assert that GAI has “substantial business activities” in the USA and cannot, therefore, be considered a shell company under the control of the British Virgin Islands’ company.
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369. After examining of all the available evidence, the Tribunal concludes that it has not been shown that Bolivia imposed, whether in the terms of reference for the privatisation of EGSA472 or afterwards, any requirement that GAI must be an SPV, let alone an American one, nor has it been shown that this company was not allowed to own any assets other than EGSA shares.

370. The Tribunal is also convinced that GAI is a company that, for the purposes of Article XII of the US-Bolivia BIT, “has no substantial business activities in the territory of the Party under whose laws it is constituted or organized.” Insufficient evidence has been provided to prove that GAI carried on substantial business activities in the US at any point in time. Finally, GAI is owned and controlled by nationals of a third country, namely, BIE, Birdsong Overseas, and ultimately Rurelec, none of them being a US company.

371. Since the initial hurdle in order to invoke the denial of benefits has been overcome, the Tribunal will now examine its timeliness. The Tribunal is cognizant of the fact that the Respondent only denied the benefits of the BIT in its Statement of Defence, after both parties had already given their consent to arbitration. Nevertheless, the denial of benefits cannot be equated to the withdrawal of prior arbitral consent, which is only permissible prior to the acceptance of the host State’s consent by the investor.

372. Whenever a BIT includes a denial of benefits clause, the consent by the host State to arbitration itself is conditional and thus may be denied by it, provided that some objective requirements concerning the investor are fulfilled. All investors are aware of the possibility of such a denial, such that no legitimate expectations are frustrated by that denial of benefits.

373. No one can accept more than what is being offered. In this case, what was offered by both Bolivia and the US, in the BIT concluded between them, was a package of benefits to investors of both countries, including the benefit of being able to submit disputes to arbitration, coupled with an express prior reservation of the right to deny those benefits if and when the Respondent so decides (subjective requirement) and if the investor’s company is or becomes a “shell company” controlled by a company incorporated in a third country (objective requirement). The reservation of the right of denial of benefits contained in Article XII operates on the Contracting Parties’ offer of consent to arbitration as much as every other benefit conferred by the BIT. Hence, any US investor who invests in Bolivia already knows in advance of the possibility of a denial of benefits by Bolivia—as long as the Article XII requirements are met—and, if it decides to accept the offer of arbitration made by Bolivia in the BIT, it accepts it at face value.
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374. Without prejudice to the fact that an investor (irrespective of whether the investment has been made before or after the entry into force of the BIT) is in principle protected by the BIT, it also bears noting that GAI (and its shareholders) did not enjoy this investment treaty protection when they decided to bid in the privatization process. Evidence has also been submitted that GAI and Rurelec had been worried about the risk of nationalisation since at least 2006.

375. This being the case, following the signature and final ratification of the BIT, the Claimants were fully aware of the denial of benefits clause and could have acted in such a way as to preclude the Respondent from being able to invoke that clause, and thereby avoid the risk of a denial of benefits, by having GAI undertake substantial activities in the USA or through some other equivalent solution. That did not happen. The Tribunal therefore finds that the Claimants’ reliance on the pacta sunt servanda principle is misplaced since the denial of benefits clause is part of the “pactum” agreed by the Contracting Parties.

376. The same must be said in relation to the supposedly retroactive application of the clause. The Tribunal cannot agree with the Claimants when they argue that the Respondent is precluded from applying the denial of benefits clause retroactively. The very purpose of the denial of benefits is to give the Respondent the possibility of withdrawing the benefits granted under the BIT to investors who invoke those benefits. As such, it is proper that the denial is “activated” when the benefits are being claimed.

377. The Contracting Parties to the BIT could have agreed otherwise, but they decided not to do so. Instead they agreed that a Contracting Party could deny benefits (including the benefit of having a dispute decided by an arbitral tribunal) subject to meeting certain conditions, none of which entails that such denial is only effective in relation to disputes arising after the notification of such denial or imposes any other limitation period that would occur before the Respondent’s submission of its Statement of Defence.

378. On the contrary, the Tribunal agrees that the denial can and usually will be used whenever an investor decides to invoke one of the benefits of the BIT. It will be on that occasion that the respondent State will analyse whether the objective conditions for the denial are met and, if so, decide on whether to exercise its right to deny the benefits contained in the BIT, up to the submission of its statement of defence.

379. As a matter of fact, it would be odd for a State to examine whether the requirements of Article XII had been fulfilled in relation to an investor with whom it had no dispute whatsoever. In that case, the notification of the denial of benefits would—per se—be seen as an unfriendly and groundless act, contrary to the promotion of foreign investments. On the
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other side, the fulfilment of the aforementioned requirements is not static and can change from one day to the next, which means that it is only when a dispute arises that the respondent State will be able to assess whether such requirements are met and decide whether it will deny the benefits of the treaty in respect of that particular dispute.

380. The Tribunal further notes that in this particular case (contrary to what occurred in the Plama case) the investment did not follow the entry into force of the BIT but was made prior to the BIT’s entry into force. The benefits contained in the BIT thus did not play any role in the decision of the investor to make this investment. In the Plama case, the tribunal emphasized the fact that the investor had relied on the protection afforded by the BIT when deciding whether to invest in the respondent State.473 

381. The consequence of the denial of benefits is that the Tribunal (which forms part of the package of benefits afforded under the BIT) will be deprived of jurisdiction over the present dispute. Accordingly, as a jurisdictional issue, it must be raised at the latest in the respondent’s statement of defence, as it was here. Although it is perhaps unusual for both the fact that leads to a lack of jurisdiction and the submission of the related jurisdictional objection to arise at the same time, nothing prevents both (the act that forms the basis of the plea and the plea itself) from coinciding as they do here.

382. The Tribunal therefore considers that the objection to jurisdiction was made in good time, taking into account Article 23(2) of the UNCITRAL Rules. The Tribunal agrees with the decision of the Ulysseas Inc. v. Ecuador474 when it states that “[a]ccording to the UNCITRAL rules, a jurisdictional objection must be raised not later than the statement of defence (Article 21(3) [equivalent to Article 23(2) of the UNCITRAL Rules 2010]). By exercising the right to deny Claimant the BIT’s advantages in the Answer, Respondent has complied with the time limit prescribed by the UNCITRAL Rules. Nothing in Article I(2) of the BIT excludes that the right to deny the BIT’s advantages be exercised by the State at the time when such advantages are sought by the investor through a request for arbitration.”

383. The Tribunal is cognisant that this puts the investor in something of a fragile position, since the investor will never know if there might be a denial of benefits exactly when the investor needs them the most. At the same time, one cannot say that such a denial will come as a total surprise for the investor, since the BIT is not secret and we are dealing in this case with an investor who has opted to use an investment vehicle controlled by a company of a third
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country, which has no substantial business activities in the territory of the Contracting Party under whose laws it is constituted or organized.

384. For all the above reasons, the Tribunal concludes, in accordance with Article XII of the US- Bolivia BIT, that it has no jurisdiction to entertain GAI’s claims against the Respondent.

D. JURISDICTION IN RESPECT OF THE ALLEGED NEW CLAIMS

385. The Tribunal observes that the UK-Bolivia BIT contains a typical “cooling off period” clause. In fact, Article 8 of the BIT determines that “[d]isputes between a national or company of one Contracting Party and the other Contracting Party concerning an obligation of the latter under this Agreement in relation to an investment of the former which have not been legally and amicably settled shall after a period of six months from written notification of a claim be submitted to international arbitration if either party to the dispute so wishes” [emphasis added].

386. The Tribunal is mindful that the particular circumstances of the present case might allow one to surmise that applying the general “cooling off” period envisaged in the BIT to the so- called “New Claims” would be a waste of time. Indeed, the fact that Bolivia has expropriated Rurelec’s475 investment leads the Tribunal to believe that the practical effects of the rationale behind the cooling off theory and rule would in the end have been non-existent. Nevertheless, Rurelec was fully aware of the rule at play here and it would not have been difficult to comply with the cooling off period, which did not in fact happen. The Tribunal has no mandate to “rewrite” the BIT.

387. The Tribunal considers that the “New Claims” are distinct and separate from the “main claim” for compensation for the nationalisation of EGSA. However, this does not mean that the Tribunal will not examine the issue of capacity payments and spot prices when deciding on the substantive aspects of the expropriation: it will do so, but only to check whether those measures could be construed, as alledged by Rurelec, as the initial steps of a “creeping expropriation”.

388. The explicit wording requiring a written notification and the expiry of a period of six months from that notification leads the Tribunal to consider that the “cooling off period” narrows the consent given by the Contracting Parties to international arbitration.
135389. It is not up to the Tribunal to evaluate the importance or effect of such a condition, but simply to acknowledge that it was agreed by the two Contracting Parties as a condition precedent to the availability of an arbitral tribunal which is, and must be, based on consent. The truth is that the Contracting Parties only gave their consent to arbitration subject to the existence of a written notification of a claim and subject to the passing of six months’ time between such notification and any request of arbitration.

390. The Tribunal thus concludes that, at least in this case, the “cooling off period” is a jurisdictional barrier conditioning the jurisdiction of the Tribunal rationae voluntatis, since it is not up to a claimant to decide whether and when to notify the host State of the dispute, just as it is not up to such claimant to decide how long they must wait before submitting the request for arbitration.

391. The Tribunal agrees with the Respondent that no explicit notification has been made in relation to the so-called “New Claims” and thus the cooling off period has been breached. The Tribunal notes that Rurelec has acted in accordance with this very interpretation of the BIT in respect of its claim regarding the nationalisation, as is mentioned by the Respondent in its Memorial on Jurisdiction.476 In particular, in its Notice of Arbitration, Rurelec states that the applicable waiting periods found in the Treaties had already passed477 and “[a]ccordingly, the Dispute is validly submitted to arbitration under UNCITRAL Rules pursuant to Article IX.3(iii) of the US Treaty and Article 8(2), final paragraph, of the UK Treaty respectively”478 [emphasis added].

392. It is irrelevant for the issue at hand whether it could be anticipated—by Rurelec or even by this Tribunal—that nothing would happen during said six-month period and that the Respondent would not react to the notification and take advantage of the chance to negotiation a resolution. The “cooling off period” clause imposes an obligation of means and not an obligation of result. All clauses of the BIT must be given equal effect and, if the Contracting Parties gave their consent subject to those conditions, Rurelec could only accept the offer of arbitration as it was presented and not as it would have liked to receive it.479 The Tribunal thus feels no need to elaborate any further on what it believes the Respondent’s behaviour would have been if it had been properly notified.
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393.The Tribunal’s analysis is in line with the decision of the tribunal in ICS v. Argentina480 where it stated as follows:

“At the time of commencing dispute resolution under the treaty, the investor can only accept or decline the offer to arbitrate, but cannot vary its terms. The investor, regardless of the particular circumstances affecting the investor or its belief in the utility or fairness of the conditions attached to the offer of the host State, must nonetheless contemporaneously consent to the application of the terms and conditions of the offer made by the host State, or else no agreement to arbitrate may be formed”.

394. Moreover, the notification of the dispute and the “cooling off period” were requirements that could easily have been met by Rurelec, since there exists no obligation to reach an amicable agreement. Thus, Rurelec cannot bemoan the fact that it is inefficient and costly to submit a new request for arbitration concerning those claims; it was in their control to act differently and in accordance with the BIT’s conditions concerning the New Claims.

395. Another line of argument put forward by Rurelec was that the notifications submitted to Bolivia in respect of the initial claim for nationalisation were broad enough to cover and include the New Claims. The Tribunal will therefore turn to the content of those notifications of the dispute in order to determine whether, as they were made, they encompass all the claims subsequently submitted to this Tribunal, including the supposedly “New Claims”.

396. According to Rurelec, “the claims regarding spot prices, capacity payments and the Worthington engines are all related to the notified nationalization dispute and therefore the Claimants complied with any requirements the Treaties may impose.”481 The Tribunal cannot agree with Rurelec’s position regarding the spot prices and capacity payments, since it considers that it has not been demonstrated that those regulatory changes —made years before the nationalisation— were connected to the nationalisation dispute, let alone that they formed part of that dispute. The Tribunal thus cannot accept Rurelec’s allegation that the “New Claims” “arise out of the same dispute.”482 

397. The Tribunal observes that, according to the definition of the “Dispute” provided in Rurelec’s request for arbitration, disputes concerned only the nationalisation act and its consequences:483 

“4. As described in more detail in Section II below, this dispute concerns the Government’s 1 May 2010 expropriation of the Claimants’ investments in the power generation sector in Bolivia, specifically Rurelec’s 50.001% shareholding in Empresa

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Electrica Guaracachi S.A. (Guaracachi), held through Guaracachi America, without the payment of prompt, adequate and effective compensation in violation of the Treaties and international law (the Dispute).

[...]

6. The Dispute arose on 1 May 2010, the date of the expropriation of the Claimants’ investments. Bolivia has been formally on notice of the Dispute since 13 May 2010, the date on which the Claimants submitted notifications of the Dispute under the Treaties to the Government (the Notices of Dispute). The amicable negotiation periods of three months pursuant to US Treaty Article IX.3(a) and six months pursuant to UK Treaty Article 8(1) have elapsed. Despite the Claimants’ intensive efforts, the parties have been unable to reach an amicable settlement of their Dispute.”

398. Therefore, when Rurelec stated in its Notice of Dispute484 that “nothing in this letter should be considered as limitation of any kind on issues of fact or law, which Rurelec may invoke before an international arbitral tribunal,” that disclaimer can only be understood as comprising the possibility of new claims related to that dispute and not new claims from new (albeit factually older) disputes. Furthermore, the Tribunal notes that Rurelec never claimed that there had been a creeping expropriation but rather that there was a direct expropriation/nationalisation, which leads to the conclusion that, even for Rurelec, the prior events they invoke should be characterized as representing different disputes that were only for the first time asserted in the Statement of Claim.

399. The Tribunal recalls that, in CMS v. Argentina, cited by Rurelec,485 the notification of the dispute related to a claim that was followed (after the notification) by a new, further claim which was not individually notified (because it did not exist at the time of the notification). Meanwhile, in the present case, the facts are quite different, or more correctly, exactly the opposite. The notification of a claim cannot be interpreted as incorporating previous potential claims that were not asserted in the notification even though they were already in existence (and known by Rurelec) at the time of such notification.

400. As to the Worthington engines, the Tribunal considers that the issue could be more complicated and deserve further analysis. However, seeing as the parties have already settled that part of the dispute, it is not necessary to address it further.

401. As opposed to the UK-Bolivia BIT, the US-Bolivia BIT seems not to impose a duty of notification on GAI and only stipulates, in Article IX 3(a), that the dispute may be submitted to arbitration after “three months have elapsed from the date on which the dispute arose.” If the Tribunal had not already concluded that it lacked jurisdiction in respect of the claims of
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GAI, the Tribunal would have had to carefully analyse how that provision should be applied, and would have had to determine the point at which that dispute arose in the context of Article IX(3)(a) of the BIT. In any case, the Tribunal does not have to decide this issue because of its decision accepting Bolivia’s denial of benefits towards GAI.

E. THE DOMESTIC NATURE OF THE ALLEGED NEW CLAIMS

402. The Tribunal finds that, for jurisdictional purposes, the characterization of the claims should in principle be accepted prima facie as put forward by Rurelec. In this case, it seems that the New Claims could be accepted as treaty claims for jurisdictional purposes.

403. The Tribunal, however, sees no need to decide this issue since it has already decided that it does not have jurisdiction over said claims due to the fact that the “cooling off period” was not complied with by Rurelec and due to the fact that it has found Bolivia’s denial of benefits towards GAI to be valid and effective.

F. THE ALLEGED EXERCISE OF THE FORK IN THE ROAD CLAUSE

404. The Tribunal notes that an analysis of the claims submitted to the Bolivian courts would be necessary in order to compare it with the claim submitted before this Tribunal in order to make a decision concerning whether the “fork in the road” clause precluded arbitration of the latter claims. In addition, the Tribunal notes that the UK-Bolivia BIT does not contain a “fork in the road” clause analogous to Article IX(3)(a) of the US-Bolivia BIT.

405. In any event, given the Tribunal’s decision concerning Rurelec’s non-compliance with the “cooling off period” and Bolivia’s denial of benefits to GAI, which result in a lack of jurisdiction to hear the New Claims, the Tribunal need not decide on the alleged effect of the “fork in the road” clause.

G. ALLEGED PREMATURE EXERCISE OF SPOT PRICE AND WORTHINGTON ENGINES

406. The Tribunal considers that the New Claims were not prima facie premature since there was no obligation to submit those claims to Bolivia’s domestic courts as a condition precedent to recourse to an international tribunal. Nonetheless, for the same reasons given in the preceding paragraphs, the Tribunal need not decide this particular issue either.
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CHAPTER X – DECISION ON THE MERITS

A. THE SITUATION OF THE BOLIVIAN ELECTRICITY INDUSTRY AND ENDE BEFORE THE PRIVATIZATION PROCESS

407. The description of the evolution of Bolivia’s economy, ENDE’s financial situation until the start of the privatization of the electricity sector, and the reasons behind Bolivia’s strategy in respect of these issues are not always agreed between the Parties. However, this discrepancy is not relevant to the outcome of this arbitration. Irrespective of the situation and the motivation for commencing the process, the privatization and liberalization of the electricity sector, together with the capitalization rules, happened in accordance with rules and commitments; and an international investor (later setting up a SPV, GAI) acquired, in two stages, shares in EGSA. The Tribunal therefore does not deem it necessary to enter into any special analysis and conclusions related to the period before June 1995, except as specifically required by particular circumstances regarding discrete issues.

B. THE DATE OF THE INVESTMENTS MADE BY GAI AND RURELEC’S INDIRECT ACQUISITION OF GAI

408. The same applies to the issue of whether the investments made by GAI were made before or after the acquisition by Rurelec of indirect control of EGSA and the actual date of such acquisition. The issue of the indirect acquisition by Rurelec of the controlling stake in EGSA—as a matter of jurisdiction—has already been examined and decided. However, irrespective of the investment being made when Rurelec was already or was not yet the indirect owner of 50.001% of EGSA’s stock capital, the Tribunal’s conclusion remains that said investment is protected under the relevant BIT.

C. EGSA’S FINANCIAL SITUATION PRIOR TO THE NATIONALISATION

409. The Tribunal also considers that the issue of EGSA’s dividend policy and divestments that have occasioned much debate between the Parties is immaterial to the outcome of this case. The inflation index (UFV), EGSA’s decisions about dividends, and the respective distributions to its shareholders—also with the approval and for the benefit of Bolivian minority shareholders—were made in accordance with the law and are a normal practice for companies all over the world. The same is the case for divestment of assets no longer considered necessary for generation by EGSA,486 as well as the debates surrounding EGSA’s credit rating and all the elements to confirm its accuracy. Therefore, the Tribunal will not
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enter into any analysis or conclusions regarding these issues, except as specifically required by particular circumstances regarding discrete issues.

410. Much of the Parties’ efforts related to the points mentioned above are deemed irrelevant by the Tribunal, if only because the Parties agreed that the main approach to the valuation of EGSA (and the compensation to be paid after nationalisation, if any) should be the FMV, as determined on the date of the nationalisation using the DCF method, which is forward-looking. The Tribunal agrees with the Respondent (and Rurelec also appears to agree) that this case concerns quantum.487 Irrespective of what may have happened before May 2010, if a notional willing buyer (WB) would have agreed to pay a positive amount for the shares of EGSA, compensation is due; otherwise, no compensation would be due.

411. The Tribunal will now turn to one issue that has been the subject of much debate between the Parties during the proceedings: EGSA’s liquidity situation prior to its nationalisation.

412. The existence in EGSA of acute liquidity problems prior to its nationalisation has been amply demonstrated by the Respondent by means of contemporaneous evidence, including the views expressed by EGSA’s finance director in internal communications. But the most relevant controversy pertains to the explanation of such financial difficulties and its relevance for the valuation of EGSA.

413. For the Respondent those liquidity problems were a clear indication of fundamental weaknesses in EGSA’s finances which cast a dark shadow on its future, since they were, in the Respondent’s view, one of the fundamental reasons for the delay in the implementation of the CCGT project and exposed EGSA to the catastrophic risk of being denied access to gas supplies. Thus, the Respondent portrays EGSA’s liquidity problems as consistent with the negative value which PROFIN assigned to its shares immediately following its nationalisation.

414. Rurelec, after recognizing the reality of such liquidity problems, has consistently attempted to portray them as the result of the Respondent’s hostility towards EGSA and, more specifically, of the change of the regulatory environment, of some bona fide measures like the Rural Electrification Projects (Proyectos de Electrificación Rural) and Dignity Tariff (Tarifa Dignidad), and of Bolivia’s lack of interest in facilitating a rapid sale by EGSA of its carbon credit rights—a transaction which, by injecting new money into the company, might have helped the company overcome its liquidity squeeze.
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415. The Tribunal rejects both the Respondent’s story of the nationalisation as the “rescue” of a cash-strapped utility on the brink of bankruptcy and Rurelec’s story of EGSA’s liquidity problems as the result of a “creeping expropriation” strategy pursued by the Bolivian authorities.

416. In the Tribunal’s view, EGSA’s liquidity problems can be seen as the cumulative result of a complex set of circumstances, which cannot be traced either to lack of management skills in EGSA, fundamental weaknesses in its balance sheet or business model, or deliberate attempts by the Bolivian authorities to bring the company to its financial knees.

417. The Tribunal considers that the capital expenditures in the CCGT, the Rural Electrification Projects, and the Dignity Tariff drained financial resources, reduced EGSA’s liquidity, and constrained the pay-out of dividends to EGSA’s shareholders. Together with the modification of the regulatory environment regarding capacity payments and spot prices,488 these circumstances largely explain the liquidity problems actually faced by EGSA. It is true that, while some of those circumstances had a sudden and unexpected effect on EGSA—for example, the reduction of capacity payments by 17% without any gradual phasing-in—others were predictable and developed over the years, such that EGSA and its shareholders could have anticipated them and have taken measures to prevent the ensuing liquidity squeeze.

418. The Tribunal has not found any grounds to conclude that lack of management skills was the relevant reason for this liquidity problem. The CCGT project experienced cost overruns, but this was due to an increase in generation capacity which was in the interest of Bolivia and its consumers, and the need for additional investment obviously necessitated new financial resources that would only be paid back later on.489 The liquidity problems might arguably have prompted EGSA shareholders to provide EGSA with additional funding to avoid major difficulties with its suppliers and, more particularly, with its gas supplier (YPFB).However, no evidence has been provided that the gas supplier was considering, let alone had decided upon, charging interest, cancelling the supply of gas, or instituting legal proceedings in order to obtain payment on the outstanding invoices.

419. No evidence has been provided that a prospective buyer would not also have benefitted from that situation of coerced supplier-financing, particularly bearing in mind that the gas supplier
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had, at that time, an excess of production and difficulties to export larger quantities. Moreover, no reason would have existed to refuse to the prospective buyer what had been tolerated to EGSA.

420. Rurelec refers, notably to justify the liquidity problems, to the fact it did not have access to the carbon credits before the nationalisation as a result of the Respondent’s attitude and lack of cooperation in getting the United Nations’ clearance. The Tribunal disagrees with Rurelec. This fact was not materially a consequence of the acts or omissions of Bolivia,490 which did not have any responsibility in this respect.

421. Evidence has been provided that the CCGT project was near completion in May 2010 (95.1%),491 such that it was clearly feasible to start production later that year.492 Thus, delays in the implementation of the project were limited and it is not necessary for the Tribunal to ascertain in detail to what extent they were caused by EGSA’s liquidity constraints or the relatively long time required to obtain the necessary authorizations from the Municipality of Santa Cruz and Bolivia’s regulatory authorities.

422. In conclusion, as indicated above, EGSA’s liquidity problems resulted from a complex set of circumstances and were neither the result of fundamental weaknesses in the company’s balance sheet, business model, or economic prospects, nor of a deliberate attempt by the Bolivian authorities to prepare its subsequent nationalisation. Yet, in the Tribunal’s view, EGSA’s liquidity problems, even if arguably of a short-term nature, are not totally immaterial to EGSA’s valuation, since they could have likely had some influence on the risk perception of a WB and influence, at least marginally, the discount factor or WACC applied in its valuation.

D. THE REGULATORY MODIFICATIONS, ALLEGED CREEPING EXPROPRIATION, AND THE DIGNITY TARIFF

423. It is still necessary to study the issue of the potential effects of modifications capacity payments and spot prices on the FMV of EGSA as at the date of nationalisation as well as certain other events which transpired in the years leading up to May 2010. Having already decided that it has no jurisdiction over the so-called “New Claims”, the Tribunal will
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therefore refrain from dealing with any alleged BIT violations concerning the modification of spot price or capacity payments in their own right. The Tribunal may nevertheless take these measures into account to the extent that they could be construed, as alleged by Rurelec, as the initial steps of a “creeping expropriation”. Despite acknowledging that these measures had a very strong impact on the liquidity and/or the accounts of EGSA, however, the Tribunal concludes that it has not been demonstrated that these measures formed part of a creeping expropriation or a discriminatory one, even if it is clear that Bolivia was fully aware that such regulatory decisions would affect EGSA’s and other energy companies’ market values.

424. It is undisputed that the 1994 Electricity Law constitutes the framework to be taken into account in defining the rights of international investors in the electricity sector, notably the principles of efficiency, transparency, quality, continuity, adaptability, and neutrality. At the time of nationalisation, ROME 1995 (specifically Article 63 thereof) was the applicable rule and it had been amended more than once,493 for instance by ROME 2001 (Supreme Decree 26,093, in particular Article 67 thereof). One of the modifications consisted of disregarding, in the calculation of the marginal cost, the so-called forced supply (“generación forzada” or “despacho forzado”494) and the cold reserve (“reserva fría”) which was remunerated at 50% of PBP until the reserve of the system reaches 17.5%.495 

425. Stability and predictability are values generally applicable to tariffs. But that does not and cannot preclude modifications, which modifications, to the Tribunal’s knowledge, EGSA did not in fact react to in any way until the last one (in 2008). The price-setting mechanisms established for the electricity sector in each period were no more than possibilities and clearly did not form part of the programme proposed to investors as a condition for investment (the so-called “stable and predictable regulatory framework”), even if Bolivia accepted, notably with the “Sector Policy Letter”,496 that tariffs would “reflect the economic and financial supply costs”.
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426. In addition, the modifications did not constitute “the setting of prices that do not remunerate the investment made nor allow reasonable profit to be gained”, nor was this their intent.497 The changes in fact still allowed for reasonable profit to the point that even dividends were possible. Therefore, after reviewing the relevant documents and witness testimony regarding this matter, the Tribunal does not consider that Bolivia acted, in relation to the capacity payment and the method for calculation of the spot price, in a way that, from a global viewpoint, violated this rule: investment returns remained, reasonable profits were obtained, and “economic and financial supply costs” were covered. The Tribunal is also not convinced that GAI’s investment—in relation to Bolivia—relied on that previous regulatory environment. Consequently, and contrary to Rurelec’s assertion,498 the Tribunal is not persuaded that the regulatory changes formed part of a scheme leading up to the nationalisation of EGSA.

427. Moreover, to reach this conclusion, the Tribunal does not need to enter into the question of the independence (or lack thereof) of the decision-maker, CNDC,499 as it seems obvious that regulators, even when formally independent, are close to governments and do not normally act in a way that is unnecessarily detrimental to national strategies, but rather act in the opposite fashion.

428. In particular, with respect to the capacity payments, evidence has been provided that the capacity price increase of 20% constituted compensation for additional costs related to a special situation arising in 2001.500 Therefore, there was no justification for this measure to be maintained any longer—and especially to be maintained, not as compensation for costs, but rather as a guarantee of reasonable profits/returns—after these conditions had changed, as had in fact occurred prior to 2007 when Resolution SSDE 040 eliminated the complementary 20% equipment head.

429. The Tribunal is also not convinced that the exclusion of the marginal liquid fuel units in the calculation of the spot prices up to 2008 was essential to the economic viability of EGSA.501 As such, the 2008 modification did not affect said viability. The Tribunal does not agree with Rurelec.502 Even though consumers were financially protected under Supreme Decree 27302
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(stabilization of tariffs through a Stabilization Fund to the benefit of end users503), the fact is that sooner or later this excessive burden would fall on the general public.504 

430. Furthermore, while evidence has been provided that CNDC did not allow the older units to be decommissioned505 (EGSA was “forced to retain” them, in Rurelec’s words506), the simple fact that decommissioning was requested is strong evidence that these units were not essential to EGSA’s profitability. The argument thus seems to backfire against Rurelec. However, even if decommissioning had not been requested by EGSA, the Tribunal considers that no justification exists to consider the measures regarding spot prices to be unjust per se, let alone part of a creeping expropriation scheme.

431. The regulatory framework was first implemented in 1994/5, as is accepted by both sides.507 Such framework, defined in the 1994 Electricity Law, referred to the “costo marginal del sistema” (Article 45), to be determined by CNDC, and to the “precios de nodo” as “costos marginales de corto plazo de energía del sistema” (Article 49), to be determined by Superintendencia de Electricidad.508 To prevent Bolivia from introducing non-arbitrary technical adjustments in the definition of the electricity system’s marginal cost would be an excessive limitation of Bolivia’s rights, especially when it has not been shown that such regulatory changes formed part of a nationalisation scheme.509 

432. In any event, as calculated by the two expert witnesses, and irrespective of the differences between them, the marginal discount value associated with the spot price modification was minimal.510 The legality or illegality of the measure is therefore a matter of national administrative law and the Tribunal will not take it into consideration in the determining the FMV of EGSA.511 

433. As for the Dignity Tariff (2006), this was clearly accepted by EGSA and its shareholders as a way of increasing goodwill through social responsibility and cooperation, and thereby
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averting or forestalling any nationalisation. It is also undisputed that, since at least 2006,512 if not 2005,513 nationalisation was on the political agenda.

434. However, the Dignity Tariff agreement cannot be construed as a safety net against future changes. Article 5 is a best efforts clause (“agotar esfuerzos”) and not an abdication of Bolivia’s right to modify the pricing system. Nor did it expand from a legal point of view the investment protection already in existence. In fact, “ensuring that [electricity sector companies’] income allows them to ensure the sustainability and reliability of supply” (C-119, Article 5) means what it says and nothing more. No explicit legal commitment against modifications was made, except to the extent of endeavouring to ensure that such modifications would not affect the supply of electricity.

435. As to quantum, the Tribunal considers, therefore, that such value ought to be calculated “taking into account all the existing regulations in place (or expected) as of May 1, 2010”.514 This is not only because of the Tribunal’s declared lack of jurisdiction over the so-called “New Claims”, but also on the grounds that, in the Tribunal’s view:

(a)  The 2007 decision to remove the 20% additional cost, added for the purpose of calculating capacity payments, was not arbitrary or discriminatory and had been taken on the basis of adequate professional advice. Thus, there is no reason to consider likely that such decision might been reverted in the future when analysed by a WB.

(b)  Similarly, the technical change introduced in 2008 by SSDE Resolution No. 283/08 in the determination of spot prices—i.e. the exclusion, for the purposes of calculating the system’s “marginal price”, of the exceptionally high price of the energy produced by diesel fuel units—were not arbitrary or discriminatory, or part of a strategy of rampant or creeping expropriation. Thus, in estimating the value of EGSA the Tribunal will assume that said Resolution remained in force throughout the life of the project.

E. THE ILLEGALITY OF THE EXPROPRIATION

436. The right to expropriate is a sovereign right recognized by international law, subject to certain conditions. Both Parties agree with that statement, as it is uncontroversial. Legality at the international level, and under Article 5(1) of the UK-Bolivia BIT, is dependent upon the existence of a “public purpose” and the payment at the time of the expropriation of “just and effective compensation”.
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437. If the expropriation had not been made “for a public purpose and for a social benefit related to the internal needs of that Party” it would have then been illegal per se. However, the precise contours of public purpose and social benefit lies with the internal constitutional and legal order of the State in question, and in this case the conditions are evidently met,515 and are not disputed between the Parties.

438. As for “just and effective compensation”, Bolivia decided that the value of the assets was less than zero and, therefore, no compensation was due. Had this been true, the expropriation would have been legal. This Tribunal, after an adversarial process with the benefit of very professional advocacy and expert testimony, has concluded, however, that EGSA had a positive value, as explained further below. However, irrespective of Bolivia’s failure to properly assess and understand why and how EGSA did not have a negative value, the facts presented by Rurelec were insufficient to convince the Tribunal that Bolivia acted wilfully and intentionally to obtain an expert valuation setting forth such negative value for EGSA.516 

439. Rurelec also alleged that the expropriation was illegal because the Respondent has not complied with its obligation to provide due process of law by refusing to allow Rurelec to participate in the valuation process to assess the fair value of compensation.517 The Tribunal does not agree. As opposed to the US-Bolivia BIT, which prohibits expropriation “except [...] in accordance with due process of law”, the UK-Bolivia BIT does not explicitly establish due process as a precondition for the expropriation of an investment. Moreover, the Tribunal considers that Article 5(1) of the UK-Bolivia BIT, which states that “[t]he national or company affected shall have the right to establish promptly by due process of law in the territory of the contracting party making the expropriation, the legality of the expropriation and the amount of the compensation in accordance with the principle set out in this paragraph”, does not impose upon the expropriating State an obligation to assess the value of compensation through a process in which the expropriated national or company must necessarily participate. Further, the Tribunal also does not consider it possible to derive from the cases cited by Rurelec518 (which, moreover, concern radically different facts than the present case) the existence of a rule of customary international law obliging expropriating
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States to grant to the expropriated national or company a right to participate in such valuation process.

440. Rather, the investor’s recourse, if it disputes the valuation performed by the expropriating State, is to seek review through procedures made available in that State’s internal law in accordance with Article 5(1) or to submit the matter to international arbitration in accordance with Article 8. However, no evidence has been provided that the internal expropriation procedure was illegal per se under Bolivian law, and Rurelec itself did not seek the annulment of the expropriation.

441. The issue of illegality is thus mostly objective: if EGSA had a positive value, Bolivia should have indemnified Rurelec, providing just and effective compensation, since any State which carries out an expropriation is expected to accurately and professionally assess the true value of the expropriated assets. Bolivia did not actually compensate (or intend to compensate) Rurelec as it did not make an accurate assessment of EGSA’s value at the time. In fact, it did quite the opposite, and if the Tribunal finds the valuation to be “manifestly inadequate”, this is Bolivia’s responsibility. As will be explained further below, this is in fact the case and the expropriation was therefore illegal.519 

442. The Respondent does not appear to disagree: the heading of chapter 2.4.2520 of the Respondent’ s Rejoinder reads, “The Nationalization was not illegal because no compensation was due in the present case” (“La Nacionalización no fue illegal porque en el presente caso ninguna compensación era debida”). Therefore, given the Tribunal’s decision that compensation was indeed due, the nationalisation must be illegal with respect to the requirement of compensation.

443. As the Respondent acknowledges,521 both sides agree on the principle to be used for the calculation of the value of EGSA: FMV as assessed using the DCF method in accordance with the WBS. Given the above, the standard of compensation does not seem to differ whether the expropriation is deemed legal or not. The Parties do not appear to differ on this point either.522 

444. International investment arbitration is often the land of ideological confrontation and moral judgments. However, this Tribunal considers that it should restrict itself to ruling on the relief sought and, as such, to pass directly to the quantum part of this Award, to assess
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whether EGSA had a positive value at the date of the nationalisation. Since the Tribunal concludes below that this was the case, “just and effective compensation” should have been paid, along with interest on such value accruing from the date of the nationalisation at an appropriate rate to be determined by this Tribunal.

F. ALTERNATIVE VALUATION METHODS

445. As to quantum, both sides agree, and the Tribunal concurs, that the main principle guiding the determination of the value of EGSA should be FMV as assessed using the DCF method in accordance with the WBS. Rurelec has, however, drawn the Tribunal’s attention to two alternative valuation methods—Book Value (BV) and EBIDTA multiple comparables—as benchmarks for its valuation and to demonstrate that the result of their DCF calculations were reasonable, while the Respondent’s were not. Furthermore, during the arbitration proceedings an additional benchmark indirectly came up: the actual price paid for EGSA’s shares in its 2003 purchase by IEL—where the seller, First Energy, sold at a price well below book value—and, subsequently, in its indirect purchase by Rurelec in 2006, which paid USD 35 million. Since the Tribunal believes that those alternative benchmarks have very limited value, it will just highlight below the main claims made by the Parties, before embarking in a far more detailed, substantive analysis of the main valuation method agreed by the Parties and the Tribunal, i.e. the DCF method.

446. In its first expert report, Compass Lexecon excluded other alternative valuation methods (net capital contribution, comparable transactions, etc.), but benchmarked its DCF valuation of EGSA against its Enterprise Value (EV)/EBITDA ratio. In order to do so it estimated at 9.74 the median value of such multiple, as of April 30, 2010 for a sample of 30 comparable electric companies in emerging economies. It further estimated at USD 24.5 million EGSA’s EBITDA in 2011, the first complete year with the CCGT in operation, which resulted in an EV for EGSA of USD 238.6 million, which, after subtracting its debt, worked out to some USD 73 million for Rurelec’s 50.001 stake in EGSA.523 

447. Econ One criticized such valuation on several counts: the market multiple comparables approach is only applicable to firms with an unlimited time-horizon, rather than EGSA’s 28-year horizon; the sample selected by Econ One was not fully comparable to EGSA; no allowance had been made for EGSA’s huge outstanding commercial arrears; and, last but not least, the right EBITDA to use was the one obtained in 2009, not the expected one in 2011524.
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448. In its rebuttal report, Compass Lexecon addressed at length those criticisms and offered an additional alternative benchmark, namely EGSA’s book value, which according to its 2009 financial statements—the last audited annual report before its nationalisation—amounted to USD 133 million, i.e. some USD 66 million for Rurelec’s 50.001% stake. It stressed that Econ One’s zero DCF valuation implied a price to book value ratio of zero, a result both surprising in a company such as EGSA with a solid history and prospects of profitability and at odds with typical values of such ratio for other traded companies.525 

449. In its rejoinder report, Econ One not only responded to Compass Lexecon’s arguments on market multiples, but discussed at length EGSA’s book value. It recalled that, in past transactions, EGSA’s shares had always been sold at a discount on book value: in 2003, First Energy had taken a USD 33 million book loss and in 2006 IEL had reportedly sold EGSA to Rurelec with a discount of 20% on book value526.

450. In the Respondent’s view, EGSA’s book value had become growingly detached from its market value as a result of two new accounting policies introduced in 2007 and 2009. First, starting in 2007, EGSA had applied a new accounting rule in Bolivia requiring the price of assets to be indexed to a domestic inflation index (the so-called “Unidad de Fomento de Vivienda” or “UFV”). To the extent that during those years the Bolivian peso had strongly appreciated in real terms vis-à-vis the US dollar—because the dollar had depreciated in nominal terms vis-à-vis the peso, while Bolivia had experienced significant inflation—the book value of EGSA’s turbines was now overvalued (in dollar terms), thereby artificially inflating not only the company’s net equity (expressed in dollar terms), but also its reported profits. Secondly, starting in 2009, EGSA had started to capitalize (i.e. amortize over some years) maintenance costs which until then had been classified as current operational expenditures.

451. Even if a significant part of the hearing was devoted to further discussions on the alternative valuation methods issues described above, there is no need for further elaboration here since they do not have any bearing on the Parties’ and the Tribunal’s method of choice for evaluating EGSA: the DCF method, to which we now turn.

G. THE APPROACH TO DAMAGES

452. As previously stated, this Tribunal agrees with the Parties that this case is mostly about quantum. This Award now arrives at the part of the case that is the most relevant and clearly the most difficult to resolve, even if the Tribunal’s work has been made substantially easier
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by the quality of the advocacy and of the experts’ reports and authorities which were provided.

453. The Parties are in agreement on several relevant points, which are also accepted by the Tribunal. They include the following:

(a)  The 2010-2038 timeframe for the analysis;

(b)  FMV as the standard for defining compensation, if any;

(c)  FMV to be determined, by reference to the WBS527 as at the date of the nationalisation, by the DCF method;

(d)  The DCF method’s five main components of value:528 “revenues, operating expenses (OPEX) (including sales, general and administrative expenses), capital expenditures (CAPEX), taxes and discount rate”529 (albeit that the Parties do not agree on the actual figures and the grounds for them);

(e)  The use of the WACC530 as the appropriate discount rate;

(f)  The cost of debt to be used in the calculation of the WACC; and

(g)  A “standard of proof”, that assumes that assessing values for compensation is not an exact science, rather than “an exercise in certainty [...] an exercise in sufficient certainty”.531 

454. In spite of the general agreements described above, the Parties differ (based on the expert reports submitted) on the specifics of some underlying assumptions,532 mostly in relation to
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revenue projections, CAPEX, and the discount rate,533 the other differences between them being irrelevant or agreed by the experts following their discussions and cross-examination. These differences must be addressed in detail by the Tribunal.

455. In relation to revenues, the Parties disagree as to the projections for capacity and energy dispatch and capacity price forecasts. In relation to the discount rate, they disagree about the optimal capital/debt ratio, the country risk premium and its multiplier, and the size premium. These discrepancies create a huge difference in the WACC to be used to determine the discount rate (10.63% vs. 19.85%) and it is therefore the major reason for their differing conclusions concerning compensation.

H. REVENUE SIDE

456. To estimate EGSA’s expected revenue during the 2010-2038 period, it is necessary to make a number of assumptions.534 The revenue is mostly the result of three flows: sale of energy, capacity payments and carbon credits. Only the first two are subject to disagreement between the Parties.535

457. The projected sale of energy is, in turn, the result of two factors:

-  the price per kWh of electricity produced by each production unit; and
-  the amount of energy dispatched by each production unit.

458. Both factors are dependent upon the projected demand for electricity and the supply available in the market during the years 2010-2038.

459. The optimal scenario for each of the Parties would be either higher demand and lower supply or lower demand and higher supply, respectively, as this would slant profitability towards the position of each side.

460. In order to estimate those variables, both Parties agree with the use of the “Stochastic Dual Dynamic Programming” (SDDP), used by CNDC to simulate the future evolution of various factors that influence energy demand and supply, and mathematically determine the optimal
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distribution of energy dispatched from the various units in the system and the system’s marginal cost of production, as defined by the applicable regulations.

461. The use of the SDDP is not at issue between the Parties, although they are in disagreement on the evolution of two key variables during the period 2010-2038:

-  the evolution of electricity demand; and
-  the evolution of investments in new capacity.

462. As expected, the Parties tend to look to the future with different eyes. Rurelec sees a bright future for the revenue streams, a depressed future for new investments, and therefore higher profitability for the installed units of production. The Respondent sees the opposite: a lower revenue stream for EGSA, a bright future for new investments, and therefore a lower profitability for EGSA. The Parties’ perspectives are a very important aspect of due process, as they provide the Tribunal with contrasting views which make it easier for the Tribunal to look at the facts with independent and impartial eyes and to see what the most likely outcome actually is.

463. One important assumption in this kind of valuation is the WB’s attitude regarding the future. Since the WB assumes that all the relevant entities will act rationally, it will anticipate that: (i) the supervisory and regulatory bodies from Bolivia will do the utmost to prevent significant electricity shortages; and (ii) GDP increases will entail an increase in electricity demand.

464. This being the case, a WB would regard as highly improbable that Bolivia’s GDP will grow and entail additional needs for electricity but that no new investments would take place to meet those needs. The opposite would also be true: if GDP does not increase and the demand for electricity stagnates, no impetus would exist for significant new investments.
Another important aspect of the WB is even more evident: a prospective rational buyer will try to obtain the maximum available information with which to make a decision and, in particular, will do adequate due diligence rather than following a passive approach that just looks at official documents projecting the future. A WB tries to collect all the information possible at the time.536 Mr Paz agreed that “due diligence”, and gathering “all the available market information”537 and “technical studies” is part of the expected standard efforts of a
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WB.538 As Rurelec stated539, both experts agreed that “all information available to the market as of the valuation date should be taken into account”.540 This may include, but is not be limited to, CNDC information: it will also encompass any other information resulting from the buyer’s due diligence.

466. The Respondent argues, however, that Rurelec makes a selective use of information and Compass Lexecon “cherry picked” what it deemed helpful for its report from post- nationalisation publicly available information, while disregarding what was unhelpful.541 

467. In the Tribunal’s view, a WB would have used all the information available at the time of nationalisation, irrespective of whether: (i) it was already in the public domain or was just the result of the buyer’s own due diligence; and (ii) it resulted in a higher or lower valuation of EGSA.

468. The Respondent’s argument regarding the selective use of available information, “cherry picking”, and use of hindsight is a different issue. The Tribunal would obviously disagree with a biased use of non-official information available at the nationalisation date. Nor would the Tribunal accept that information which was not available at the date of the nationalisation, even when a proper due diligence was carried out, could be used in determining the FMV. However, the Tribunal would also disagree with the idea that only official information available at that date could be considered relevant, regardless of the possibility that such information might have been deemed inaccurate or that new facts had already clearly arisen and would therefore have been known to the WB. Thus, the Tribunal’s task shall be to act as if it were the WB and to determine, on the basis of available evidence as to facts and likely future events, and exercising judgment and a sense of proportion, the relevant information which, as of the date of the nationalisation, such WB would have likely taken into account to estimate EGSA’s FMV.

1. Electricity demand

469. For the forecast of the electricity demand, Rurelec drew on two documents: (i) the “Informe de la Programación de Mediano Plazo” (PMP) covering the period between November 2009 and October 2013 and published by CNDC in September 2009, in order to estimate the demand for electricity in 2010; and (ii) CNDC’s “Proyección de la demanda de energía
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eléctrica de largo plazo del SIN 2011/2021” for projections of demand in subsequent years. This latter report specifically envisaged that the Tarija and Chaco sub-systems would become part of the Interconnected National System (SIN), thereby increasing the demand for electricity in 2012.Rurelec’s resulting estimates of electricity demand were as follows:542

Year	Demand (GWh)	Annual Growth (%)
2010	5,782	7.9
2011	6,308	9.1
2012	6,968	10.5
2013	7,806	12.0
2014	8,665	11.0
2015	9,346	7.8
2016	9,989	6.9
2017	10,624	6.4
2018	11,256	5.9

470. The Respondent argues that, on March 15, 2010 (i.e. before the nationalisation), CNDC had already published its new PMP, so that the one used by Rurelec was already outdated.543 It further claims that the CNDC’s report “Proyección de la demanda de energía eléctrica de largo plazo del SIN 2011/2021” used by Rurelec was not published until July 2011. Consequently, it would not have been available as of the nationalisation date. The Respondent also notes that, in said report, CNDC made its highest projections ever for the demand of electricity.

471. The Respondent instead relies on the figures in the March 15, 2010 PMP report for the period from May 2010 to April 2014. After April 2014—albeit without saying so explicitly—the Respondent seems to project a 5% annual growth in electricity demand.

472. In response to the Respondent’s criticisms, Rurelec’s expert points out that he used the last PMP of September 2009 for his projections, rather than the PMP published in March 2010, because the latter did not contain enough operating information on the January-April 2010 period, as would be necessary to produce a complete electricity production forecast from January 2010 to December 2018. He adds that, if he had used the March 2010 PMP report, the amount of the compensation requested would have dropped by only USD 0.2 million.544 

473. Rurelec’s expert also points out that he made an inadvertent error in his first expert report regarding the source of electricity demand in the long term projections. MEC, the consulting firm used by Compass Lexecon, did not actually use the CNDC study “Proyección de la
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demanda de electricidad de largo plazo del SIN 2011/2021”, but rather the electricity demand projections set forth in the 2010 POES. He points out that the use of this latter source is particularly appropriate, because the POES projects both expected demand and capacity increases for the generation system. The POES demand forecasts also took into account the new power demand arising from the Huanuni and Karachipampa mining projects, which were expected to start operations in 2012. Following that period of exceptional growth, subsequent inter-annual demand growth rates slowed, gradually decreasing to 5.9% in 2018.

474. Rurelec’s expert likewise criticises the underlying assumption of 5% growth in electricity demand in Bolivia used in the Respondent’s forecasts, since it is not consistent with the increase in generation units forecasted by the CNDC in the 2009 POES, the report which the Respondent itself uses for its long-term supply forecasts.

475. The Tribunal finds that Rurelec’s demand forecast is reasonable in light of all the evidence provided as well as the Respondent’s general optimism as to the future of emerging countries in general, and in particular Bolivia itself. This is confirmed by the fact that Rurelec’s forecast is based on the POES 2011-2021, prepared by CNDC and publicly available by the end of 2010.545 This forecast takes into account not only the normal expected evolution of Bolivia’s GDP and its relation with electricity demand, but also some “special events”, notably the huge Karachipampa and Huanuni mining projects and the incorporation into the SIN of the Chaco, Trinidad and Tarija systems, among other developments.

476. It is true that the 2011-2021 POES was released in December 2010, i.e. several months after EGSA’s nationalisation. However, in the Tribunal’s view, this slight difference does not mean that the use of such information constitutes an undue resort to hindsight (a methodological defect to which the Respondent made repeated references during the witness and expert examinations, and rightly so):

(a)  The information contained in the POES was not confidential, nor was it subject to a special duty of secrecy which would have made it unlikely to be disclosed prior to its release by the CNDC.

(b)  As with other CNDC reports, there was, logically, a certain delay between the time the data on which the POES is based was collected and became known, and the publication of the POES itself.
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(c) A prospective buyer of EGSA would have had a clear financial incentive to obtain the most updated information possible on the variables that could influence the demand for and price of electricity in Bolivia and, as such, Rurelec’s assertion that it already had at its disposal in May 2010 information similar to that published by the CNDC in December of that same year is plausible.

477. Electricity demand growth forecasts used by the Respondent, and included in Mr Paz’s witness statement, are not fully consistent with the 2010-2020 POES that the CNDC published in November 2009. The forecasts included in that POES are, as the Respondent points out, lower than those of the POES published in December 2010. For instance, in 2018 it forecasts an aggregate demand of 9,963 GWh, as compared to 11,256 GWh in the aforementioned December 2010 POES. However, this is due to the fact that—as the report explains in its paragraph 4.2—it merely extrapolates from the historic relation between the GDP and electricity demand, and takes “megaprojects” into account only as a determining factor for GDP growth, but not as a factor leading to specific increases in electricity demand. Even so, the POES published in November 2009 forecasted, for the 2015-2018 period, interannual electricity demand increase rates of 7.5% (2015), 6.8% (2016), 7.3% (2017), and 7.3% (2018), values significantly higher than those tacitly assumed in the Respondent’s projections.

478. In short, the Tribunal does not find merit in the Respondent’s objections to the electricity demand growth projections used by Rurelec, and it accepts such projections as the basis for EGSA’s valuation.

2. Electricity supply

479. As already explained, in the Tribunal’s view a WB would have used a consistent approach: a bullish view of Bolivia’s economic future would have translated into an assumption of both high demand for electricity and significant new investments in capacity. Conversely, a more pessimistic view of Bolivia’s future would have translated into expectations of both a more subdued demand for electricity and sluggish investment in new capacity. Thus, the Tribunal rejects as inconsistent both Rurelec’s high demand/low supply and the Respondent’s low demand/high supply scenarios.

480. In its analysis of the demand for electricity, the Tribunal has accepted as reasonable Rurelec’s scenario of a buoyant growth for Bolivia, which entailed a sustained increase in the demand for electricity. Consequently, it should apply now a consistent view of supply decisions and new investments and, more specifically, of the expectations that a WB would have been likely to hold regarding the future of Karachipampa, the prospects for the
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construction of the Rositas hydroelectric dam, and the future of the ARJ 1 to 3 units of Sucre’s plant.

481. When estimating the future supply of electricity, Rurelec started out from CNDC’s POES 2011-2021, published in December 2010, but introduced two changes:

(a)  It pushed back the date when EGSA’s new combined cycle came on stream to November 2010, since such delay had already been foreseen by EGSA before its nationalisation, even if it was not reflected in the POES forecast.

(b)  It dismissed the POES forecast that the Rositas dam would commence operations in 2018.

482. Rurelec’s expert used the POES published in December 2010, rather than the one published in November 2009, because he considered that the information set forth in the latter was outdated. He supports that assertion on the basis that the November 2009 POES forecasted the coming into operation between December 2009 and May 2010 of five new thermal units—four in the Entre Ríos plant in Cochabamba, and EGSA’s combined cycle in Santa Cruz—which were actually several months delayed in commencing operations. He holds that a rational buyer would not have relied on the information set forth in that version of the POES and would have instead gathered more recent information similar to that subsequently published in the December 2010 POES.

483. Rurelec argues that the Rositas power plant is a huge project that has been studied and analysed for more than 40 years.546 While it recognizes that the 2010-20 POES considered that Rositas would be built and be in operation by January 2018,547 it points out that none of the money budgeted for the project in 2010 had been spent in the first four months of the year,548 and that CNDC had regularly included Rositas in its projections even if initial investments and studies required to start the project had never materialized.549 The huge size of the project and these historical precedents lead Rurelec and Compass Lexecon to consider it highly improbable, if not impossible, that Rositas would come on stream by 2018.550 

484. The Respondent and Mr Paz assert the opposite and, therefore, include the Rositas power plant in the projections as a unit able to dispatch.
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485. The Tribunal considers that the size of an investment is certainly an important issue: it is easier to bet on a brighter future for new investments when the amounts needed are smaller than when they are more substantial. However, a rational decision is based upon general optimism or pessimism regarding the future. If the dominant attitude is negative, investment is less probable than if the trend is the opposite. The Tribunal tends to agree with Rurelec: in May 2010, without taking into account the nationalisation of EGSA, a WB having done the necessary due diligence would have harboured optimism regarding the future and, therefore, would have expected demand to increase in the coming years, as anticipated by the Compass Lexecon report based upon MEC’s projections.

486. A rational and consistent WB having done the necessary due diligence would had also been optimistic regarding the near future for emerging economies551 (China’s investment in energy-related companies in particular is a good example). Therefore, such WB would have anticipated that the necessary funding for Rositas would materialize, if not in accordance with the POES 2010-20’s timetable, then not much later. This conclusion is reinforced by the fact that the POES emphasized the risk of potential electricity shortages if Rositas was not available by 2019 and was actively considering the possibility of building it initially on a smaller scale,552 to be subsequently enlarged, say in 2019/2020.553 For these reasons, the Tribunal will assume that Rositas would have been built by 2018 and become operational by at the beginning of 2019.554 

487. By the same token, a WB with bullish views on Bolivia’s economic future and having done the necessary due diligence would have considered it unlikely that Karachipampa would be decommissioned,555 at least until Rositas came online.556 It is true that EGSA had requested authorization in January 2010 to shut it down557 because, as stated by Messrs Aliaga and Andrade, EGSA was not making money from it.558 However, this would not have been the
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first time that CNDC refused or postponed a decommissioning request. Indeed, Bolivian regulatory bodies had shown in the past a very conservative and prudent approach concerning the electricity supply, as there was a strong risk of shortages559 and in a number of similar cases CNDC had postponed or refused requests for decommissioning.560 This trend is still true: even if such could not have been known by a WB in 2010, Karachipampa remians available for dispatch today. Thus, the Tribunal agrees with Rurelec that Karachipampa must be included in the dispatch calculations.561 

488. In conclusion, the scenarios on Rositas and Karachipampa are closely linked, since a WB with optimistic views on Bolivia’s demand for electricity would have expected both that the former would be built according to schedule and the latter would not be decommissioned until Rositas came on stream.

3. Price of Electricity

489. Differences between the Parties as to their respective expectations of the growth of demand for electricity and the increase in generation units result in differences regarding the two main factors which make up EGSA’s revenues from electricity sales: (i) the unit price per MWh produced and (ii) the total physical amount of electricity dispatched to the SIN by EGSA’s units.
The differences between electricity prices forecasted by Rurelec and by the Respondent are relevant, as illustrated in the following figure:
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491. As can be observed in the above figure, Rurelec forecasts a slight initial decline in the price of electricity, with nominal prices ranging from USD 16.6 to USD 18.4 for the various nodes as of 2018. From 2018 onwards, Rurelec anticipates that the price will be stable in real terms, and thus adjust it in nominal terms using the expected US PPI.

492.The Respondent argues otherwise and anticipates a lower nominal price for the coming years.

493. Those differences are completely aside from the Parties’ differences regarding Resolution SSDE No. 283/08, which excluded units using liquid fuel for the determination of the system’s marginal cost, since Rurelec made a clean separation between its expropriation and “spot price” claims, and assumed for the former calculations that Resolution SSDE N0 283/08 remained in force.

494. The Tribunal in this case is therefore more convinced by Rurelec’s forecast as to electricity prices. However, given that Rositas shall be assumed to enter into production in 2019, it will be necessary to adjust the forecasts accordingly, not only concerning EGSA’s electricity dispatch, but also in relation to the price for electricity from 2019 onwards.

495. Even if Rurelec assumed in its own calculations that the Rositas dam would never be built, they estimated in exhibit C-359 the consequences of assuming that it was built and became operational as of 2018. To the extent that document C-359 includes both the physical amount of electricity dispatched by EGSA in 2018—i.e. assuming Rositas was already in operation—and EGSA’s revenue from energy sales that year, it allows the Tribunal, after inferring the electricity prices that, according to Rurelec, would have prevailed in 2018 assuming that Rositas entered in operation that year, to adapt these for 2019.
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496. In order to estimate electricity prices from 2019 onwards, the Tribunal has applied to the 2018 prices in exhibit C-359 the PPI inflation estimate—i.e. a cumulative 2.5% rate—used generally by both sides to index all dollar figures after that year.

497. In summary, the Tribunal decides to accept Rurelec’s forecast of electricity prices up to 2018, and reject the Respondent’s. However, it has decided to reflect, starting in 2019, the impact of Rositas’ entry in operation on the price of electricity. The following figure compares the Tribunal’s forecast of electricity prices with those of the Parties:

4. Revenues from capacity payments

498. The forecast of EGSA’s revenues for capacity payments depends on two main factors:

-  The prevailing unit price in each period for every kW of installed capacity with a payment right (“capacity price”); and
-  The aggregate capacity of EGSA’s units that at each moment in time were part of the “firm capacity” and were consequently entitled to payment.

(i) Capacity Prices (“Precio Básico por Potencia”)

499. The capacity price (PBP) is, as already discussed above, the payment obtained by generators for putting their generation capacity at the system’s disposal, regardless of whether they actually dispatch energy or not, provided that the corresponding unit forms part of the so- called “firm capacity” and has not been relegated because of its economic inefficiency to the category of “cold reserve”.

500. PBP has been forecast by the Parties in the same way and with similar reasoning as for spot prices. For different reasons, the Parties made their calculation based on the rules valid in
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May 2010 and, therefore, without using the 20% increase that had been cancelled by the Norma Operativa No 19/2007 (Resolución aprobada por la SSDE No 040).

501. This being so, the main issue between the Parties is the index to be used in the calculation of the PBP. Rurelec, based upon the reports of Compass Lexecon, uses the “US Producer Prices Index – Turbine and Turbine Generator Set Units” (Turbine Index),562 using a reference period of 2000-10. As a consequence, Rurelec assumes that the unit price would grow at a rate of 3.47% annually in nominal terms.

502. The Respondent, based on the reports of Econ One, prefers to use the standard US PPI—i.e. a 2.5% annual rate—and insists that, if the Turbine Index is used, the reference period should be a longer one (1990-2010) during which turbine prices grew at a cumulative annual rate of only 2.27%.563 

503. The Tribunal agrees with the Respondent. The explanations provided by Compass Lexecon were not strong enough to eliminate the impression that the reference period that they used— i.e. 2000-2010—was not representative of long-term trends, since it was distorted by an exceptional increase in turbine prices in 2007-2008.564 Mr Abdala accepted that the Turbine Index used by him was high565 or at least that “probably [...] over the long term, there shouldn’t be that much of a difference” between the two indexes.566 In response to the Tribunal, he was also unable to explain the logic of his assumption that the relative price of turbines would increase for the foreseeable future, particularly since there are no specific barriers to entry in the market for turbines which could explain that sustained trend in a market economy.

504. The only doubt for the Tribunal was whether to accept the standard US PPI or the Turbine Index available for a longer period. Mr Flores stated in his direct examination presentation (Slide 9) that both experts use the Turbine Index.567 However, the Tribunal, faced with this discrepancy and the challenge of selecting the appropriate period, prefers to use the standard US PPI, and therefore will use the 2.5% value for its calculations.
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(ii) Eligible installed capacity

505. Compass Lexecon assumes, from its very first expert report, that EGSA’s aggregate installed capacity, present and future, would be entitled to capacity payments, such that they merely multiply that aggregate capacity by the unit PBP forecasted in each period.

506. The Respondent points out, on the contrary, that EGSA’s firm capacity entitled to collect capacity payments is lower than that indicated by Rurelec, since the latter only forecasted the generation capacity EGSA would have had in 2012—i.e., once the combined cycle came on stream—as if it were all firm capacity, failing to take into account that some of EGSA’s oldest thermal units would fall out of the “firm capacity” category, and would become “cold reserve” units not entitled to collect the PBP, as a result of the installation of new competitive hydroelectric power plants.568 Thus, in the Respondent’s view, Rurelec has overestimated EGSA’s firm capacity by 21 Mw in 2011, 42 Mw in 2012, 86 Mw in 2013, and 99 Mw from 2014 onwards.569 The Respondent points out that Rurelec’s expert has clearly not conducted any simulation of the future firm capacity, but has simply used EGSA’s whole installed capacity, including the least efficient units thereof (such as Guaracachi 1, 2 and 6, Santa Cruz 1 and 2 and Aranjuez 1, 2 and 3).

507. In his third witness statement submitted by the Respondent, dated 1 March 2013, Engineer Paz deemed this a serious error, especially in respect of the abovementioned three Aranjuez units following Rositas’ entry in operation, because Rositas would be within the same circuit as the Aranjuez plant and would displace the production of those inefficient thermal power stations, whose production cost is twofold that of the more modern turbines belonging to EGSA itself.570 

508. Rurelec rejects this counter-argument on the basis that, given the forecasted growth in demand for electricity—ranging between 7% and 12% per year during the 2011-2018 period—the new hydroelectric power plants would have been unlikely to displace EGSA’s thermal units. In addition, the need for SIN to maintain an appropriate capacity reserve margin reinforces Rurelec’s hypothesis. In any event, Rurelec asserts that the Respondent overestimates the new hydroelectric generation capacity.571 

509. The Tribunal, in keeping with the abovementioned principle of consistency between the forecasted growth in demand for electricity and the expansion of installed capacity in the
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SIN, considers Rurelec’s forecast until 2018 to be justified, because the strong growth in demand is likely to force the authorities to deem all of EGSA’s generation facilities as part of the firm capacity.

510. However, as pointed out by the Respondent, the foreseeable entry into operation of the Rositas power plant—that Rurelec has disregarded, but which the Tribunal considers should be included as part of the forecasts (as of 2019)—would probably relegate EGSA’s most inefficient units to mere “cold reserve”, in particular those of the Aranjuez plant. Consequently, the Tribunal understands that units ARJ-1, 2, and 3 as well as the Karachipampa power plant should be withdrawn from EGSA’s capacity revenue forecasts for the 2019-2038 period.

5. Conclusion about Revenues

511. As a result of the foregoing conclusions, the Tribunal has decided to introduce into Rurelec’s forecast of EGSA’s revenues the following modifications:

(a)  those resulting from a WB’s expectation that Rositas would start operating in 2019 and, as a consequence,

-  the electricity dispatched by EGSA would be reduced;
-  the spot price would also be similarly reduced; and
-  EGSA’s installed capacity eligible to received capacity payments would also be reduced.

(b)  the reduction in the rate of inflation on the PBP is reduced from 3.47% to2.5%.

512.The following figure compares the result of the Tribunal’s decisions with the Parties’ forecasts of EGSA’s revenues:
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513. As a consequence, modifications have been made to Rurelec’s valuation model and the conclusions are presented at the Excel table attached to this Award as Annex A.

I. COST SIDE

514. After looking at the revenue side, it is now time to look in detail at the cost side. The relevant items are (i) OPEX, including cost of energy (natural gas and diesel), and (ii) CAPEX.572 

1. OPEX

515. The biggest part of OPEX, by far (90%573), is energy costs. The Parties are in agreement on energy costs. The prices in Bolivia have been fixed since 2001 at 1.30$/Tcf for natural gas and 0.526$/litre for diesel. The minor discrepancy between the Parties relates to what inflation should be added: Econ One considers that prices would remain flat until 2018 and so applied inflation only to the remaining 10% of the total costs. Compass Lexecon decided to assume price inflation from 2010 to 2038 and so it applied the US PPI to the total amount of costs. The PPI is accepted by Econ One, but applied only from 2019 to 2038. The Tribunal sees no reason to apply a different approach before and after 2018 on this particular issue, as no explanation has been given to justify doing so. Therefore, the Tribunal accepts Rurelec’s approach.

516. Some differences also arise in relation to administrative costs.574 In their initial reports, both experts projected these costs as a fixed percentage of EGSA’s revenues, drawn from figures
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for the 2005-2009 period.575 However, in its rebuttal report,576 Compass Lexecon claimed that it had made an error and decided instead to assume that administrative costs would remain constant in real terms and thus grow “in nominal terms, with growth in overall inflation”. Econ One criticized Compass’ change of criterion and noted that it increased EGSA’s value. The Tribunal agrees, however, with Rurelec’s solution, which it regards as more logical, since EGSA’s administrative costs were limited, and can largely be regarded as a recurrent fixed cost, unrelated to the actual level of electricity produced.

517. Other minor discrepancies between the Parties (albeit in regard to very small amounts) relate to depreciation, namely the start date for CCGT depreciation577 and working capital.578 Here, the Tribunal thinks that CCGT depreciation should start in November 2010 and accepts Rurelec’s view as to working capital.

518. The Tribunal was therefore able to reach the conclusion in relation to OPEX shown in Annex A.

2. CAPEX

519. Compass Lexecon considered that the only investment to be included for the purposes of the cost calculation is the CCGT expansion project.579 The reasons for not assuming additional CAPEX are as follows:

(a) no new investments were predicted or predictable in May 2010; and

(b) all maintenance costs were included in the maintenance, materials, spare parts, and supplies components of the OPEX.580 

520. Econ One strongly disagrees,581 and asserts, on the basis of Mr Paz’s statement,582 that EGSA’s equipment could not remain operational without major replacements with a cost of at least USD 2.5 million for each of the 21 units, being USD 52.5 million in total. The
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Respondent interprets a statement from Mr Abdala,583 when cross-examined, as an example of inconsistency related to this issue.584 

521. The Tribunal agrees with the Respondent that, after more than 30 years of operation, major replacements to be included under CAPEX would need to be made. However, taking into account that operations would end in 2038 (28 years after de expropriation), this factor will only apply to the units that had reached 30 years of operation by that year. Therefore, it is assumed no CAPEX would be necessary or justified for units that would not yet have reached more than 30/31 years of operation by 2038.

522. The Tribunal will also assume that the situation where the unit is expected to work for a few more years past the 30 year mark is not the same as the situation in which the operations are expected to continue for many more years. So, while the Tribunal accepts the USD 2.5 million value as the basis for the calculation of required CAPEX per unit on the basis that the new investment would allow the unit to operate for another 28 years, it will adjust that value according to the number of additional years of operation expected from each unit.

523. For all these assumptions and calculations, the Tribunal will refer to the table provided by Mr Paz:585 
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524. In accordance with the Tribunal’s decision and this table,

(a) GCH-11 and ARJ-9 to ARJ-15 will not need new CAPEX;

(b)  ARJ-1 to ARJ-3 will need new CAPEX for a period of 8 years and Karachipampa for a period of 6 years;

(c)  GCH-1, GCH-2, and GCH-4 will need new CAPEX for 28 years, GCH-6 for a period of 20 years, and GCH-9/10 for 9 years (USD 803,571 for each of GCH-9/10 in 2030);

(d)  SCZ-1 will need new CAPEX for 18 years and SCZ-2 for a period of 20 years; and

(e)  ARJ-8 will need new CAPEX for a period of 22 years.

525. This leads to CAPEX costs, summarized as follows:

-  in 2011: USD 9,642,958 (USD 2.5 million for each of GCH-1, GCH-2, and GCH-4, and USD 714,286 for each of ARJ-1 to ARJ-3);

-  in 2013: USD 535,714 (for KAR-1);

-  in 2019: USD 1,785,714 (for GCH-6);

-  in 2021: USD 1,607,143 (for SCZ-1);
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-  in 2023: USD 1,428,571 (for SCZ-2);

-  in 2024: USD 1,339,286 (for ARJ-8); and

-  in 2030: USD 1,607,142 (USD 803,571 for each of GCH-9/10).

3. Conclusions about Costs

526. The Tribunal overall conclusions in relation to costs are shown in Annex A.

J. DISCOUNT RATE

527. The parties and their experts agree on a few things concerning the discount rate, but they disagree on the specific value of most of its components and on whether some additional risk factors should be added when calculating EGSA’s cost of equity, namely:

(a)  a multiplier to be applied to Bolivia’s sovereign risk, to take into account the special volatility of equity investments in emerging economies; and

(b)  a “size premium”, to account for EGSA’s small size.

528. The specific disagreements are illustrated in the following table, taken from Econ One:586
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[Row 7 / (1+ Row 7)]
16. Equity-Capital Ratio	55.34%	64.08%
[1 - Row 15]
17. WACC (nominal)	10.63%	19.85%
[Row 14 x Row 15 + Row 12 x Row 16 ]

529. Under the Capital Asset Pricing Model (“CAPM”) methodology the cost of debt and the cost of equity are external parameters introduced in the model as independent variables. However, Rurelec argues that there should be consistency between their relative values, since the degree of riskiness of a company affects both its creditors and its shareholders, even if the latter are subordinated to the former and bear the company’s “residual risk”. In Rurelec’s words, an excessive difference “between the cost of debt and cost of equity suggests that creditors do not care about risks that are causing equity-holders to demand high returns.”587 More specifically, Rurelec insists that “Dr Flores’ cost-of-debt/cost-of-equity ratio of 3.51 is out of proportion with the 1.53 median ratio for the Santander sample, while Dr Abdala’s ratio, 1.83, is much closer both to reality and to the sample’s median ratio”.588 

530. As it may be seen below, the Tribunal will determine a cost of equity for EGSA whose ratio with EGSA’s commonly agreed cost of debt is higher than the one suggested by Rurelec, but lower than the Respondent’s.

531. However, the Tribunal will not factor in, in the determination of the Discount Rate, the actual ratio between equity and debt cost that would result from the Tribunal’s conclusions. The Tribunal considers that it is more important to look directly at the actual costs, and notes that the Parties have agreed on the cost of debt irrespective of their disagreement in relation to equity costs. As such, the Tribunal concludes that it would not be appropriate to simply calculate the cost of equity as a multiple of the cost of debt, as Compass Lexecon suggests. The Tribunal will therefore analyse below each of the parameters whose value the parties disagree on.

1. Risk-free rate

532. The first discrepancy is related to the risk-free rate. Both experts agree that the maturity of the bond should be consonant with the life of EGSA’s financial flows to be discounted, but disagree on the practical application of such criterion.

533. Compass Lexecon uses the yield of the 10-year US Treasury bond (i.e. 3.58%) and Econ One the 20-year bond’s (i.e. 4.36%). According to Econ One, despite the 10-year bond’s
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higher liquidity and lower volatility against changes in inflation,589 the 20-year bond is more appropriate to the timeframe being used.590 However, Compass Lexecon insists on the appropriateness of its choice because the average “duration” of the cash flows for EGSA is 11 years, closer to the “duration” of the 10-year bond (i.e. approximately 9 years) than that of the 20-year bond (i.e. approximately 14 years).591 Econ One retorts that the investment bank’s reports (i.e. Banco Santander’s) cited by Compass Lexecon used in 2010 a yield, 4.2%, which seems closer to Econ One’s proposal.592 Mr Abdala asserts that his choice is “not a question of hindsight”,593 since he used these reports mostly just for context, and the evolution of Banco Santander’s estimates from 2009 to 2010 confirms his position.594

534. The Tribunal agrees with Econ One that the risk-free rate used by Banco Santander’s seems closer to the yield of the 20-year bond than the 10-year bond. Yet, the Tribunal grants more weight to Compass Lexecon’s argument that the choice of the relevant bond tenor should be made on the basis of the “duration” of cash flows. The “duration” of EGSA’s cash flows (in discounted terms) would in fact be even shorter—and even closer to that of the 10-year bond—if a higher discount factor than Compass Lexecon’s 10.63% is used for discounting purposes, since that will significantly diminish the discounted present value of EGSA’s most distant cash flows. The Tribunal thus concludes that the yield of the 10-year US Treasury Bonds should be used.

2. Market risk or equity premium

535. The next discrepancy relates to the market risk premium—commonly described in the literature as the “equity premium”—which represents the additional return over the risk-free rate that an investor expects from holding a market portfolio of riskier securities, such as company shares.

536. Even if the market premium is usually defined as an “expected” supplementary return—i.e. as a forward-looking assessment of market risks during the years ahead—both sides and their experts (in particular the Respondent), rely on the common procedure of equating such “expected” value to the “historical” value of the premium during some past reference period. Despite this simplification, three methodological issues arise on which the Parties’ responses differ:
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-  the reference period from which the historical market premium is calculated;

-  whether historical averages should be calculated as “arithmetic averages” or as “geometric averages” of historical values; and

-  the influence of the 2008-2009 international and US financial crisis on historical an “expected” market premiums;

537. Compass Lexecon relies on Professor Damodaran, whose views on the appropriate value of the market risk premium have changed several times as a result of the ups and downs of the US equity market in the wake of the 2008 financial crisis. Up to the onset of the crisis, Professor Damodaran had traditionally used a 4% market premium. However, in early 2009, reflecting on the damage inflicted by the crisis to US equity portfolios during the last quarter of 2008, he wrote: “[2008] has been a year that has shaken our faith in mean reversion and using long term averages, especially when it comes to equity risk premiums and default spreads. I have done my annual update for historical equity risk premiums for the United States but 2008 has changed the numbers dramatically. The geometric average risk premium for stocks over treasury bonds, going back to 1928, was 4.79% at the end of [2008], has dropped to 3.88%, with premiums over shorter periods (10 years) becoming negative. The implied equity risk premium, which was 4.37% at the end of 2007, jumped to 6.43% at the end of [2008].595 In the datasets that compute cost of equity and capital, I have abandoned my practice of using historical risk premiums and used596 a higher value (5%). Even that may be too low a number. I would suggest that you up that number towards the current implied equity risk premium, if you want a cost of equity and capital today.”597 

538. A few months later, in October 2009, Professor Damodaran struck a slightly less sombre note: “Though I believe that mean reversion is a powerful force, I think that the banking and financial crisis of 2008 was unlike other market fevers and downturns in terms of exposing weaknesses in developed capital markets. When valuing emerging markets prior to September 2008, I used 4% as my mature market equity risk premium and based the estimate on the average implied equity risk premium over time (1960-2007). Since October of 2008, I have moved to a 5-6% mature market equity risk premium and will continue to use this higher premium until I am convinced otherwise.”598 
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539. Only four months later still, in February 2010, probably influenced by the recovery in US equity markets, Professor Damodaran supplanted his last sentence in the above quote with the following: “After the crisis, in the first half of 2009, I used equity risk premiums of 5-6% in my valuations. Having watched the reversion of historical averages in 2009, my valuations in 2010 will be based upon equity risk premiums of 4.5-5%. While some may view this shifting equity risk premium as a sign of weakness, I would frame it differently. When valuing individual companies, I want my valuations to reflect my assessments of the company and not assessments of the overall equity market.”599 

540. As indicated, Compass Lexecon draws on Damodaran’s views and uses a 5% premium, which, while at the low end of Damodaran’s views in October 2009 (as pointed out by Econ One), was nonetheless at the high end of Damodaran’s estimate by February 2010, right before EGSA’s nationalisation (as pointed out by Compass Lexecon).

541. Compass benchmarks its 5% estimate against the market premiums used in a “sample” of “Investment Banks’ Reports”, which Rurelec submitted as document C-300. According to Compass, the average market premium used in those reports is 5.8%, while the median is 5.5%600.

542. Econ One correctly argues that Compass’s estimates are partially based on reports made public by Santander after EGSA’s nationalisation: the correct figure for the market risk estimates in the “Informes de Analistas Financieros” should have been 6.5%.

543. Econ One’s own estimate of market risk, 6.7%, relies not on Damodaran, but on the equity risk premiums calculated by Ibbotson/Morningstar in March 2010, as the arithmetic average for equity premiums in the US market during the period 1926-2009.

544. After carefully considering the parties ́positions, the Tribunal has decided to accept an equity premium of 5%, as suggested by Claimant.
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3. Beta

545. In the CAPM methodology, “the market risk premium is weighted by the beta coefficient, which measures a security’s (or a group of securities’) exposure to general market risk.”601 This is not contested. However some discrepancies remain as to the calculation of the Beta:

-  the universe of US listed electricity companies from which the “unlevered beta” of electric companies comparable to EGSA should be extracted; and

-  the optimal debt-equity financial structure of a Bolivian electricity company like EGSA.

(i) Unlevered beta of US electricity companies comparable to EGSA

546. Compass Lexecon says it used “the industry beta of US-based firms in the electric power generation, transmission, or distribution industry calculated by Morningstar (formerly Ibbotson Associates) that corresponds to the SIC code 4911”602, and then explains the procedure to adjust that “raw beta” to obtain a final figure of 0.77.603 

547. Econ One disagrees and states that the criterion used to select the comparable companies used by Ibbotson/Morningstar for its report is unclear and does not correspond to SIC code 4911. In any event, Econ One suggests that instead of using SIC code 4911, Compass Lexecon should have requested a custom report.604 Following its criticism, Econ One explains how it selected the 5 companies which it considers most comparable to EGSA. After de-leveraging the 1.34 raw beta of this set of comparable companies, it arrives at an “unlevered adjusted beta” of 0.68. In its second report, Econ One further comments on and criticizes Compass Lexecon’s analysis and maintains its figures.605 

548. In its second report, Compass Lexecon clarifies what it actually requested from Morningstar and why it also criticizes Econ One’s sample of 5 US-based power generators and maintains its figures.

549. The Tribunal has considered Compass Lexecon’s position that too small a sample may make for unreliable beta valuations that are subject to a large margin of error, as well as Econ One’s stance that the precision of the sample—and its focus on energy generation, the sole activity of EGSA—is much more important than its size. In the end, the Tribunal has decided to give precedence to the precision of the sample over its size, and thus accepts Econ One’s
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unlevered and adjusted beta, i.e. 0.68, as applicable to a notional unlevered Bolivian electric generator like EGSA.

(ii) EGSA’s optimal capital structure

550. After determining the “unlevered adjusted beta” of comparable US electricity companies, it is now necessary, in keeping with the CAPM methodology, to determine the optimal leverage ratio to apply to a Bolivian company like EGSA, with a view to calculate its “levered beta”, i.e. the specific factor to apply to the general “market” or “equity premium” discussed above.

551. Both parties and their experts agree that, in the absence of market figures on optimal leverage ratios for Bolivian companies, there is a need to rely on proxies from other emerging economies.

552. Compass Lexecon posits a “raw beta” of 0.57 and a leverage ratio of 80.69%, and arrives at an “unlevered and adjusted” beta of 0.48 for what it claims is the relevant sample of US electric companies comparable to EGSA, while Econ One starts from a “raw beta” of 1.34 and a leverage ratio of 133.27%, which results in an “unlevered and adjusted” beta of 0.68 for the limited sample of US electric utilities that it considers comparable to EGSA.

553. Compass Lexecon uses as a proxy “the average capital structure observed for the same comparables in the US SIC 4911 sample used in the calculation of the raw beta” and this results in an optimal debt-to-equity ratio of 80.69%.606 Econ One criticizes Compass Lexecon’s approach, since access to financial markets is more difficult for a Bolivian company like EGSA than for an equivalent US one. As a proxy, it prefers the debt-equity ratio for energy companies in emerging countries published by Professor Damodaran, 56.04%.607 Econ One’s approach is, in turn, criticized by Compass Lexecon, which refers in its Rebuttal Report608 to EGSA’s debt-raising ability, as demonstrated by its actual debt-equity ratio of 71.24% as at the end of 2009, a ratio significantly higher than Econ One’s estimate.609 

554. After carefully considering the divergent views of the Parties and their experts, the Tribunal has come to the conclusion that the use of proxies from other markets to calculate EGSA’s
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optimal capital structure is fraught with practical difficulties, since it is not easy to select a sample of non-Bolivian companies with similar financial options to those available to EGSA.

555. The Tribunal has thus decided to simplify the calculation of EGSA’s optimal capital structure and, rather than attempt to identify an elusive proxy, to use instead EGSA’s actual debt/equity ratio as of the end of 2009, namely 71.24%, on the reasonable assumption that EGSA’s actual debt-equity ratio was close, if not identical, to its “optimal” one. The ratio ultimately taken also coincidentally falls in between the Parties’ estimated proxies. It shall be used to re-lever the “unlevered adjusted beta” of US electricity companies comparable to EGSA. This debt-equity ratio translates arithmetically into debt/capital and equity/capital ratios of 41.60% and 58.40%, respectively, which will be used later on to calculate EGSA’s “weighted” average cost of capital or WACC.610 

(iii) EGSA’ s specific beta and equity premium

556. As explained in previous paragraphs, the Tribunal considers 0.68 to be the relevant “unlevered adjusted beta” of electricity companies comparable to EGSA. It further considers 0.7124 to be EGSA’s optimal debt-equity ratio. Using the latter ratio to re-lever the 0.68 unlevered beta results in a 1.047 final beta for EGSA.611 

557. In keeping with the above, the resulting equity premium to be applied by a “willing buyer” considering the purchase of EGSA would be 1.047 times the general 5% equity premium, i.e. 5.23%.

4. Country risk premium

558.The country risk premium is “the incremental return demanded by investors for an investment in a country or location where the investment is exposed to greater risk than would be the case in a more stable economy, like the U.S.”612. Such “country” or “sovereign risk” premium is typically calculated by looking at the spread implicit in the market yield of sovereign bonds of the country traded in the international financial markets. However, since no such Bolivian bonds existed as of the date of expropriation both parties were again obliged to use a proxy.
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559. To calculate it, Compass Lexecon considers it appropriate to construct “an EMBI [Emerging Market Bond Index] proxy in accordance to the Sovereign Rating given to Bolivia by Standard & Poor’s, Fitch Ratings and Moody’s. To construct Bolivia’s EMBI proxy I computed the average EMBI for countries with the same rating as Bolivia”613, and settles upon a premium of 7.017%. Econ One accepts this methodology, subject to its views on the 1.5 multiplier to be discussed below.

560. The Tribunal agrees that it is appropriate to calculate country risk—as both parties have done—using an index of emerging market bonds, and shall apply the resulting premium of 7.017%.

5. Should additional equity risk factors be added?

561. Rurelec considers that the CAPM model, with the addition of a country risk premium for Bolivia, duly captures all the relevant factors necessary to calculate the cost of equity for an electricity company like EGSA and arrives, thus, at a cost of capital of 14.45%. On the other hand, the Respondent claims that two additional add-ons should be included in EGSA’s cost of capital, to reflect risks still not captured by Rurelec’s model:

-  The additional risk of equity investments in emerging economies, not fully captured by its sovereign country risk. In the Respondent’s view, this warrants the application of a 1.5 multiplier (i.e. a 50% increase) to the sovereign risk of the emerging country where the company is located.
-  The additional risk associated with small companies (the “size premium”), which in the Respondent’s view would amount in EGSA’s case to 6.28%.

562. In the Tribunal’s views there are two issues to consider: first, whether the standard CAPM model—as applied by Compass Lexecon—fully captures all the relevant risks for a willing buyer considering the purchase of EGSA; and secondly, assuming a negative response to the first question, which specific additional risks should be applied to the standard CAPM model.

563. On the first question, the Tribunal shares the Respondent’s view that the standard CAPM—at least as applied by Compass Lexecon—does not fully capture all the relevant risks for a willing buyer considering the purchase of EGSA. The reasons for this view are explained below.

564. Since the Tribunal has retained a beta-weighted equity premium for EGSA that is higher than Compass Lexecon’s, the resulting equity cost would amount to 15.83% (i.e. 3.58% +
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5.23% + 7.02%) if no additional risks factors were to be taken into account, as argued by Compass Lexecon. Yet, in the Tribunal’s view that 15.83% rate still underestimates the likely equity cost that would be used by a willing buyer of EGSA.

565. First, as recognized by Rurelec itself, when on September 3, 2008 the Board of Directors of EGSA discussed Mr Lanza’s progress report on the new combined cycle, the calculations of the net present value of the new projects were made with a nominal discount rate of 12.5%. Since such a discount rate is functionally equivalent to a WACC rate, as applied in the present context, assuming the cost of debt and leverage ratio of EGSA did not depart at that time significantly from the levels considered here (i.e. an after-tax cost of debt of 5.91% and a 71.24% debt/equity ratio), the implicit equity cost considered by EGSA’s directors was 17.2%, i.e. almost 3 full points above the 14.45% used by Rurelec and significantly above the Tribunal’s 15.83% as well.

566. Even making allowances for some drop in the risk-free rate from September 2008 to May 2010 and for Mr Abdala’s argument, in response to the Tribunal’s questions, that a willing buyer would naturally espouse relatively optimistic views about the future of EGSA—for otherwise it would not have bid for the company—it would be quite extraordinary that an outside buyer, not as familiar with a company as its own managers and directors, were to consider it less risky than those insiders. As such, 17.2% can reasonably be taken a lower limit for the return on equity required by a willing buyer of EGSA.

567. Secondly, as indicated by the Respondent, Mr Earl himself, acting in September 2005 as CEO of Independent Power South Africa (IPSA), when describing potential electric projects in South Africa to investors in the UK’s Alternative Investment Markets, declared that the company expected to select projects with an Internal Rate of Return (IRR) of no less than 20%. This was in 2005, not 2010; moreover, the IRR represents the highest discount factor which would make the project not have a negative present value, rather than a normal WACC, and the 20% project IRR was probably aspirational, as befits a pitch to potential investors. Nevertheless, it is a clear indication that the cost of equity of EGSA, as calculated by Rurelec under a standard CAPM methodology, fails to reflect all the risks taken into consideration by real equity investors in emerging economies.

568. Lastly, the Tribunal, as mentioned to the Parties during the hearings, has made an effort to compare the equity costs and WACCs espoused by the parties with the alternative benchmark set out in Article 48 of the 1994 Electricity Act (Law 1604, dated December 21, 1994), still in force at the time of the expropriation, which states that “[t]he discount rate (‘tasa de actualización’) to be used when applying this law shall be ten per cent (10%) annually, in real terms. This rate shall only be modified by the Ministry by way of a duly-
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justified administrative decision. The new discount rate set by the Ministry shall not differ from the prevailing rate by more than two (2) percentage points.” [Tribunal’s translation]614 

569. The Respondent claims that this discount factor applies only to the calculation of capacity payments, based on the notional purchase of new turbines with an expected 20 year-life, far less than EGSA’s 28-year total authorization period, in a context very different from the calculation of the EGSA’s FMV as of the time of expropriation.

570. It is true that the official discount rate enshrined in the law—increased to 12% in real terms as of 2000615—has only ever been used in practice to calculate capacity payments. However, for the sake of this benchmarking exercise, one may assume that it is possible to use this discount factor for other purposes, including the valuation of an expropriated company (a scenario that, for obvious reasons, is unlikely to have been made express in a 1994 Law whose declared purpose was to attract foreign investment in Bolivia’s electricity sector).

571. Having accepted the Respondent’s view that the standard CAPM fails to reflect all the relevant risks which would have been taken into account by a WB, it is now necessary to discuss the specific risk add-ons advocated by the Respondent, namely, a 1.5 country risk multiplier and a so-called “size premium”.

6. The 1.5 country risk multiplier

572. Econ One applies a 1.5 multiplier to Compass Lexecon’s sovereign country risk for Bolivia (i.e. 7.02%) and arrives at a premium of 10.526%, which melds Bolivia’s sovereign risk with the special volatility of equity markets in emerging economies like Bolivia. This adjustment is based on Professor Damodaran’s methodology, and his concept of “country equity risk premium”, as described in the following statement: “The country default spreads that come with country ratings provide an important first step, but still only measure the premium for default risk. Intuitively, we would expect the country equity risk premium to be larger than the country default risk spread. To address the issue of how much higher, we look at the volatility of the equity market in a country relative to the volatility of the bond market used to estimate the spread."616 
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573. Professor Damodaran has further estimated that, “[i]n 2008, for instance, there were 28 emerging markets, where both the equity market volatility and the government bond volatility numbers were available. The median ratio, across these markets, of equity market volatility to bond price volatility was approximately 1.50.”617 

574. Compass Lexecon takes issue with Econ One’s multiplier, and argues that, in Professor Damodaran’s view, this correction should apply only to short-term valuations, since equity markets may be more volatile than bond markets in the short run, but there is a natural tendency for both volatilities to converge in the long run. Besides, when Damodaran uses the multiplier, it applies it to country sovereign “default spreads”, which are based on their credit ratings and in Bolivia amounted to just 5.50%, much lower than the 7.02% rate estimated by Compass Lexecon on the basis of sovereign bond spreads.

575. Econ One retorts that Damodaran has never written that his multiplier applied only to short term valuations. Besides, he has used it himself in the valuation of investments in his native India.618 Moreover, there is no natural tendency for the volatility of bonds and equities to converge, since, as argued by corporate finance professors Smithers and Wright, bonds are intrinsically less volatile than equities on two counts: “The first is that the income element is so much more important relative to changes in capital values. The second is that bonds are usually repayable at par, so that investors know in advance how much they will receive when the bond is repaid on maturity.”619 

576. The Tribunal has carefully considered Econ One’s case for a 1.5 multiplier, and has come to the conclusion that no multiplier should be applied. There are several reasons for this.

577. It is not accurate to describe the multiplier as the methodology of Professor Damodaran. It is just the third one—the so-called “Melded Approach”—of a set of three alternative approaches to assess the country-specific risk of equity investments, the two others being the “Country Bond Default Spread”—the one applied by Compass, in which the country’s sovereign risk stands on its own, without correction, and it is added to the US equity risk premium—and the “Relative Equity Market Standard Deviations”—which ignores sovereign risks and directly assesses equity risk premiums in emerging economies by correcting the US equity risk premium with an index of relative volatility of equity markets in the corresponding emerging economy and in the US.
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578. Contrary to Econ One’s assertion, Professor Damodaran is on record as favouring Econ One’s multiplier (i.e. the “melded approach”, his third and last one) only for short term valuations. For instance, he writes that “[w]e believe that the larger country risk premiums that emerge from the last approach are the more realistic for the immediate future, but that country risk premiums will decline over time. [...] One way to adjust country risk premiums over time is to begin with the premium that emerges from the melded approach and to adjust this premium down towards either the country bond default spread or the country premium estimated from equity standard deviations. Another way of presenting this argument is to note that the differences between standard deviations in equity and bond prices narrow over longer periods and the resulting relative volatility will generally be smaller. Thus the equity risk premium will converge to the country bond default spread as we look at longer term expected returns. As an illustration, the country risk premium for Brazil would be 7.67% for the next year, but decline over time to either 6.01% (country default spread) or 3.60% (relative standard deviation)” (emphasis added).620 

579. Similarly, on another occasion, he wrote, “I add this default spread to the historical risk premium for a mature equity market (estimated from US historical data) to estimate the total risk premium. In the short term especially, the equity country risk premium is likely to be greater than the country’s default spread” (emphasis added).621 

580. Damodaran has indeed applied the multiplier in valuations of equity investments in India, as claimed by Econ One, but these concerned a 5-year investment in Tata Chemicals and a 10-year in Wipro, a period far shorter than EGSA’s 28-year planning horizon.

581. The argument of Professors Smithers and Wright regarding the different structure of the return of bonds and equities is also not particularly compelling in the case of EGSA, whose expected cash flows consist purely of yearly income, with no residual value, and thus have a financial structure closer to a high-coupon long term bond than to a short or medium-term equity investment.

582. Finally, there is an even more fundamental reason which, in the Tribunal’s mind, justifies the rejection of Econ One’s multiplier, but the acceptance, as explained below, of an additional illiquidity risk premium—or better yet, additional overall risk premium, as explained below—related (though not identical) to Econ One’s “size premium”. Professor Damodaran’s multiplier attempts to capture the volatility of short-term equity investments in companies whose shares are publicly traded in stock exchanges, which are subject to the
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short-term vagaries and volatility of organized financial markets. But such volatility should not penalize, as such, the value of non-listed companies like EGSA, whose value should be assessed using the “fundamental approach” typical of long-term investors. Similarly, as a non-listed company, EGSA’s discount factor should not reflect any other quirk or anomaly typical of stock markets, even if it should nevertheless include a different add-on which reflects one of the fundamental disadvantages of any private, non-traded stock: its intrinsic illiquidity.

583. The Tribunal’s conclusion is that it will not add a specific multiplier. However, when looking at the issue of “size premium” below, the Tribunal will take into account some of the underlying factors argued by the Parties in relation to the multiplier.

7. Size Premium

584. One of the major divergences between the experts relates to the application of a size premium to the valuation. It is in fact a theoretical and philosophical issue, as the experts are in total diametrical opposition to one another: Econ One applies a 6.28% size premium which is adamantly rejected by Compass Lexecon. A substantial part of the hearings dealt with this issue.

585. Econ One argues622 that, as explained in the financial literature and shown by historic stock market records, the returns of small companies are statistically higher than the market average, since they are perceived by markets as riskier and must thus offer higher yields.623 The standard CAPM and Compass’ methodology fail to include this “size premium”.

586. Actual premiums paid depend on company size. Ibbotson/Morningstar has calculated their value in “Markets Results for Stocks, Bonds, Bills and Inflation” by classifying similar companies in ten groups by capitalization. Using EGSA’s equity value as a proxy for its market capitalization, EGSA would belong in the tenth smallest decile (“10-Smallest”), whose historical size premium is, according to Ibbotson/Morningstar, 6.28%.624 

587. Compass Lexecon starts its Rebuttal Report by tracing the size premium to illiquidity issues, as indicated by Professor Damodaran:625 “practitioners attribute all or a significant portion
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of the small stock premium reported by Ibbotson Associates to illiquidity and add it on as an illiquidity premium.”

588. After that initial statement, Compass Lexecon rejects the application of a size premium to EGSA’s discount rate on several grounds. First, it argues that whilst some authors support the use of size premium (as Fama and French did in 1992), others reject its inclusion, with some claiming that it existed in the distant past, but almost disappeared since the 1980s. Most recently, Fama and French’s 2012 empirical study of 23 countries in North America, Europe, Japan, and the Asia Pacific indicates that the size premium effect is non-existent. Secondly, some authors claim that the “size premium” can largely be attributed to the so- called “January effect”, i.e. the specific effect on relatively illiquid stocks of the practice of many US investors, either for tax or window-dressing purposes, of selling some shares in December and buying them back in January.

589. Compass Lexecon attaches importance to a paper by Tarbell,626 which provides a list of company characteristics that cause higher returns for investors in small companies. The main factors included (i) difficulty in raising financing, (ii) high sensitivity to business risks, (iii) lack of dividend history, (iv) lack of externally generated information (i.e. investment banks reports), and (v) lack of management expertise. Compass Lexecon asserts that none of the previous items apply to EGSA,627 and disagrees that it is a small company. Compass Lexecon also draws attention to the fact that, in South America, with its highly regulated and low volatility energy markets, it is “not customary” to apply the size premium. Therefore, Compass Lexecon considers that no grounds exist to apply the size premium, as the CAPM approach will capture EGSA’s default risk.628 

590. In its Second Report,629 Econ One emphasizes its arguments and insists that the size premium is clearly justified. At the hearings, Mr Flores stated that, if the markets were fully efficient, no reason would exist for the size premium.630 
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CHAPTER XI – COSTS

618. Each side has claimed its costs from the other side in accordance with the UNCITRAL Rules. Article 42(1) of the UNCITRAL Rules provides that “[t]he costs of the arbitration shall in principle be borne by the unsuccessful party or parties. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.”

619. Costs are therefore to be awarded to the successful party and against the unsuccessful party, unless the circumstances of the case justify a different approach. In this case, however, there is no clearly successful party. The Tribunal has upheld its jurisdiction in respect of Rurelec and found the Respondent liable to pay compensation. Yet, in reaching that result, the Tribunal has upheld two of the Respondent’s jurisdictional objections. One of these objections, regarding the Respondent’s right to deny the benefits of the US-Bolivia BIT, resulted in a total lack of jurisdiction over the claims of one of the two Claimants, GAI. Moreover, the Respondent has also been largely successful on quantum, reducing the compensation ultimately awarded to less than a quarter of the original claim. From a technical point of view, GAI has thus been wholly unsuccessful in these proceedings and Rurelec only partially successful. Therefore, inasmuch as it may be said that Rurelec has been forced to undertake these proceedings to obtain the “just and effective compensation” that Bolivia wrongfully denied it, it can equally be said that Bolivia has been forced to defend itself on the “New Claims” and certain elements of quantum which were ultimately unfounded.

620. The Tribunal does not consider that there any further circumstances of the case that weigh heavily in favour of one side or the other on costs. In particular, the Tribunal considers that the Parties and their counsel have been exemplary in their conduct in what has naturally been a hard-fought battle between them to defend their respective rights. As such, given the mixed success on both sides, the Tribunal has decided that each side should bear their own legal and other costs incurred in connection with the arbitration and the Parties should divide the Tribunal’s, PCA’s, and appointing authority’s fees and expenses equally.

621. Over the course of the proceedings, the Parties deposited with the PCA a total of EUR 100,000 (EUR 50,000 by each side) and USD 950,000 (USD 600,000 by the Claimants and USD 350,000 by the Respondent) to cover the costs of the arbitration. The arbitrators’ fees and expenses were USD 153,437.50 in fees and USD 1,766.38 in expenses for Dr Conthe, USD 202,000.00 in fees and USD 14,346.67 in expenses for Dr Vinuesa, and USD 296,250.00 in fees and USD 3,475.50 in expenses for Dr Júdice. The PCA’s fees for registry services in this arbitration total USD 91,777.47. Other tribunal costs, including court
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reporting, interpretation, hearing and meeting facilities, travel, teleconferencing, bank charges, tribunal witness expenses, and all other expenses related to the proceedings total 259,409.19.

622. This leaves an unexpended balance of USD 53,732.29 on deposit. Seeing as the Claimants deposited an additional USD 250,000 more than the Respondent, in order to achieve an equal division of costs, the unexpended balance of the deposit shall be returned to the Claimants and the Respondent shall reimburse the Claimants the amount of USD 71,268.71.
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1

DISSENTING OPINION OF CO-ARBITRATOR MANUEL CONTHE

1. I respectfully disagree with my colleagues on three questions which I consider to be related: Bolivia’s alleged compliance with due process, the Tribunal’s finding of a lack of jurisdiction of over the spot price and capacity payment claims, and the equal division of costs.

2. In my opinion:

(i)  Bolivia’s expropriation failed to comply with the requirements of due process.

(ii)  The Tribunal should have dismissed the spot price and capacity payment claims on the merits, not for lack of jurisdiction, but limiting itself to explain why they did not violate the Treaty.

(iii)  The Tribunal should have ordered Bolivia to pay costs, at least partially.

Bolivia failed to comply with the requirements of due process.

3. In my view, the expropriation of EGSA by Bolivia constituted a “seizure” because, besides not paying compensation, the process Bolivia followed to determine the market value of EGSA did not respect the requirements of “due process” set forth in Article 5 of the UK- Bolivia BIT. It is true that the Spanish version of the Treaty renders “due process” as “por procedimientos jurídicos”, an unfortunate expression, as it lacks the long history, jurisprudence, and legal background of the English term “due process” and is rather obscure. But, in keeping with the principles of the Vienna Convention, such obscure Spanish term should be understood as “due process”, a term frequently translated into Spanish as “proceso debido”.

4. As it is evident that a “due process” requirement must establish some minimum standard if it is to merit the title of “due”—amongst other reasons, because this is required by the principle of “most favoured nation” standard enshrined in Article 3 of the Treaty—the question arises: what are the minimum requirements that the expropriation procedure should have complied with?

5. In my view, an expropriation—as an administrative act limiting the rights of an individual—must meet, from a legal point of view, three minimum procedural requirements:-
2
(i)  It must be reasoned—i.e. accompanied by a justification of its key features (in this case, a report or analysis that justified the zero value attributed to EGSA).

(ii)  Both the act and its reasons must be formally communicated to the individual.

(iii)  The legal procedure in question should allow the individual, after being notified of such reasons, to be heard before the State adopts its final decision (i.e. sets the final fair value).

6. Bolivia appeared to intend to fulfil the first requirement because ENDE retained the PROFIN consulting firm to prepare a valuation report. However, promptly thereafter it disregarded the minimum requirements of “due process”:

(i)  As noted in the “basis and limitations” section of the PROFIN report, the consulting firm conceived of the report as a secret “strategic document” for the Bolivian Government’s use in its negotiations with GAI, from which it can be surmised that PROFIN did not act with full impartiality.

(ii)  That report was never communicated to Rurelec, who became aware of it only when it was submitted by Bolivia in this arbitration as exhibit R-154.

(iii)  Bolivia never gave Rurelec the opportunity to make allegations in response to that valuation.

7. In sum, a secret strategic report cannot legally constitute the required justification for an administrative act which limits rights.

8. Bolivia thus breached its Treaty with the United Kingdom, not only because it underestimated the value of EGSA, but also because it failed to comply with the minimum requirements of due process under Article 5 when establishing that zero valuation.

The Tribunal should have upheld its jurisdiction over the “New Claims”

9. The breach of due process by Bolivia in the expropriation strengthens the Claimants’ argument that the Tribunal had jurisdiction over what Bolivia has called the “New Claims” despite the stipulation in Article 8 of the Treaty to a 6-month waiting period following written notice “of the claim.”

10. The Claimants refer to several awards (in particular, Lauder, Abaclat, SGS v. Pakistan, Biwater Gauff v. Tanzania, etc.) characterizing such waiting periods as purely procedural,
3
rather than jurisdictional, in nature. Those arguments become stronger still, in my opinion, when a tribunal must determine whether it has jurisdiction to rule on certain claims ancillary to a main claim relating to a seizure.

11. If Bolivia did not respect the most basic requirements of due process when expropriating EGSA, how could it be entitled to require the Claimants to separately notify claims concerning spot prices and capacity payments and wait six months, even though such claims, if accepted by the Tribunal, would have increased the value of EGSA and, consequently, the amount of compensation due? In my view, given that Bolivia failed to abide by minimum standards of due process in the nationalization of EGSA, it is unreasonable to interpret Article 8 of the Treaty so as to require separate notification by the expropriated individuals of these claims, which were ancillary to the main claim.

12. By the same token, a person who is expelled from a foreign country by a public authority who, without any administrative procedure, de facto takes his or her home without paying compensation, should be entitled to claim not only its value when it was taken, but also the loss of value suffered when, shortly beforehand, the same authorities—in that person’s eyes, unfairly—reduced the surface of the garden or the property’s building rights.

13. I nevertheless share the rest of the Tribunal’s view on substance that the 2007 and 2008 decisions did not violate the Treaty, since they were not discriminatory or arbitrary and, hence, should have been dismissed by the Tribunal. I find however somewhat paradoxical that the Tribunal, after rejecting its jurisdiction on the “new claims”, included in its award a long, unrefined obiter dicta on the States’ unrestrained right to introduce regulatory changes, provided they do not put in jeopardy the financial viability of affected firms.

The Tribunal should have ordered Bolivia to pay costs, at least partially

14. Bolivia’s breach of due process should have also led the Tribunal order costs against Bolivia, at least partially.

15. Indeed, Bolivia’s failure to comply with due process forced the Claimants to commence this arbitration and has produced costs that will reduce their effective compensation. It is true that, like so many other aggrieved Claimants, Rurelec “inflated” its claims and the Tribunal has rejected a substantial part of them. However, it is particularly appropriate to point out, in a case concerning a power sector applying the principle of “marginal cost”, that the Claimants’ dismissed claims produced only a small “marginal cost” for these proceedings: the Tribunal’s and Parties’ costs were largely fixed and would not have been much lower
4
had Rurelec claimed exactly the amount of compensation that the Tribunal has awarded. Thus, the Claimants’ exaggeration of their claims has not imposed a significant “marginal cost” upon Bolivia, while Bolivia—by forcing Rurelec to initiate proceedings in order to assert its rights—has imposed a high “marginal cost” on the latter that the Tribunal should have ordered Bolivia to cover, at least in part.

16. This conclusion would have also been consistent with a basic economic principle in the design and application of mandatory rules, including those embodied in international treaties: it should not prove more advantageous to breach a rule than to comply with it. Therefore, given an expropriation that has been shown to be unlawful by the full Tribunal on the basis of the failure to pay compensation, and by me on the additional basis of a breach of “due process”, the Tribunal should have ordered costs against Bolivia, at least partially.

17. Finally, concerning CAPEX, I regret that the Tribunal, just relying on its own hunches, took at face value statements from a party ́s witness, Mr. Paz, which Bolivia ́s own expert, unable to document, did not consider appropriate to include in his own valuation model.

18. Even if I was unable to persuade my colleagues on the points mentioned in this opinion, I am glad that, thanks to our president, we were able to discuss them in a non-confrontational manner.

1Notice of Arbitration, ¶4; Statement of Claim, ¶¶3-4; Claimants’ Post-Hearing Brief, ¶1.
2According to the Respondent, “New Claims” are alleged violations of the BITs on the part of Bolivia in connection with: (i) electricity spot prices; (ii) capacity payments; and (iii) the two Worthington engines. According to the Respondent, these claims were not raised in the Notice of Dispute dated 13 May 2010 or in the Notice of Arbitration dated 24 November 2010.
3Statement of Claim, ¶21; Reply on the Merits, ¶14. See Transcript (English), Day 1, 2 April 2013, 35:22-36:1.
4Statement of Claim, ¶22. See Transcript (English), Day 1, 2 April 2013, 36:1-36:10.
5Statement of Claim, ¶¶23-24.
6Statement of Defense, ¶¶26, and 31; Rejoinder on the Merits, ¶¶30-40. In addition, the Respondent claims that the good condition of the electricity sector was confirmed by the Energy Management Assistance Program (hereinafter, “ESMAP”), and by neighboring countries. Therefore, it claims that capitalization was not an emergency measure.
7Statement of Claim, ¶25.
8Statement of Claim ¶26. See Transcript (English), Day 1, 2 April 2013, 36:13-38:6.
9In this regard, the Claimants affirm in their Reply on the Merits, ¶21, that Bolivia has only challenged the qualification of the personnel hired by ENDE. Thus, the Respondent has accepted the fact that the General Electricity Directorate was limited (in terms of technical capacity) due to budget constraints.
10Statement of Defense, ¶¶30, 32-33.
11Statement of Defense, ¶33.
12Reply on the Merits, ¶19; Joint UNDP/World Bank Program, p. 24 (Exhibit C-61); Witness Statement of Juan Carlos Andrade, 21 January 2013, ¶14.
13Rejoinder on the Merits, ¶¶40-44.
14Statement of Claim, ¶27; Reply on the Merits, ¶¶24-28; Claimants’ Post-Hearing Brief, ¶27. See Transcript (English), Day 1, 2 April 2013, 36:13-38:6. 39:14-41:3; Transcript (English), Day 6, 9 April 2013, 1338:17-1338:23.
15Id., ¶27.
16Id., ¶29; Statement of Defense, ¶39; Rejoinder on the Merits, ¶47.
17Id., ¶29.
18Statement of Claim, ¶29; Statement of Defense, ¶¶42, and 44.
19Id., ¶38.
20Id., ¶38; Memorial on Jurisdiction, ¶212.
21Memorial on Jurisdiction, ¶¶214-216.
22Id., ¶¶222, and 225.
23See Electricity Law (Exhibit C-5). See Transcript (English), Day 1, 2 April 2013, 41:13-41:22.
24Statement of Claim, ¶42; See Joint UNDP/World Bank Energy Sector Management Assistance Program, “Bolivia: Restructuring and Capitalization of the Electricity Supply Industry- an Outline for Change” (Exhibit C-61).
25Statement of Defense, ¶40. See Transcript (English), Day 1, 2 April 2013, 38:6-38:19.
26Statement of Claim, ¶53; Statement of Defense, ¶42; Rejoinder on the Merits, ¶48; Claimants’ Post-Hearing Brief, ¶29. See Transcript (English), Day 1, 2 April 2013, 47:9-47:14.
27Id., ¶57; Claimants’ Post-Hearing Brief, ¶29. See Terms of Reference (Exhibit C-7, Article 2.3).
28Id., ¶57; Claimants’ Post-Hearing Brief, ¶29. See Certificate of Incorporation GAI 13 July 1995 (Exhibit C-11), and Proof of Subscription of 50% of the shares of EGSA by GAI for USD 47.131 million, 28 July 1995 (Exhibit C-12); Letter from the Central Bank of Bolivia to the Minister of Capitalization, 28 July 1995 (Exhibit C-13). See Transcript (English), Day 1, 2 April 2013, 47:14-47:24 and Day 6, 9 April 2013, 1339:15-1340:3.
29Id., ¶58. See Capitalization Agreement, clauses 5.1 and 8 (Exhibit C-14). See Transcript (English), Day 1, 2 April 2013, 47:24-48:3.
30It is worth clarifying that at this point the Claimants had no control over EGSA (they only held 50% of the shares), so that the Board was not chiefly composed by shareholders of the current Claimants.
31Statement of Claim, ¶60; Reply on the Merits, ¶¶38-40. See Transcript (English), Day 1, 2 April 2013, 48:22-49:23.
32Id., ¶63. See Gover Barja and Miguel Urquiola, Capitalización y Privatización en Bolivia: Una aproximación a una evaluación, February 2003 (Exhibit C-96); Witness Statement of Lanza, ¶19.
33Id., ¶65; Statement of Defense, ¶44; Rejoinder on the Merits, ¶49. See Transcript (English), Day 1, 2 April 2013, 48:4- 48:13.
34Id., ¶66. See Transcript (English), Day 1, 2 April 2013, 48:14-48:17.
35See Purchase and Sale of Empresa para Sistemas Aislados ESA S.A. by and between Empresa Eléctrica Guaracachi S.A. and Rurelec PLC (Exhibit C-103).
36Initially, it can be noted that in the Statement of Claim, ¶67, the amount indicated is USD 41.2 million. However, as shown in the Memorial on Jurisdiction, ¶113, the Claimants have rectified such amount in the e-mail dated 12 September 2012. See- email (Exhibit R-2).
37Statement of Claim, ¶67; Claimants’ Post-Hearing Brief, ¶¶59-63. See Agreement for the purchase of shares (Exhibit R- 61); Certificate of Incorporation of Birdsong Overseas Limited (Exhibit C-30) and BIE (Exhibit C-25); Share certificates evidencing the shares in GAI held by Birdsong Overseas Limited (Exhibit C-29) and BIE (Exhibit C-27); Share certificate evidencing that Birdsong held 100% of the shares in BIE (Exhibit C-35). See Transcript (English), Day 1, 2 April 2013, 48:17-48:21.
38Memorial on Jurisdiction, ¶34; Respondent’s Post-Hearing Brief, ¶36.
39Statement of Claim, ¶70; Reply on the Merits, ¶¶41-43. See 2008 Annual Report of EGSA (Exhibit C-32, pp. 7, 22 and 25); 2009 Annual Report of EGSA (Exhibit C-36, pp.12 and 22). See Transcript (English), Day 1, 2 April 2013, 54:25-56:3.
40Reply on the Merits, ¶44.
41Statement of Defense, ¶¶73-74. See Audited Financial Statements of Empresa para Sistemas Aislados ESA S.A., 27 May 2004 (Exhibit C-100); Audited Financial Statements of Empresa para Sistemas Aislados ESA S.A., 30 May 2004 (Exhibit C- 102); Proof of fund transfer from Rurelec to GAI, 13 October 2004 and 4 March 2005 (Exhibit C-104).
42Id., ¶¶73-74.
43Id., ¶78; Reply on the Merits, ¶¶45-46. See Transcript (English), Day 1, 2 April 2013, 58:11-58:18, 59:2-61:18.
44Id., ¶88. On the CCGT project, consult also Claimants’ Post-Hearing Brief, ¶¶39-54.
45Id., ¶¶83-84; Reply on the Merits, ¶¶51-53. Concerning these projects, the Claimants refer to that performed in San Matías, arguing that the statements made by Mr Paz regarding the fact that the time of the nationalisation, EGSA had introduced no improvement whatsoever to the distribution of electricity in the area; it was not their responsibility pursuant to the Agreement for the supply of electricity to rural areas. See Transcript (English), Day 1, 2 April 2013, 56:18-58:10.
46Id., ¶87; Statement of Defense, ¶¶338-344.
47Memorial on jurisdiction, ¶¶122-125; Statement of Defense, ¶¶45-51; Respondent’s Post-Hearing Brief, ¶6. The Respondent provides the following as examples for such acts: the distribution of all of EGSA’s profits as dividends, the 2001 sale of the turbines GCH-3 and 5 decreasing production capacity by 40MW, the intent to decapitalize EGSA in 2004 by trying to transfer the 7 engines to the plants in Aranjuez and Karachipampa for the purposes of selling them to Rurelec together with ESA S.A or the intent to dismantle the KAR-1 unit in 2010; Rejoinder on the Merits, ¶50. See Transcript (English), Day 1, 2 April 2013, 157:5-157:9; Transcript (English), Day 6, 9 April 2013, 1420:18-1420:19.
48First Witness Statement of Paz, ¶¶64, 68, and 72.
49Reply on the Merits, ¶¶47-50. See Progress Report on the Combined Cycle Turbine Project, 26 March 2010 (Exhibit C-313). See Transcript (English), Day 1, 2 April 2013, 58:19-58:25, 61:19-62:2.
50Rejoinder on the Merits, ¶¶51-92. As examples of EGSA’s disinvestment, Respondent refers, inter alia, to the following scenarios: the sale of the GCH-3 and GCH-5 units (these were the most efficient units, and their sale was not aimed at installing more efficient technology, since the money obtained was distributed as profits among shareholders, and the Jenbacher engines were installed five years later), the attempt to remove the KAR-1 unit (decision reversed by the Board of EGSA after the nationalisation), the sale of the plot in the Santa Cruz industrial complex (challenged by ENDE representatives in the Board of EGSA) or the sale of the engines of the Aranjuez plant to ESA (according to the Respondent, for the purposes of finally selling them to Rurelec). As examples of EGSA’s difficult economic situation, the Respondent refers, inter alia, to the liquidity issues acknowledged by the Claimants themselves, the problems with payments to suppliers, the lack of generation of “robust” profits between 2005 and 2009, or the distribution of dividends higher than the profits since 2006. Finally, Bolivia denies the fact that EGSA received good ratings by rating agencies (in an attempt to confuse the Tribunal), and it is not true either that the rates at which EGSA could obtain funds until 2009 reflected a healthy economic condition.
51Statement of Claim, ¶¶9-15. See Transcript (English), Day 1, 2 April 2013, 63:13-64:16.
52Id., ¶¶9-15; Reply on the Merits, ¶2. See Transcript (English), Day 1, 2 April 2013, 23:7-25:16, 63:3-63:13, 64:17-64:23; Transcript (English), Day 6, 9 April 2013, 1359:21-1360:12.
53Reply on the Merits, ¶2. See Transcript (English), Day 6, 9 April 2013, 1407:10-1408:7.
54Rejoinder on the Merits, ¶¶130-132. See Transcript (English), Day 1, 2 April 2013, 187:14-187:21.
55Statement of Defense, ¶¶342-344, and 384-394; Rejoinder on the Merits, ¶¶293-297.
56Statement of Defense, ¶43; Respondent’s Post-Hearing Brief, ¶80. See Expropriation Insurance Agreement by and between Power Inc. and Overseas Private Investment Corporation, 27 December 1995 (Exhibit R-44).
57Id., ¶8, and Section 2.2.1; Rejoinder on the Merits, ¶¶99, 106, 109-114. See 2006-2010 Programa de Gobierno del Movimiento al Socialismo-Instrumento Político por la Soberanía de los Pueblos (MAS-IPSP) 2006-2010 “Bolivia digna, soberana y productiva para vivir bien” published in 2005 (Exhibit R-52); El plan de gobierno más progresista propone: Nacionalizar por etapas”, Bolpress, 11 November 2005 (Exhibit R-62); Letter of the Minister of Hydrocarbons and Electricity to EGSA, 21 April 2009 (Exhibit R-59). See Transcript (English), Day 1, 2 April 2013, 158:1-158:3, 183:9-184:3.
58Id., ¶¶69-81; Rejoinder on the Merits, ¶115.
59In the Statement of Claim, ¶104, the Claimants mention the existence of an e-mail sent by Marie Beatriz Souviron, Bolivian Ambassador in the United Kingdom, stating that she was unaware of the possibility of the expropriation of Rurelec’s interest in GAI. However, Respondent noted that such an e-mail was not submitted by the Claimants and that, if it had been submitted, it would still be insufficient evidence, since it would only prove an officer’s unawareness of the nationalisation plans; Rejoinder on the Merits, ¶¶116-117. The Respondent explains how Mr Earl has now modified his version: senior officers of the Ministry of Foreign Affairs of the United Kingdom would have confirmed that the Ambassador was unaware of the nationalisation. However, this is no evidence of the purported confirmation and, in any case, even if it existed, it would only demonstrate that a Bolivian diplomat in the United Kingdom was not aware of the nationalisation. Similarly, Mr Aliaga states that he received guaranteed from members of the Board of ENDE in a barbecue, without giving any names or explaining why guarantees given by EGSA employees would compromise the State.
60Set forth in Article 49 e) of the Electricity Law. In accordance with RPT 1995 and RPT 2001, it is defined as the unitary cost of increasing the installed capacity. It is tantamount to the Capacity Marginal Cost.
61Article 15 of the RPT 1995. In addition, once the investment cost has been determined one should proceed to carry out a number of operations detailed in the above mentioned order until de PBP is reached. See Transcript (English) Day 1, 2 April 2013, 46:19-46:21.
62For a further explanation on the modifications introduced, consult Memorial on Jurisdiction, ¶258.
63Operating Norm No. 19/2001, Rule 7; Statement of Claim, ¶90; Memorial on Jurisdiction, ¶259.
64Statement of Claim, ¶90.
65Memorial on Jurisdiction, ¶259.
66Id., ¶262.
67Statement of Claim, ¶91; Memorial on Jurisdiction, ¶270. See Transcript (English), Day 1, 2 April 2013, 64:23-64:25.
68Statement of Claim, ¶91; Reply on the Merits, ¶73; Claimants’ Post-Hearing Brief, ¶117; Compass Lexecon Report, ¶¶34- 38 and 126-136; Witness Statement of Aliaga, ¶39; Witness Statement of Andrade, ¶¶45-50. See Transcript (English), Day 1, 2 April 2013, 65:8-65:25.
69Memorial on Jurisdiction, ¶259.
70Id., ¶¶259-268. See Report prepared by Bates White LLC dated 18 January 2007 on Revision of Operating Norm No.19 (Exhibit R-34).
71Statement of Claim, ¶¶92-94; Memorial on Jurisdiction, ¶272; Reply on the Merits, ¶75; Claimants’ Post-Hearing Brief, ¶120. See Transcript (English), Day 1, 2 April 2013, 65:8-65:25.
72Article 63, ROME 1995; Article 2, RPT 1995. Pursuant to RPT 1995, the spot market is defined as “the market of short term electricity purchase and sale transactions, not having been contemplated in the supply agreements.”
73Payment that, for the Claimants in their Statement of Claim, ¶190, was uniform for all generating units, whereas for the Respondent, as per its Memorial on Jurisdiction, ¶228, such uniformity did not exist.
74Article 63, ROME 1995. Pursuant to Article 1 of ROME 1995, the Marginal Cost is defined as “the cost [...] to supply one additional kilowatt-hour (kWh) of power, at a certain level of power demand and considering the generation and transmission park to be fixed [...]” [Tribunal’s Translation].
75Statement of Claim, ¶45; Memorial on Jurisdiction, ¶218. Pursuant to Article 1 of ROME 1995, the Marginal Generation Unit is meant to be “the last generation unit capable of meeting a demand increase, dispatched by the CNDC in accordance with the procedures set forth in this Regulation” [Tribunal’s Translation. See Transcript (English), Day 1, 2 April 2013, 42:2- 42:3.
76Operating Norm No. 3/1999, paragraph 4.
77Article 1, ROME 2001. In this sense, the concept of “Forced Generation Unit” is introduced, such being understood as the “unit resulting from the generation in a mandatory way due to minimum performance requirements in an area, displacing lower cost generation in the system” [Tribunal’s Translation].
78Memorial on Jurisdiction, ¶¶226-227.
79In this sense, there is disagreement between the Parties. The Claimants consider in their Statement of Claim, ¶191, that until 2008 all thermal units were candidates for selection as the Marginal Generation Unit, a fact that is denied by the Respondent in its Memorial on Jurisdiction, ¶228, and in its Rejoinder on the Merits, ¶271, due to the above mentioned modifications. See Transcript (English), Day 1, 2 April 2013, 66:2-66:23.
80Statement of Claim, ¶96; Reply on the Merits, ¶77; Claimants’ Post-Hearing Brief, ¶109; Witness Statement of Aliaga, ¶37; Witness Statement of Andrade, ¶¶55-56; Second Witness Statement of Andrade, ¶23. See Transcript (English), Day 1, 2 April 2013, 66:24-68:5.
81Statement of Defense, ¶329; Second Witness Statement of Quispe, ¶13. Nevertheless, the Claimants allege in their Reply, ¶¶84-87, that such assertion is misleading. Mr Andrade contested when such modification was proposed and, consequently, EGSA cannot be understood to have approved it, see Second Witness Statement of Andrade, ¶37, and Minutes of Session No. 236 of the CNDC dated 30 June 2008 (Exhibit R-87). The Respondent considered that it accepted both in its Statement of Defense, ¶329, as well as in its Rejoinder on the Merits, ¶291, that Mr Andrade voted against such modification. Nevertheless, that is not the relevant issue, but that the CNDC is a self-regulatory authority that adopts norms by simple majority.
82Rejoinder on the Merits, ¶273.
83Memorial on Jurisdiction, ¶¶230-236; Statement of Defense, ¶¶316-323; Rejoinder on the Merits, ¶274
84Statement of Defense, ¶305.
85Reply on the Merits, ¶¶78-83; Second Witness Statement of Andrade, ¶33. Regarding the stabilization of tariffs, the Claimants hold that such fund did not affect the spot price level received by electricity generators as Bolivia suggests, and likewise, it is also erroneous that EGSA could indefinitely accumulate funds in the stabilization fund.
86Reply on the Merits, ¶79; Second Witness Statement of Andrade, ¶35.
87Rejoinder on the Merits, ¶¶279-280. See Transcript (English), Day 1, Tuesday, 2 April 2013, 253:17-255:5.
88Statement of Claim, ¶15; Reply on the Merits, ¶¶95-96; Claimants’ Post-Hearing Brieg, ¶3; First Witness Statement of Earl, ¶¶58-59. The Claimants insist that there was no certainty whatsoever to believe that expropriation was going to be imminent. In any event, when Evo Morales was elected and the platform for the nationalisation of hydrocarbons sector was concocted, there were no signals in 2005 that the electricity sector could be subjected to the strict state control. Not until the end did the Claimants realize that EGSA was going to be expropriated. In this regard, see First Witness Statement of Earl, ¶40; Second Witness Statement of Earl, ¶38, and 45; and Second Witness Statement of Aliaga, ¶¶53-57. See Transcript (English), Day 1, 2 April 2013, 21:22-22-22.
89Statement of Claim, ¶¶15, and 98; Reply on the Merits, ¶93; Claimants’ Post-Hearing Brief, ¶32.
90Statement of Defense, ¶¶85-86, and 89; Witness Statement of Paz, ¶82; Rejoinder on the Merits, ¶¶119-120. See Transcript (English), Day 1, 2 April 2013, 184:24-185:9; Day 6, 9 April 2013, 1412:20-1412:23, 1416:3:1416:4, 1416:12-1416:13, 1431:19:1432:2.
91See Nationalisation Decree (Exhibit C-3).
92Statement of Claim, ¶103; Statement of Defense, ¶101. See Transcript (English), Day 1, 2 April 2013, 184:17-184:23.
93Statement of Claim, ¶103; Reply on the Merits, ¶98. The Claimants hold that they did not take part in the valuation process and the results thereof were never disclosed. See Transcript (English), Day 6, 9 April 2013, 1329:4-1329:21.
94Id., ¶¶106-110; Witness Statement of Aliaga, ¶¶56-58; Witness Statement of Earl, ¶¶61-62; Witness Statement of Andrade, ¶64.
95Statement of Defense, ¶¶95-101. See “Profin valora acciones de Elfec”, Los Tiempos, 13 August 2010 (Exhibit R-81). See Transcript (English), Day 1, 2 April 2013, 185:10-186:6; Transcript (English), Day 6, 9 April 2013, 1801:5-1801:24.
96Id., ¶104. See Exhibit R-78.
97See Transcript (English), Day 1, 2 April 2013, 184:7-184:9, 186:10-186:17.
98Id., ¶¶114-115; Claimants’ Post-Hearing Briefs, ¶¶55-58. See EGSA’s 2010 Audited Financial Statements, 25 March 2011 (Exhibit C-209).
99Id., ¶¶114-115. See “Proyecto Ciclo Combinado ‘Enredado’ en la Situación Contable de EGSA” Reporte Energía No. 59, dated 16-30 June 2011 (Exhibit C-194); Witness Statement of Lanza, ¶¶54-55; Witness Statement of Blanco, ¶¶43-44.
100Id., ¶106; Bejarano’s Second Statement, ¶9; Rejoinder on the Merits, ¶¶121-128.
101Statement of Claim, ¶¶111-112. See Transcript (English), Day 1, 2 April 2013, 70:5-70:11.
102Statement of Claim, ¶113. See Freshfields’ note to the Attorney General (Procurador General del Estado), dated 25 October 2011 (Exhibit C-199); Freshfields’ note to the Attorney General (Procurador General del Estado), dated 29 November 2011 (Exhibit C-201).
103Rejoinder on the Merits, ¶¶416-422. See EGSA’s letter to Energais dated 26 February 2013 (Exhibit R-167).
104See Transcript (English), Day 1, 2 April 2013, 70:13-71:1.
105Respondent’s Post-Hearing Brief, ¶172. See Transcript (English), Day 1, 2 April 2013, 256:16-257:1.

106Memorial on Jurisdiction, ¶17; Respondent’s Post-Hearing Brief, ¶¶25-26, 30, and 35. See Transcript (English), Day 1, 2 April 2013, 161:14-162:4; Transcript (English), Day 6, 9 April 2013, 1418:22-1419:7.
107Id., ¶21; Notice of Arbitration, ¶¶57-63; Statement of Claim, ¶¶135-141.
108See Transcript (English), Day 1, 2 April 2013, 164:15-165:1.
109See Transcript (English), Day 1, 2 April 2013, 168:3-168:12.
110Memorial on Jurisdiction, ¶¶23-26.
111Counter-Memorial on Jurisdiction, ¶6.
112Id., ¶6. See Transcript (English), Day 1, 2 April 2013, 162:5-162:23.
113Reply on Jurisdiction, ¶22. See Transcript (English), Day 1, 2 April 2013, 167:13-168:2.
114Reply on Jurisdiction, ¶24.
115Id., ¶26. See ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (PCA Case No. 2010- 9), Award on Jurisdiction,10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29); Impregilo S.p.A v. Argentine Republic (ICSID Case No. ARB/07/17), Dissenting Opinion of Professor Brigitte Stern, 21 June 2011 (Exhibit RL-119).
116Id., ¶¶27-31. In such regard, the Respondent believes that Lauder and CME cases illustrate this situation, since, in such cases, investors instituted two different arbitrations against the Czech Republic under two different treaties, as the Czech Republic had only consented thereto. Hence, had investors in such cases wished to consolidate the proceedings, they should have had the express consent of the State, given that the applicable treaties did not contain the consent of the State to the joinder. Likewise, in Pan American case, the Respondent maintains that claimants distort its content, since the tribunal never stated that, had claimants chosen to commence a single proceeding instead of two, they would not have needed Argentina’s consent.
117Counter-Memorial on Jurisdiction, ¶7.
118Reply on Jurisdiction, ¶33.
119Id., ¶38.
120Id., ¶40; Respondent’s Post-Hearing Brief, ¶33. See Transcript (English), Day 1, 2 April 2013, 166:1-166:19; Transcript (English), Day 6, 9 April 2013, 1419:25-1420:5.
121See Duke Energy Electroquil Partners & Electroquil S.A. v. Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann-Kohler, Pinzón and van den Berg) (Exhibit CL-53).
122Reply on Jurisdiction, ¶46(c); Respondent’s Post-Hearing Brief, ¶31.
123Id., ¶42; Respondent’s Post-Hearing Brief, ¶34. See Plama Consortium Limited v. Republic of Bulgaria (ICSID Case No. ARB/03/24), Decision on Jurisdiction, 8 February 2005 (Salans, van den Berg and Veeder) (Exhibit CL-110). See Transcript (English), Day 1, 2 April 2013, 163:8-163:15.
124Id., ¶44.
125Counter-Memorial on Jurisdiction, ¶12.
126See Transcript (English), Day 1, 2 April 2013, 170:9-170:18.
127Counter-Memorial on Jurisdiction, ¶6. See Canfor Corporation v. United States of America; Terminal Forest Products Ltd. v. United States of America (UNCITRAL Case), Order of the Consolidation Tribunal, 7 September 2005, (van den Berg, Robinson and L.C de Mestral) (Exhibit CL-115).
128As explained by the Claimants at ¶6(a) and (b) of the Counter-Memorial on Jurisdiction, the case Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic, (ICSID Case No. ARB/03/13), Decision on Preliminary Objections, 27 July 2006, and the case CME Czech Republic B.V. v. The Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001, cited by Bolivia, refer to arbitrations in which the claimants filed two different arbitration proceedings and then requested the consolidation thereof. However, in this case, the Claimants have not filed two different requests for arbitration, but have acted jointly.
129Claimants’ Post-Hearing Brief, ¶68. See Transcript (English), Day 6, 9 April 2013, 1355:17-1356:1.
130Counter-Memorial on Jurisdiction, ¶¶8-9; Claimants’ Post-Hearing Brief, ¶¶74, and 76. See Piero Foresti, Laura de Carli and others v. The Republic of South Africa (ICSID Case No. ARB(AF)/07/1), Award, 4 August 2010 (Lowe, Browner and Matthews) (Exhibit CL-134); OKO Pankki OYJ, VTB Bank (Germany) AG and Sampo Bank Plc v. Republic of Estonia (ICSID Case No. ARB/04/6), Award, 19 November 2007 (Wijnen, Fortier and Veeder) (Exhibit CL-120); Itera International Energy LLC and Itera Group NV v. Georgia (ICSID No. ARB/08/7), Decision on Admissibility of Ancillary Claims, 4 December 2009 (Danelius, Orrego Vicuña and Stern) (Annex CL-128); Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic (ICSID Case No. ARB/03/17), Decision on Jurisdiction, 16 May 2006 (Salakuse, Kaufmann-Kohler and Nikken) (Exhibit CL-117); Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Preliminary Objections, 2 August 2010 (Veeder, Tawil and Stern) (Exhibit CL-133); Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan (ICSID Case No. ARB/05/16), Award, 29 July 2008 (Boyd, Lalonde and Hanotiau) (Exhibit CL-52); Duke Energy Electroquil Partners & Electroquil S.A. v. Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann Kolher, Gómez Pinzón and van den Berg) (Exhibit CL-53); Perenco Ecuador Ltd. v. The Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (ICSID Case No. ARB/08/06), Decision on Jurisdiction, 30 June 2011 (Tomka, Kaplan and Thomas) (Exhibit CL-137).
131Memorial on Jurisdiction, ¶29.
132Counter-Memorial on Jurisdiction, ¶10; Claimants’ Post-Hearing Brief, ¶¶72-73.
133Id., ¶¶11-13; Claimants’ Post-Hearing Brief, ¶77. See Transcript (English), Day 1, 2 April 2013, 136:16-138:16.
134Rejoinder on Jurisdiction, ¶¶5-7. In this regard, the Claimants cite several cases in support of their argument, such as Chevron Corporation and Texaco Petroleum Company v. The Republic of Ecuador (PCA Case No. 34877), Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. Mongolia (UNCITRAL Arbitration), and Abaclat and others v. The Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4 August 2011. See Transcript (English), Day 1, 2 April 2013, 136:24-137:9; Transcript (English), Day 6, 9 April 2013, 1356:13-1356:15.
135See Transcript (English), Day 6, 9 April 2013, 1357:22-1358:21.
136Rejoinder on Jurisdiction, ¶11.
137Claimants’ Post-Hearing Brief, ¶¶64-66. See Transcript (English), Day 6, 9 April 2013, 1353:15-1355:6.
138Memorial on Jurisdiction, ¶¶35-37; Respondent’s Post-Hearing Brief, ¶38. See Limited Liability Company AMTO v. Ukraine (Arbitration Institute of the Stockholm Chamber of Commerce (SCC) Case No. 80/2005), Final Award, 26 March 2008 (Cremades, Runeland and Soderlund) (Exhibit RL-34); Salini Construttori S.P.A. and Italstrade S.P.A v. Jordania (ICSID Case No. ARB/02/13), Award, 31 January 2006 (Guillaume, Cremades, Sinclair) (Exhibit RL-35); Hussein Nuaman Soufraki v. United Arab Emirates (ICSID Case No. ARB/02/07), Award, 7 July 2004 (Fortier, Schwebel and El-Khoseri) (Exhibit RL-37); Phoenix Action, Ltd. v. Czech Republic (ICSID Case No. ARB/06/5), Award, 15 April 2009 (Stern, Bucher and Fernández-Armesto) (Exhibit RL-38); Brandes Investment Partners, LP v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/3), Decision on the Respondent’s Objection Under Rule 41(5) of the ICSID Arbitration Rules, 2 February 2009 (Briner, Stern and Böckstiegel) (Exhibit RL-39); Inceysa Vallisoletana S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26), Award, 2 August 2006 (Oreamuno Blanco, Landy and von Wobeser) (Exhibit RL-40).
139The Respondent believes that it is such date that should be taken as a reference, rather than the date alleged by the Claimants, as it appears on the Share Certificate that evidences the ownership interests of Birdsong Overseas Limited in BIE (Exhibit C-35).
140Memorial on Jurisdiction, ¶51. See Certificate of Incorporation of Bolivia Integrated Energy Limited (Exhibit C-25); Certificate of Incorporation of Birdsongs Overseas Limited (Exhibit C-29).
141Id., ¶62; Article I(4) of the US-Bolivia BIT.
142Id., ¶75. See Aguas del Tunari S.A. v. Republic of Bolivia (ICSID Case No. ARB/02/3), Decision on Respondent’s Objections to Jurisdiction, 21 October 2005 (D. Caron, Alberro-Semerena and C. Alvarez) (Exhibit RL-28).
143Memorial on Jurisdiction, Section 3.2.2; Reply on Jurisdiction, ¶¶77-82; Counter-Memorial on Jurisdiction, ¶¶22-31.
144Reply on Jurisdiction, ¶¶83-87. See Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004 (Sureda, Brower and Janeiro) (Exhibit CL-109); Cemex Caracas Investments B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/15), Decision on Jurisdiction, 30 December 2010 (Guillaume, Abi-Saab and von Mehren) (Exhibit CL-136). In this respect, in its allegations on 14 January 2013, the Respondent denies that the case Teinver S.A. v. The Argentine Republic (ICSID Case No. ARB/90/1), Decision on Jurisdiction, 21 December 2011 (Exhibit CL-151), supports the Claimants’ position on this issue since: (i) bilateral investment treaties are not identical in specific aspects which are relevant to these proceedings; and (ii) the Decision applies a pro-investor principle that has not been justified by said tribunal.
145Memorial on Jurisdiction, ¶¶85-89; Respondent’s Post-Hearing Brief, ¶43.
146Id., ¶¶91-96. See Romak S.A. v. Uzbekistan (UNCITRAL Case-PCA No. AA280), Award, 26 November 2009 (Mantilla- Serrano, Rubins and Molfessis) (Exhibit RL-54); GEA Group Aktiengesellschaft v. Ukraine (ICSID Case No. ARB/08/16), Award, 31 March 2011 (van den Berg, Landau and Stern) (Exhibit RL-55); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (RL-56).
147Counter-Memorial on Jurisdiction, ¶¶37-41.
148See White Industries Australia Limited v. India (UNCITRAL Case), Award, 30 November 2011 (Brower, Lau and Rowley) (Exhibit CL-73).
149Reply on Jurisdiction, ¶95.
150See Romak S.A. v. Uzbekistan (UNCITRAL Case-PCA No. AA280), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL-54); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (Exhibit RL-56).
151See Transcript (English), Day 1, 2 April 2013, 171:9-172:10; Transcript (English), Day 6, 9 April 2013, 1420:19-1421:1.
152Reply on Jurisdiction, ¶¶101-102, and 109; Respondent’s Post-Hearing Brief, ¶37.
153Id., ¶¶103-112. In this regard, the Respondent establishes that there is no evidence whatsoever that Rurelec has paid USD 35 million for the shares in EGSA. Also, the investments in generation equipment were made without the Claimants’ own capital contribution. As regards the alleged technical support mentioned by the Claimants in their Counter-Memorial on Jurisdiction, ¶33, no evidence has been submitted and, in any case, the technical support received by EGSA came from abroad, through subcontractors from Independent Power Operation Ltd. (See Exhibit R-103). Moreover, at least 4 out of the 7 Jenbacher engines (which Claimants include as Rurelec’s contribution) have belonged to EGSA since April 2005, that is, several months prior to Rurelec’s alleged investment in Bolivia. Ultimately, as claimed by the Respondent, it is not true that Rurelec’s conduct has helped remedying the difficult financial situation of EGSA, as its indebtedness had been evident since 2008. Fitch Ratings had downgraded EGSA’s credit rating and by 2009 it had exhausted all its financing sources, with USD 3 millions of cash in 2010. This, coupled with the distribution of dividends qualified as “conservative” by the Claimants, led to a decapitalization of EGSA (See Exhibits R-104, 105 and 106). See Transcript (English), Day 1, 2 April 2013, 172:11- 173:19.
154Memorial on Jurisdiction, ¶¶116-127.
154Counter-Memorial on Jurisdiction, ¶¶17-19.
157Counter-Memorial on Jurisdiction, ¶17.
158Reply on Jurisdiction, ¶¶59-61; Respondent’s Post-Hearing Brief, ¶¶38-41. As regards the agreement (Exhibit R-61), Bolivia states that it does not show whether a payment has been made. It provides for some deferred payments but it is uncertain whether they have been made or not. Moreover, the last payment was scheduled for 2008, which makes it impossible for the 2006 Share Transfer (Exhibit C-214) to prove any payment (a total of USD 35 millions) in 2006 if the aggregate amount had not yet been paid. The same happens with Rurelec’s press release (Exhibit C-215).
159Letter from Nerine Fiduciaries to Freshfields dated 26 October 2012 (Exhibit C-226).
160Reply on Jurisdiction, ¶69. The Respondent considers that the Claimants have just established that Birdsong was organized in December 2005 and that Rurelec owned one share at a par value of USD 1 (Exhibits C-29 and 30). However, said documents fail to show how many shares form Birdsong’s capital, which makes it impossible to determine Rurelec’s percentage interest thereon.
161Id., ¶¶62-65.
162Id., ¶71.

163Statement of Claim, ¶70; Counter-Memorial on Jurisdiction, ¶15.
164Examples of documents include: (i) EGSA’s annual reports on stock ownership by Rurelec since the investment, (ii) the position of Peter Earl —Director of Rurelec— as President of the Board of Directors of EGSA in 2006, and (iii) different press releases which mention the investments made in Bolivia for power generation.
165Counter-Memorial on Jurisdiction, ¶¶17-19; Claimants’ Post-Hearing Brief, ¶95. See Transcript (English), Day 1, 2 April 2013, 138:17-140:4.
166See Transcript (English), Day 6, 9 April 2013, 1350:22-1353:4.
167Counter-Memorial on Jurisdiction, ¶¶23-26. See Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. The Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Buergenthal, Alvarez and Hossain) (Exhibit CL-151); Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004 (Sureda, Brower and Janeiro) (Exhibit CL-109); Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision on Jurisdiction, 6 July 2007 (Fortier, Orrego Vicuña and Watts) (Exhibit CL-119); Mobil Corporation, Venezuela Holdings, B.V. and others v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/27), Decision on Jurisdiction, 10 June 2010 (Guillaume, Kaufmann-Kohler and El-Kosheri) (Exhibit CL-131); Mr. Tza Yap Shum v. Republic of Peru (ICSID Case No. ARB/07/6), Decision on Jurisdiction and Competence, 19 June 2009 (Fernández- Armesto, Otero and Kessler) (Exhibit CL-124). See Transcript (English), Day 1, 2 April 2013, 140:17-141:9; Transcript (English), Day 6, 9 April 2013, 1368:9-1368:21.
168Rejoinder on Jurisdiction, ¶¶20-22.
169Rejoinder on Jurisdiction, ¶¶23-25. The Claimants consider that the Anglo Iranian Oil case cited by the Respondent to support its argument at ¶72 of its Objections, makes no reference to the concept of direct or indirect investment. Moreover, Bolivia’s argument that the cases cited by the Respondent should be disregarded because they do not involve the UK-Bolivia BIT or any other treaties executed by Bolivia, should not be accepted since the provisions analyzed in those cases are substantially the same as those under the UK-Bolivia BIT. For more reference to those cases, see Counter-Memorial on Jurisdiction, ¶¶23-26. See also the Claimants’ allegations on 2 January 2013 about the case Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. The Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).
170Counter-Memorial on Jurisdiction, ¶28. See Cemex Caracas Investments B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/15), Decision on Jurisdiction, 30 December 2010 (Guillaume, Abi-Saab and von Mehren) (Exhibit CL-136).
171Counter-Memorial on Jurisdiction, ¶¶29-30. See C.H. Schreuer, “Shareholder Protection in International Investment Law”, Transnational Dispute Management, Volume 2, Issue 3, 8 May 2005 (Exhibit CL-112); Inmaris Perestroika Sailing Maritime Services GMBH and others v. Ukraine (ICSID Case No. ARB/08/08), Decision on Jurisdiction, 8 March 2010 (Alexandrov, Cremades, Rubins) (Exhibit CL-130).
172See Transcript (English), Day 1, 2 April 2013, 141:19-142:2.
173Rejoinder on Jurisdiction, ¶¶27-28.
174For example, they also cite the payment of USD 35 million for the acquisition of EGSA in 2006, an estimated investment of USD 110 million to increase EGSA’s efficiency (through a 185 MW increase), as well as the introduction of a new technology which entailed an increase of EGSA’s power generation capacity. See Statement of Claim, ¶¶70-79; Counter- Memorial on Jurisdiction, ¶33. See Transcript (English), Day 1, 2 April 2013, 142:3-142:17.
175Counter-Memorial on Jurisdiction, ¶34.
176Id., ¶37.
177Id., ¶40. See Article 1(b) of the UK-Bolivia BIT (Exhibit C-1).
178Counter-Memorial on Jurisdiction, ¶42(a)(b). The Claimants refer here to the cases Romak S.A. v. Uzbekistan (UNCITRAL-PCA Case No. AA280), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL- 54); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (Exhibit RL-56).
179Counter-Memorial on Jurisdiction, ¶42 (c)(d).
180Id., ¶43; Second Witness Statement of Blanco, ¶¶6 and 21
181Counter-Memorial on Jurisdiction, ¶44. See Romak S.A. (Switzerland) v. Republic of Uzbekistan (UNCITRAL Case), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL-54).
182Counter-Memorial on Jurisdiction, ¶45. See Fedax N.V. v. Republic of Venezuela (ICSID Case No. ARB/96/3), Decision on Jurisdiction, 11 July 1997 (Orrego Vicuña, Meir Helt, B. Owen) (Exhibit CL-101).
183Reply on Jurisdiction, ¶114.
184See Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplun v. Plurinational State of Bolivia (ICSID Case No. ARB/06/2), Decision on Jurisdiction, 27 September 2012 (Kaufmann-Kohler, Lalonde and Stern) (Exhibit CL-132).
185Rejoinder on Jurisdiction, ¶¶30-31; Claimants’ Post-Hearing Brief, ¶96.
186Id., ¶32.
187Counter-Memorial on Jurisdiction, ¶46.
188Memorial on Jurisdiction, ¶¶138-139. See Transcript (English), Day 1, 2 April 2013, 143:7-143:21,174:12-175:1.
189Memorial on Jurisdiction, ¶¶130-142.
190Counter-Memorial on Jurisdiction, ¶¶51-52.
191Reply on Jurisdiction, ¶122-124. See Ulysseas Inc. v. Republic of Ecuador (UNCITRAL-PCA Case No. 2009-19), Interim Award, 28 September 2010 (Bernardini, Pryles and Stern) (Exhibit CL-135); Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Twail and Stern) (Exhibit CL-140). See Transcript (English), Day 1, 2 April 2013, 178:25-179:3, 179:23-181:2; Transcript (English), Day 6, 9 April 2013, 1428:2-1428:6.
192Counter-Memorial on Jurisdiction, ¶52.
193Reply on Jurisdiction, ¶¶127-129. See Transcript (English), Day 1, 2 April 2013, 178:12-178:18, 181:3-181:23, 179:12- 179:15.
194Counter-Memorial on Jurisdiction, ¶56; Respondent’s Post-Hearing Brief, ¶53.
195Reply on Jurisdiction, ¶¶132-137. The Respondent refers to the Bidding Rules (Exhibit C-7), which define “Stock Subscribing Company” as “the company that shall subscribe the Subscription Shares” (Article 1) [Tribunal’s Translation]. Moreover, Article 2.1 stated that “the bidding company may be: 2.1.1 Electricity Company [...] 2.1.2 Consortium of Related Companies [...] 2.1.3 Specific Company. A juridical person constituted exclusively for the purposes of participating in the bid, which could be the Stock Subscribing Company. 2.1.4 Other Consortiums. Article 2.3 provided that “the Qualified Bidder that is declared the winning bidder must constitute, if necessary, prior to the Closing Date, the Stock Subscribing Company” (Article 2.3) and, finally, in the Closing Deed, the Stock Subscribing Company shall subscribe the Subscription Shares (Article 8.3). In turn, the Capitalization Agreement uses a similar definition of Stock Subscribing Company: “the company which subscribes to the shares under the Agreement” (Article 3) and “undertakes to pay to the Company the Subscription Amount” (Article 5.1) [Tribunal’s Translation]. See Transcript (English), Day 1, 2 April 2013, 175:21-176:6; Transcript (English), Day 6, 9 April 2013, 1428:22-1429:7.
196Counter-Memorial on Jurisdiction, ¶62.
197The tribunal in Pac Rim Cayman LLC v. El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Tawil and Stern) (Exhibit CL-140), considered that a traditional “holding company” is a company created in order to “own shares in its groups of companies, with attendant benefits as to control, taxation and risk Management for the holding company’s group of companies.” However, according to said tribunal, the fact that a company is organized in the United States for the sole purpose of holding shares in foreign companies indicates that such company is not a “traditional holding company” and fails to meet the essential condition of carrying out material businesses in its home country.
198Reply on Jurisdiction, ¶144. The activities mentioned by the Claimants, which the Respondent considers insufficient and/or inexistent are: (a) maintaining a “registered office” and a “principal office” in Akron, Ohio, as the Delaware General Corporation Law requires having an address in such state (See Exhibit R-107). Moreover, the office in Akron does not belong to GAI, but to FirstEnergy; (b) having appointed an agent in the State of Delaware is also a legal requirement under the General Corporation Law; (c) holding shareholders’ meetings is also mandatory under the General Corporation Law, and the only meetings held were those prior to FirstEnergy’s disinvestment in 2003 (no meeting-related documents have been submitted thereafter); (d) no meetings of the board of directors have been held since 2003 (only an extraordinary meeting of the board of directors was held in 2008 in order to the adopt solutions required by the CAF as a precondition for a credit disbursement); and (e) as regards the appointment of its administrators, the same happens, as since the end of 2003 there has been just one administrator appointed (in 2008) (Exhibit C-230).
199Reply on Jurisdiction, ¶146; Respondent’s Post-Hearing Brief, ¶¶50-53, 58.
200See Transcript (English), Day 1, 2 April 2013, 176:15-177:24; Transcript (English), Day 6, 9 April 2013, 1428:8-1428:18.
201Counter-Memorial on Jurisdiction, ¶¶52-55. See Plama Consortium Limited v. Republic of Bulgaria (ICSID Case No. ARB/03/24), Decision on Jurisdiction, 8 February 2005 (Salans, van den Berg and Veeder) (Exhibit CL-110); Hulley Enterprises Limited (Cyprus) v. The Russian Federation (PCA Case No. AA226), Award on Jurisdiction and Admissibility, 30 November 2009 (Fortier, Poncet and Schwebel) (Exhibit CL-125); Veteran Petroleum Limited (Cyprus) v. The Russian Federation (CPA Case No. AA228), Award on Jurisdiction and Admissibility, 30 November 2009 (Fortier, Poncet and Schwebel) (Exhibit CL-126); Yukos Universal Limited (Isle of Man) v. The Russian Federation (CPA Case No. AA227), Award on Jurisdiction and Admissibility, 30 November 2009, (Fortier, Poncet and Schwebel) (Exhibit CL-127). See Transcript (English), Day 6, 9 April 2013, 1362:2-1367:19.
202Id., ¶¶56-58;. See Transcript (English), Day 1, 2 April 2013, 143:22-144:19; Transcript (English), Day 6, 9 April 2013, 1360:22-1360:25, 1362:2-1367:19.
203Id., ¶¶61-62; Claimants’ Post-Hearing Brief, ¶84. See Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Tawil and Stern) (Exhibit CL- 140); Petrobart Limited v. The Kyrgyz Republic (SSS Case No. 126/2003), Award, 29 March 2005, (Danelius, Bring and Smets) (Exhibit CL-111). See Transcript (English), Day 1, 2 April 2013, 144:19-145:7; Transcript (English), Day 6, 9 April 2013, 1360:20-1361:18.
204See Counter-Memorial on Jurisdiction, Section IV.
205Reply on Jurisdiction, ¶122.
206Rejoinder on Jurisdiction, ¶37.
207Id., ¶¶38-39. See Compañía de Aguas Del Aconquija S.A. and Vivendi Universal S.A. v. The Argentine Republic (ICSID Case No. ARB/97/3), Resubmitted Case, Decision on Jurisdiction, 14 November 2005 (Kaufmann-Kohler, Bernal Verea and Rowley) (Exhibit CL-145).
208Id., ¶40.
209Id., ¶¶41-42. See Transcript (English), Day 6, 9 April 2013, 1362:2-1367:19.
210Reply on Jurisdiction, ¶140.
211Rejoinder on Jurisdiction, ¶40.
212Memorial on Jurisdiction, ¶¶159-165; Respondent’s Post-Hearing Brief, ¶60. See Transcript (English), Day 6, 9 April 2013, 1429:14-1430:1.
213Id., ¶170.
214Id., ¶¶171-175. See Burlington Resources Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17); Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/08/04), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60); Argentine Republic v. BG Group PLC, Decision on Annulment of the U.S Court of Appeals in and for the District of Columbia, 17 January 2012 (Judge Rogers) (Exhibit RL-61); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on Jurisdiction, 14 January 2004 (Orrego Vicuña, Gros Espiell and Tschanz) (Exhibit RL-16).
215See ¶236 infra.
216Memorial on Jurisdiction, ¶155.
217See Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/01/8), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60).
218 Respondent’s Post-Hearing Brief, ¶63. See Transcript (English), Day 1, 2 April 2013, 244:8-245:12.
219Statement of Claim, ¶138; Notice of Arbitration; GAI’s Notice of Claim to President Evo Morales, 13 May 2010 (Exhibit C-39).
220Reply on Jurisdiction, ¶¶158-163. See Burlington Resources Inc. v Republic of Ecuador (ICSID Case No. ARB/08/4), Award on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17); Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/01/8), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60).
221 Reply on Jurisdiction, ¶167. See Daimler Financial Services AG v. Argentine Republic (ICSID Case No. ARB/05/1), Award, 22 August 2012 (Dupuy, Brower and Janeiro) (Exhibit RL-118); Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno and Derains) (Exhibit RL-22); ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (UNCITRAL Case-PCA Case No. 2010-9), Award on Jurisdiction, 10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29); Abaclat et al v. Argentine Republic (ICSID Case No. ARB/07/5), Dissenting Opinion of Professor Georges Abi-Saab, 28 October 2011 (Exhibit RL-121); Impregilo S.p.A v. Argentine Republic (ICSID Case No. ARB/07/17), Dissenting Opinion of Professor Brigitte Stern, 21 June 2011 (Exhibit RL-119); Noble Energy, Inc. and Machalapower CIA. LTDA v. Ecuador and Consejo Nacional de Electricidad (ICSID Case No. ARB/05/12), Decision on Jurisdiction, 5 March 2008 (Kaufmann Kohler, Cremades and Alvarez) (Exhibit RL-20).
222See Transcript (English), Day 1, 2 April 2013, 245:13-246:16; Transcript (English), Day 6, 9 April 2013, 1429:14-1430:1.
223Reply on Jurisdiction, ¶168. In addition, the Respondent relies on various precedents supporting its argument: Eduardo Vieira v. Republic of Chile (ICSID Case No. ARB/04/7), Award, 21 August 2007 (Wobeser, Zalduendo and Reisman) (Exhibit RL-125); Asian Agricultural Products Ltd. v. Sri Lanka (ICSID Case No. ARB/87/3), Award, 27 June 1990 (El- Kosheri, Goldman and Asante) (Exhibit CL-10).
224Id., ¶169. See ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (UNCITRAL Case- PCA Case No. 2010-9), Award on Jurisdiction, 10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29).
225The Respondent notes that in their Counter-Memorial on Jurisdiction, ¶¶64, 72, and 73, the Claimants have only affirmed that Bolivia made no attempt to amicably settle the New Claims, that negotiations on nationalisation were unsuccessful and that Bolivia’s stance in this arbitration confirms the scarce possibilities that an agreement would have been reached. See ¶236 infra. Additionally, the Respondent considers in its allegations of 14 January 2013 that Teinver S.A. v. Argentine Republic (ICSID Case No. ARB/90/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151), reinforces Bolivia’s stance in this respect. This is so because the circumstances of such case and of this case are very different: here, there has been no kind of negotiation on the New Claims (unlike in the mentioned case). Therefore, the prior negotiation requirement has not been observed. See Transcript (English), Day 1, 2 April 2013, 246:17-247:15.
226Respondent’s Post-Hearing Brief, ¶¶64-65.
227Reply on Jurisdiction, ¶¶176-177. See ¶236 infra.
228Counter-Memorial on Jurisdiction, ¶¶63, 73, and 78. See ¶234 infra. In this regard, in its allegations of 14 January 2013, the Respondent contradicts the position of Claimants concerning Teinver S.A. v. Argentine Republic. According to the Respondent, what is decisive in this concern is for the claims to relate to the same object; without the tribunal defining what should be considered as such. In any case, the New Claims have no relation whatsoever to nationalisation. See Transcript (English), Day 6, 9 April 2013, 1430:1-1430:9.
229Reply on Jurisdiction, ¶179. See Transcript (English), Day 1, 2 April 2013, 248:20-248:22.
230Counter-Memorial on Jurisdiction, ¶70. See ¶234 infra.
231Reply on Jurisdiction, ¶180; Respondent’s Post-Hearing Brief, ¶66. See Transcript (English), Day 1, 2 April 2013, 248:24-249:11.
232Id., ¶181.
233Id., ¶182.
234See Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru (ICSID Case No. ARB/03/4), Award, 7 February 2005 (Buergenthal, Cremades and Paulsson) (Exhibit RL-126).
235Reply on Jurisdiction, ¶186. See Transcript (English), Day 1, 2 April 2013, 247:23-248:20.
236Id., ¶187.
237Id., ¶188; Statement of Claim, ¶254.
238Reply on Jurisdiction, ¶191.
239Statement of Claim, ¶¶105-110.
240Counter-Memorial on Jurisdiction, ¶¶79-80, and 192.
241Counter-Memorial on Jurisdiction, ¶79.
242Reply on Jurisdiction, ¶193.
243See Transcript (English), Day 1, 2 April 2013, 145:11-145:12; Transcript (English), Day 6, 9 April 2013, 1359:21- 1360:12.
244The UK-Bolivia BIT establishes that once an agreement has not been reached after the amicable consultation period and six months have passed since one of the parties notified the other of the existence of the dispute, the relevant arbitration may be commenced. On the contrary, the US-Bolivia BIT simply refers to the lapse of three months for any of the parties to submit the dispute to mandatory arbitration, with no additional requirements.
245Counter-Memorial on Jurisdiction, ¶¶68-71. See Abaclat and others v. Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4 August 2011 (Tercier, Abi-Saab and van den Berg) (Exhibit CL-138); Biwater Gauff (Tanzania) Ltd. v. Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); Bayindir Insaat Turizm Ticaret ve Sanayi A.S v. Islamic Republic of Pakistan (ICSID Case No. ARB/01/13), Decision on Jurisdiction, 14 November 2005, (Kaufmann Kohler, Berman and Böckstiegel) (Exhibit CL-116); SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan (ICSID Case No. ARB/01/13), Decision on Jurisdiction, 6 August 2003, (P.Feliciano, Faurès and Thomas) (Exhibit CL-107); Ronald S. Lauder v. Czech Republic (UNCITRAL Case), Award, 3 September 2001 (Briner, Klein and Cutler) (Exhibit CL-23); Link-Trading Joint Stock Company v. Consumer Control Department of the Republic of Moldavia, Award on Jurisdiction, 16 February 2001 (Hertzfeld, Buruiana and Zykln) (Exhibit CL-105); Wena Hotels Limited v. Republic of Egypt (ICSID Case No. ARB/98/4), Summary of the Tribunal ́s Minutes, 25 May 1999 (Leigh, Fadlallah and Haddad) (Exhibit CL-103); Frank J. Sedelmayer v. Russian Federation, Award, 7 July 1998 (Exhibit CL-102); Ethyl Corporation v. Government of Canada, Award on Jurisdiction, 24 June 1998 (Böckstiegel, Brower and Lalonde) (Exhibit RL-5). See Transcript (Spanish), Day 1, 2 April 2013, 1359:1-1359:4.
246Id., ¶¶73-75.
247Id., ¶¶75-76. See Generation Ukraine, Inc. v. Ukraine (ICSID Case No. ARB/00/9), Award, 16 September 2003 (Salpius, Voss and Paulsson) (Exhibit RL-24); Swisslion DOO Skopje v. Former Yugoslav Republic of Macedonia (ICSID Case No. ARB/09/16), Award, 6 July 2012 (Guillaume, Price and Thomas) (Exhibit CL-142); CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on Jurisdiction, 17 July 2003 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-83).
248Id., ¶77. See Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/08/4), Award on Jurisdiction, 15 December 2010, (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60); Burlington Resources Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17).
249Id., ¶¶80-83. In this respect, see the allegations of the Claimants concerning Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151), since according to Claimants it supports their stance. See Transcript (English), Day 1, 2 April 2013, 146:7-146:19.
250Id., ¶¶49-50. See, inter alia, Ronald S. Lauder v. Czech Republic (UNCITRAL), Final Award, 3 September 2001 (Exhibit CL-23); Abaclat et al v. Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4August 2011(Tercier, Abi-Saab and van den Berg) (Exhibit CL-138); Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51) or Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).
251Statement of Claim, ¶¶106-110, and 167-171.
252Statement of Defense, ¶¶19-20, 24, 136, 231, 296, and 616. See, Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).
253Rejoinder on the Merits, ¶¶53-57. See, Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).
254Respondent’s Post-Hearing Brief, ¶¶68-69.
255See Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno Blanco and Derains) (Exhibit RL-22). See Transcript (English), Day 6, 9 April 2013, 1431:1-1431:6.
256Memorial on Jurisdiction, ¶¶185-187; Respondent’s Post-Hearing Brief, ¶74.
257Id., ¶¶195-206. See Pantechniki S.A. Contractors & Engineers v. Albania (ICSID Case No. ARB/07/21), Award, 28 July 2009, (Paulsson) (Exhibit RL-18); Societé Générale de Surveillance S.A. v. Republic of Philipines (ICSID Case No. ARB/02/6), Tribunal ́s Decision on Objections to Jurisdiction, 29 January 2004, (El Khoseri, Crawford and Crivellaro) (Exhibit RL-19); Noble Energy, Inc. and Machalapowe CIA. LTDA v. Ecuador and Consejo Nacional de Electricidad (ICSID Case No. ARB/05/12), Decision on Jurisdiction, 5 March 2008 (Kaufmann-Kohler, Cremades and Alvarez) (Exhibit RL-20); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (former Compaigne Générale des Eaux) v. Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002, (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26).
258Reply on Jurisdiction, ¶¶197-198; Respondent’s Post-Hearing Brief, ¶69. See Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Jurisdiction, 25 August 2006 (Sacerdoti, Marcano and Alvarez) (Exhibit RL-127); Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno and Derains) (Exhibit RL-22).
259See ¶¶144-146 supra.
260Memorial on Jurisdiction, ¶¶210-228.
261Id., ¶¶217-218.
262ROME 1995: Article 1, “Marginal Generation Unit. The last Generation Unit in the condition to satisfy a rise in demand, dispatched by the [CNDC] in accordance with the procedures established in these Regulations” [Tribunal’s Translation].
263Text of Supreme Decree No. 29599 available in the Memorial on Jurisdiction, ¶235.
264Reply on Jurisdiction, ¶202(a).
265See footnote on p. 193 of the Reply on Jurisdiction.
266Memorial on Jurisdiction, ¶¶239-242, and 246-251.
267Id., ¶¶244, 245, and 251; Respondent’s Post-Hearing Brief, ¶70. See Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012, (Zuleta, Oreamundo Blanco and Derains) (Exhibit RL-22); Generation Ukraine Inc. v Ucraine (ICSID Case No. ARB/00/9), Award, 16 September 2003, (Paulsson, Salpius and Voss) (Exhibit RL-24).
268See ¶¶138-141 supra. Respondent’s Post-Hearing Brief, ¶72.
269Memorial on Jurisdiction, ¶¶253-267.
270Id., ¶268.
271See ¶134 supra.
272See ¶135 supra.
273In this regard, the Respondent mentions the case of Iberdrola again, where the arbitration tribunal considered that the investor was making claims based on a treaty concerning matters that were actually utterly regulatory in relation to the tariffs applicable to the electricity sector. Thus, it considered that the claims were not protected under the treaty.
274Memorial on Jurisdiction, ¶¶275-277; Reply on Jurisdiction, ¶202(b).
275The Respondent argues, relying on Joy Mining Machinery Limited v. Arab Republic of Egypt (ICSID Case No. ARB/03/11), Decision on Jurisdiction, 6 August 2004 (Orrego Vicuña, Laurence Craig and Weeramantry) (Exhibit RL-11), that such merely commercial claims do not give rise to claims under the investment treaties.
276See ¶¶127, 158-160 supra.
277Memorial on Jurisdiction, ¶¶290-291; Reply on Jurisdiction, ¶202(c).
278See Transcript (English), Day 6, 9 April 2013, 1430:11-1430-14.
279See ¶¶239-251 supra.
280See Counter-Memorial on Jurisdiction, ¶86(a), and Statement of Claim, ¶¶189-209, for the measure relating to spot prices; Counter-Memorial on Jurisdiction, ¶86(b), and Statement of Claim, ¶¶210-220, for the measure relating to the PBP; Counter- Memorial on Jurisdiction, ¶86(c), and Statement of Claim, ¶¶111-113, and 254-259, for the measure relating to the Worthington engines.
281Counter-Memorial on Jurisdiction, ¶86(a).
282See Total S.A. v. The Argentine Republic (ICSID Case No. ARB/04/1), Decision on Responsibility, 27 December 2010.
283Rejoinder on Jurisdiction, ¶61.
284Id., ¶86(b).
285Id., ¶62.
286Id., ¶87. See Oil Platforms- Islamic Republic of Iran v. United States of America (International Court of Justice), Justice Higgins’ Separate Opinion dated 12 December 1996, ICJ Reports 1996 847 (Exhibit CL-100).
287Id., ¶88. The Respondent used the Iberdrola Energía v. Republic of Guatemala case as a support of its argument. Nevertheless, the Claimants allege that case has no relation whatsoever with the case at issue, since in that arbitration claimant failed to prove that the claims submitted were of international nature. The tribunal in that case determined that whether the State had violated or not its obligations under the treaty was not in debate, therefore everything ended up in the fact that it was a question relating to the law of the State of Guatemala.
288Reply on Jurisdiction, ¶204; Statement of Claim, ¶211; Counter-Memorial on Jurisdiction, section 2 and footnote 193.
289Memorial on Jurisdiction, ¶299. See Z. Douglas, “The Hybrid Foundations of Investment Treaty arbitration”, 74 BYIL, 2005, p. 275 (Exhibit RL-66).
290Id., ¶307.
291Memorial on Jurisdiction, ¶307; Reply on Jurisdiction, ¶209.
292Reply on Jurisdiction, ¶210; Statement of Claim, ¶219. See Transcript (English) Day 1, 2 April 2013, 258:21-259:8.
293Response to the Request for Bifurcation of 27 August 2012, ¶36; Reply on Jurisdiction, ¶205; Counter-Memorial on Jurisdiction, ¶¶95-96. According to the Respondent, the Claimants argue the existence of a triple identity test that in this case would not have been confirmed and, in addition, Bolivia’s objection would deprive the US-Bolivia BIT’s effective means protection from its effet utile.
294Memorial on Jurisdiction, ¶¶313-316; Reply on Jurisdiction, ¶206. See Chevron Corporation and Texaco Petroleum Corporation v. Republic of Ecuador [II] (PCA Case No. 2009-23), Third Provisional Award on Jurisdiction, 27 February 2012, (Veeder, Grigera Naón and Vaughan Lowe) (Exhibit RL-23); Pantechniki S.A. Contractors & Engineers v. Albany (ICSID Case No. ARB/07/21), Award of 28 July 2009, (Paulsson) (Exhibit RL-18). See Transcript (English) Day 1, 2 April 2013, 257:12-258:20.
295Counter-Memorial on Jurisdiction, ¶¶94-95. The Respondent, in its Reply on Jurisdiction, ¶207, copies textually from the Counter-Memorial the arguments presented thereby: “the fork in the road clause applies only when an investment treaty arbitration and a domestic court litigation have [...] (iii) the same legal basis for the claim [...] although [EGSA] relied on Bolivian Law, GAI is suing for breach of the effective means provision (Article II.4) of the US Treaty.”
296Reply on Jurisdiction, ¶211. The Respondent considers that GAI, not having been incorporated in Bolivia or performing energy activities at its own risk, lacks standing to commence administrative proceedings. Likewise, the company is controlled, mostly, by Bolivian investors. At the time of submitting a request for arbitration, EGSA could not be regarded as an investor from the United States.
297See Alex Genin, Eastern Credit Limited, INC. and A.S. Baltoil v. Republic of Estonia (ICSID Case No. ARB/99/2), Award, 25 June 2001 (Fortier, Heth and van den Berg) (Exhibit RL-128).
298Reply on Jurisdiction, ¶213. The Respondent holds that the Claimants’ assertion would make it impossible for the fork-in- the-road and the effective remedy clauses to coexist. Nevertheless, this is not true, since an American investor, in accordance with the US-Bolivia BIT, can submit a claim before the domestic courts, when being affected by ineffective means, and submit a claim under the BIT itself that is not affected by the fork-in-the-road clause. This would actually occur when there is no dispute unity
299Counter-Memorial on Jurisdiction, ¶94. See, inter alia, Yukos Universal Limited (Isle of Man) v. Russian Federation (UNCITRAL Case, PCA Case No. AA227), Award on Jurisdiction and Admissibility, 30 November 2009, (Fortier, Poncet and Schwebel) (Exhibit CL-127); Desert Line Projects LLC v. Republic of Yemen (ICSID Case No. ARB/05/17), Award, 6 February 2008 (Tercier, Paulsson and El-Kosheri) (Exhibit CL-95); Occidental Exploration and Production Company v. Republic of Ecuador (LCIA Case No. UN 3467), Final Award of 1 July 2004 (Orrego Vicuña, Brower and Sweeney) (Exhibit CL-31).
300See Pantechniki S.A. Contractors & Engineers (Greece) v. Republic of Albany (ICSID Case No. ARB/07/21), Award, 30 July 2009, (Paulsson) (Exhibit RL-18).
301See ¶¶259-262 supra.
302Reply on Jurisdiction, footnote 202.
303Rejoinder on Jurisdiction, ¶211.
304See Transcript (English), Day 1, 2 April 2013, 147:14-147:22.
305See Transcript (English), Day 1, 2 April 2013, 147:23-147:25.
306Reply on Jurisdiction, ¶208
307Rejoinder on Jurisdiction, ¶¶74-75.
308Memorial on Jurisdiction, ¶¶321-325. See Jan de Nul N.V. and Dredging International N.V. v Arab Republic of Egypt (ICSID Case No. ARB/04/13), Decision on Jurisdiction, 16 June 2006 (Kaufmann-Kohler, Mayer and Stern) (Exhibit RL- 12); Loewen Group. Inc. and Raymond L. Loewen v. United States (ICSID Case No. ARB(AF)/98/3), Decision on the merits, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68); Generation Ukraine, Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-34).
309Id., ¶320.
310Id., ¶329. Dr Carlos Quispe is “responsible for responding the administrative remedies filed against the energy authorities’ decisions and representing the Bolivian State in the judicial proceedings against such decisions.”
311Reply on Jurisdiction, ¶¶215-216.
312Id., ¶217; Counter-Memorial on Jurisdiction, ¶¶99, 101-103.
313See Generation Ukraine Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Salpius, Voss and Paulsson) (Exhibit RL-24); Saluka Investments BV v. Czech Republic (UNCITRAL Case-PCA Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36). See Transcript (English) Day 1, 2 April 2013, 250:2-250:21.
314Counter-Memorial on Jurisdiction, ¶102. In this regard, the Claimants assert that both cases were claims based on the denial of justice and, therefore, in this case the exhaustion of local remedies would indeed be required. See ¶276 infra.
315See Loewen Group, Inc. and Raymond L. Loewen v. United States (ICSID Case No. ARB(AF)/98/3), Decision, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68).
316See Jan de Nul N.V v. Republic of Egypt (ICSID Case No. ARB/04/13), Decision, 16 June 2006 (Kaufmann-Kohler, Mayer and Stern) (Exhibit RL-12).
317Counter-Memorial on Jurisdiction, ¶102. See ¶276 infra.
318See Helnan International Hotels A/S v. Egypt (ICSID Case No. ARB/05/19), Annulment Proceeding, Decision of the ad hoc Committee, 14 June 2010 (Schwebel, Ajibola and McLachlan) (Exhibit CL-132).
319See Generation Ukraine Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-24).
320Reply on Jurisdiction, ¶222.
321Id., ¶223.
322Counter-Memorial on Jurisdiction, ¶101. See CME Czech Republic BV v. Czech Republic (UNCITRAL), Partial Award, 13 September 2001 (Kuhn, Schwebel and Hándl) (Exhibit RL-33); Mytilineos Holdings S.A. v. State Union of Serbia & Montenegro and Republic of Serbia (UNCITRAL Case), Partial Award on Jurisdiction, 8 September 2006 (Reinisch, Koussolis and Mitrović) (Exhibit CL-94). See Transcript (English), Day 1, 2 April 2013, 148:8-148:19.
323Id., ¶102. See Jan de Nul NV and Dredging International NV v. Republic of Egypt (ICSID Case No. ARB/04/13), Award, 6 November 2008 (Kaufmann Kohler, Mayer and Stern) (Exhibit CL-56); The Loewen Group, Inc. and Raymond L. Loewen v. United States of America (ICSID Case No. ARB(AF)/98/3), Award, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68); Waste Management, Inc. v. United Mexican States (ICSID Case No. ARB(AF)/00/3), Award, 30 April 2004 (Crawford, Civiletti and Magallón Gómez) (Exhibit RL-99); Parkerings-Compagniet A.S. v. Republic of Lithuania (ICSID Case No. ARB/05/8), Award, 11 September 2007 (Lew, Lalonde and Lévy) (Exhibit RL-13).
324Id, ¶102. See Generation Ukraine, Inc, v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-24); Helnan International Hotels A/S v. Republic of Egypt (ICSID Case No. ARB/05/19), Annulment Proceeding, Decision of the ad hoc Committee, 14 June 2010 (Schwebel, Ajibola and McLachlan) (Exhibit CL- 132).
325Memorial on Jurisdiction, ¶318.
326Reply on Jurisdiction, ¶¶220-223; Counter-Memorial on Jurisdiction, ¶¶102-103.
327Rejoinder on Jurisdiction, ¶79, and footnotes 163 and 164.
328Reply on Jurisdiction, ¶233(2)(b).
329Memorial on Jurisdiction, ¶337.
330Counter-Memorial on Jurisdiction, ¶110; Rejoinder on the Merits, ¶85.
331Statement of Claim, ¶¶146-148.
332Id., ¶¶151-154. See Norwegian Shipowners’ claims (Norway v. United States), Award, 13 October 1922, United Nations Reports of International Arbitral Awards, Vol. I (Anderson, Vogt and Valloton) (Exhibit CL-1); Goldenberg Case (Germany v. Romania), Award, 27 September 1928, United Nations Reports of International Arbitral Awards , Vol. II (Fazy) (Exhibit CL-3). See K. J. Vandevelde, “U.S. International Investment Agreements” (2009) (Exhibit CL-59); L. B. Sohn and R. R. Baxter, “Responsibility of States for Injuries to the Economic Interests of Aliens”, American Journal of International Law (1961) (Exhibit CL-4).
333Claimants’ Post-Hearing Brief, ¶7.
334Id., ¶¶156-161. See CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Final Award, 14 March 2003 (Kuhn, Schwebel and Brownlie) (Exhibit CL-27); Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana, Award on Jurisdiction and Liability, 27 October 1989, in (1994) 95 International Law Reports (Schewebel, Wallace and Leigh) (Exhibit CL-8); Amoco International Finance Co v. The Islamic Republic of Iran (Iran-US Claims Tribunal), Award, 14 July 1987 (Exhibit CL-6); Rumeli Telekom A.S. and Telsom Mobil Telekomikasyon Hizmetteri A.S. v. Republic of Kazakhstan (ICSID Case No. ARB/05/16), Award, 29 July 2008 (Hanotiau, Boyd and Lalonde) (Exhibit CL-52). See Transcript (English), Day 1, 2 April 2013, 73:4-74:17.
335Id., ¶¶162-165; Reply on the Merits, ¶110. See ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38); Ioannis Kardassopoulos and Ron Fuchs v. Georgia (ICSID Cases Nos., ARB/05/18 and ARB/07/15), Award, 3 March 2010 (Fortier, Orrego Vicuña and Lowe) (Exhibit CL-65); Mohammad Ammar Al-Bahloul v. Republic of Tajikistan (SCC Case No. V (064/2008)), Partial Award on Jurisdiction and Liability, 2 September 2009 (Hertzfeld, Happ and Zykin) (Exhibit CL-64).
336Statement of Claim, ¶¶166-168.
337Statement of Claim, ¶169. See Transcript (English), Day 1, 2 April 2013, 74:21-77:8; Transcript (English), Day 6, 9 April 2013, 1329:4-1329:21.
338Statement of Claim, ¶¶228-229; Reply on the Merits, ¶¶165-167. See, inter alia, Chorzów Factory (Merits), PCIJ, Series A, No. 17, 1928 (Exhibit CL-2); Sempra Energy International v. The Argentine Republic (ICSID Case No. ARB/02/16), Award, 28 September 2007 (Orrego Vicuña, Lalonde and Rico) (Exhibit CL-46); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly, Compagnie Générale des Eaux) v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26); International Law Commission, “Draft Articles on Responsibility of States for Internationally Wrongful Acts (with comments)”, 2001 (Exhibit CL-21). See Transcript (English), Day 1, 2 April 2013, 77:13-77:23.
339Reply on the Merits, ¶172. See Sapphire International Petroleums Ltd. v. National Iranian Oil Co. (1963) 35 ILR 136 (Exhibit CL-152); Gemplus SA v. The United Mexican States (ICSID Case No. ARB(AF)/04/3 & ARB(AF)/04/4), Award, 16 June 2010 (Fortier, Magallón Gómez and Veeder) (Exhibit CL-67). See Transcript (English), Day 1, 2 April 2013, 94:11- 94:15.
340Statement of Claim, ¶¶230-231. See Compañía del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica (ICSID Case No. ARB/96/1), Award, 17 February 2000 (Fortier, Lauterpacht and Weil) (Exhibit CL-19); CMS Gas Transmission Company v. The Argentine Republic (ICSID Case No. ARB/01/8), Award, 12 May 2005 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-35); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly, Compagnie Générale des Eaux) v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26).
341Id., ¶¶233-235. See Compass Lexecon Report, ¶69.
342See Section B.
343Id., ¶237. See Compass Lexecon Report, ¶65.
344Id., ¶252.
345Compass Lexecon Report, ¶71.
346Compass Lexecon Report, ¶72, footnote 53.
347Reply on the Merits, ¶¶185-186; Compass Lexecon Report, ¶¶110-119, and 121-125; Compass Lexecon Rebuttal Report ¶¶169-170. Claimants explain, for instance: (a) the SDDP from May 2010 to April 2014 was incomplete and therefore was lower; (b) the 2010 POES reflects information that would have been available at the market in May 2010 and which has proven more accurate than other forecasts; (c) MEC did not use the 2011-2022 long-term electricity programming of the SIN, but the 2010 POES for the same previous reasons. See Transcript (English), Day 1, 2 April 2013, 112:5-117:12; Transcript (English), Day 6, 9 April 2013, 1398:22-1401:18.
348Compass Lexecon Report, ¶¶140-143.
349Reply on the Merits, ¶¶179, and 182; Compass Lexecon Rebuttal Report, ¶¶58, 60-67, 70-74, 80-103, and 147. See Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Award, 6 February 2007 (Sureda, Brower and Bello Janeiro) (Exhibit CL-41); Enron Corporation v. The Argentine Republic (ICSID Case No. ARB/01/3), Award, 22 May 2007 (Orrego Vicuña, van den Berg and Tschanz) (Exhibit CL-42); Sempra Energy International v. The Argentine Republic (ICSID Case No. ARB/02/16), Award, 28 September 2007 (Orrego Vicuña, Lalonde and Morelli Rico) (Exhibit CL-46); EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. v. The Argentine Republic (ICSID Case No. ARB/03/23), Award, 11 June 2012 (Kaufmann-Kohler, Remón and Park) (Exhibit RL-141).


350Claimants’ Post-Hearing Brief, ¶¶136-145. See Transcript (English), Day 1, 2 April 2013, 100:24-101:6, 101:22-105:6; Transcript (English), Day 6, 9 April 2013, 1380:7-1386:23, 1387:23-1388:2.
351 Reply on the Merits, ¶180; Claimants’ Post-Hearing Brief, ¶¶146-149; Compass Lexecon Rebuttal Report, ¶¶7, 55, 60-67, 70-73, and 80-102. See Transcript (English), Day 1, 2 April 2013, 100:24-101:6, 105:15-107:18. See Transcript (English), Day 6, 9 April 2013, 1388:12-1398:8.
352Statement of Claim, ¶238.
353Id., ¶¶240-245; Reply on the Merits, ¶¶214-220; Claimants’ Post-Hearing Brief, ¶176; Compass Lexecon Rebuttal Report, ¶175. See Gotanda, A study of Interest (Exhibit CL-44); Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26); Alpha Projektholding GmbH v. Ukraine (ICSID Case No. ARB/07/16), Award, 8 November 2010 (Robinson, Alexandrov and Turbowicz) (Exhibit CL-68); France Telecom v. Lebanon (UNCITRAL), Award, 31 January 2005 (Audit, Lalonde and Akl) (Exhibit CL-34); Funnekotter & Ors v. Republic of Zimbabwe (ICSID Case No. ARB/05/6), Award, 22 April 2009 (Guillaume, Cass and Zafar) (Exhibit CL-61); Continental Casualty Company v. The Argentine Republic (ICSID Case No. ARB/03/9), Award, 5 September 2008 (Griffith, Söderlund and Ajibola) (Exhibit CL-54). See Transcript (English), Day 1, 2 April 2013, 130:21-133:16.
354Reply on the Merits, ¶¶221-223.
355Statement of Claim, ¶¶247-251; Reply on the Merits, ¶188. The numerical data were corrected, as evidenced in the Reply on the Merits, ¶188; Compass Lexecon Rebuttal Report, ¶¶27, 30-52, and 142. See Transcripts (English), Day 1, 2 April 2013, 117:13-126:19.
356Id., ¶171; Reply on the Merits, ¶¶110-112; Claimant’s Post-Hearing Brief, ¶¶100, and 106. See Mohammad Ammar Al- Bahloul v. Republica of Tajikistan (SCC Case No. V (064/2008)), Partial Award on Jurisdiction and Liability, 2 September 2009 (Hertzfeld, Happ and Zykin) (Exhibit CL-64); ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38). See Transcript (English), Day 1, 2 April 2013, 75:2-77:8.
357Statement of Defense, ¶115; Rejoinder on the Merits, ¶¶147-149; Respondent’s Post-Hearing Brief, ¶¶81-83. See Transcript (English), Day 1, 2 April 2013, 188:6-188:8.
359Id., ¶121; Respondent’s Post-Hearing Brief, ¶82. See Transcript (English), Day 1, 2 April 2013, 195:14-196:10.
360Id., ¶¶126-134. See Transcript (English), Day 1, 2 April 2013, 186:9-186:10.
361Id., ¶¶124, 136-139. See Amoco International Finance Corporation v. The Government of the Islamic Republic of Iran (Iran-US Claims Tribunal, Case No. 56), Partial Award, 14 June 1987 (Virally, Three and Brower) (Exhibit RL-76); Goetz and others v. Burundi (ICSID Case No. ARB/95/3), Award, 10 February 1999 (Weil, Bedjaoui and Bredin) (Exhibit RL-70). See Transcript (English), Day 1, 2 April 2013, 187:22-188:8.
362Statement of Defense, ¶150; Rejoinder on the Merits, ¶¶161-168. See Transcript (English), Day 1, 2 April 2013, 190:2- 190:4.
363Statement of Defense, ¶154; Rejoinder on the Merits, ¶160. See Transcript (English), Day 1, 2 April 2013, 189:21-189:24.
364Statement of Defense, ¶¶155-158, 160-162; Rejoinder on the Merits, ¶128. See Transcript (English), Day 1, 2 April 2013, 190:10-190:17.
365Statement of Defense, ¶159. See Transcript (English), Day 1, 2 April 2013, 190:19-190:21.
366Statement of Defense, ¶¶166-171; Rejoinder on the Merits, ¶¶123-128, and 172. See Minutes of the Meeting held by Bolivia, Rurelec and GAI, dated 5 July 2010 (Exhibit C-187); “Profin valora acciones del Elfec”, Los Tiempos, 13 August 2010 (Exhibit R-81). See Transcript (English), Day 1, 2 April 2013, 185:10-185:15, 185:17-185:19, 186:2-186:4, 186:9- 186:10, 190:10-190:17.
367 Statement of Defense, ¶¶8(c), and 135; Rejoinder on the Merits, ¶¶11, 127, and 152.
368PROFIN Report (Exhibit R-154).
369Statement of Defense, ¶¶143-144.
370Id., ¶¶174 (f)(g), and 185-193; Respondent’s Post-Hearing Brief, ¶¶92-93. See Econ One Report, ¶¶7, 41, and 95. See Transcript (English), Day 1, 2 April 2013, 198:20-206:5; Transcript (English), Day 6, 9 April 2013, 1435:11-1435:18, 1436:14-1441:13.
371Id., ¶175.
372Id., ¶¶177-184, 199-200; Rejoinder on the Merits, ¶¶176-182. See The Mavrommatis Palestine Concessions (Greece v. United Kingdom), PCIJ Series A, No. 5 (1925) (Exhibit RL-81); Martini Case, 2 U.N.R.I.A.A 554, Award, 8 May 1930 (Exhibit RL-82). See Transcript (English), Day 1, 2 April 2013, 193:12-193:17, 196:6-196:10.
373Rejoinder on the Merits, ¶¶186-205. See Transcript (English), Day 1, 2 April 2013, 236:13-242:1; Transcript (English), Day 6, 9 April 2013, 1471:9-1473:24.
374Statement of Defense, ¶¶202-203; See Lighthouses Concession Case (1956), Claim No. 27 (Exhibit RL-84); Philips Petroleum Company Iran v. The Islamic Republic of Iran (Iran-US Claims Tribunal), Award No. 425-39-2, 29 June 1989 (Exhibit RL-85); American International Group Inc. and American Life Insurance Company v. Iran (Iran-US Claims Tribunal), Award No. 99-2-3, 19 December 1983 (Exhibit RL-86); Thomas Earl Payne v. The Government of the Islamic Republic of Iran (Iran-US Claims Tribunal), Award No. 245-335-2, 8 August 1986 (Exhibit RL-87); Saghi v. The Islamic Republic of Iran (Iran-US Claim Tribunal), Award No. 544-298-2, 22 January 1993 (Exhibit RL-88).
375Id., ¶206; Econ One Valuation Report, ¶¶13-14.
376Id., ¶207.
377Id., ¶208.
378Id., ¶209.
379Statement of Defense, ¶¶214-218; Rejoinder on the Merits, ¶¶234-243. See Paz, ¶¶91-92, 95-100, and 102-105. See Transcript (English), Day 1, 2 April 2013, 207:14-208:22, 214:10-219:6; Transcript (English), Day 6, 9 April 2013, 1449:3- 1454:3.
380Statement of Defense, ¶223; Econ One Report, ¶20.
381Statement of Defense, ¶¶224-227; Econ One Report, ¶¶20-21, and 123; Paz, ¶¶113-115. In this regard, Respondent explains that since Claimants have disregarded stabilization when preparing their reports, so has Respondent when preparing its.
382Id., ¶¶236-237; Paz, ¶¶129-130, and 132.
383 Id., ¶¶232-235; Paz, ¶¶127-128. See Transcript (English), Day 6, 9 April 2013, 1456:22-1457:12.
384Statement of Defense, ¶¶238-239. See Transcript (English), Day 6, 9 April 2013, 1457:13-1458:17.
385Id., ¶¶243-246; Aliaga, ¶32; Paz, ¶79; Econ One Report, ¶¶32-33. See Transcript (English), Day 1, 2 April 2013, 222:10- 222:22.
386Id., ¶¶248-250; Paz, ¶137; Econ One Report, ¶38. See Transcript (English), Day 1, 2 April 2013, 223:9-223:21.
387Id., ¶¶251-252; Compass Lexecon Report, ¶¶39-40. The Respondent explains that the mistake in this case does not necessarily benefit Bolivia. See Transcript (English), Day 1, 2 April 2013, 223:22-224:3.
388Id., ¶¶253-254; Econ One Report, ¶¶44-45. See Transcript (English), Day 1, 2 April 2013, 224:5-224:24.
389Id., ¶¶255-261; Paz, ¶¶134-136; Econ One Report, ¶48. See Transcript (English), Day 1, 2 April 2013, 225:4-226:7.
390Id., ¶¶262-269; Econ One Report, ¶51. See SEDCO, Inc. v. National Iranian Oil Company and the Islamic Republic of Iran (Iran- US Claims Tribunal), Award No. 309-129-3, 2 July 1987 (Exhibit RL-91); Himpurna California Energy Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Paulsson, Fina and Setiawan) (Exhibit RL-92).
391Id., ¶¶270-278; Econ One Report, ¶¶52-84.
392See Transcript (English), Day 1, 2 April 2013, 232:2-232:4, 233:10-233:17.
393See Transcript (English), Day 1, 2 April 2013, 232:4-232:9, 234:9-234:12, 235:5-235:15.
394See Transcript (English), Day 1, 2 April 2013, 227:16-231:18; Transcript (English), Day 6, 9 April 2013, 1459:15- 1468:19.
395See Himpurna California Energy Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Exhibit RL-92); Patuha Power Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Exhibit RL-137); Mobil Cerro Negro, Ltd. v. Petróleos de Venezuela, S.A. and PDVSA Cerro Negro, S.A. (ICC Case No. 15416/JRF/CA), Award, 23 December 2011 (Exhibit RL-138); Joseph Charles Lemire v. Ukraine (ICSID Case No. ARB/06/18), Award, 28 March 2011 (Armesto, Paulsson and Voss) (Exhibit CL-70); Railroad Development Corporation (RDC) v. Guatemala (ICSID Case No. ARB/07/23), Award, 29 June 2012 (Sureda, Eizenstat and Crawford) (Exhibit RL-139).
396Rejoinder on the Merits, ¶¶210-233.
397Statement of Defense, ¶280.
398Statement of Defense, ¶¶288-290. See Desert Line Projects LLC v. Republic of Yemen (ICSID Case No. ARB/05/17), Award, 6 February 2008 (Tercier, Paulsson, El-Kosheri) (Exhibit RL-140); Autopista Concesionada de Venezuela, C.A. (“Aucoven”) v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/00/5), Award, 23 September 2003 (Kauffman- Kohler, Böckstiegel and Cremades) (Exhibit CL-29)
399Rejoinder on the Merits, ¶¶254-261.
400Statement of Defense, ¶278; Rejoinder on the Merits, Section 2.5; Econ One Report, ¶¶87-88.
401Statement of Claim, ¶260.
402Statement of Claim, ¶¶174-175. See, inter alia, Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt (ICSID Case No. ARB/04/13), Award, 6 November 2008 (Kaufmann Kohler, Mayer and Stern) (Exhibit CL-56); P. Muchlinski, MULTINATIONAL ENTERPRISES AND THE LAW (Blackwell, Oxford: 1999) (Exhibit CL-18); R. Dolzer, “Fair and Equitable Treatment: A Key Standard in Investment Treaties” (2005) 39 The International Lawyer 87 (Exhibit CL-17).
403Id., ¶¶180-183. See Azurix Corp v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); MTD Equity Sdn Bhd and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Award, 25 May 2004 (Sureda, Lalonde, Oreamuno Blanco) (Exhibit CL-30); Saluka Investments BV v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (KCMG, Fortier and Behrens) (Exhibit CL-36); PSEG Global Inc., and Konya Ilgin Elektrik Uretim ve Ticaret Limited Sirketi v. Republic of Turkey (ICSID Case No. ARB/02/5), Award, 19 January 2007 (Orrego Vicuña, Fortier and Kaufmann-Kohler) (Exhibit CL-40). See Transcript (English), Day 1, 2 April 2013, 78:10-78:20.
404Id., ¶184. See Bayindir Insaat Turizm Ticaret Ve Sayani A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/03/29), Award, 27 August 2009 (Kaufmann Kohler, Berman, Böckstiegel) (Exhibit CL-63); Joseph Charles Lemire v. Ukraine (ICSID Case No. ARB/06/18), Decision on Jurisdiction and Responsibility, 28 March 2011 (Fernández-Armesto, Paulsson and Voss) (Exhibit CL-70); Técnicas Medioambientales TECMED S.A. v. United Mexican States (ICSID Case No. ARB (AF) 00/2/), Award, 29 May 2003 (Grigera Naón, Fernández Rozas and Bernal Verea) (Exhibit CL-28). See Transcript (English), Day 1, 2 April 2013, 78:21-79:6.
405See CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kühn, Schewebel and Hándl) (Exhibit CL-74).
406See Azurix Corp v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37).
407See Siemens A.G. v. Argentine Republic (ICSID Case No. ARB/05/3), Award, 6 February 2007 (Sureda, Brower, Janeiro) (Exhibit CL-41).
408Reply on the Merits, ¶¶124-125. See CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Award, 12 May 2005 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-35); Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Responsibility, 27 December 2010 (Sacerdoti, Alvarez and Marcano) (Exhibit CL- 69). See Transcript (English), Day 1, 2 April 2013, 81:10-81:20.
409Statement of Claim, ¶¶189-191; Claimants’ Post-Hearing Brief, ¶¶107, and 109.
410Reply on the Merits, ¶¶128-130. See Transcript (English), Day 1, 2 April 2013, 68:7-70:4, 81:22-82:8.
411See National Grid PLC v. Argentine Republic (UNCITRAL), Award, 3 November 2008 (Garro, Kessler and Sureda) (Exhibit CL-55).
412Reply on the Merits, ¶¶131-133.
413Statement of Defense, ¶¶348-350, 353-365, and 395-400. Rejoinder on the Merits, ¶¶300-312. See, inter alia, Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); Ulysseas, Inc. v. Ecuador (UNCITRAL Case), Award, 12 June 2012 (Bernardini, Pryles and Stern) (Exhibit RL-94); Parkerings-Compagniet AS v. Republic of Lithuania (ICSID Case No. ARB/05/8), Award, 11 September 2007 (Lévy, Lew and Lalonde) (Exhibit RL-13); El paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96).
414Statement of Defense, ¶366. See Continental Casualty Company v. Argentina (ICSID Case No. ARB/03/9), Award, 5 September 2008 (Griffith, Söderlund and Ajibola) (Exhibit CL-54); El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96); White Industries Australia Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau SC and Rowley) (Exhibit CL-73).
415Statement of Defense, ¶¶369-392. See Transcript (English), Day 1, 2 April 2013, 252:4-252:10.
416Rejoinder on the Merits, ¶¶315-324. See Letter from EGSA to the Minister of Hydrocarbons and Energy of 7 April 2010 (Exhibit R-149) and Agreement entered into by and between the Minister of Hydrocarbons and Energy and the Companies from the Electricity Sector – “Dignity Tariff” Strategic Alliance Agreement dated 11 March 2010, Section 2, Article 2.3 (Exhibit R-89). See Transcript (English), Day 1, 2 April 2013, 253:4-253:16.
417Statement of Defense, ¶¶415-419. See, inter alia, Waste Management v. Mexico (No. 2) (ICSID Case No. ARB(AF)/00/3), Award, 30 April 2004 (Crawford, Civiletti and Magallón Gómez) (Exhibit RL-99); Thunderbird v. Mexico (UNCITRAL Case), Award, 26 January 2006 (van den Berg, Ariosa and Wälde ) (Exhibit RL-100).
418Rejoinder on the Merits, ¶325; Econ One Second Report, ¶¶222-228. See Transcript (English), Day 1, 2 April 2013, 253:17-255:5.
419Rejoinder on the Merits, ¶¶332-333.
420Statement of Claim, ¶197.
421Id., ¶¶199-200; CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kühn, Schwebel and Hándl) (Exhibit CL-74); Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); Asian Agricultural Products Ltd v. Sri Lanka (ICSID Case No. ARB/87/3), Final Award, 27 June 1990 (El-Kosheri, Goldman and Asante) (Exhibit CL-10). See Transcript (English), Day 1, 2 April 2013, 82:11-82:16.
422Reply on the Merits, ¶¶136-138. See Biwater Gauff (Tanzania) Ltd. v. Unified Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); National Grid PLC v. Argentine Republic (UNCITRAL Case), Award, 3 November 2008 (Garro, Kessler and Sureda ) (Exhibit CL-55).
423Statement of Claim, ¶¶201-205; Reply on the Merits, ¶¶140-141.
424Statement of Defense, ¶¶436, and 439-441. See Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kuhn, Schwebel and Hándl) (Exhibit RL-33).
425Statement of Defense, ¶¶427-428.
426Id., ¶¶429-435. See El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96); Asian Agricultural Products Ltd v. Sri Lanka (ICSID Case No. ARB/87/3), Final Award, 27 June 1990 (El-Kosheri, Goldman and Asante) (Exhibit CL-10); Saluka Investments BV v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36).
427Id., ¶¶442-443.
428Statement of Claim, ¶¶208-209.
429Reply on the Merits, ¶¶143-146. See Saluka Investments BV (Netherlands) v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36); Biwater Gauff (Tanzania) Ltd. v. Unified Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Garro, Kessler and Sureda) (Exhibit CL-51).
430Statement of Claim, ¶261; Claimants’ Post-Hearing Brief, ¶109.
431Reply on the Merits, ¶204; Compass Lexecon Rebuttal Report, ¶¶135-136, and 125.
432Statement of Claim, ¶¶263-265; Reply on the Merits, ¶¶206-207; Compass Lexecon Report, ¶¶121, 118-119, and 124- 125; Corrections made to Compass Lexecon Rebuttal Report, ¶175. See Transcript (English), Day 1, 2 April 2013, 128:2- 129:11; Transcript (English), Day 6, 9 April 2013, 1406:2-1407:9.
433Statement of Defense, ¶¶449-451. See AIG Capital Partners, Inc. and CJSC Tema Real Estate Company v. Republic of Kazakhstan (ICSID Case No. ARB/01/6), Award, 7 October 2003 (Nariman, Bernardini and Vukmir) (Exhibit RL-103); Lauder v. Czech Republic (UNCITRAL Case), Award, 3 September 2001 (Briner, Klein and Cutler) (Exhibit CL-23).
434Statement of Defense, ¶¶445-448, 450-452, and 455.
435Statement of Defense, ¶¶420-423, and 473-483; Econ One Report, ¶¶121, and 124. See Compass Lexecon Report, ¶121, and 123; Econ One Report, ¶¶115-119. See Transcript (English), Day 1, 2 April 2013, 253:17-255:5.
436Statement of Defense, ¶¶460-462, 463-466, and 468-469; Rejoinder on the Merits, ¶¶357-367. See, inter alia, Chorzów Factory, PCIJ, Ser. A, No. 17, Judgment, 13 September 1928 (Exhibit C-2); Nykomb Synergetics Tech. Holding A.B. v. Republic of Latvia (Arbitration Institute of the Stockholm Chamber of Commerce), Award, 16 December 2003 (Haug, Schütze and Gernandt) (Exhibit RL-106); S.D. Meyers, Inc. v. Government of Canada (UNCITRAL Case), Partial Award, 13 November 2000 (Schwartz, Rae and Hunter) (Exhibit RL-107). See Transcript (English), Day 1, 2 April 2013, 255:18-256:7; Transcript (English), Day 6, 9 April 2013, 1447:19-1447:22.
437Rejoinder on the Merits, ¶374.
438Statement of Claim, ¶¶210-215; Reply on the Merits, ¶¶150, and 152; Claimants’ Post-Hearing Brief, ¶¶117-119. See White Industries Australias Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau and Rowley) (Exhibit CL-73); EDF International S.A., SAUR International S.A. and Leon Participaciones Argentinas S.A. v. Argentine Republic (ICSID Case No. ARB/03/23), Award, 11 June 2012 (Kaufmann-Kohler, Remón and Park) (Exhibit CL- 141); Bayindir Insaat Turizm Ticaret ve Sanayi A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/03/29), Award, 27 August 2009 (Kaufmann-Kohler, Berman and Böckstiegel) (Exhibit CL-170); MTD Equity Sdn. Bhd and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Award, 25 May 2004 (Exhibit CL-30). See Transcript (English), Day 1, 2 April 2013, 85:24-88:7.
439Statement of Claim, ¶¶216-220; Claimants’ Post-Hearing Brief, ¶¶120, and 128. See Transcript (English), Day 1, 2 April 2013, 88:18-89:10, 89:20-90:15, 90:16-91:9; Transcript (English), Day 6, 9 April 2013, 1373:9-1374:20.
440Reply on the Merits, ¶¶153-154; Claimants’ Post-Hearing Brief, ¶122. See Transcript (English), Day 1, 2 April 2013, 90:16-92:1.
441Reply on the Merits, ¶¶156-157. See Transcript (English), Day 6, 9 April 2013, 1374:21-1376:2.
442Statement of Claim, ¶¶268-270; Compass Lexecon Report, ¶¶128, 132, and 139; Reply on the Merits, ¶¶210-211; Compass Lexecon Rebuttal Report, ¶¶154-157, 160, 175, and footnote 199. See Transcript (English), Day 1, 2 April 2013, 129:12-130:20.
443Statement of Defense, ¶¶491-492.
444Id., ¶¶529-531. See Transcript (English), Day 1, 2 April 2013, 259:24-260:6.
445Id., ¶523.
446Id., ¶¶535, and 564-571. Third Witness Statement of Dr Quispe, ¶¶19, and 21. See Transcript (English), Day 1, 2 April 2013, 261:11-261:16.
447Id., ¶¶537-538. See Duke Energy Electroquil Partners & Electroquil S.A. v. Republic of Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann Kolher, Gómez Pinzón and van den Berg) (Exhibit RL-109); Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (UNCITRAL Case), Partial Award on the Merits, 30 March 2010 (Böckstiegel, Brower and van den Berg) (Exhibit CL-66).
448Id, ¶¶545-546, and 549. See White Industries Australia Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau SC and Rowley) (Exhibit CL-73); Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (UNCITRAL Case), Partial Award on the Merits, 30 March 2010 (Böckstiegel, Brower and van den Berg) (Exhibit CL-66).
449Id., ¶¶557-560, and 562-563. See Transcript (English), Day 1, 2 April 2013, 259:24-260:23.
450Third Witness Statement of Quispe, ¶¶14-15. See 1992 Statistics (Exhibit R-161); 1994 Statistics (Exhibit R-162); 1995 Statistics (Exhibit R-163); 1996 Statistics (Exhibit R-164); 2007 Statistics (Exhibit R-165); 2009 Statistics (Exhibit R-166). See Transcript (English), Day 1, 2 April 2013, 261:1-261:4.
451Id., ¶¶575-576. See, inter alia, Elettronica Sicula S.p.A (ELSI) (United States v. Italy), ICJ Reports 1989, Judgment, 20 July 1989 (Exhibit RL-83); Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. Mexico (ICSID Case No. ARB(AF)/05/22), Award, 21 November 2007 (Cremades, Rovine and Siqueiros) (Exhibit CL-47); Gami Investments Inc. v. Government of the United Mexican States (UNCITRAL (NAFTA) Case), Final Award, 15 November 2004 (Reisman, Muró and Paulsson) (Exhibit RL-105). See Transcript (English), Day 1, 2 April 2013, 261:17-262:11.
452Id., ¶¶577-582.
453Statement of Defense, ¶¶587-596; Compass Lexecon Report, ¶¶129-130; Econ One Report, ¶¶130-131.
454The original amount of USD 142.3 million is recalculated by Claimants in their Reply, and produces a result of USD 136.4 million. Moreover, they request post-award interest once again. For greater clarity, see damages summary table in Reply, ¶224.
455Statement of Claim, ¶274; Reply on the Merits, ¶227; Claimants’ Post-Hearing Brief, ¶178.
456Statement of Defense, ¶628; Rejoinder on the Merits, ¶428.
457Ambiente Ufficio v. Argentine Republic, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶¶111-147.
458Ambiente Ufficio v. Argentine Republic, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶141.
459Noble Energy, Inc and Machalapower Cia, Ltda v. The Republic of Ecuador and Consejo Nacional de Electricidad, Decision on Jurisidction, 2008, ¶206.
460Rejoinder on Jurisdiction, ¶¶14-18, and documents referred thereto. See Exhibit R-61.
461Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012.
462Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012, ¶210.
463Cemex Caracas Investments, B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela, Decision on Jurisdiction, 30 December 2010, ¶¶152-158.
464Cemex Caracas Investments, B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela, Decision on Jurisdiction, 30 December 2010, ¶¶157-158.
465Siemens A.G. v. Argentina (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004, ¶137: “[T]here is no explicit reference to direct or indirect investment as such in the [German/Argentine BIT]. The definition of ‘investment’ is very broad. An investment is any kind of asset considered to be under the law of the Contracting Party where the investment has been made. The specific categories of investment included in the definition are included as examples rather than with the purpose of excluding those not listed. The drafters were careful to use the words ‘not exclusively’ before listing the categories of ‘particularly’ included investments. One of the categories consists of ‘shares, rights of participation in companies and other type of participation in companies’. The plain meaning of this provision is that shares held by a German shareholder are protected under the Treaty. The Treaty does not require that there be no interposed companies between the investment and the ultimate owner of the company. Therefore a literal reading of the Treaty does not support the allegation that the definition of investment excludes indirect investments.”
466Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision on Jurisdiction, 6 July 2007, ¶¶123–124, interpreting the Greece-Georgia BIT.
467Tza Yap Shun v. Republic of Peru (ICSID Case No. ARB/07/6), Decision on Jurisdiction, 19 June 2009, ¶¶106–111, where the tribunal based its decision on the text of Article 1 of the Peru-China BIT, the intention of the Contracting States to promote and protect investments, and the absence of an express limitation in the BIT.
468Mobil Corporation and Others v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/27), Decision on Jurisdiction, 10 June 2010, ¶¶ 162-66.
469Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012, ¶229.
470Romak S.A. (Switzerland) v. The Republic of Uzbekistan, Award, 26 November 2009.
471Alps Finance v. The Slovak Republic, Award, 5 March 2011.
472See Exhibit C-7.
473Plama v. Bulgaria, Decision on Jurisdiction, 8 February 2005, ¶161. See also Ulysseas Inc. v. Ecuador, Interim Award, 28 September 2010, ¶¶172-173.
474Ulysseas Inc. v. Ecuador, Interim Award, 28 September 2010, ¶172.
475Given its decision that it lacks jurisdiction over GAI, and for simplicity’s sake, the award will from now on refer only to a single Claimant, Rurelec, unless explicitly stated otherwise.
476Memorial on Jurisdiction, ¶155.
477Notice of Arbitration, ¶¶61-62.
478Notice of Arbitration, ¶63.
479The Tribunal also agrees with the decision of the Ambiente Ufficio v. Argentine case, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶¶570-585, and the decision of ICS v. Argentina case, Award on Jurisdiction, 10 February 2012, ¶¶263-273. According to the latter decision: “[t]he Tribunal cannot therefore create exceptions to treaty rules where these are merely based upon an assessment of the wisdom of the policy in question, having no basis in either the treaty text or in any supplementary interpretive source, however desirable such policy considerations might be seen to be in the abstract” (¶267).
480ICS v. Argentina, Award on Jurisdiction, 10 February 2012, ¶272.
481Counter-Memorial on Jurisdiction, ¶73.
482Counter-Memorial on Jurisdiction, ¶64.
483Notice of Arbitration, ¶¶4, 6.
484See Exhibit C-40 (the same wording has been used in the Notice of Arbitration).
485CMS Gas Transmission Company v. Argentine, Decision of the Tribunal on Objections to Jurisdiction, 17 July 2003, ¶¶92-126.
486In any event the decommissioning and future sale could not occur, at least in practical terms, without the agreement of the regulator.
487Rejoinder on the Merits, ¶133; Claimants’ Opening Statement, 2 April 2013; Transcript (English), Day 1, 2 April 2013, 92:1-92:4.
488In the latter case, had the regulatory environment not been changed, the additional funds would have gone into the Stabilization Fund and therefore would not have created a positive cash flow in time (Rejoinder on the Merits, ¶371). This would nonetheless have had a positive impact on the economic fundamentals of EGSA, thereby increasing its capacity to obtain third party funding.
489Mr Earl and Mr Lanza expected that, once in operation, the CCGT would double the EGSA EBIDTA (see, for instance, Earl’s Cross-Examination, Transcript (English), Day 1, 2 April 2013, 25:20-25:22).
490Although it is true that some delays could have been avoided in the licensing phase, the main reasons for the lack of credits before nationalisation were not related to these delays, but to the complexity of the process.
491First Witness Statement of Paz, Annex 29; “Pacific Credit Ratings Report on Empresa Eléctrica Guaracachi S.A., September 2010”, p. 3 (Exhibit C-188), and “2009 Audited Financial Statements of Empresa Eléctrica Guaracachi S.A.”, notes 26, 15, and 4, 22 March 2010, p.32, note 26 (Exhibit C-183). The Tribunal also notes that by the end of the year the physical completion reached 99.9% (“Progress Report for Combined-Cycle Project GCH 12” December 2010 (Exhibit C-321)) even without the benefit of Mr Jerry Blake and IPOL’s cooperation (Claimants’ Closing Statement, 9 April 2013, Slides 29-32; Lanza’s Direct Examination, Transcript (English), Day 3, 4 April 2013, 609:19-609:22.
492Compass Lexecon Rebuttal Report, ¶20 and note 4.
493Rejoinder on Merits, ¶270.
494Llarens’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1022:15-1022:17.
495For the definition of “reserva fría”, see Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 869:6- 869:13.
496Joint UNDP/World Bank Energy Sector Management Assistance Programme, “Bolivia: Restructuring and Capitalization of the Electricity Supply Industry–An Outline for Change”, Report No. 21520, 12 September 1995 (Exhibit C-61); Joint UNDP/World Bank Energy Sector Management Assistance Programme, “ESMAP Country Paper: Bolivia,” Report No. 10498, December 1991 (Exhibit C-50); Bolivia: Reglamento de Operación del Mercado Eléctrico Mayorista, 28 June 1993 (Exhibit R-27); Statement of Claim, ¶¶190, 128; Electricity Law (Exhibit C-5); Supreme Decree No. 26,093/2001, 2 March 2001 (Exhibit C-85).
497Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Liability, 27 December 2010, (Sacerdoti, Álvarez, and Marcano) (Exhibit CL-69).
498Reply on the Merits, ¶¶131, 133-134.
499Rejoinder on Merits, ¶291.
500Statement of Claim, ¶89.
501Statement of Claim, ¶192.
502Reply on the Merits, ¶79.
503Statement of Defence, ¶330; Reply on Merits, ¶76.
504Reply on the Merits, ¶¶82-83.
505Resolution SSDE No. 185/2009, 25 September 2009 (Exhibit C-176).
506Claimants’ Closing Statement, 9 April 2013, Slide 18.
507Statement of Claim ¶¶37-38; Statement of Defence, ¶302.
508Later “Autoridad de Electricidad”. For the evolution of the legal and regulatory framework since 1994, see Respondent’s Opening Statement, 2 April 2013, Slide 245.
509Statement of Defence, ¶¶352-355 et seq.
510Reply on the Merits, ¶167, notably as to interest rate.
511Albeit that the Tribunal is convinced that causation and harm has been proven—see Reply on the Merits, ¶200 et seq.
512Claimants’ Opening Statement, 2 April 2013, Slide 60, and Aliaga’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 465:20-465:24.
513Earl’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 365:22-366:20.
514Compass Lexecon Report, ¶78.
515Statement of Defence, ¶54.
516It is true that PROFIN’s valuation had been considered as “un elemento estratégico en la negociación con GA” (PROFIN Consultores, S.A. “Estimación del valor de la empresa eléctrica Guaracachi S.A.” (Exhibit R-154)) but this does not mean that the conduct of Bolivia was wilful—see Claimants’ Post-Hearing Brief, ¶5.
517Reply on the Merits, ¶111.
518ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38); Ioannis Kardassopoulos and Ron Fuchs v. Georgia (ICSID Cases Nos. ARB/05/18 and ARB/07/15), Award, 3 March 2010 (Fortier, Orrego Vicuña and Lowe) (Exhibit CL-65).
519Reply on the Merits, ¶¶101, 106.
520Rejoinder on the Merits, p. 50.
521Statement of Defence, ¶175.
522Respondent’s Closing Statement, 9 April 2013, Slide 35.
523Compass Lexecon Report, ¶¶284-287.
524Econ One Report, ¶¶89-98.
525Compass Lexecon Rebuttal Report, ¶¶25-29.
526Econ One Second Report, ¶¶50-73.
527Claimants’ Closing Statement, 9 April 2013, Slide 5; Respondent’s Opening Statement, 2 April 2013; Transcript (English), Day 1, 2 April 2013, 194:1-194:3.
528With the relevant exceptions of “size premium” and “country risk premium multiplier”, to be addressed below.
529Compass Lexecon Report, ¶66.
530“The appropriate risk-adjusted discount factor is the WACC of an efficiently managed firm in a similar market, contractual and institutional environment. The WACC is a firm’s (or a project’s) cost of raising funds from both shareholders (equity) and lenders (debt) in an efficient proportion, otherwise known as the optimal capital structure” (Compass Lexecon, Report, ¶¶68, 93). “El WACC representa la mínima tasa de rentabilidad que una empresa tiene que ofrecer a sus proveedores de capital para que inviertan en ella. Para una empresa que se financia con deuda y con capital propio, el WACC se calcula como el promedio ponderado del costo de la deuda (neto de impuestos) y el costo del capital propio” (Econ One Report, ¶51).
531Gemplus S.A. v The United Mexican States (ICSID Case Nos. ARB(AF)/04/3 & ARB(AF)/04/4), Award, 16 June 2010 (Fortier, Magallón Gómez, and Veeder), ¶13.91 (Exhibit CL-67).
532“This difference is explained primarily by Econ One’s ... assessments of the discount rate, spot energy price forecasts and capacity revenues” (Compass Lexecon Rebuttal Report, ¶4), meaning Revenues and Discount Rate, corresponding almost to 95% of the difference between the two experts positions (Id. ¶10). See also Compass Lexecon Rebuttal Report, ¶53; Econ One Second Report, ¶111; Respondent’s Opening Statement, 2 April 2013, Slide 107; Claimants’ Opening Statement, 2 April 2013, Slides 101-104.
533Compass Lexecon Rebuttal Report, ¶53.
534Compass Lexecon Rebuttal Report, ¶106 et seq. These assumptions, which relate to future needs for energy and the actual structure of production, provide a huge variety of results. It is therefore necessary to select which one to retain—see Llarens’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1019-1022.
535In relation to Carbon credits (Compass Lexecon Report, ¶83 and Econ One Report, ¶29) both experts calculate the sales value of the credits the same way. However, Compass Lexecon did not initially deduct the 30% that should revert to Bolivia in the first report. See the explanations and corrections of Dr Abdala (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April, 1188).
536Including the expectations of the willing seller and the way it fulfilled or not what it had expected.
537Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 936:18-936:21. See also Abdala’s Cross- Examination, Transcript (English), Day 5, 8 April 2013, 1183:12-1184:8; Flores’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1277:13-1278:1.
538See, for instance, Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 936:5-936:21; Transcript (English), Day 4, 5 April 2013, 935:5-935:21; Transcript (English), Day 4, 5 April 2013, 954:3-954:8.
539Claimants’ Post-Hearing Brief, ¶165.
540See for instance Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1183:11-1183:18; Transcript (English), Day 5, 8 April 2013, 1077:21-1077:24.
541Respondent’s Post Hearing Brief, ¶111 et seq.
542Compass Lexecon Report, Appendix C (“Mercados Energéticos’s Report on Dispatch Run Assumptions”).
543First Witness Statement of Paz, ¶¶96-97.
544Compass Lexecon Rebuttal Report, ¶¶110, 112, and footnote 122.
545First Witness Statement of Paz, Annex 39 (CNDC, “Plan Óptimo del Sistema de Interconectado Nacional, 2011-2021, Diciembre 2010”), p. 32.
546Reporte Energía, Magazine No. 07, January 2009, p. 12 (Exhibit C-294).
547First Witness Statement of Paz, Annex 40 (CNDC, “Plan de Expansión del Sistema Interconectado Nacional”).
548And assuming that a WB could have anticipated 9 years for the construction (First Witness Statement of Paz, Annex 29, p. 104).
549Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1083:7-1083:19.
550Abdala considers this opinion his “judgement call”, albeit the CNDC inputs and lack of budget confirm his point of view (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1080:22-1080:23; 1082:18-1082:21).
551As the 2012 international bond issue of Bolivia would confirm.
552First Witness Statement of Paz, Annex 40: CNDC, “Plan de Expansión del Sistema Interconectado Nacional”, p. 17; Flores’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1208-1210.
553First Witness Statement of Paz, Annex 39: CNDC, “Plan Óptimo del Sistema de Interconectado Nacional, 2011-2021, Diciembre 2010”, p. 103; Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 993:12-994:16.
554If Rositas commenced production in 2018, the value of the damages, in accordance with Compass Lexecon’s valuation, would be USD 900,000 (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1079). This figure has not been subject to any comment from Mr Flores or the Respondent.
555The same reasoning shall be applied to ARJ 1, ARJ 2 and ARJ 3.
556First Witness Statement of Paz, Annex 8: CNDC, “Informe de Precios de Nodo, Período Mayo-Octubre 2010”, p. 10; Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 944-947. PROFIN Consultores, S.A. “Estimación del valor de la empresa eléctrica Guaracachi S.A.” (Exhibit R-154); First Witness Statement of Paz, Annex 4 (ENDE, “Memoria Anual 1991”) (assuming Karachipampa would still be active in 2020).
55701/2010 Acta de Reunión de Directorio de la “Empresa Guaracachi S.A.” 27 January 2010 (Exhibit R-83).
558Aliaga’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 441:7-441:12; Andrade’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 471:21-472:3.
559Compass Lexecon Rebuttal Report, ¶¶119-120.
560See, for example, in relation to the decommissioning of units ARJ 5 and ARJ 6, Resolution SSDE No. 107/2007, 2 April 2007 (Exhibit C-136); Resolution SSDE No. 341/2007, 8 November 2007 (Exhibit C-141); and Resolution SSDE No. 185/2009, 25 September 2009 (Exhibit C-176).
561In any case, the difference at stake in relation to Karachipampa is of USD 1.1million (Compass Lexecon Rebuttal Report, ¶120).
562Compass Lexecon Report, ¶80; Compass Lexecon Rebuttal Report, ¶123; Econ One Second Report, ¶194.
563Respondent’s Closing Statement, 9 April 2013, Econ One Report, ¶7, Table 1.
564Respondent’s Closing Statement, 9 April 2013, Slide 74, quoting Lanza’s Cross-Examination, Transcript (English), Day 3, 4 April 2013, p. 642:25-643:9.
565Respondent’s Post-Hearing Brief, ¶¶129-132.
566Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1201:7-1201:21.
567Flores’ Direct Examination Presentation, Slides 9-14 (albeit that Slide 13 shows as “Indexación Econ One” the standard index that is less favourable to the Respondent than that accepted by the Tribunal).
568First Witness Statement of Paz, ¶¶126-132.
569First Witness Statement of Paz, ¶131 (Table).
570Third Witness Statement of Paz, ¶¶55-56.
571Compass Lexecon Rebuttal Report, ¶¶169-173, 179.
572Tax has been considered as an issue, but Compass Lexecon agreed in its Rebuttal Report (Compass Lexecon Rebuttal Report, ¶140) with Econ One’s remarks (Econ One Report, ¶34).
573Econ One Report, ¶20.
574Econ One Second Report, ¶219.
575Econ One Second Report, ¶¶219-221.
576Compass Lexecon Rebuttal Report, ¶141.
577Econ One Report, ¶39.
578Econ One Report, ¶¶41-45; Compass Lexecon Rebuttal Report, ¶¶126-131; Econ One Second Report, ¶¶204-210.
579Compass Lexecon Report, ¶90.
580Compass Lexecon Report, ¶91; Transcript (English), Day 5, 8 April 2013, 1070 et seq.
581Econ One Report, ¶¶46-48.
582First Witness Statement of Paz, ¶¶134-135.
583Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1065:11-1065:23.
584Respondent’s Post-Hearing Brief, ¶¶133-136.
585First Witness Statement of Paz, ¶135.
586Econ One Report, ¶52.
587Claimants’ Post-Hearing Brief, ¶152.
588Claimants’ Post-Hearing Brief, ¶152.
589Compass Lexecon Report, ¶152.
590Econ One Report, ¶¶54-56; Econ One Second Report, ¶¶153-159.
591Compass Lexecon Rebuttal Report , ¶81. An argument made in this last report about investment banks (¶82) appeared to be wrong (Econ One Second Report, ¶155).
592Econ One Second Report, ¶159.
593Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1105:7.
594Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1110-1112.
595For all the respect that Professor Damodaran commands among practitioners and financial experts, his texts are not always fully polished. Professor Damodaran’s text literally refers to 2009, which seems to be an obvious mistake,as the document was actually written in early 2009.
596Context suggests that Professor Damodaran did not mean “used” in the past, but rather “have now used” in the annual update he is referring to.
597A. Damodaran, “The year that was and hopefully will not see again for a while...Thoughts on 2009”, 2009, p.1 (Exhibit C-168).
598A. Damodaran, “Equity Risk Premium (ERP): Determinants, Estimation and Implications- A Post-Crisis Update”, Stern School of Business, October 2009, p. 67 (Exhibit C-177).
599A. Damodaran, “Equity Risk Premium (ERP): Determinants, Estimation and Implications-The 2010 Edition”, Stern School of Business, February 2010, p. 68 (Exhibit E0-29).
600In the Tribunal’s view, it bears noting that the indication made by the Respondent that all the reports at Exhibit C-300 come from the Latin American Equity Research Department of just one single bank (Banco Santander). Moreover, even if Exhibit C-300 was dated 27 August 2009 by the Claimants, it still contains reports dated in Santiago de Chile at three different times, showing a series of market premiums in its WACC estimates for Argentina, Chile, Colombia and Peru (namely: August 27, 2009: 6.5%; June 8, 2010: 5.50%; October 25, 2010: 5.50%).
601Compass Lexecon Report, ¶155.
602Compass Lexecon Report, ¶156.
603Compass Lexecon Report, ¶¶157-159.
604Econ One Report, ¶¶62-65.
605Econ One Second Report, ¶¶167-173.
606Compass Lexecon Report, ¶167.
607Econ One Report, ¶¶83-85.
608Compass Lexecon Rebuttal Report, ¶¶100-102.
609Econ One Second Report, ¶¶176-178.
610As indicated in line 15 of Table 2 above, the debt to capital ratio (41.60%) is the result of dividing the debt/equity ratio by (1 + debt/equity), i.e. 0.7124/1.7124=0.4160. The difference between this number and 1 is the ratio equity/capital (0.5840).
611This number is the consequence of “re-levering” the “unlevered beta” according to the formula at line 9 of Table 2 above: 0.68226 (1 + (1-0.25) x 0.7124).
612Compass Lexecon Report, ¶160. See also Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1054:2- 1054:7, and Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1256:13-1256:20.
613Compass Lexecon Report, ¶161.
614Spanish original: “La tasa de actualización a utilizar en la aplicación de la presente ley será de diez por ciento (10%) anual, en términos reales. Esta tasa solo podrá ser modificada por el Ministerio, mediante resolución administrativa debidamente fundamentada. La nueva tasa de actualización fijada por el Ministerio no podrá diferir en más de dos (2) puntos porcentuales de la tasa vigente”. Electricity Law, Article 48 (Exhibit C-5).
615Claimants’ Post-Hearing Brief, ¶154.
616A. Damodaran, “Measuring Company Exposure to Country Risk: Theory and Practice”, Stern School of Business, September 2003, p. 10 (Exhibit EO-25).
617A. Damodaran, “Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2010 Edition”, Stern School of Business, February 2010, pp. 53-54. (Exhibit EO-29).
618A. Damodaran, “Valuation”, undated (Exhibit EO-71).
619A. Smithers, S. Wright, “Valuing Wall Street: Protecting Wealth in Turbulent Markets”, 2000, p. 176 (Exhibit EO-73).
620A. Damodaran, “Measuring Company Exposure to Country Risk: Theory and Practice”, Stern School of Business, September 2003, pp. 11-12 (Exhibit EO-25).
621A. Damodaran, “Country Risk Premium Spreadsheet Calculations”, January 2010, p.1 (Exhibit C-308).
622Econ One Report, ¶¶75-76.
623MORNINGSTAR, “Markets Results for Stocks, Bonds, Bills and Inflation 1926-2009 - Ibboston SBBI 2010 Valuation Yearbook” (Exhibit EO-13); Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1289:11-1289:12.
624MORNINGSTAR, “Markets Results for Stocks, Bonds, Bills and Inflation 1926-2009-Ibboston SBBI 2010 Valuation Yearbook”, pp. 44-46, 86, Table 7-2 (Exhibit EO-13).
625Compass Lexecon Rebuttal Report, ¶¶60-67; Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1051:9-1051:16, quoting Damodaran.
626J. Tarbell, “The Small Company Risk Premium: Does it Really Exist?” American Society of Appraisers, 18th Annual Advanced Business Valuation Conference, New Orleans, Louisiana, 1999 (Exhibit C-247). This piece was actually dated 1999 and not 2012, as referred to in the Compass Lexecon Rebuttal Report, ¶63. Dr Abdala noted this mistake during the hearings and corrected it (See Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1130).
627Also, in accordance with Mr Abdala, even if any of those items existed, the size premium would not be used automatically, as its potential application would become a matter of judgment (see Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1132). Mr Abdala noted that in more than 150 valuations he had only used size premium in one or two cases in which very severe illiquidity situations were present (see Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1130:6-1130-12).
628See, for instance, Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1122:15-1122:23; 1123:1- 1123:5.
629Econ One Second Report, ¶¶126-135.
630Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1229:25-1230:5.
631Claimants’ Post-Hearing Brief, ¶137.
632The Respondent notes that Fama and French’s position was taken two years after the relevant date for valuation (see Respondent’s Post-Hearing Brief, ¶140; and Flores’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1239-1242). Professor Damodaran stated in April 2011 that he refuses to use the “Fama-French model or added a small premium cap to a CAPM model in intrinsic valuation” (A. Damodaran, “Alternatives to the CAPM: Part 2: Proxy Models”, 20 April 2011, p.3 (Exhibit C-370)), but Dr Flores disagrees with Professor Damodaran’s approach (Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1243:12-1243:13; 1253:11-1253:15). See also Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1292-1293.
633Claimants’ Post-Hearing Brief, ¶¶138-139.
634Claimants’ Post-Hearing Brief, ¶141.
635Claimants’ Post-Hearing Brief, ¶145; Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1243:8- 1248:6. However, when redirected, Dr Flores brought new arguments related to the need to sacrifice the “granulate” effect to statistic strength (Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1291-1292).
636Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1132:4-1132:16..
637Dr Abdala holds a totally opposite view with the Respondent as to the point that, if a single item is applicable, the size premium would be justified (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1131-1132).
638A. Damodaran, “Comatose Markets: What If Liquidity Is Not The Norm?”, Stern School of Business, December 2010, pp. 53-54 (Exhibit C-268).
639A. Damodaran, “Comatose Markets: What If Liquidity Is Not The Norm?”, Stern School of Business, December 2010, pp. 55-56 (Exhibit C-268).
640Statement of Claim, ¶238.
641Compass Lexecon Report, ¶98.
642Statement of Claim,. ¶¶241-242.
643Econ One Report, ¶136
644Claimants’ Post-Hearing Brief, ¶¶176-177.
645Statement of Defence, ¶¶288-289.
646Respondent Post-Hearing Brief, ¶¶168-169.
647Available at: and in the document called "MONEDA Y MERCADO 2010" (available at ). At that website, one can see that the "TASAS DE INTERES ACTIVAS ANUALES" in foreign currenccy as at May 2010 were, for commercial bank loans: nominal (5,474092%) and effective (5,633331%).

1Notice of Arbitration, ¶4; Statement of Claim, ¶¶3-4; Claimants’ Post-Hearing Brief, ¶1.

2According to the Respondent, “New Claims” are alleged violations of the BITs on the part of Bolivia in connection with: (i) electricity spot prices; (ii) capacity payments; and (iii) the two Worthington engines. According to the Respondent, these claims were not raised in the Notice of Dispute dated 13 May 2010 or in the Notice of Arbitration dated 24 November 2010.

3Statement of Claim, ¶21; Reply on the Merits, ¶14. See Transcript (English), Day 1, 2 April 2013, 35:22-36:1.

4Statement of Claim, ¶22. See Transcript (English), Day 1, 2 April 2013, 36:1-36:10.

5Statement of Claim, ¶¶23-24.

6Statement of Defense, ¶¶26, and 31; Rejoinder on the Merits, ¶¶30-40. In addition, the Respondent claims that the good condition of the electricity sector was confirmed by the Energy Management Assistance Program (hereinafter, “ESMAP”), and by neighboring countries. Therefore, it claims that capitalization was not an emergency measure.

7Statement of Claim, ¶25.

8Statement of Claim ¶26. See Transcript (English), Day 1, 2 April 2013, 36:13-38:6.

9In this regard, the Claimants affirm in their Reply on the Merits, ¶21, that Bolivia has only challenged the qualification of the personnel hired by ENDE. Thus, the Respondent has accepted the fact that the General Electricity Directorate was limited (in terms of technical capacity) due to budget constraints.

10Statement of Defense, ¶¶30, 32-33.

11Statement of Defense, ¶33.

12Reply on the Merits, ¶19; Joint UNDP/World Bank Program, p. 24 (Exhibit C-61); Witness Statement of Juan Carlos Andrade, 21 January 2013, ¶14.

13Rejoinder on the Merits, ¶¶40-44.

14Statement of Claim, ¶27; Reply on the Merits, ¶¶24-28; Claimants’ Post-Hearing Brief, ¶27. See Transcript (English), Day 1, 2 April 2013, 36:13-38:6. 39:14-41:3; Transcript (English), Day 6, 9 April 2013, 1338:17-1338:23.

15Id., ¶27.

16Id., ¶29; Statement of Defense, ¶39; Rejoinder on the Merits, ¶47.

17Id., ¶29.

18Statement of Claim, ¶29; Statement of Defense, ¶¶42, and 44.

19Id., ¶38.

20Id., ¶38; Memorial on Jurisdiction, ¶212.

21Memorial on Jurisdiction, ¶¶214-216.

22Id., ¶¶222, and 225.

23See Electricity Law (Exhibit C-5). See Transcript (English), Day 1, 2 April 2013, 41:13-41:22.

24Statement of Claim, ¶42; See Joint UNDP/World Bank Energy Sector Management Assistance Program, “Bolivia: Restructuring and Capitalization of the Electricity Supply Industry- an Outline for Change” (Exhibit C-61).

25Statement of Defense, ¶40. See Transcript (English), Day 1, 2 April 2013, 38:6-38:19.

26Statement of Claim, ¶53; Statement of Defense, ¶42; Rejoinder on the Merits, ¶48; Claimants’ Post-Hearing Brief, ¶29. See Transcript (English), Day 1, 2 April 2013, 47:9-47:14.

27Id., ¶57; Claimants’ Post-Hearing Brief, ¶29. See Terms of Reference (Exhibit C-7, Article 2.3).

28Id., ¶57; Claimants’ Post-Hearing Brief, ¶29. See Certificate of Incorporation GAI 13 July 1995 (Exhibit C-11), and Proof of Subscription of 50% of the shares of EGSA by GAI for USD 47.131 million, 28 July 1995 (Exhibit C-12); Letter from the Central Bank of Bolivia to the Minister of Capitalization, 28 July 1995 (Exhibit C-13). See Transcript (English), Day 1, 2 April 2013, 47:14-47:24 and Day 6, 9 April 2013, 1339:15-1340:3.

29Id., ¶58. See Capitalization Agreement, clauses 5.1 and 8 (Exhibit C-14). See Transcript (English), Day 1, 2 April 2013, 47:24-48:3.

30It is worth clarifying that at this point the Claimants had no control over EGSA (they only held 50% of the shares), so that the Board was not chiefly composed by shareholders of the current Claimants.

31Statement of Claim, ¶60; Reply on the Merits, ¶¶38-40. See Transcript (English), Day 1, 2 April 2013, 48:22-49:23.

32Id., ¶63. See Gover Barja and Miguel Urquiola, Capitalización y Privatización en Bolivia: Una aproximación a una evaluación, February 2003 (Exhibit C-96); Witness Statement of Lanza, ¶19.

33Id., ¶65; Statement of Defense, ¶44; Rejoinder on the Merits, ¶49. See Transcript (English), Day 1, 2 April 2013, 48:4- 48:13.

34Id., ¶66. See Transcript (English), Day 1, 2 April 2013, 48:14-48:17.

35See Purchase and Sale of Empresa para Sistemas Aislados ESA S.A. by and between Empresa Eléctrica Guaracachi S.A. and Rurelec PLC (Exhibit C-103).

36Initially, it can be noted that in the Statement of Claim, ¶67, the amount indicated is USD 41.2 million. However, as shown in the Memorial on Jurisdiction, ¶113, the Claimants have rectified such amount in the e-mail dated 12 September 2012. See- email (Exhibit R-2).

37Statement of Claim, ¶67; Claimants’ Post-Hearing Brief, ¶¶59-63. See Agreement for the purchase of shares (Exhibit R- 61); Certificate of Incorporation of Birdsong Overseas Limited (Exhibit C-30) and BIE (Exhibit C-25); Share certificates evidencing the shares in GAI held by Birdsong Overseas Limited (Exhibit C-29) and BIE (Exhibit C-27); Share certificate evidencing that Birdsong held 100% of the shares in BIE (Exhibit C-35). See Transcript (English), Day 1, 2 April 2013, 48:17-48:21.

38Memorial on Jurisdiction, ¶34; Respondent’s Post-Hearing Brief, ¶36.

39Statement of Claim, ¶70; Reply on the Merits, ¶¶41-43. See 2008 Annual Report of EGSA (Exhibit C-32, pp. 7, 22 and 25); 2009 Annual Report of EGSA (Exhibit C-36, pp.12 and 22). See Transcript (English), Day 1, 2 April 2013, 54:25-56:3.

40Reply on the Merits, ¶44.

41Statement of Defense, ¶¶73-74. See Audited Financial Statements of Empresa para Sistemas Aislados ESA S.A., 27 May 2004 (Exhibit C-100); Audited Financial Statements of Empresa para Sistemas Aislados ESA S.A., 30 May 2004 (Exhibit C- 102); Proof of fund transfer from Rurelec to GAI, 13 October 2004 and 4 March 2005 (Exhibit C-104).

42Id., ¶¶73-74.

43Id., ¶78; Reply on the Merits, ¶¶45-46. See Transcript (English), Day 1, 2 April 2013, 58:11-58:18, 59:2-61:18.

44Id., ¶88. On the CCGT project, consult also Claimants’ Post-Hearing Brief, ¶¶39-54.

45Id., ¶¶83-84; Reply on the Merits, ¶¶51-53. Concerning these projects, the Claimants refer to that performed in San Matías, arguing that the statements made by Mr Paz regarding the fact that the time of the nationalisation, EGSA had introduced no improvement whatsoever to the distribution of electricity in the area; it was not their responsibility pursuant to the Agreement for the supply of electricity to rural areas. See Transcript (English), Day 1, 2 April 2013, 56:18-58:10.

46Id., ¶87; Statement of Defense, ¶¶338-344.

47Memorial on jurisdiction, ¶¶122-125; Statement of Defense, ¶¶45-51; Respondent’s Post-Hearing Brief, ¶6. The Respondent provides the following as examples for such acts: the distribution of all of EGSA’s profits as dividends, the 2001 sale of the turbines GCH-3 and 5 decreasing production capacity by 40MW, the intent to decapitalize EGSA in 2004 by trying to transfer the 7 engines to the plants in Aranjuez and Karachipampa for the purposes of selling them to Rurelec together with ESA S.A or the intent to dismantle the KAR-1 unit in 2010; Rejoinder on the Merits, ¶50. See Transcript (English), Day 1, 2 April 2013, 157:5-157:9; Transcript (English), Day 6, 9 April 2013, 1420:18-1420:19.

48First Witness Statement of Paz, ¶¶64, 68, and 72.

49Reply on the Merits, ¶¶47-50. See Progress Report on the Combined Cycle Turbine Project, 26 March 2010 (Exhibit C-313). See Transcript (English), Day 1, 2 April 2013, 58:19-58:25, 61:19-62:2.

50Rejoinder on the Merits, ¶¶51-92. As examples of EGSA’s disinvestment, Respondent refers, inter alia, to the following scenarios: the sale of the GCH-3 and GCH-5 units (these were the most efficient units, and their sale was not aimed at installing more efficient technology, since the money obtained was distributed as profits among shareholders, and the Jenbacher engines were installed five years later), the attempt to remove the KAR-1 unit (decision reversed by the Board of EGSA after the nationalisation), the sale of the plot in the Santa Cruz industrial complex (challenged by ENDE representatives in the Board of EGSA) or the sale of the engines of the Aranjuez plant to ESA (according to the Respondent, for the purposes of finally selling them to Rurelec). As examples of EGSA’s difficult economic situation, the Respondent refers, inter alia, to the liquidity issues acknowledged by the Claimants themselves, the problems with payments to suppliers, the lack of generation of “robust” profits between 2005 and 2009, or the distribution of dividends higher than the profits since 2006. Finally, Bolivia denies the fact that EGSA received good ratings by rating agencies (in an attempt to confuse the Tribunal), and it is not true either that the rates at which EGSA could obtain funds until 2009 reflected a healthy economic condition.

51Statement of Claim, ¶¶9-15. See Transcript (English), Day 1, 2 April 2013, 63:13-64:16.

52Id., ¶¶9-15; Reply on the Merits, ¶2. See Transcript (English), Day 1, 2 April 2013, 23:7-25:16, 63:3-63:13, 64:17-64:23; Transcript (English), Day 6, 9 April 2013, 1359:21-1360:12.

53Reply on the Merits, ¶2. See Transcript (English), Day 6, 9 April 2013, 1407:10-1408:7.

54Rejoinder on the Merits, ¶¶130-132. See Transcript (English), Day 1, 2 April 2013, 187:14-187:21.

55Statement of Defense, ¶¶342-344, and 384-394; Rejoinder on the Merits, ¶¶293-297.

56Statement of Defense, ¶43; Respondent’s Post-Hearing Brief, ¶80. See Expropriation Insurance Agreement by and between Power Inc. and Overseas Private Investment Corporation, 27 December 1995 (Exhibit R-44).

57Id., ¶8, and Section 2.2.1; Rejoinder on the Merits, ¶¶99, 106, 109-114. See 2006-2010 Programa de Gobierno del Movimiento al Socialismo-Instrumento Político por la Soberanía de los Pueblos (MAS-IPSP) 2006-2010 “Bolivia digna, soberana y productiva para vivir bien” published in 2005 (Exhibit R-52); El plan de gobierno más progresista propone: Nacionalizar por etapas”, Bolpress, 11 November 2005 (Exhibit R-62); Letter of the Minister of Hydrocarbons and Electricity to EGSA, 21 April 2009 (Exhibit R-59). See Transcript (English), Day 1, 2 April 2013, 158:1-158:3, 183:9-184:3.

58Id., ¶¶69-81; Rejoinder on the Merits, ¶115.

59In the Statement of Claim, ¶104, the Claimants mention the existence of an e-mail sent by Marie Beatriz Souviron, Bolivian Ambassador in the United Kingdom, stating that she was unaware of the possibility of the expropriation of Rurelec’s interest in GAI. However, Respondent noted that such an e-mail was not submitted by the Claimants and that, if it had been submitted, it would still be insufficient evidence, since it would only prove an officer’s unawareness of the nationalisation plans; Rejoinder on the Merits, ¶¶116-117. The Respondent explains how Mr Earl has now modified his version: senior officers of the Ministry of Foreign Affairs of the United Kingdom would have confirmed that the Ambassador was unaware of the nationalisation. However, this is no evidence of the purported confirmation and, in any case, even if it existed, it would only demonstrate that a Bolivian diplomat in the United Kingdom was not aware of the nationalisation. Similarly, Mr Aliaga states that he received guaranteed from members of the Board of ENDE in a barbecue, without giving any names or explaining why guarantees given by EGSA employees would compromise the State.

60Set forth in Article 49 e) of the Electricity Law. In accordance with RPT 1995 and RPT 2001, it is defined as the unitary cost of increasing the installed capacity. It is tantamount to the Capacity Marginal Cost.

61Article 15 of the RPT 1995. In addition, once the investment cost has been determined one should proceed to carry out a number of operations detailed in the above mentioned order until de PBP is reached. See Transcript (English) Day 1, 2 April 2013, 46:19-46:21.

62For a further explanation on the modifications introduced, consult Memorial on Jurisdiction, ¶258.

63Operating Norm No. 19/2001, Rule 7; Statement of Claim, ¶90; Memorial on Jurisdiction, ¶259.

64Statement of Claim, ¶90.

65Memorial on Jurisdiction, ¶259.

66Id., ¶262.

67Statement of Claim, ¶91; Memorial on Jurisdiction, ¶270. See Transcript (English), Day 1, 2 April 2013, 64:23-64:25.

68Statement of Claim, ¶91; Reply on the Merits, ¶73; Claimants’ Post-Hearing Brief, ¶117; Compass Lexecon Report, ¶¶34- 38 and 126-136; Witness Statement of Aliaga, ¶39; Witness Statement of Andrade, ¶¶45-50. See Transcript (English), Day 1, 2 April 2013, 65:8-65:25.

69Memorial on Jurisdiction, ¶259.

70Id., ¶¶259-268. See Report prepared by Bates White LLC dated 18 January 2007 on Revision of Operating Norm No.19 (Exhibit R-34).

71Statement of Claim, ¶¶92-94; Memorial on Jurisdiction, ¶272; Reply on the Merits, ¶75; Claimants’ Post-Hearing Brief, ¶120. See Transcript (English), Day 1, 2 April 2013, 65:8-65:25.

72Article 63, ROME 1995; Article 2, RPT 1995. Pursuant to RPT 1995, the spot market is defined as “the market of short term electricity purchase and sale transactions, not having been contemplated in the supply agreements.”

73Payment that, for the Claimants in their Statement of Claim, ¶190, was uniform for all generating units, whereas for the Respondent, as per its Memorial on Jurisdiction, ¶228, such uniformity did not exist.

74Article 63, ROME 1995. Pursuant to Article 1 of ROME 1995, the Marginal Cost is defined as “the cost [...] to supply one additional kilowatt-hour (kWh) of power, at a certain level of power demand and considering the generation and transmission park to be fixed [...]” [Tribunal’s Translation].

75Statement of Claim, ¶45; Memorial on Jurisdiction, ¶218. Pursuant to Article 1 of ROME 1995, the Marginal Generation Unit is meant to be “the last generation unit capable of meeting a demand increase, dispatched by the CNDC in accordance with the procedures set forth in this Regulation” [Tribunal’s Translation. See Transcript (English), Day 1, 2 April 2013, 42:2- 42:3.

76Operating Norm No. 3/1999, paragraph 4.

77Article 1, ROME 2001. In this sense, the concept of “Forced Generation Unit” is introduced, such being understood as the “unit resulting from the generation in a mandatory way due to minimum performance requirements in an area, displacing lower cost generation in the system” [Tribunal’s Translation].

78Memorial on Jurisdiction, ¶¶226-227.

79In this sense, there is disagreement between the Parties. The Claimants consider in their Statement of Claim, ¶191, that until 2008 all thermal units were candidates for selection as the Marginal Generation Unit, a fact that is denied by the Respondent in its Memorial on Jurisdiction, ¶228, and in its Rejoinder on the Merits, ¶271, due to the above mentioned modifications. See Transcript (English), Day 1, 2 April 2013, 66:2-66:23.

80Statement of Claim, ¶96; Reply on the Merits, ¶77; Claimants’ Post-Hearing Brief, ¶109; Witness Statement of Aliaga, ¶37; Witness Statement of Andrade, ¶¶55-56; Second Witness Statement of Andrade, ¶23. See Transcript (English), Day 1, 2 April 2013, 66:24-68:5.

81Statement of Defense, ¶329; Second Witness Statement of Quispe, ¶13. Nevertheless, the Claimants allege in their Reply, ¶¶84-87, that such assertion is misleading. Mr Andrade contested when such modification was proposed and, consequently, EGSA cannot be understood to have approved it, see Second Witness Statement of Andrade, ¶37, and Minutes of Session No. 236 of the CNDC dated 30 June 2008 (Exhibit R-87). The Respondent considered that it accepted both in its Statement of Defense, ¶329, as well as in its Rejoinder on the Merits, ¶291, that Mr Andrade voted against such modification. Nevertheless, that is not the relevant issue, but that the CNDC is a self-regulatory authority that adopts norms by simple majority.

82Rejoinder on the Merits, ¶273.

83Memorial on Jurisdiction, ¶¶230-236; Statement of Defense, ¶¶316-323; Rejoinder on the Merits, ¶274

84Statement of Defense, ¶305.

85Reply on the Merits, ¶¶78-83; Second Witness Statement of Andrade, ¶33. Regarding the stabilization of tariffs, the Claimants hold that such fund did not affect the spot price level received by electricity generators as Bolivia suggests, and likewise, it is also erroneous that EGSA could indefinitely accumulate funds in the stabilization fund.

86Reply on the Merits, ¶79; Second Witness Statement of Andrade, ¶35.

87Rejoinder on the Merits, ¶¶279-280. See Transcript (English), Day 1, Tuesday, 2 April 2013, 253:17-255:5.

88Statement of Claim, ¶15; Reply on the Merits, ¶¶95-96; Claimants’ Post-Hearing Brieg, ¶3; First Witness Statement of Earl, ¶¶58-59. The Claimants insist that there was no certainty whatsoever to believe that expropriation was going to be imminent. In any event, when Evo Morales was elected and the platform for the nationalisation of hydrocarbons sector was concocted, there were no signals in 2005 that the electricity sector could be subjected to the strict state control. Not until the end did the Claimants realize that EGSA was going to be expropriated. In this regard, see First Witness Statement of Earl, ¶40; Second Witness Statement of Earl, ¶38, and 45; and Second Witness Statement of Aliaga, ¶¶53-57. See Transcript (English), Day 1, 2 April 2013, 21:22-22-22.

89Statement of Claim, ¶¶15, and 98; Reply on the Merits, ¶93; Claimants’ Post-Hearing Brief, ¶32.

90Statement of Defense, ¶¶85-86, and 89; Witness Statement of Paz, ¶82; Rejoinder on the Merits, ¶¶119-120. See Transcript (English), Day 1, 2 April 2013, 184:24-185:9; Day 6, 9 April 2013, 1412:20-1412:23, 1416:3:1416:4, 1416:12-1416:13, 1431:19:1432:2.

91See Nationalisation Decree (Exhibit C-3).

92Statement of Claim, ¶103; Statement of Defense, ¶101. See Transcript (English), Day 1, 2 April 2013, 184:17-184:23.

93Statement of Claim, ¶103; Reply on the Merits, ¶98. The Claimants hold that they did not take part in the valuation process and the results thereof were never disclosed. See Transcript (English), Day 6, 9 April 2013, 1329:4-1329:21.

94Id., ¶¶106-110; Witness Statement of Aliaga, ¶¶56-58; Witness Statement of Earl, ¶¶61-62; Witness Statement of Andrade, ¶64.

95Statement of Defense, ¶¶95-101. See “Profin valora acciones de Elfec”, Los Tiempos, 13 August 2010 (Exhibit R-81). See Transcript (English), Day 1, 2 April 2013, 185:10-186:6; Transcript (English), Day 6, 9 April 2013, 1801:5-1801:24.

96Id., ¶104. See Exhibit R-78.

97See Transcript (English), Day 1, 2 April 2013, 184:7-184:9, 186:10-186:17.

98Id., ¶¶114-115; Claimants’ Post-Hearing Briefs, ¶¶55-58. See EGSA’s 2010 Audited Financial Statements, 25 March 2011 (Exhibit C-209).

99Id., ¶¶114-115. See “Proyecto Ciclo Combinado ‘Enredado’ en la Situación Contable de EGSA” Reporte Energía No. 59, dated 16-30 June 2011 (Exhibit C-194); Witness Statement of Lanza, ¶¶54-55; Witness Statement of Blanco, ¶¶43-44.

100Id., ¶106; Bejarano’s Second Statement, ¶9; Rejoinder on the Merits, ¶¶121-128.

101Statement of Claim, ¶¶111-112. See Transcript (English), Day 1, 2 April 2013, 70:5-70:11.

102Statement of Claim, ¶113. See Freshfields’ note to the Attorney General (Procurador General del Estado), dated 25 October 2011 (Exhibit C-199); Freshfields’ note to the Attorney General (Procurador General del Estado), dated 29 November 2011 (Exhibit C-201).

103Rejoinder on the Merits, ¶¶416-422. See EGSA’s letter to Energais dated 26 February 2013 (Exhibit R-167).

104See Transcript (English), Day 1, 2 April 2013, 70:13-71:1.

105Respondent’s Post-Hearing Brief, ¶172. See Transcript (English), Day 1, 2 April 2013, 256:16-257:1.

106Memorial on Jurisdiction, ¶17; Respondent’s Post-Hearing Brief, ¶¶25-26, 30, and 35. See Transcript (English), Day 1, 2 April 2013, 161:14-162:4; Transcript (English), Day 6, 9 April 2013, 1418:22-1419:7.

107Id., ¶21; Notice of Arbitration, ¶¶57-63; Statement of Claim, ¶¶135-141.

108See Transcript (English), Day 1, 2 April 2013, 164:15-165:1.

109See Transcript (English), Day 1, 2 April 2013, 168:3-168:12.

110Memorial on Jurisdiction, ¶¶23-26.

111Counter-Memorial on Jurisdiction, ¶6.

112Id., ¶6. See Transcript (English), Day 1, 2 April 2013, 162:5-162:23.

113Reply on Jurisdiction, ¶22. See Transcript (English), Day 1, 2 April 2013, 167:13-168:2.

114Reply on Jurisdiction, ¶24.

115Id., ¶26. See ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (PCA Case No. 2010- 9), Award on Jurisdiction,10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29); Impregilo S.p.A v. Argentine Republic (ICSID Case No. ARB/07/17), Dissenting Opinion of Professor Brigitte Stern, 21 June 2011 (Exhibit RL-119).

116Id., ¶¶27-31. In such regard, the Respondent believes that Lauder and CME cases illustrate this situation, since, in such cases, investors instituted two different arbitrations against the Czech Republic under two different treaties, as the Czech Republic had only consented thereto. Hence, had investors in such cases wished to consolidate the proceedings, they should have had the express consent of the State, given that the applicable treaties did not contain the consent of the State to the joinder. Likewise, in Pan American case, the Respondent maintains that claimants distort its content, since the tribunal never stated that, had claimants chosen to commence a single proceeding instead of two, they would not have needed Argentina’s consent.

117Counter-Memorial on Jurisdiction, ¶7.

118Reply on Jurisdiction, ¶33.

119Id., ¶38.

120Id., ¶40; Respondent’s Post-Hearing Brief, ¶33. See Transcript (English), Day 1, 2 April 2013, 166:1-166:19; Transcript (English), Day 6, 9 April 2013, 1419:25-1420:5.

121See Duke Energy Electroquil Partners & Electroquil S.A. v. Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann-Kohler, Pinzón and van den Berg) (Exhibit CL-53).

122Reply on Jurisdiction, ¶46(c); Respondent’s Post-Hearing Brief, ¶31.

123Id., ¶42; Respondent’s Post-Hearing Brief, ¶34. See Plama Consortium Limited v. Republic of Bulgaria (ICSID Case No. ARB/03/24), Decision on Jurisdiction, 8 February 2005 (Salans, van den Berg and Veeder) (Exhibit CL-110). See Transcript (English), Day 1, 2 April 2013, 163:8-163:15.

124Id., ¶44.

125Counter-Memorial on Jurisdiction, ¶12.

126See Transcript (English), Day 1, 2 April 2013, 170:9-170:18.

127Counter-Memorial on Jurisdiction, ¶6. See Canfor Corporation v. United States of America; Terminal Forest Products Ltd. v. United States of America (UNCITRAL Case), Order of the Consolidation Tribunal, 7 September 2005, (van den Berg, Robinson and L.C de Mestral) (Exhibit CL-115).

128As explained by the Claimants at ¶6(a) and (b) of the Counter-Memorial on Jurisdiction, the case Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic, (ICSID Case No. ARB/03/13), Decision on Preliminary Objections, 27 July 2006, and the case CME Czech Republic B.V. v. The Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001, cited by Bolivia, refer to arbitrations in which the claimants filed two different arbitration proceedings and then requested the consolidation thereof. However, in this case, the Claimants have not filed two different requests for arbitration, but have acted jointly.

129Claimants’ Post-Hearing Brief, ¶68. See Transcript (English), Day 6, 9 April 2013, 1355:17-1356:1.

130Counter-Memorial on Jurisdiction, ¶¶8-9; Claimants’ Post-Hearing Brief, ¶¶74, and 76. See Piero Foresti, Laura de Carli and others v. The Republic of South Africa (ICSID Case No. ARB(AF)/07/1), Award, 4 August 2010 (Lowe, Browner and Matthews) (Exhibit CL-134); OKO Pankki OYJ, VTB Bank (Germany) AG and Sampo Bank Plc v. Republic of Estonia (ICSID Case No. ARB/04/6), Award, 19 November 2007 (Wijnen, Fortier and Veeder) (Exhibit CL-120); Itera International Energy LLC and Itera Group NV v. Georgia (ICSID No. ARB/08/7), Decision on Admissibility of Ancillary Claims, 4 December 2009 (Danelius, Orrego Vicuña and Stern) (Annex CL-128); Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic (ICSID Case No. ARB/03/17), Decision on Jurisdiction, 16 May 2006 (Salakuse, Kaufmann-Kohler and Nikken) (Exhibit CL-117); Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Preliminary Objections, 2 August 2010 (Veeder, Tawil and Stern) (Exhibit CL-133); Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan (ICSID Case No. ARB/05/16), Award, 29 July 2008 (Boyd, Lalonde and Hanotiau) (Exhibit CL-52); Duke Energy Electroquil Partners & Electroquil S.A. v. Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann Kolher, Gómez Pinzón and van den Berg) (Exhibit CL-53); Perenco Ecuador Ltd. v. The Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (ICSID Case No. ARB/08/06), Decision on Jurisdiction, 30 June 2011 (Tomka, Kaplan and Thomas) (Exhibit CL-137).

131Memorial on Jurisdiction, ¶29.

132Counter-Memorial on Jurisdiction, ¶10; Claimants’ Post-Hearing Brief, ¶¶72-73.

133Id., ¶¶11-13; Claimants’ Post-Hearing Brief, ¶77. See Transcript (English), Day 1, 2 April 2013, 136:16-138:16.

134Rejoinder on Jurisdiction, ¶¶5-7. In this regard, the Claimants cite several cases in support of their argument, such as Chevron Corporation and Texaco Petroleum Company v. The Republic of Ecuador (PCA Case No. 34877), Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. Mongolia (UNCITRAL Arbitration), and Abaclat and others v. The Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4 August 2011. See Transcript (English), Day 1, 2 April 2013, 136:24-137:9; Transcript (English), Day 6, 9 April 2013, 1356:13-1356:15.

135See Transcript (English), Day 6, 9 April 2013, 1357:22-1358:21.

136Rejoinder on Jurisdiction, ¶11.

137Claimants’ Post-Hearing Brief, ¶¶64-66. See Transcript (English), Day 6, 9 April 2013, 1353:15-1355:6.

138Memorial on Jurisdiction, ¶¶35-37; Respondent’s Post-Hearing Brief, ¶38. See Limited Liability Company AMTO v. Ukraine (Arbitration Institute of the Stockholm Chamber of Commerce (SCC) Case No. 80/2005), Final Award, 26 March 2008 (Cremades, Runeland and Soderlund) (Exhibit RL-34); Salini Construttori S.P.A. and Italstrade S.P.A v. Jordania (ICSID Case No. ARB/02/13), Award, 31 January 2006 (Guillaume, Cremades, Sinclair) (Exhibit RL-35); Hussein Nuaman Soufraki v. United Arab Emirates (ICSID Case No. ARB/02/07), Award, 7 July 2004 (Fortier, Schwebel and El-Khoseri) (Exhibit RL-37); Phoenix Action, Ltd. v. Czech Republic (ICSID Case No. ARB/06/5), Award, 15 April 2009 (Stern, Bucher and Fernández-Armesto) (Exhibit RL-38); Brandes Investment Partners, LP v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/3), Decision on the Respondent’s Objection Under Rule 41(5) of the ICSID Arbitration Rules, 2 February 2009 (Briner, Stern and Böckstiegel) (Exhibit RL-39); Inceysa Vallisoletana S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26), Award, 2 August 2006 (Oreamuno Blanco, Landy and von Wobeser) (Exhibit RL-40).

139The Respondent believes that it is such date that should be taken as a reference, rather than the date alleged by the Claimants, as it appears on the Share Certificate that evidences the ownership interests of Birdsong Overseas Limited in BIE (Exhibit C-35).

140Memorial on Jurisdiction, ¶51. See Certificate of Incorporation of Bolivia Integrated Energy Limited (Exhibit C-25); Certificate of Incorporation of Birdsongs Overseas Limited (Exhibit C-29).

141Id., ¶62; Article I(4) of the US-Bolivia BIT.

142Id., ¶75. See Aguas del Tunari S.A. v. Republic of Bolivia (ICSID Case No. ARB/02/3), Decision on Respondent’s Objections to Jurisdiction, 21 October 2005 (D. Caron, Alberro-Semerena and C. Alvarez) (Exhibit RL-28).

143Memorial on Jurisdiction, Section 3.2.2; Reply on Jurisdiction, ¶¶77-82; Counter-Memorial on Jurisdiction, ¶¶22-31.

144Reply on Jurisdiction, ¶¶83-87. See Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004 (Sureda, Brower and Janeiro) (Exhibit CL-109); Cemex Caracas Investments B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/15), Decision on Jurisdiction, 30 December 2010 (Guillaume, Abi-Saab and von Mehren) (Exhibit CL-136). In this respect, in its allegations on 14 January 2013, the Respondent denies that the case Teinver S.A. v. The Argentine Republic (ICSID Case No. ARB/90/1), Decision on Jurisdiction, 21 December 2011 (Exhibit CL-151), supports the Claimants’ position on this issue since: (i) bilateral investment treaties are not identical in specific aspects which are relevant to these proceedings; and (ii) the Decision applies a pro-investor principle that has not been justified by said tribunal.

145Memorial on Jurisdiction, ¶¶85-89; Respondent’s Post-Hearing Brief, ¶43.

146Id., ¶¶91-96. See Romak S.A. v. Uzbekistan (UNCITRAL Case-PCA No. AA280), Award, 26 November 2009 (Mantilla- Serrano, Rubins and Molfessis) (Exhibit RL-54); GEA Group Aktiengesellschaft v. Ukraine (ICSID Case No. ARB/08/16), Award, 31 March 2011 (van den Berg, Landau and Stern) (Exhibit RL-55); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (RL-56).

147Counter-Memorial on Jurisdiction, ¶¶37-41.

148See White Industries Australia Limited v. India (UNCITRAL Case), Award, 30 November 2011 (Brower, Lau and Rowley) (Exhibit CL-73).

149Reply on Jurisdiction, ¶95.

150See Romak S.A. v. Uzbekistan (UNCITRAL Case-PCA No. AA280), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL-54); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (Exhibit RL-56).

151See Transcript (English), Day 1, 2 April 2013, 171:9-172:10; Transcript (English), Day 6, 9 April 2013, 1420:19-1421:1.

152Reply on Jurisdiction, ¶¶101-102, and 109; Respondent’s Post-Hearing Brief, ¶37.

153Id., ¶¶103-112. In this regard, the Respondent establishes that there is no evidence whatsoever that Rurelec has paid USD 35 million for the shares in EGSA. Also, the investments in generation equipment were made without the Claimants’ own capital contribution. As regards the alleged technical support mentioned by the Claimants in their Counter-Memorial on Jurisdiction, ¶33, no evidence has been submitted and, in any case, the technical support received by EGSA came from abroad, through subcontractors from Independent Power Operation Ltd. (See Exhibit R-103). Moreover, at least 4 out of the 7 Jenbacher engines (which Claimants include as Rurelec’s contribution) have belonged to EGSA since April 2005, that is, several months prior to Rurelec’s alleged investment in Bolivia. Ultimately, as claimed by the Respondent, it is not true that Rurelec’s conduct has helped remedying the difficult financial situation of EGSA, as its indebtedness had been evident since 2008. Fitch Ratings had downgraded EGSA’s credit rating and by 2009 it had exhausted all its financing sources, with USD 3 millions of cash in 2010. This, coupled with the distribution of dividends qualified as “conservative” by the Claimants, led to a decapitalization of EGSA (See Exhibits R-104, 105 and 106). See Transcript (English), Day 1, 2 April 2013, 172:11- 173:19.

154Memorial on Jurisdiction, ¶¶116-127.

154Counter-Memorial on Jurisdiction, ¶¶17-19.

157Counter-Memorial on Jurisdiction, ¶17.

158Reply on Jurisdiction, ¶¶59-61; Respondent’s Post-Hearing Brief, ¶¶38-41. As regards the agreement (Exhibit R-61), Bolivia states that it does not show whether a payment has been made. It provides for some deferred payments but it is uncertain whether they have been made or not. Moreover, the last payment was scheduled for 2008, which makes it impossible for the 2006 Share Transfer (Exhibit C-214) to prove any payment (a total of USD 35 millions) in 2006 if the aggregate amount had not yet been paid. The same happens with Rurelec’s press release (Exhibit C-215).

159Letter from Nerine Fiduciaries to Freshfields dated 26 October 2012 (Exhibit C-226).

160Reply on Jurisdiction, ¶69. The Respondent considers that the Claimants have just established that Birdsong was organized in December 2005 and that Rurelec owned one share at a par value of USD 1 (Exhibits C-29 and 30). However, said documents fail to show how many shares form Birdsong’s capital, which makes it impossible to determine Rurelec’s percentage interest thereon.

161Id., ¶¶62-65.

162Id., ¶71.

163Statement of Claim, ¶70; Counter-Memorial on Jurisdiction, ¶15.

164Examples of documents include: (i) EGSA’s annual reports on stock ownership by Rurelec since the investment, (ii) the position of Peter Earl —Director of Rurelec— as President of the Board of Directors of EGSA in 2006, and (iii) different press releases which mention the investments made in Bolivia for power generation.

165Counter-Memorial on Jurisdiction, ¶¶17-19; Claimants’ Post-Hearing Brief, ¶95. See Transcript (English), Day 1, 2 April 2013, 138:17-140:4.

166See Transcript (English), Day 6, 9 April 2013, 1350:22-1353:4.

167Counter-Memorial on Jurisdiction, ¶¶23-26. See Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. The Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Buergenthal, Alvarez and Hossain) (Exhibit CL-151); Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004 (Sureda, Brower and Janeiro) (Exhibit CL-109); Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision on Jurisdiction, 6 July 2007 (Fortier, Orrego Vicuña and Watts) (Exhibit CL-119); Mobil Corporation, Venezuela Holdings, B.V. and others v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/27), Decision on Jurisdiction, 10 June 2010 (Guillaume, Kaufmann-Kohler and El-Kosheri) (Exhibit CL-131); Mr. Tza Yap Shum v. Republic of Peru (ICSID Case No. ARB/07/6), Decision on Jurisdiction and Competence, 19 June 2009 (Fernández- Armesto, Otero and Kessler) (Exhibit CL-124). See Transcript (English), Day 1, 2 April 2013, 140:17-141:9; Transcript (English), Day 6, 9 April 2013, 1368:9-1368:21.

168Rejoinder on Jurisdiction, ¶¶20-22.

169Rejoinder on Jurisdiction, ¶¶23-25. The Claimants consider that the Anglo Iranian Oil case cited by the Respondent to support its argument at ¶72 of its Objections, makes no reference to the concept of direct or indirect investment. Moreover, Bolivia’s argument that the cases cited by the Respondent should be disregarded because they do not involve the UK-Bolivia BIT or any other treaties executed by Bolivia, should not be accepted since the provisions analyzed in those cases are substantially the same as those under the UK-Bolivia BIT. For more reference to those cases, see Counter-Memorial on Jurisdiction, ¶¶23-26. See also the Claimants’ allegations on 2 January 2013 about the case Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. The Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).

170Counter-Memorial on Jurisdiction, ¶28. See Cemex Caracas Investments B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/08/15), Decision on Jurisdiction, 30 December 2010 (Guillaume, Abi-Saab and von Mehren) (Exhibit CL-136).

171Counter-Memorial on Jurisdiction, ¶¶29-30. See C.H. Schreuer, “Shareholder Protection in International Investment Law”, Transnational Dispute Management, Volume 2, Issue 3, 8 May 2005 (Exhibit CL-112); Inmaris Perestroika Sailing Maritime Services GMBH and others v. Ukraine (ICSID Case No. ARB/08/08), Decision on Jurisdiction, 8 March 2010 (Alexandrov, Cremades, Rubins) (Exhibit CL-130).

172See Transcript (English), Day 1, 2 April 2013, 141:19-142:2.

173Rejoinder on Jurisdiction, ¶¶27-28.

174For example, they also cite the payment of USD 35 million for the acquisition of EGSA in 2006, an estimated investment of USD 110 million to increase EGSA’s efficiency (through a 185 MW increase), as well as the introduction of a new technology which entailed an increase of EGSA’s power generation capacity. See Statement of Claim, ¶¶70-79; Counter- Memorial on Jurisdiction, ¶33. See Transcript (English), Day 1, 2 April 2013, 142:3-142:17.

175Counter-Memorial on Jurisdiction, ¶34.

176Id., ¶37.

177Id., ¶40. See Article 1(b) of the UK-Bolivia BIT (Exhibit C-1).

178Counter-Memorial on Jurisdiction, ¶42(a)(b). The Claimants refer here to the cases Romak S.A. v. Uzbekistan (UNCITRAL-PCA Case No. AA280), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL- 54); Alps Finance and Trade AG v. Slovakia (UNCITRAL Case), Award, 5 March 2011 (Stuber, Klein and Crivellaro) (Exhibit RL-56).

179Counter-Memorial on Jurisdiction, ¶42 (c)(d).

180Id., ¶43; Second Witness Statement of Blanco, ¶¶6 and 21

181Counter-Memorial on Jurisdiction, ¶44. See Romak S.A. (Switzerland) v. Republic of Uzbekistan (UNCITRAL Case), Award, 26 November 2009 (Mantilla-Serrano, Rubins and Molfessis) (Exhibit RL-54).

182Counter-Memorial on Jurisdiction, ¶45. See Fedax N.V. v. Republic of Venezuela (ICSID Case No. ARB/96/3), Decision on Jurisdiction, 11 July 1997 (Orrego Vicuña, Meir Helt, B. Owen) (Exhibit CL-101).

183Reply on Jurisdiction, ¶114.

184See Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplun v. Plurinational State of Bolivia (ICSID Case No. ARB/06/2), Decision on Jurisdiction, 27 September 2012 (Kaufmann-Kohler, Lalonde and Stern) (Exhibit CL-132).

185Rejoinder on Jurisdiction, ¶¶30-31; Claimants’ Post-Hearing Brief, ¶96.

186Id., ¶32.

187Counter-Memorial on Jurisdiction, ¶46.

188Memorial on Jurisdiction, ¶¶138-139. See Transcript (English), Day 1, 2 April 2013, 143:7-143:21,174:12-175:1.

189Memorial on Jurisdiction, ¶¶130-142.

190Counter-Memorial on Jurisdiction, ¶¶51-52.

191Reply on Jurisdiction, ¶122-124. See Ulysseas Inc. v. Republic of Ecuador (UNCITRAL-PCA Case No. 2009-19), Interim Award, 28 September 2010 (Bernardini, Pryles and Stern) (Exhibit CL-135); Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Twail and Stern) (Exhibit CL-140). See Transcript (English), Day 1, 2 April 2013, 178:25-179:3, 179:23-181:2; Transcript (English), Day 6, 9 April 2013, 1428:2-1428:6.

192Counter-Memorial on Jurisdiction, ¶52.

193Reply on Jurisdiction, ¶¶127-129. See Transcript (English), Day 1, 2 April 2013, 178:12-178:18, 181:3-181:23, 179:12- 179:15.

194Counter-Memorial on Jurisdiction, ¶56; Respondent’s Post-Hearing Brief, ¶53.

195Reply on Jurisdiction, ¶¶132-137. The Respondent refers to the Bidding Rules (Exhibit C-7), which define “Stock Subscribing Company” as “the company that shall subscribe the Subscription Shares” (Article 1) [Tribunal’s Translation]. Moreover, Article 2.1 stated that “the bidding company may be: 2.1.1 Electricity Company [...] 2.1.2 Consortium of Related Companies [...] 2.1.3 Specific Company. A juridical person constituted exclusively for the purposes of participating in the bid, which could be the Stock Subscribing Company. 2.1.4 Other Consortiums. Article 2.3 provided that “the Qualified Bidder that is declared the winning bidder must constitute, if necessary, prior to the Closing Date, the Stock Subscribing Company” (Article 2.3) and, finally, in the Closing Deed, the Stock Subscribing Company shall subscribe the Subscription Shares (Article 8.3). In turn, the Capitalization Agreement uses a similar definition of Stock Subscribing Company: “the company which subscribes to the shares under the Agreement” (Article 3) and “undertakes to pay to the Company the Subscription Amount” (Article 5.1) [Tribunal’s Translation]. See Transcript (English), Day 1, 2 April 2013, 175:21-176:6; Transcript (English), Day 6, 9 April 2013, 1428:22-1429:7.

196Counter-Memorial on Jurisdiction, ¶62.

197The tribunal in Pac Rim Cayman LLC v. El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Tawil and Stern) (Exhibit CL-140), considered that a traditional “holding company” is a company created in order to “own shares in its groups of companies, with attendant benefits as to control, taxation and risk Management for the holding company’s group of companies.” However, according to said tribunal, the fact that a company is organized in the United States for the sole purpose of holding shares in foreign companies indicates that such company is not a “traditional holding company” and fails to meet the essential condition of carrying out material businesses in its home country.

198Reply on Jurisdiction, ¶144. The activities mentioned by the Claimants, which the Respondent considers insufficient and/or inexistent are: (a) maintaining a “registered office” and a “principal office” in Akron, Ohio, as the Delaware General Corporation Law requires having an address in such state (See Exhibit R-107). Moreover, the office in Akron does not belong to GAI, but to FirstEnergy; (b) having appointed an agent in the State of Delaware is also a legal requirement under the General Corporation Law; (c) holding shareholders’ meetings is also mandatory under the General Corporation Law, and the only meetings held were those prior to FirstEnergy’s disinvestment in 2003 (no meeting-related documents have been submitted thereafter); (d) no meetings of the board of directors have been held since 2003 (only an extraordinary meeting of the board of directors was held in 2008 in order to the adopt solutions required by the CAF as a precondition for a credit disbursement); and (e) as regards the appointment of its administrators, the same happens, as since the end of 2003 there has been just one administrator appointed (in 2008) (Exhibit C-230).

199Reply on Jurisdiction, ¶146; Respondent’s Post-Hearing Brief, ¶¶50-53, 58.

200See Transcript (English), Day 1, 2 April 2013, 176:15-177:24; Transcript (English), Day 6, 9 April 2013, 1428:8-1428:18.

201Counter-Memorial on Jurisdiction, ¶¶52-55. See Plama Consortium Limited v. Republic of Bulgaria (ICSID Case No. ARB/03/24), Decision on Jurisdiction, 8 February 2005 (Salans, van den Berg and Veeder) (Exhibit CL-110); Hulley Enterprises Limited (Cyprus) v. The Russian Federation (PCA Case No. AA226), Award on Jurisdiction and Admissibility, 30 November 2009 (Fortier, Poncet and Schwebel) (Exhibit CL-125); Veteran Petroleum Limited (Cyprus) v. The Russian Federation (CPA Case No. AA228), Award on Jurisdiction and Admissibility, 30 November 2009 (Fortier, Poncet and Schwebel) (Exhibit CL-126); Yukos Universal Limited (Isle of Man) v. The Russian Federation (CPA Case No. AA227), Award on Jurisdiction and Admissibility, 30 November 2009, (Fortier, Poncet and Schwebel) (Exhibit CL-127). See Transcript (English), Day 6, 9 April 2013, 1362:2-1367:19.

202Id., ¶¶56-58;. See Transcript (English), Day 1, 2 April 2013, 143:22-144:19; Transcript (English), Day 6, 9 April 2013, 1360:22-1360:25, 1362:2-1367:19.

203Id., ¶¶61-62; Claimants’ Post-Hearing Brief, ¶84. See Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12), Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (Veeder, Tawil and Stern) (Exhibit CL- 140); Petrobart Limited v. The Kyrgyz Republic (SSS Case No. 126/2003), Award, 29 March 2005, (Danelius, Bring and Smets) (Exhibit CL-111). See Transcript (English), Day 1, 2 April 2013, 144:19-145:7; Transcript (English), Day 6, 9 April 2013, 1360:20-1361:18.

204See Counter-Memorial on Jurisdiction, Section IV.

205Reply on Jurisdiction, ¶122.

206Rejoinder on Jurisdiction, ¶37.

207Id., ¶¶38-39. See Compañía de Aguas Del Aconquija S.A. and Vivendi Universal S.A. v. The Argentine Republic (ICSID Case No. ARB/97/3), Resubmitted Case, Decision on Jurisdiction, 14 November 2005 (Kaufmann-Kohler, Bernal Verea and Rowley) (Exhibit CL-145).

208Id., ¶40.

209Id., ¶¶41-42. See Transcript (English), Day 6, 9 April 2013, 1362:2-1367:19.

210Reply on Jurisdiction, ¶140.

211Rejoinder on Jurisdiction, ¶40.

212Memorial on Jurisdiction, ¶¶159-165; Respondent’s Post-Hearing Brief, ¶60. See Transcript (English), Day 6, 9 April 2013, 1429:14-1430:1.

213Id., ¶170.

214Id., ¶¶171-175. See Burlington Resources Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17); Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/08/04), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60); Argentine Republic v. BG Group PLC, Decision on Annulment of the U.S Court of Appeals in and for the District of Columbia, 17 January 2012 (Judge Rogers) (Exhibit RL-61); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on Jurisdiction, 14 January 2004 (Orrego Vicuña, Gros Espiell and Tschanz) (Exhibit RL-16).

215See ¶236 infra.

216Memorial on Jurisdiction, ¶155.

217See Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/01/8), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60).

218 Respondent’s Post-Hearing Brief, ¶63. See Transcript (English), Day 1, 2 April 2013, 244:8-245:12.

219Statement of Claim, ¶138; Notice of Arbitration; GAI’s Notice of Claim to President Evo Morales, 13 May 2010 (Exhibit C-39).

220Reply on Jurisdiction, ¶¶158-163. See Burlington Resources Inc. v Republic of Ecuador (ICSID Case No. ARB/08/4), Award on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17); Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/01/8), Award on Jurisdiction, 15 December 2010 (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60).

221 Reply on Jurisdiction, ¶167. See Daimler Financial Services AG v. Argentine Republic (ICSID Case No. ARB/05/1), Award, 22 August 2012 (Dupuy, Brower and Janeiro) (Exhibit RL-118); Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno and Derains) (Exhibit RL-22); ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (UNCITRAL Case-PCA Case No. 2010-9), Award on Jurisdiction, 10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29); Abaclat et al v. Argentine Republic (ICSID Case No. ARB/07/5), Dissenting Opinion of Professor Georges Abi-Saab, 28 October 2011 (Exhibit RL-121); Impregilo S.p.A v. Argentine Republic (ICSID Case No. ARB/07/17), Dissenting Opinion of Professor Brigitte Stern, 21 June 2011 (Exhibit RL-119); Noble Energy, Inc. and Machalapower CIA. LTDA v. Ecuador and Consejo Nacional de Electricidad (ICSID Case No. ARB/05/12), Decision on Jurisdiction, 5 March 2008 (Kaufmann Kohler, Cremades and Alvarez) (Exhibit RL-20).

222See Transcript (English), Day 1, 2 April 2013, 245:13-246:16; Transcript (English), Day 6, 9 April 2013, 1429:14-1430:1.

223Reply on Jurisdiction, ¶168. In addition, the Respondent relies on various precedents supporting its argument: Eduardo Vieira v. Republic of Chile (ICSID Case No. ARB/04/7), Award, 21 August 2007 (Wobeser, Zalduendo and Reisman) (Exhibit RL-125); Asian Agricultural Products Ltd. v. Sri Lanka (ICSID Case No. ARB/87/3), Award, 27 June 1990 (El- Kosheri, Goldman and Asante) (Exhibit CL-10).

224Id., ¶169. See ICS Inspection and Control Services Limited (United Kingdom) v. Argentine Republic (UNCITRAL Case- PCA Case No. 2010-9), Award on Jurisdiction, 10 February 2012 (Dupuy, Bernárdez and Lalonde) (Exhibit RL-29).

225The Respondent notes that in their Counter-Memorial on Jurisdiction, ¶¶64, 72, and 73, the Claimants have only affirmed that Bolivia made no attempt to amicably settle the New Claims, that negotiations on nationalisation were unsuccessful and that Bolivia’s stance in this arbitration confirms the scarce possibilities that an agreement would have been reached. See ¶236 infra. Additionally, the Respondent considers in its allegations of 14 January 2013 that Teinver S.A. v. Argentine Republic (ICSID Case No. ARB/90/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151), reinforces Bolivia’s stance in this respect. This is so because the circumstances of such case and of this case are very different: here, there has been no kind of negotiation on the New Claims (unlike in the mentioned case). Therefore, the prior negotiation requirement has not been observed. See Transcript (English), Day 1, 2 April 2013, 246:17-247:15.

226Respondent’s Post-Hearing Brief, ¶¶64-65.

227Reply on Jurisdiction, ¶¶176-177. See ¶236 infra.

228Counter-Memorial on Jurisdiction, ¶¶63, 73, and 78. See ¶234 infra. In this regard, in its allegations of 14 January 2013, the Respondent contradicts the position of Claimants concerning Teinver S.A. v. Argentine Republic. According to the Respondent, what is decisive in this concern is for the claims to relate to the same object; without the tribunal defining what should be considered as such. In any case, the New Claims have no relation whatsoever to nationalisation. See Transcript (English), Day 6, 9 April 2013, 1430:1-1430:9.

229Reply on Jurisdiction, ¶179. See Transcript (English), Day 1, 2 April 2013, 248:20-248:22.

230Counter-Memorial on Jurisdiction, ¶70. See ¶234 infra.

231Reply on Jurisdiction, ¶180; Respondent’s Post-Hearing Brief, ¶66. See Transcript (English), Day 1, 2 April 2013, 248:24-249:11.

232Id., ¶181.

233Id., ¶182.

234See Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru (ICSID Case No. ARB/03/4), Award, 7 February 2005 (Buergenthal, Cremades and Paulsson) (Exhibit RL-126).

235Reply on Jurisdiction, ¶186. See Transcript (English), Day 1, 2 April 2013, 247:23-248:20.

236Id., ¶187.

237Id., ¶188; Statement of Claim, ¶254.

238Reply on Jurisdiction, ¶191.

239Statement of Claim, ¶¶105-110.

240Counter-Memorial on Jurisdiction, ¶¶79-80, and 192.

241Counter-Memorial on Jurisdiction, ¶79.

242Reply on Jurisdiction, ¶193.

243See Transcript (English), Day 1, 2 April 2013, 145:11-145:12; Transcript (English), Day 6, 9 April 2013, 1359:21- 1360:12.

244The UK-Bolivia BIT establishes that once an agreement has not been reached after the amicable consultation period and six months have passed since one of the parties notified the other of the existence of the dispute, the relevant arbitration may be commenced. On the contrary, the US-Bolivia BIT simply refers to the lapse of three months for any of the parties to submit the dispute to mandatory arbitration, with no additional requirements.

245Counter-Memorial on Jurisdiction, ¶¶68-71. See Abaclat and others v. Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4 August 2011 (Tercier, Abi-Saab and van den Berg) (Exhibit CL-138); Biwater Gauff (Tanzania) Ltd. v. Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); Bayindir Insaat Turizm Ticaret ve Sanayi A.S v. Islamic Republic of Pakistan (ICSID Case No. ARB/01/13), Decision on Jurisdiction, 14 November 2005, (Kaufmann Kohler, Berman and Böckstiegel) (Exhibit CL-116); SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan (ICSID Case No. ARB/01/13), Decision on Jurisdiction, 6 August 2003, (P.Feliciano, Faurès and Thomas) (Exhibit CL-107); Ronald S. Lauder v. Czech Republic (UNCITRAL Case), Award, 3 September 2001 (Briner, Klein and Cutler) (Exhibit CL-23); Link-Trading Joint Stock Company v. Consumer Control Department of the Republic of Moldavia, Award on Jurisdiction, 16 February 2001 (Hertzfeld, Buruiana and Zykln) (Exhibit CL-105); Wena Hotels Limited v. Republic of Egypt (ICSID Case No. ARB/98/4), Summary of the Tribunal ́s Minutes, 25 May 1999 (Leigh, Fadlallah and Haddad) (Exhibit CL-103); Frank J. Sedelmayer v. Russian Federation, Award, 7 July 1998 (Exhibit CL-102); Ethyl Corporation v. Government of Canada, Award on Jurisdiction, 24 June 1998 (Böckstiegel, Brower and Lalonde) (Exhibit RL-5). See Transcript (Spanish), Day 1, 2 April 2013, 1359:1-1359:4.

246Id., ¶¶73-75.

247Id., ¶¶75-76. See Generation Ukraine, Inc. v. Ukraine (ICSID Case No. ARB/00/9), Award, 16 September 2003 (Salpius, Voss and Paulsson) (Exhibit RL-24); Swisslion DOO Skopje v. Former Yugoslav Republic of Macedonia (ICSID Case No. ARB/09/16), Award, 6 July 2012 (Guillaume, Price and Thomas) (Exhibit CL-142); CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on Jurisdiction, 17 July 2003 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-83).

248Id., ¶77. See Murphy Exploration and Production Company International v. Republic of Ecuador (ICSID Case No. ARB/08/4), Award on Jurisdiction, 15 December 2010, (Oreamuno Blanco, Grigera Naón and Vinuesa) (Exhibit RL-60); Burlington Resources Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Jurisdiction, 2 June 2010 (Kaufmann-Kohler, Stern and Orrego Vicuña) (Exhibit RL-17).

249Id., ¶¶80-83. In this respect, see the allegations of the Claimants concerning Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151), since according to Claimants it supports their stance. See Transcript (English), Day 1, 2 April 2013, 146:7-146:19.

250Id., ¶¶49-50. See, inter alia, Ronald S. Lauder v. Czech Republic (UNCITRAL), Final Award, 3 September 2001 (Exhibit CL-23); Abaclat et al v. Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility, 4August 2011(Tercier, Abi-Saab and van den Berg) (Exhibit CL-138); Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51) or Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).

251Statement of Claim, ¶¶106-110, and 167-171.

252Statement of Defense, ¶¶19-20, 24, 136, 231, 296, and 616. See, Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).

253Rejoinder on the Merits, ¶¶53-57. See, Teinver S.A., Transportes de Cercanías S.A and Autobuses Urbanos del Sur S.A. v. Argentine Republic (ICSID Case No. ARB/09/1), Decision on Jurisdiction, 21 December 2012 (Exhibit CL-151).

254Respondent’s Post-Hearing Brief, ¶¶68-69.

255See Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno Blanco and Derains) (Exhibit RL-22). See Transcript (English), Day 6, 9 April 2013, 1431:1-1431:6.

256Memorial on Jurisdiction, ¶¶185-187; Respondent’s Post-Hearing Brief, ¶74.

257Id., ¶¶195-206. See Pantechniki S.A. Contractors & Engineers v. Albania (ICSID Case No. ARB/07/21), Award, 28 July 2009, (Paulsson) (Exhibit RL-18); Societé Générale de Surveillance S.A. v. Republic of Philipines (ICSID Case No. ARB/02/6), Tribunal ́s Decision on Objections to Jurisdiction, 29 January 2004, (El Khoseri, Crawford and Crivellaro) (Exhibit RL-19); Noble Energy, Inc. and Machalapowe CIA. LTDA v. Ecuador and Consejo Nacional de Electricidad (ICSID Case No. ARB/05/12), Decision on Jurisdiction, 5 March 2008 (Kaufmann-Kohler, Cremades and Alvarez) (Exhibit RL-20); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (former Compaigne Générale des Eaux) v. Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002, (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26).

258Reply on Jurisdiction, ¶¶197-198; Respondent’s Post-Hearing Brief, ¶69. See Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Jurisdiction, 25 August 2006 (Sacerdoti, Marcano and Alvarez) (Exhibit RL-127); Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012 (Zuleta, Oreamuno and Derains) (Exhibit RL-22).

259See ¶¶144-146 supra.

260Memorial on Jurisdiction, ¶¶210-228.

261Id., ¶¶217-218.

262ROME 1995: Article 1, “Marginal Generation Unit. The last Generation Unit in the condition to satisfy a rise in demand, dispatched by the [CNDC] in accordance with the procedures established in these Regulations” [Tribunal’s Translation].

263Text of Supreme Decree No. 29599 available in the Memorial on Jurisdiction, ¶235.

264Reply on Jurisdiction, ¶202(a).

265See footnote on p. 193 of the Reply on Jurisdiction.

266Memorial on Jurisdiction, ¶¶239-242, and 246-251.

267Id., ¶¶244, 245, and 251; Respondent’s Post-Hearing Brief, ¶70. See Iberdrola Energía, S.A. v. Republic of Guatemala (ICSID Case No. ARB/09/5), Award, 17 August 2012, (Zuleta, Oreamundo Blanco and Derains) (Exhibit RL-22); Generation Ukraine Inc. v Ucraine (ICSID Case No. ARB/00/9), Award, 16 September 2003, (Paulsson, Salpius and Voss) (Exhibit RL-24).

268See ¶¶138-141 supra. Respondent’s Post-Hearing Brief, ¶72.

269Memorial on Jurisdiction, ¶¶253-267.

270Id., ¶268.

271See ¶134 supra.

272See ¶135 supra.

273In this regard, the Respondent mentions the case of Iberdrola again, where the arbitration tribunal considered that the investor was making claims based on a treaty concerning matters that were actually utterly regulatory in relation to the tariffs applicable to the electricity sector. Thus, it considered that the claims were not protected under the treaty.

274Memorial on Jurisdiction, ¶¶275-277; Reply on Jurisdiction, ¶202(b).

275The Respondent argues, relying on Joy Mining Machinery Limited v. Arab Republic of Egypt (ICSID Case No. ARB/03/11), Decision on Jurisdiction, 6 August 2004 (Orrego Vicuña, Laurence Craig and Weeramantry) (Exhibit RL-11), that such merely commercial claims do not give rise to claims under the investment treaties.

276See ¶¶127, 158-160 supra.

277Memorial on Jurisdiction, ¶¶290-291; Reply on Jurisdiction, ¶202(c).

278See Transcript (English), Day 6, 9 April 2013, 1430:11-1430-14.

279See ¶¶239-251 supra.

280See Counter-Memorial on Jurisdiction, ¶86(a), and Statement of Claim, ¶¶189-209, for the measure relating to spot prices; Counter-Memorial on Jurisdiction, ¶86(b), and Statement of Claim, ¶¶210-220, for the measure relating to the PBP; Counter- Memorial on Jurisdiction, ¶86(c), and Statement of Claim, ¶¶111-113, and 254-259, for the measure relating to the Worthington engines.

281Counter-Memorial on Jurisdiction, ¶86(a).

282See Total S.A. v. The Argentine Republic (ICSID Case No. ARB/04/1), Decision on Responsibility, 27 December 2010.

283Rejoinder on Jurisdiction, ¶61.

284Id., ¶86(b).

285Id., ¶62.

286Id., ¶87. See Oil Platforms- Islamic Republic of Iran v. United States of America (International Court of Justice), Justice Higgins’ Separate Opinion dated 12 December 1996, ICJ Reports 1996 847 (Exhibit CL-100).

287Id., ¶88. The Respondent used the Iberdrola Energía v. Republic of Guatemala case as a support of its argument. Nevertheless, the Claimants allege that case has no relation whatsoever with the case at issue, since in that arbitration claimant failed to prove that the claims submitted were of international nature. The tribunal in that case determined that whether the State had violated or not its obligations under the treaty was not in debate, therefore everything ended up in the fact that it was a question relating to the law of the State of Guatemala.

288Reply on Jurisdiction, ¶204; Statement of Claim, ¶211; Counter-Memorial on Jurisdiction, section 2 and footnote 193.

289Memorial on Jurisdiction, ¶299. See Z. Douglas, “The Hybrid Foundations of Investment Treaty arbitration”, 74 BYIL, 2005, p. 275 (Exhibit RL-66).

290Id., ¶307.

291Memorial on Jurisdiction, ¶307; Reply on Jurisdiction, ¶209.

292Reply on Jurisdiction, ¶210; Statement of Claim, ¶219. See Transcript (English) Day 1, 2 April 2013, 258:21-259:8.

293Response to the Request for Bifurcation of 27 August 2012, ¶36; Reply on Jurisdiction, ¶205; Counter-Memorial on Jurisdiction, ¶¶95-96. According to the Respondent, the Claimants argue the existence of a triple identity test that in this case would not have been confirmed and, in addition, Bolivia’s objection would deprive the US-Bolivia BIT’s effective means protection from its effet utile.

294Memorial on Jurisdiction, ¶¶313-316; Reply on Jurisdiction, ¶206. See Chevron Corporation and Texaco Petroleum Corporation v. Republic of Ecuador [II] (PCA Case No. 2009-23), Third Provisional Award on Jurisdiction, 27 February 2012, (Veeder, Grigera Naón and Vaughan Lowe) (Exhibit RL-23); Pantechniki S.A. Contractors & Engineers v. Albany (ICSID Case No. ARB/07/21), Award of 28 July 2009, (Paulsson) (Exhibit RL-18). See Transcript (English) Day 1, 2 April 2013, 257:12-258:20.

295Counter-Memorial on Jurisdiction, ¶¶94-95. The Respondent, in its Reply on Jurisdiction, ¶207, copies textually from the Counter-Memorial the arguments presented thereby: “the fork in the road clause applies only when an investment treaty arbitration and a domestic court litigation have [...] (iii) the same legal basis for the claim [...] although [EGSA] relied on Bolivian Law, GAI is suing for breach of the effective means provision (Article II.4) of the US Treaty.”

296Reply on Jurisdiction, ¶211. The Respondent considers that GAI, not having been incorporated in Bolivia or performing energy activities at its own risk, lacks standing to commence administrative proceedings. Likewise, the company is controlled, mostly, by Bolivian investors. At the time of submitting a request for arbitration, EGSA could not be regarded as an investor from the United States.

297See Alex Genin, Eastern Credit Limited, INC. and A.S. Baltoil v. Republic of Estonia (ICSID Case No. ARB/99/2), Award, 25 June 2001 (Fortier, Heth and van den Berg) (Exhibit RL-128).

298Reply on Jurisdiction, ¶213. The Respondent holds that the Claimants’ assertion would make it impossible for the fork-in- the-road and the effective remedy clauses to coexist. Nevertheless, this is not true, since an American investor, in accordance with the US-Bolivia BIT, can submit a claim before the domestic courts, when being affected by ineffective means, and submit a claim under the BIT itself that is not affected by the fork-in-the-road clause. This would actually occur when there is no dispute unity

299Counter-Memorial on Jurisdiction, ¶94. See, inter alia, Yukos Universal Limited (Isle of Man) v. Russian Federation (UNCITRAL Case, PCA Case No. AA227), Award on Jurisdiction and Admissibility, 30 November 2009, (Fortier, Poncet and Schwebel) (Exhibit CL-127); Desert Line Projects LLC v. Republic of Yemen (ICSID Case No. ARB/05/17), Award, 6 February 2008 (Tercier, Paulsson and El-Kosheri) (Exhibit CL-95); Occidental Exploration and Production Company v. Republic of Ecuador (LCIA Case No. UN 3467), Final Award of 1 July 2004 (Orrego Vicuña, Brower and Sweeney) (Exhibit CL-31).

300See Pantechniki S.A. Contractors & Engineers (Greece) v. Republic of Albany (ICSID Case No. ARB/07/21), Award, 30 July 2009, (Paulsson) (Exhibit RL-18).

301See ¶¶259-262 supra.

302Reply on Jurisdiction, footnote 202.

303Rejoinder on Jurisdiction, ¶211.

304See Transcript (English), Day 1, 2 April 2013, 147:14-147:22.

305See Transcript (English), Day 1, 2 April 2013, 147:23-147:25.

306Reply on Jurisdiction, ¶208

307Rejoinder on Jurisdiction, ¶¶74-75.

308Memorial on Jurisdiction, ¶¶321-325. See Jan de Nul N.V. and Dredging International N.V. v Arab Republic of Egypt (ICSID Case No. ARB/04/13), Decision on Jurisdiction, 16 June 2006 (Kaufmann-Kohler, Mayer and Stern) (Exhibit RL- 12); Loewen Group. Inc. and Raymond L. Loewen v. United States (ICSID Case No. ARB(AF)/98/3), Decision on the merits, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68); Generation Ukraine, Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-34).

309Id., ¶320.

310Id., ¶329. Dr Carlos Quispe is “responsible for responding the administrative remedies filed against the energy authorities’ decisions and representing the Bolivian State in the judicial proceedings against such decisions.”

311Reply on Jurisdiction, ¶¶215-216.

312Id., ¶217; Counter-Memorial on Jurisdiction, ¶¶99, 101-103.

313See Generation Ukraine Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Salpius, Voss and Paulsson) (Exhibit RL-24); Saluka Investments BV v. Czech Republic (UNCITRAL Case-PCA Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36). See Transcript (English) Day 1, 2 April 2013, 250:2-250:21.

314Counter-Memorial on Jurisdiction, ¶102. In this regard, the Claimants assert that both cases were claims based on the denial of justice and, therefore, in this case the exhaustion of local remedies would indeed be required. See ¶276 infra.

315See Loewen Group, Inc. and Raymond L. Loewen v. United States (ICSID Case No. ARB(AF)/98/3), Decision, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68).

316See Jan de Nul N.V v. Republic of Egypt (ICSID Case No. ARB/04/13), Decision, 16 June 2006 (Kaufmann-Kohler, Mayer and Stern) (Exhibit RL-12).

317Counter-Memorial on Jurisdiction, ¶102. See ¶276 infra.

318See Helnan International Hotels A/S v. Egypt (ICSID Case No. ARB/05/19), Annulment Proceeding, Decision of the ad hoc Committee, 14 June 2010 (Schwebel, Ajibola and McLachlan) (Exhibit CL-132).

319See Generation Ukraine Inc. v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-24).

320Reply on Jurisdiction, ¶222.

321Id., ¶223.

322Counter-Memorial on Jurisdiction, ¶101. See CME Czech Republic BV v. Czech Republic (UNCITRAL), Partial Award, 13 September 2001 (Kuhn, Schwebel and Hándl) (Exhibit RL-33); Mytilineos Holdings S.A. v. State Union of Serbia & Montenegro and Republic of Serbia (UNCITRAL Case), Partial Award on Jurisdiction, 8 September 2006 (Reinisch, Koussolis and Mitrović) (Exhibit CL-94). See Transcript (English), Day 1, 2 April 2013, 148:8-148:19.

323Id., ¶102. See Jan de Nul NV and Dredging International NV v. Republic of Egypt (ICSID Case No. ARB/04/13), Award, 6 November 2008 (Kaufmann Kohler, Mayer and Stern) (Exhibit CL-56); The Loewen Group, Inc. and Raymond L. Loewen v. United States of America (ICSID Case No. ARB(AF)/98/3), Award, 26 June 2003 (Mason, Mikva and Mustill) (Exhibit RL-68); Waste Management, Inc. v. United Mexican States (ICSID Case No. ARB(AF)/00/3), Award, 30 April 2004 (Crawford, Civiletti and Magallón Gómez) (Exhibit RL-99); Parkerings-Compagniet A.S. v. Republic of Lithuania (ICSID Case No. ARB/05/8), Award, 11 September 2007 (Lew, Lalonde and Lévy) (Exhibit RL-13).

324Id, ¶102. See Generation Ukraine, Inc, v. Ukraine (ICSID Case No. ARB/00/9), Decision, 16 September 2003 (Paulsson, Salpius and Voss) (Exhibit RL-24); Helnan International Hotels A/S v. Republic of Egypt (ICSID Case No. ARB/05/19), Annulment Proceeding, Decision of the ad hoc Committee, 14 June 2010 (Schwebel, Ajibola and McLachlan) (Exhibit CL- 132).

325Memorial on Jurisdiction, ¶318.

326Reply on Jurisdiction, ¶¶220-223; Counter-Memorial on Jurisdiction, ¶¶102-103.

327Rejoinder on Jurisdiction, ¶79, and footnotes 163 and 164.

328Reply on Jurisdiction, ¶233(2)(b).

329Memorial on Jurisdiction, ¶337.

330Counter-Memorial on Jurisdiction, ¶110; Rejoinder on the Merits, ¶85.

331Statement of Claim, ¶¶146-148.

332Id., ¶¶151-154. See Norwegian Shipowners’ claims (Norway v. United States), Award, 13 October 1922, United Nations Reports of International Arbitral Awards, Vol. I (Anderson, Vogt and Valloton) (Exhibit CL-1); Goldenberg Case (Germany v. Romania), Award, 27 September 1928, United Nations Reports of International Arbitral Awards , Vol. II (Fazy) (Exhibit CL-3). See K. J. Vandevelde, “U.S. International Investment Agreements” (2009) (Exhibit CL-59); L. B. Sohn and R. R. Baxter, “Responsibility of States for Injuries to the Economic Interests of Aliens”, American Journal of International Law (1961) (Exhibit CL-4).

333Claimants’ Post-Hearing Brief, ¶7.

334Id., ¶¶156-161. See CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Final Award, 14 March 2003 (Kuhn, Schwebel and Brownlie) (Exhibit CL-27); Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana, Award on Jurisdiction and Liability, 27 October 1989, in (1994) 95 International Law Reports (Schewebel, Wallace and Leigh) (Exhibit CL-8); Amoco International Finance Co v. The Islamic Republic of Iran (Iran-US Claims Tribunal), Award, 14 July 1987 (Exhibit CL-6); Rumeli Telekom A.S. and Telsom Mobil Telekomikasyon Hizmetteri A.S. v. Republic of Kazakhstan (ICSID Case No. ARB/05/16), Award, 29 July 2008 (Hanotiau, Boyd and Lalonde) (Exhibit CL-52). See Transcript (English), Day 1, 2 April 2013, 73:4-74:17.

335Id., ¶¶162-165; Reply on the Merits, ¶110. See ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38); Ioannis Kardassopoulos and Ron Fuchs v. Georgia (ICSID Cases Nos., ARB/05/18 and ARB/07/15), Award, 3 March 2010 (Fortier, Orrego Vicuña and Lowe) (Exhibit CL-65); Mohammad Ammar Al-Bahloul v. Republic of Tajikistan (SCC Case No. V (064/2008)), Partial Award on Jurisdiction and Liability, 2 September 2009 (Hertzfeld, Happ and Zykin) (Exhibit CL-64).

336Statement of Claim, ¶¶166-168.

337Statement of Claim, ¶169. See Transcript (English), Day 1, 2 April 2013, 74:21-77:8; Transcript (English), Day 6, 9 April 2013, 1329:4-1329:21.

338Statement of Claim, ¶¶228-229; Reply on the Merits, ¶¶165-167. See, inter alia, Chorzów Factory (Merits), PCIJ, Series A, No. 17, 1928 (Exhibit CL-2); Sempra Energy International v. The Argentine Republic (ICSID Case No. ARB/02/16), Award, 28 September 2007 (Orrego Vicuña, Lalonde and Rico) (Exhibit CL-46); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly, Compagnie Générale des Eaux) v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26); International Law Commission, “Draft Articles on Responsibility of States for Internationally Wrongful Acts (with comments)”, 2001 (Exhibit CL-21). See Transcript (English), Day 1, 2 April 2013, 77:13-77:23.

339Reply on the Merits, ¶172. See Sapphire International Petroleums Ltd. v. National Iranian Oil Co. (1963) 35 ILR 136 (Exhibit CL-152); Gemplus SA v. The United Mexican States (ICSID Case No. ARB(AF)/04/3 & ARB(AF)/04/4), Award, 16 June 2010 (Fortier, Magallón Gómez and Veeder) (Exhibit CL-67). See Transcript (English), Day 1, 2 April 2013, 94:11- 94:15.

340Statement of Claim, ¶¶230-231. See Compañía del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica (ICSID Case No. ARB/96/1), Award, 17 February 2000 (Fortier, Lauterpacht and Weil) (Exhibit CL-19); CMS Gas Transmission Company v. The Argentine Republic (ICSID Case No. ARB/01/8), Award, 12 May 2005 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-35); Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly, Compagnie Générale des Eaux) v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26).

341Id., ¶¶233-235. See Compass Lexecon Report, ¶69.

342See Section B.

343Id., ¶237. See Compass Lexecon Report, ¶65.

344Id., ¶252.

345Compass Lexecon Report, ¶71.

346Compass Lexecon Report, ¶72, footnote 53.

347Reply on the Merits, ¶¶185-186; Compass Lexecon Report, ¶¶110-119, and 121-125; Compass Lexecon Rebuttal Report ¶¶169-170. Claimants explain, for instance: (a) the SDDP from May 2010 to April 2014 was incomplete and therefore was lower; (b) the 2010 POES reflects information that would have been available at the market in May 2010 and which has proven more accurate than other forecasts; (c) MEC did not use the 2011-2022 long-term electricity programming of the SIN, but the 2010 POES for the same previous reasons. See Transcript (English), Day 1, 2 April 2013, 112:5-117:12; Transcript (English), Day 6, 9 April 2013, 1398:22-1401:18.

348Compass Lexecon Report, ¶¶140-143.

349Reply on the Merits, ¶¶179, and 182; Compass Lexecon Rebuttal Report, ¶¶58, 60-67, 70-74, 80-103, and 147. See Siemens A.G. v. The Argentine Republic (ICSID Case No. ARB/02/8), Award, 6 February 2007 (Sureda, Brower and Bello Janeiro) (Exhibit CL-41); Enron Corporation v. The Argentine Republic (ICSID Case No. ARB/01/3), Award, 22 May 2007 (Orrego Vicuña, van den Berg and Tschanz) (Exhibit CL-42); Sempra Energy International v. The Argentine Republic (ICSID Case No. ARB/02/16), Award, 28 September 2007 (Orrego Vicuña, Lalonde and Morelli Rico) (Exhibit CL-46); EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. v. The Argentine Republic (ICSID Case No. ARB/03/23), Award, 11 June 2012 (Kaufmann-Kohler, Remón and Park) (Exhibit RL-141).

350Claimants’ Post-Hearing Brief, ¶¶136-145. See Transcript (English), Day 1, 2 April 2013, 100:24-101:6, 101:22-105:6; Transcript (English), Day 6, 9 April 2013, 1380:7-1386:23, 1387:23-1388:2.

351 Reply on the Merits, ¶180; Claimants’ Post-Hearing Brief, ¶¶146-149; Compass Lexecon Rebuttal Report, ¶¶7, 55, 60-67, 70-73, and 80-102. See Transcript (English), Day 1, 2 April 2013, 100:24-101:6, 105:15-107:18. See Transcript (English), Day 6, 9 April 2013, 1388:12-1398:8.

352Statement of Claim, ¶238.

353Id., ¶¶240-245; Reply on the Merits, ¶¶214-220; Claimants’ Post-Hearing Brief, ¶176; Compass Lexecon Rebuttal Report, ¶175. See Gotanda, A study of Interest (Exhibit CL-44); Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. The Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment, 3 July 2002 (Fortier, Crawford and Fernández Rozas) (Exhibit CL-26); Alpha Projektholding GmbH v. Ukraine (ICSID Case No. ARB/07/16), Award, 8 November 2010 (Robinson, Alexandrov and Turbowicz) (Exhibit CL-68); France Telecom v. Lebanon (UNCITRAL), Award, 31 January 2005 (Audit, Lalonde and Akl) (Exhibit CL-34); Funnekotter & Ors v. Republic of Zimbabwe (ICSID Case No. ARB/05/6), Award, 22 April 2009 (Guillaume, Cass and Zafar) (Exhibit CL-61); Continental Casualty Company v. The Argentine Republic (ICSID Case No. ARB/03/9), Award, 5 September 2008 (Griffith, Söderlund and Ajibola) (Exhibit CL-54). See Transcript (English), Day 1, 2 April 2013, 130:21-133:16.

354Reply on the Merits, ¶¶221-223.

355Statement of Claim, ¶¶247-251; Reply on the Merits, ¶188. The numerical data were corrected, as evidenced in the Reply on the Merits, ¶188; Compass Lexecon Rebuttal Report, ¶¶27, 30-52, and 142. See Transcripts (English), Day 1, 2 April 2013, 117:13-126:19.

356Id., ¶171; Reply on the Merits, ¶¶110-112; Claimant’s Post-Hearing Brief, ¶¶100, and 106. See Mohammad Ammar Al- Bahloul v. Republica of Tajikistan (SCC Case No. V (064/2008)), Partial Award on Jurisdiction and Liability, 2 September 2009 (Hertzfeld, Happ and Zykin) (Exhibit CL-64); ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38). See Transcript (English), Day 1, 2 April 2013, 75:2-77:8.

357Statement of Defense, ¶115; Rejoinder on the Merits, ¶¶147-149; Respondent’s Post-Hearing Brief, ¶¶81-83. See Transcript (English), Day 1, 2 April 2013, 188:6-188:8.

359Id., ¶121; Respondent’s Post-Hearing Brief, ¶82. See Transcript (English), Day 1, 2 April 2013, 195:14-196:10.

360Id., ¶¶126-134. See Transcript (English), Day 1, 2 April 2013, 186:9-186:10.

361Id., ¶¶124, 136-139. See Amoco International Finance Corporation v. The Government of the Islamic Republic of Iran (Iran-US Claims Tribunal, Case No. 56), Partial Award, 14 June 1987 (Virally, Three and Brower) (Exhibit RL-76); Goetz and others v. Burundi (ICSID Case No. ARB/95/3), Award, 10 February 1999 (Weil, Bedjaoui and Bredin) (Exhibit RL-70). See Transcript (English), Day 1, 2 April 2013, 187:22-188:8.

362Statement of Defense, ¶150; Rejoinder on the Merits, ¶¶161-168. See Transcript (English), Day 1, 2 April 2013, 190:2- 190:4.

363Statement of Defense, ¶154; Rejoinder on the Merits, ¶160. See Transcript (English), Day 1, 2 April 2013, 189:21-189:24.

364Statement of Defense, ¶¶155-158, 160-162; Rejoinder on the Merits, ¶128. See Transcript (English), Day 1, 2 April 2013, 190:10-190:17.

365Statement of Defense, ¶159. See Transcript (English), Day 1, 2 April 2013, 190:19-190:21.

366Statement of Defense, ¶¶166-171; Rejoinder on the Merits, ¶¶123-128, and 172. See Minutes of the Meeting held by Bolivia, Rurelec and GAI, dated 5 July 2010 (Exhibit C-187); “Profin valora acciones del Elfec”, Los Tiempos, 13 August 2010 (Exhibit R-81). See Transcript (English), Day 1, 2 April 2013, 185:10-185:15, 185:17-185:19, 186:2-186:4, 186:9- 186:10, 190:10-190:17.

367 Statement of Defense, ¶¶8(c), and 135; Rejoinder on the Merits, ¶¶11, 127, and 152.

368PROFIN Report (Exhibit R-154).

369Statement of Defense, ¶¶143-144.

370Id., ¶¶174 (f)(g), and 185-193; Respondent’s Post-Hearing Brief, ¶¶92-93. See Econ One Report, ¶¶7, 41, and 95. See Transcript (English), Day 1, 2 April 2013, 198:20-206:5; Transcript (English), Day 6, 9 April 2013, 1435:11-1435:18, 1436:14-1441:13.

371Id., ¶175.

372Id., ¶¶177-184, 199-200; Rejoinder on the Merits, ¶¶176-182. See The Mavrommatis Palestine Concessions (Greece v. United Kingdom), PCIJ Series A, No. 5 (1925) (Exhibit RL-81); Martini Case, 2 U.N.R.I.A.A 554, Award, 8 May 1930 (Exhibit RL-82). See Transcript (English), Day 1, 2 April 2013, 193:12-193:17, 196:6-196:10.

373Rejoinder on the Merits, ¶¶186-205. See Transcript (English), Day 1, 2 April 2013, 236:13-242:1; Transcript (English), Day 6, 9 April 2013, 1471:9-1473:24.

374Statement of Defense, ¶¶202-203; See Lighthouses Concession Case (1956), Claim No. 27 (Exhibit RL-84); Philips Petroleum Company Iran v. The Islamic Republic of Iran (Iran-US Claims Tribunal), Award No. 425-39-2, 29 June 1989 (Exhibit RL-85); American International Group Inc. and American Life Insurance Company v. Iran (Iran-US Claims Tribunal), Award No. 99-2-3, 19 December 1983 (Exhibit RL-86); Thomas Earl Payne v. The Government of the Islamic Republic of Iran (Iran-US Claims Tribunal), Award No. 245-335-2, 8 August 1986 (Exhibit RL-87); Saghi v. The Islamic Republic of Iran (Iran-US Claim Tribunal), Award No. 544-298-2, 22 January 1993 (Exhibit RL-88).

375Id., ¶206; Econ One Valuation Report, ¶¶13-14.

376Id., ¶207.

377Id., ¶208.

378Id., ¶209.

379Statement of Defense, ¶¶214-218; Rejoinder on the Merits, ¶¶234-243. See Paz, ¶¶91-92, 95-100, and 102-105. See Transcript (English), Day 1, 2 April 2013, 207:14-208:22, 214:10-219:6; Transcript (English), Day 6, 9 April 2013, 1449:3- 1454:3.

380Statement of Defense, ¶223; Econ One Report, ¶20.

381Statement of Defense, ¶¶224-227; Econ One Report, ¶¶20-21, and 123; Paz, ¶¶113-115. In this regard, Respondent explains that since Claimants have disregarded stabilization when preparing their reports, so has Respondent when preparing its.

382Id., ¶¶236-237; Paz, ¶¶129-130, and 132.

383 Id., ¶¶232-235; Paz, ¶¶127-128. See Transcript (English), Day 6, 9 April 2013, 1456:22-1457:12.

384Statement of Defense, ¶¶238-239. See Transcript (English), Day 6, 9 April 2013, 1457:13-1458:17.

385Id., ¶¶243-246; Aliaga, ¶32; Paz, ¶79; Econ One Report, ¶¶32-33. See Transcript (English), Day 1, 2 April 2013, 222:10- 222:22.

386Id., ¶¶248-250; Paz, ¶137; Econ One Report, ¶38. See Transcript (English), Day 1, 2 April 2013, 223:9-223:21.

387Id., ¶¶251-252; Compass Lexecon Report, ¶¶39-40. The Respondent explains that the mistake in this case does not necessarily benefit Bolivia. See Transcript (English), Day 1, 2 April 2013, 223:22-224:3.

388Id., ¶¶253-254; Econ One Report, ¶¶44-45. See Transcript (English), Day 1, 2 April 2013, 224:5-224:24.

389Id., ¶¶255-261; Paz, ¶¶134-136; Econ One Report, ¶48. See Transcript (English), Day 1, 2 April 2013, 225:4-226:7.

390Id., ¶¶262-269; Econ One Report, ¶51. See SEDCO, Inc. v. National Iranian Oil Company and the Islamic Republic of Iran (Iran- US Claims Tribunal), Award No. 309-129-3, 2 July 1987 (Exhibit RL-91); Himpurna California Energy Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Paulsson, Fina and Setiawan) (Exhibit RL-92).

391Id., ¶¶270-278; Econ One Report, ¶¶52-84.

392See Transcript (English), Day 1, 2 April 2013, 232:2-232:4, 233:10-233:17.

393See Transcript (English), Day 1, 2 April 2013, 232:4-232:9, 234:9-234:12, 235:5-235:15.

394See Transcript (English), Day 1, 2 April 2013, 227:16-231:18; Transcript (English), Day 6, 9 April 2013, 1459:15- 1468:19.

395See Himpurna California Energy Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Exhibit RL-92); Patuha Power Ltd. v. PT (Persero) Perusahaan Listruik Negara, Award, 4 May 1999 (Exhibit RL-137); Mobil Cerro Negro, Ltd. v. Petróleos de Venezuela, S.A. and PDVSA Cerro Negro, S.A. (ICC Case No. 15416/JRF/CA), Award, 23 December 2011 (Exhibit RL-138); Joseph Charles Lemire v. Ukraine (ICSID Case No. ARB/06/18), Award, 28 March 2011 (Armesto, Paulsson and Voss) (Exhibit CL-70); Railroad Development Corporation (RDC) v. Guatemala (ICSID Case No. ARB/07/23), Award, 29 June 2012 (Sureda, Eizenstat and Crawford) (Exhibit RL-139).

396Rejoinder on the Merits, ¶¶210-233.

397Statement of Defense, ¶280.

398Statement of Defense, ¶¶288-290. See Desert Line Projects LLC v. Republic of Yemen (ICSID Case No. ARB/05/17), Award, 6 February 2008 (Tercier, Paulsson, El-Kosheri) (Exhibit RL-140); Autopista Concesionada de Venezuela, C.A. (“Aucoven”) v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/00/5), Award, 23 September 2003 (Kauffman- Kohler, Böckstiegel and Cremades) (Exhibit CL-29)

399Rejoinder on the Merits, ¶¶254-261.

400Statement of Defense, ¶278; Rejoinder on the Merits, Section 2.5; Econ One Report, ¶¶87-88.

401Statement of Claim, ¶260.

402Statement of Claim, ¶¶174-175. See, inter alia, Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt (ICSID Case No. ARB/04/13), Award, 6 November 2008 (Kaufmann Kohler, Mayer and Stern) (Exhibit CL-56); P. Muchlinski, MULTINATIONAL ENTERPRISES AND THE LAW (Blackwell, Oxford: 1999) (Exhibit CL-18); R. Dolzer, “Fair and Equitable Treatment: A Key Standard in Investment Treaties” (2005) 39 The International Lawyer 87 (Exhibit CL-17).

403Id., ¶¶180-183. See Azurix Corp v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); MTD Equity Sdn Bhd and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Award, 25 May 2004 (Sureda, Lalonde, Oreamuno Blanco) (Exhibit CL-30); Saluka Investments BV v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (KCMG, Fortier and Behrens) (Exhibit CL-36); PSEG Global Inc., and Konya Ilgin Elektrik Uretim ve Ticaret Limited Sirketi v. Republic of Turkey (ICSID Case No. ARB/02/5), Award, 19 January 2007 (Orrego Vicuña, Fortier and Kaufmann-Kohler) (Exhibit CL-40). See Transcript (English), Day 1, 2 April 2013, 78:10-78:20.

404Id., ¶184. See Bayindir Insaat Turizm Ticaret Ve Sayani A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/03/29), Award, 27 August 2009 (Kaufmann Kohler, Berman, Böckstiegel) (Exhibit CL-63); Joseph Charles Lemire v. Ukraine (ICSID Case No. ARB/06/18), Decision on Jurisdiction and Responsibility, 28 March 2011 (Fernández-Armesto, Paulsson and Voss) (Exhibit CL-70); Técnicas Medioambientales TECMED S.A. v. United Mexican States (ICSID Case No. ARB (AF) 00/2/), Award, 29 May 2003 (Grigera Naón, Fernández Rozas and Bernal Verea) (Exhibit CL-28). See Transcript (English), Day 1, 2 April 2013, 78:21-79:6.

405See CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kühn, Schewebel and Hándl) (Exhibit CL-74).

406See Azurix Corp v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37).

407See Siemens A.G. v. Argentine Republic (ICSID Case No. ARB/05/3), Award, 6 February 2007 (Sureda, Brower, Janeiro) (Exhibit CL-41).

408Reply on the Merits, ¶¶124-125. See CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Award, 12 May 2005 (Orrego Vicuña, Lalonde and Rezek) (Exhibit CL-35); Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Responsibility, 27 December 2010 (Sacerdoti, Alvarez and Marcano) (Exhibit CL- 69). See Transcript (English), Day 1, 2 April 2013, 81:10-81:20.

409Statement of Claim, ¶¶189-191; Claimants’ Post-Hearing Brief, ¶¶107, and 109.

410Reply on the Merits, ¶¶128-130. See Transcript (English), Day 1, 2 April 2013, 68:7-70:4, 81:22-82:8.

411See National Grid PLC v. Argentine Republic (UNCITRAL), Award, 3 November 2008 (Garro, Kessler and Sureda) (Exhibit CL-55).

412Reply on the Merits, ¶¶131-133.

413Statement of Defense, ¶¶348-350, 353-365, and 395-400. Rejoinder on the Merits, ¶¶300-312. See, inter alia, Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); Ulysseas, Inc. v. Ecuador (UNCITRAL Case), Award, 12 June 2012 (Bernardini, Pryles and Stern) (Exhibit RL-94); Parkerings-Compagniet AS v. Republic of Lithuania (ICSID Case No. ARB/05/8), Award, 11 September 2007 (Lévy, Lew and Lalonde) (Exhibit RL-13); El paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96).

414Statement of Defense, ¶366. See Continental Casualty Company v. Argentina (ICSID Case No. ARB/03/9), Award, 5 September 2008 (Griffith, Söderlund and Ajibola) (Exhibit CL-54); El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96); White Industries Australia Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau SC and Rowley) (Exhibit CL-73).

415Statement of Defense, ¶¶369-392. See Transcript (English), Day 1, 2 April 2013, 252:4-252:10.

416Rejoinder on the Merits, ¶¶315-324. See Letter from EGSA to the Minister of Hydrocarbons and Energy of 7 April 2010 (Exhibit R-149) and Agreement entered into by and between the Minister of Hydrocarbons and Energy and the Companies from the Electricity Sector – “Dignity Tariff” Strategic Alliance Agreement dated 11 March 2010, Section 2, Article 2.3 (Exhibit R-89). See Transcript (English), Day 1, 2 April 2013, 253:4-253:16.

417Statement of Defense, ¶¶415-419. See, inter alia, Waste Management v. Mexico (No. 2) (ICSID Case No. ARB(AF)/00/3), Award, 30 April 2004 (Crawford, Civiletti and Magallón Gómez) (Exhibit RL-99); Thunderbird v. Mexico (UNCITRAL Case), Award, 26 January 2006 (van den Berg, Ariosa and Wälde ) (Exhibit RL-100).

418Rejoinder on the Merits, ¶325; Econ One Second Report, ¶¶222-228. See Transcript (English), Day 1, 2 April 2013, 253:17-255:5.

419Rejoinder on the Merits, ¶¶332-333.

420Statement of Claim, ¶197.

421Id., ¶¶199-200; CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kühn, Schwebel and Hándl) (Exhibit CL-74); Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); Asian Agricultural Products Ltd v. Sri Lanka (ICSID Case No. ARB/87/3), Final Award, 27 June 1990 (El-Kosheri, Goldman and Asante) (Exhibit CL-10). See Transcript (English), Day 1, 2 April 2013, 82:11-82:16.

422Reply on the Merits, ¶¶136-138. See Biwater Gauff (Tanzania) Ltd. v. Unified Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Born, Landau and Hanotiau) (Exhibit CL-51); National Grid PLC v. Argentine Republic (UNCITRAL Case), Award, 3 November 2008 (Garro, Kessler and Sureda ) (Exhibit CL-55).

423Statement of Claim, ¶¶201-205; Reply on the Merits, ¶¶140-141.

424Statement of Defense, ¶¶436, and 439-441. See Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Award, 14 July 2006 (Sureda, Lalonde and Martins) (Exhibit CL-37); CME Czech Republic BV v. Czech Republic (UNCITRAL Case), Partial Award, 13 September 2001 (Kuhn, Schwebel and Hándl) (Exhibit RL-33).

425Statement of Defense, ¶¶427-428.

426Id., ¶¶429-435. See El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Award, 31 October 2011 (Caflisch, Bernardini and Stern) (Exhibit RL-96); Asian Agricultural Products Ltd v. Sri Lanka (ICSID Case No. ARB/87/3), Final Award, 27 June 1990 (El-Kosheri, Goldman and Asante) (Exhibit CL-10); Saluka Investments BV v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36).

427Id., ¶¶442-443.

428Statement of Claim, ¶¶208-209.

429Reply on the Merits, ¶¶143-146. See Saluka Investments BV (Netherlands) v. Czech Republic (UNCITRAL Case), Partial Award, 17 March 2006 (Watts, Fortier and Behrens) (Exhibit CL-36); Biwater Gauff (Tanzania) Ltd. v. Unified Republic of Tanzania (ICSID Case No. ARB/05/22), Award, 24 July 2008 (Garro, Kessler and Sureda) (Exhibit CL-51).

430Statement of Claim, ¶261; Claimants’ Post-Hearing Brief, ¶109.

431Reply on the Merits, ¶204; Compass Lexecon Rebuttal Report, ¶¶135-136, and 125.

432Statement of Claim, ¶¶263-265; Reply on the Merits, ¶¶206-207; Compass Lexecon Report, ¶¶121, 118-119, and 124- 125; Corrections made to Compass Lexecon Rebuttal Report, ¶175. See Transcript (English), Day 1, 2 April 2013, 128:2- 129:11; Transcript (English), Day 6, 9 April 2013, 1406:2-1407:9.

433Statement of Defense, ¶¶449-451. See AIG Capital Partners, Inc. and CJSC Tema Real Estate Company v. Republic of Kazakhstan (ICSID Case No. ARB/01/6), Award, 7 October 2003 (Nariman, Bernardini and Vukmir) (Exhibit RL-103); Lauder v. Czech Republic (UNCITRAL Case), Award, 3 September 2001 (Briner, Klein and Cutler) (Exhibit CL-23).

434Statement of Defense, ¶¶445-448, 450-452, and 455.

435Statement of Defense, ¶¶420-423, and 473-483; Econ One Report, ¶¶121, and 124. See Compass Lexecon Report, ¶121, and 123; Econ One Report, ¶¶115-119. See Transcript (English), Day 1, 2 April 2013, 253:17-255:5.

436Statement of Defense, ¶¶460-462, 463-466, and 468-469; Rejoinder on the Merits, ¶¶357-367. See, inter alia, Chorzów Factory, PCIJ, Ser. A, No. 17, Judgment, 13 September 1928 (Exhibit C-2); Nykomb Synergetics Tech. Holding A.B. v. Republic of Latvia (Arbitration Institute of the Stockholm Chamber of Commerce), Award, 16 December 2003 (Haug, Schütze and Gernandt) (Exhibit RL-106); S.D. Meyers, Inc. v. Government of Canada (UNCITRAL Case), Partial Award, 13 November 2000 (Schwartz, Rae and Hunter) (Exhibit RL-107). See Transcript (English), Day 1, 2 April 2013, 255:18-256:7; Transcript (English), Day 6, 9 April 2013, 1447:19-1447:22.

437Rejoinder on the Merits, ¶374.

438Statement of Claim, ¶¶210-215; Reply on the Merits, ¶¶150, and 152; Claimants’ Post-Hearing Brief, ¶¶117-119. See White Industries Australias Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau and Rowley) (Exhibit CL-73); EDF International S.A., SAUR International S.A. and Leon Participaciones Argentinas S.A. v. Argentine Republic (ICSID Case No. ARB/03/23), Award, 11 June 2012 (Kaufmann-Kohler, Remón and Park) (Exhibit CL- 141); Bayindir Insaat Turizm Ticaret ve Sanayi A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/03/29), Award, 27 August 2009 (Kaufmann-Kohler, Berman and Böckstiegel) (Exhibit CL-170); MTD Equity Sdn. Bhd and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Award, 25 May 2004 (Exhibit CL-30). See Transcript (English), Day 1, 2 April 2013, 85:24-88:7.

439Statement of Claim, ¶¶216-220; Claimants’ Post-Hearing Brief, ¶¶120, and 128. See Transcript (English), Day 1, 2 April 2013, 88:18-89:10, 89:20-90:15, 90:16-91:9; Transcript (English), Day 6, 9 April 2013, 1373:9-1374:20.

440Reply on the Merits, ¶¶153-154; Claimants’ Post-Hearing Brief, ¶122. See Transcript (English), Day 1, 2 April 2013, 90:16-92:1.

441Reply on the Merits, ¶¶156-157. See Transcript (English), Day 6, 9 April 2013, 1374:21-1376:2.

442Statement of Claim, ¶¶268-270; Compass Lexecon Report, ¶¶128, 132, and 139; Reply on the Merits, ¶¶210-211; Compass Lexecon Rebuttal Report, ¶¶154-157, 160, 175, and footnote 199. See Transcript (English), Day 1, 2 April 2013, 129:12-130:20.

443Statement of Defense, ¶¶491-492.

444Id., ¶¶529-531. See Transcript (English), Day 1, 2 April 2013, 259:24-260:6.

445Id., ¶523.

446Id., ¶¶535, and 564-571. Third Witness Statement of Dr Quispe, ¶¶19, and 21. See Transcript (English), Day 1, 2 April 2013, 261:11-261:16.

447Id., ¶¶537-538. See Duke Energy Electroquil Partners & Electroquil S.A. v. Republic of Ecuador (ICSID Case No. ARB/04/19), Award, 18 August 2008 (Kaufmann Kolher, Gómez Pinzón and van den Berg) (Exhibit RL-109); Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (UNCITRAL Case), Partial Award on the Merits, 30 March 2010 (Böckstiegel, Brower and van den Berg) (Exhibit CL-66).

448Id, ¶¶545-546, and 549. See White Industries Australia Limited v. Republic of India (UNCITRAL Case), Final Award, 30 November 2011 (Brower, Lau SC and Rowley) (Exhibit CL-73); Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (UNCITRAL Case), Partial Award on the Merits, 30 March 2010 (Böckstiegel, Brower and van den Berg) (Exhibit CL-66).

449Id., ¶¶557-560, and 562-563. See Transcript (English), Day 1, 2 April 2013, 259:24-260:23.

450Third Witness Statement of Quispe, ¶¶14-15. See 1992 Statistics (Exhibit R-161); 1994 Statistics (Exhibit R-162); 1995 Statistics (Exhibit R-163); 1996 Statistics (Exhibit R-164); 2007 Statistics (Exhibit R-165); 2009 Statistics (Exhibit R-166). See Transcript (English), Day 1, 2 April 2013, 261:1-261:4.

451Id., ¶¶575-576. See, inter alia, Elettronica Sicula S.p.A (ELSI) (United States v. Italy), ICJ Reports 1989, Judgment, 20 July 1989 (Exhibit RL-83); Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. Mexico (ICSID Case No. ARB(AF)/05/22), Award, 21 November 2007 (Cremades, Rovine and Siqueiros) (Exhibit CL-47); Gami Investments Inc. v. Government of the United Mexican States (UNCITRAL (NAFTA) Case), Final Award, 15 November 2004 (Reisman, Muró and Paulsson) (Exhibit RL-105). See Transcript (English), Day 1, 2 April 2013, 261:17-262:11.

452Id., ¶¶577-582.

453Statement of Defense, ¶¶587-596; Compass Lexecon Report, ¶¶129-130; Econ One Report, ¶¶130-131.

454The original amount of USD 142.3 million is recalculated by Claimants in their Reply, and produces a result of USD 136.4 million. Moreover, they request post-award interest once again. For greater clarity, see damages summary table in Reply, ¶224.

455Statement of Claim, ¶274; Reply on the Merits, ¶227; Claimants’ Post-Hearing Brief, ¶178.

456Statement of Defense, ¶628; Rejoinder on the Merits, ¶428.

457Ambiente Ufficio v. Argentine Republic, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶¶111-147.

458Ambiente Ufficio v. Argentine Republic, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶141.

459Noble Energy, Inc and Machalapower Cia, Ltda v. The Republic of Ecuador and Consejo Nacional de Electricidad, Decision on Jurisidction, 2008, ¶206.

460Rejoinder on Jurisdiction, ¶¶14-18, and documents referred thereto. See Exhibit R-61.

461Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012.

462Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012, ¶210.

463Cemex Caracas Investments, B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela, Decision on Jurisdiction, 30 December 2010, ¶¶152-158.

464Cemex Caracas Investments, B.V. and Cemex Caracas II Investments B.V. v. Bolivarian Republic of Venezuela, Decision on Jurisdiction, 30 December 2010, ¶¶157-158.

465Siemens A.G. v. Argentina (ICSID Case No. ARB/02/8), Decision on Jurisdiction, 3 August 2004, ¶137: “[T]here is no explicit reference to direct or indirect investment as such in the [German/Argentine BIT]. The definition of ‘investment’ is very broad. An investment is any kind of asset considered to be under the law of the Contracting Party where the investment has been made. The specific categories of investment included in the definition are included as examples rather than with the purpose of excluding those not listed. The drafters were careful to use the words ‘not exclusively’ before listing the categories of ‘particularly’ included investments. One of the categories consists of ‘shares, rights of participation in companies and other type of participation in companies’. The plain meaning of this provision is that shares held by a German shareholder are protected under the Treaty. The Treaty does not require that there be no interposed companies between the investment and the ultimate owner of the company. Therefore a literal reading of the Treaty does not support the allegation that the definition of investment excludes indirect investments.”

466Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision on Jurisdiction, 6 July 2007, ¶¶123–124, interpreting the Greece-Georgia BIT.

467Tza Yap Shun v. Republic of Peru (ICSID Case No. ARB/07/6), Decision on Jurisdiction, 19 June 2009, ¶¶106–111, where the tribunal based its decision on the text of Article 1 of the Peru-China BIT, the intention of the Contracting States to promote and protect investments, and the absence of an express limitation in the BIT.

468Mobil Corporation and Others v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/27), Decision on Jurisdiction, 10 June 2010, ¶¶ 162-66.

469Quiborax S.A. Non Metalic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, Decision on Jurisidction, 27 September 2012, ¶229.

470Romak S.A. (Switzerland) v. The Republic of Uzbekistan, Award, 26 November 2009.

471Alps Finance v. The Slovak Republic, Award, 5 March 2011.

472See Exhibit C-7.

473Plama v. Bulgaria, Decision on Jurisdiction, 8 February 2005, ¶161. See also Ulysseas Inc. v. Ecuador, Interim Award, 28 September 2010, ¶¶172-173.

474Ulysseas Inc. v. Ecuador, Interim Award, 28 September 2010, ¶172.

475Given its decision that it lacks jurisdiction over GAI, and for simplicity’s sake, the award will from now on refer only to a single Claimant, Rurelec, unless explicitly stated otherwise.

476Memorial on Jurisdiction, ¶155.

477Notice of Arbitration, ¶¶61-62.

478Notice of Arbitration, ¶63.

479The Tribunal also agrees with the decision of the Ambiente Ufficio v. Argentine case, Decision on Admissibility and Jurisdiction, 8 February 2013, ¶¶570-585, and the decision of ICS v. Argentina case, Award on Jurisdiction, 10 February 2012, ¶¶263-273. According to the latter decision: “[t]he Tribunal cannot therefore create exceptions to treaty rules where these are merely based upon an assessment of the wisdom of the policy in question, having no basis in either the treaty text or in any supplementary interpretive source, however desirable such policy considerations might be seen to be in the abstract” (¶267).

480ICS v. Argentina, Award on Jurisdiction, 10 February 2012, ¶272.

481Counter-Memorial on Jurisdiction, ¶73.

482Counter-Memorial on Jurisdiction, ¶64.

483Notice of Arbitration, ¶¶4, 6.

484See Exhibit C-40 (the same wording has been used in the Notice of Arbitration).

485CMS Gas Transmission Company v. Argentine, Decision of the Tribunal on Objections to Jurisdiction, 17 July 2003, ¶¶92-126.

486In any event the decommissioning and future sale could not occur, at least in practical terms, without the agreement of the regulator.

487Rejoinder on the Merits, ¶133; Claimants’ Opening Statement, 2 April 2013; Transcript (English), Day 1, 2 April 2013, 92:1-92:4.

488In the latter case, had the regulatory environment not been changed, the additional funds would have gone into the Stabilization Fund and therefore would not have created a positive cash flow in time (Rejoinder on the Merits, ¶371). This would nonetheless have had a positive impact on the economic fundamentals of EGSA, thereby increasing its capacity to obtain third party funding.

489Mr Earl and Mr Lanza expected that, once in operation, the CCGT would double the EGSA EBIDTA (see, for instance, Earl’s Cross-Examination, Transcript (English), Day 1, 2 April 2013, 25:20-25:22).

490Although it is true that some delays could have been avoided in the licensing phase, the main reasons for the lack of credits before nationalisation were not related to these delays, but to the complexity of the process.

491First Witness Statement of Paz, Annex 29; “Pacific Credit Ratings Report on Empresa Eléctrica Guaracachi S.A., September 2010”, p. 3 (Exhibit C-188), and “2009 Audited Financial Statements of Empresa Eléctrica Guaracachi S.A.”, notes 26, 15, and 4, 22 March 2010, p.32, note 26 (Exhibit C-183). The Tribunal also notes that by the end of the year the physical completion reached 99.9% (“Progress Report for Combined-Cycle Project GCH 12” December 2010 (Exhibit C-321)) even without the benefit of Mr Jerry Blake and IPOL’s cooperation (Claimants’ Closing Statement, 9 April 2013, Slides 29-32; Lanza’s Direct Examination, Transcript (English), Day 3, 4 April 2013, 609:19-609:22.

492Compass Lexecon Rebuttal Report, ¶20 and note 4.

493Rejoinder on Merits, ¶270.

494Llarens’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1022:15-1022:17.

495For the definition of “reserva fría”, see Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 869:6- 869:13.

496Joint UNDP/World Bank Energy Sector Management Assistance Programme, “Bolivia: Restructuring and Capitalization of the Electricity Supply Industry–An Outline for Change”, Report No. 21520, 12 September 1995 (Exhibit C-61); Joint UNDP/World Bank Energy Sector Management Assistance Programme, “ESMAP Country Paper: Bolivia,” Report No. 10498, December 1991 (Exhibit C-50); Bolivia: Reglamento de Operación del Mercado Eléctrico Mayorista, 28 June 1993 (Exhibit R-27); Statement of Claim, ¶¶190, 128; Electricity Law (Exhibit C-5); Supreme Decree No. 26,093/2001, 2 March 2001 (Exhibit C-85).

497Total S.A. v. Argentine Republic (ICSID Case No. ARB/04/1), Decision on Liability, 27 December 2010, (Sacerdoti, Álvarez, and Marcano) (Exhibit CL-69).

498Reply on the Merits, ¶¶131, 133-134.

499Rejoinder on Merits, ¶291.

500Statement of Claim, ¶89.

501Statement of Claim, ¶192.

502Reply on the Merits, ¶79.

503Statement of Defence, ¶330; Reply on Merits, ¶76.

504Reply on the Merits, ¶¶82-83.

505Resolution SSDE No. 185/2009, 25 September 2009 (Exhibit C-176).

506Claimants’ Closing Statement, 9 April 2013, Slide 18.

507Statement of Claim ¶¶37-38; Statement of Defence, ¶302.

508Later “Autoridad de Electricidad”. For the evolution of the legal and regulatory framework since 1994, see Respondent’s Opening Statement, 2 April 2013, Slide 245.

509Statement of Defence, ¶¶352-355 et seq.

510Reply on the Merits, ¶167, notably as to interest rate.

511Albeit that the Tribunal is convinced that causation and harm has been proven—see Reply on the Merits, ¶200 et seq.

512Claimants’ Opening Statement, 2 April 2013, Slide 60, and Aliaga’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 465:20-465:24.

513Earl’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 365:22-366:20.

514Compass Lexecon Report, ¶78.

515Statement of Defence, ¶54.

516It is true that PROFIN’s valuation had been considered as “un elemento estratégico en la negociación con GA” (PROFIN Consultores, S.A. “Estimación del valor de la empresa eléctrica Guaracachi S.A.” (Exhibit R-154)) but this does not mean that the conduct of Bolivia was wilful—see Claimants’ Post-Hearing Brief, ¶5.

517Reply on the Merits, ¶111.

518ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary (ICSID Case No. ARB/03/16), Award, 2 October 2006 (Kaplan, Brower and van den Berg) (Exhibit CL-38); Ioannis Kardassopoulos and Ron Fuchs v. Georgia (ICSID Cases Nos. ARB/05/18 and ARB/07/15), Award, 3 March 2010 (Fortier, Orrego Vicuña and Lowe) (Exhibit CL-65).

519Reply on the Merits, ¶¶101, 106.

520Rejoinder on the Merits, p. 50.

521Statement of Defence, ¶175.

522Respondent’s Closing Statement, 9 April 2013, Slide 35.

523Compass Lexecon Report, ¶¶284-287.

524Econ One Report, ¶¶89-98.

525Compass Lexecon Rebuttal Report, ¶¶25-29.

526Econ One Second Report, ¶¶50-73.

527Claimants’ Closing Statement, 9 April 2013, Slide 5; Respondent’s Opening Statement, 2 April 2013; Transcript (English), Day 1, 2 April 2013, 194:1-194:3.

528With the relevant exceptions of “size premium” and “country risk premium multiplier”, to be addressed below.

529Compass Lexecon Report, ¶66.

530“The appropriate risk-adjusted discount factor is the WACC of an efficiently managed firm in a similar market, contractual and institutional environment. The WACC is a firm’s (or a project’s) cost of raising funds from both shareholders (equity) and lenders (debt) in an efficient proportion, otherwise known as the optimal capital structure” (Compass Lexecon, Report, ¶¶68, 93). “El WACC representa la mínima tasa de rentabilidad que una empresa tiene que ofrecer a sus proveedores de capital para que inviertan en ella. Para una empresa que se financia con deuda y con capital propio, el WACC se calcula como el promedio ponderado del costo de la deuda (neto de impuestos) y el costo del capital propio” (Econ One Report, ¶51).

531Gemplus S.A. v The United Mexican States (ICSID Case Nos. ARB(AF)/04/3 & ARB(AF)/04/4), Award, 16 June 2010 (Fortier, Magallón Gómez, and Veeder), ¶13.91 (Exhibit CL-67).

532“This difference is explained primarily by Econ One’s ... assessments of the discount rate, spot energy price forecasts and capacity revenues” (Compass Lexecon Rebuttal Report, ¶4), meaning Revenues and Discount Rate, corresponding almost to 95% of the difference between the two experts positions (Id. ¶10). See also Compass Lexecon Rebuttal Report, ¶53; Econ One Second Report, ¶111; Respondent’s Opening Statement, 2 April 2013, Slide 107; Claimants’ Opening Statement, 2 April 2013, Slides 101-104.

533Compass Lexecon Rebuttal Report, ¶53.

534Compass Lexecon Rebuttal Report, ¶106 et seq. These assumptions, which relate to future needs for energy and the actual structure of production, provide a huge variety of results. It is therefore necessary to select which one to retain—see Llarens’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1019-1022.

535In relation to Carbon credits (Compass Lexecon Report, ¶83 and Econ One Report, ¶29) both experts calculate the sales value of the credits the same way. However, Compass Lexecon did not initially deduct the 30% that should revert to Bolivia in the first report. See the explanations and corrections of Dr Abdala (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April, 1188).

536Including the expectations of the willing seller and the way it fulfilled or not what it had expected.

537Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 936:18-936:21. See also Abdala’s Cross- Examination, Transcript (English), Day 5, 8 April 2013, 1183:12-1184:8; Flores’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1277:13-1278:1.

538See, for instance, Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 936:5-936:21; Transcript (English), Day 4, 5 April 2013, 935:5-935:21; Transcript (English), Day 4, 5 April 2013, 954:3-954:8.

539Claimants’ Post-Hearing Brief, ¶165.

540See for instance Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1183:11-1183:18; Transcript (English), Day 5, 8 April 2013, 1077:21-1077:24.

541Respondent’s Post Hearing Brief, ¶111 et seq.

542Compass Lexecon Report, Appendix C (“Mercados Energéticos’s Report on Dispatch Run Assumptions”).

543First Witness Statement of Paz, ¶¶96-97.

544Compass Lexecon Rebuttal Report, ¶¶110, 112, and footnote 122.

545First Witness Statement of Paz, Annex 39 (CNDC, “Plan Óptimo del Sistema de Interconectado Nacional, 2011-2021, Diciembre 2010”), p. 32.

546Reporte Energía, Magazine No. 07, January 2009, p. 12 (Exhibit C-294).

547First Witness Statement of Paz, Annex 40 (CNDC, “Plan de Expansión del Sistema Interconectado Nacional”).

548And assuming that a WB could have anticipated 9 years for the construction (First Witness Statement of Paz, Annex 29, p. 104).

549Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1083:7-1083:19.

550Abdala considers this opinion his “judgement call”, albeit the CNDC inputs and lack of budget confirm his point of view (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1080:22-1080:23; 1082:18-1082:21).

551As the 2012 international bond issue of Bolivia would confirm.

552First Witness Statement of Paz, Annex 40: CNDC, “Plan de Expansión del Sistema Interconectado Nacional”, p. 17; Flores’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1208-1210.

553First Witness Statement of Paz, Annex 39: CNDC, “Plan Óptimo del Sistema de Interconectado Nacional, 2011-2021, Diciembre 2010”, p. 103; Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 993:12-994:16.

554If Rositas commenced production in 2018, the value of the damages, in accordance with Compass Lexecon’s valuation, would be USD 900,000 (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1079). This figure has not been subject to any comment from Mr Flores or the Respondent.

555The same reasoning shall be applied to ARJ 1, ARJ 2 and ARJ 3.

556First Witness Statement of Paz, Annex 8: CNDC, “Informe de Precios de Nodo, Período Mayo-Octubre 2010”, p. 10; Paz’s Cross-Examination, Transcript (English), Day 4, 5 April 2013, 944-947. PROFIN Consultores, S.A. “Estimación del valor de la empresa eléctrica Guaracachi S.A.” (Exhibit R-154); First Witness Statement of Paz, Annex 4 (ENDE, “Memoria Anual 1991”) (assuming Karachipampa would still be active in 2020).

55701/2010 Acta de Reunión de Directorio de la “Empresa Guaracachi S.A.” 27 January 2010 (Exhibit R-83).

558Aliaga’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 441:7-441:12; Andrade’s Cross-Examination, Transcript (English), Day 2, 3 April 2013, 471:21-472:3.

559Compass Lexecon Rebuttal Report, ¶¶119-120.

560See, for example, in relation to the decommissioning of units ARJ 5 and ARJ 6, Resolution SSDE No. 107/2007, 2 April 2007 (Exhibit C-136); Resolution SSDE No. 341/2007, 8 November 2007 (Exhibit C-141); and Resolution SSDE No. 185/2009, 25 September 2009 (Exhibit C-176).

561In any case, the difference at stake in relation to Karachipampa is of USD 1.1million (Compass Lexecon Rebuttal Report, ¶120).

562Compass Lexecon Report, ¶80; Compass Lexecon Rebuttal Report, ¶123; Econ One Second Report, ¶194.

563Respondent’s Closing Statement, 9 April 2013, Econ One Report, ¶7, Table 1.

564Respondent’s Closing Statement, 9 April 2013, Slide 74, quoting Lanza’s Cross-Examination, Transcript (English), Day 3, 4 April 2013, p. 642:25-643:9.

565Respondent’s Post-Hearing Brief, ¶¶129-132.

566Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1201:7-1201:21.

567Flores’ Direct Examination Presentation, Slides 9-14 (albeit that Slide 13 shows as “Indexación Econ One” the standard index that is less favourable to the Respondent than that accepted by the Tribunal).

568First Witness Statement of Paz, ¶¶126-132.

569First Witness Statement of Paz, ¶131 (Table).

570Third Witness Statement of Paz, ¶¶55-56.

571Compass Lexecon Rebuttal Report, ¶¶169-173, 179.

572Tax has been considered as an issue, but Compass Lexecon agreed in its Rebuttal Report (Compass Lexecon Rebuttal Report, ¶140) with Econ One’s remarks (Econ One Report, ¶34).

573Econ One Report, ¶20.

574Econ One Second Report, ¶219.

575Econ One Second Report, ¶¶219-221.

576Compass Lexecon Rebuttal Report, ¶141.

577Econ One Report, ¶39.

578Econ One Report, ¶¶41-45; Compass Lexecon Rebuttal Report, ¶¶126-131; Econ One Second Report, ¶¶204-210.

579Compass Lexecon Report, ¶90.

580Compass Lexecon Report, ¶91; Transcript (English), Day 5, 8 April 2013, 1070 et seq.

581Econ One Report, ¶¶46-48.

582First Witness Statement of Paz, ¶¶134-135.

583Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1065:11-1065:23.

584Respondent’s Post-Hearing Brief, ¶¶133-136.

585First Witness Statement of Paz, ¶135.

586Econ One Report, ¶52.

587Claimants’ Post-Hearing Brief, ¶152.

588Claimants’ Post-Hearing Brief, ¶152.

589Compass Lexecon Report, ¶152.

590Econ One Report, ¶¶54-56; Econ One Second Report, ¶¶153-159.

591Compass Lexecon Rebuttal Report , ¶81. An argument made in this last report about investment banks (¶82) appeared to be wrong (Econ One Second Report, ¶155).

592Econ One Second Report, ¶159.

593Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1105:7.

594Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1110-1112.

595For all the respect that Professor Damodaran commands among practitioners and financial experts, his texts are not always fully polished. Professor Damodaran’s text literally refers to 2009, which seems to be an obvious mistake,as the document was actually written in early 2009.

596Context suggests that Professor Damodaran did not mean “used” in the past, but rather “have now used” in the annual update he is referring to.

597A. Damodaran, “The year that was and hopefully will not see again for a while...Thoughts on 2009”, 2009, p.1 (Exhibit C-168).

598A. Damodaran, “Equity Risk Premium (ERP): Determinants, Estimation and Implications- A Post-Crisis Update”, Stern School of Business, October 2009, p. 67 (Exhibit C-177).

599A. Damodaran, “Equity Risk Premium (ERP): Determinants, Estimation and Implications-The 2010 Edition”, Stern School of Business, February 2010, p. 68 (Exhibit E0-29).

600In the Tribunal’s view, it bears noting that the indication made by the Respondent that all the reports at Exhibit C-300 come from the Latin American Equity Research Department of just one single bank (Banco Santander). Moreover, even if Exhibit C-300 was dated 27 August 2009 by the Claimants, it still contains reports dated in Santiago de Chile at three different times, showing a series of market premiums in its WACC estimates for Argentina, Chile, Colombia and Peru (namely: August 27, 2009: 6.5%; June 8, 2010: 5.50%; October 25, 2010: 5.50%).

601Compass Lexecon Report, ¶155.

602Compass Lexecon Report, ¶156.

603Compass Lexecon Report, ¶¶157-159.

604Econ One Report, ¶¶62-65.

605Econ One Second Report, ¶¶167-173.

606Compass Lexecon Report, ¶167.

607Econ One Report, ¶¶83-85.

608Compass Lexecon Rebuttal Report, ¶¶100-102.

609Econ One Second Report, ¶¶176-178.

610As indicated in line 15 of Table 2 above, the debt to capital ratio (41.60%) is the result of dividing the debt/equity ratio by (1 + debt/equity), i.e. 0.7124/1.7124=0.4160. The difference between this number and 1 is the ratio equity/capital (0.5840).

611This number is the consequence of “re-levering” the “unlevered beta” according to the formula at line 9 of Table 2 above: 0.68226 (1 + (1-0.25) x 0.7124).

612Compass Lexecon Report, ¶160. See also Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1054:2- 1054:7, and Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1256:13-1256:20.

613Compass Lexecon Report, ¶161.

614Spanish original: “La tasa de actualización a utilizar en la aplicación de la presente ley será de diez por ciento (10%) anual, en términos reales. Esta tasa solo podrá ser modificada por el Ministerio, mediante resolución administrativa debidamente fundamentada. La nueva tasa de actualización fijada por el Ministerio no podrá diferir en más de dos (2) puntos porcentuales de la tasa vigente”. Electricity Law, Article 48 (Exhibit C-5).

615Claimants’ Post-Hearing Brief, ¶154.

616A. Damodaran, “Measuring Company Exposure to Country Risk: Theory and Practice”, Stern School of Business, September 2003, p. 10 (Exhibit EO-25).

617A. Damodaran, “Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2010 Edition”, Stern School of Business, February 2010, pp. 53-54. (Exhibit EO-29).

618A. Damodaran, “Valuation”, undated (Exhibit EO-71).

619A. Smithers, S. Wright, “Valuing Wall Street: Protecting Wealth in Turbulent Markets”, 2000, p. 176 (Exhibit EO-73).

620A. Damodaran, “Measuring Company Exposure to Country Risk: Theory and Practice”, Stern School of Business, September 2003, pp. 11-12 (Exhibit EO-25).

621A. Damodaran, “Country Risk Premium Spreadsheet Calculations”, January 2010, p.1 (Exhibit C-308).

622Econ One Report, ¶¶75-76.

623MORNINGSTAR, “Markets Results for Stocks, Bonds, Bills and Inflation 1926-2009 - Ibboston SBBI 2010 Valuation Yearbook” (Exhibit EO-13); Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1289:11-1289:12.

624MORNINGSTAR, “Markets Results for Stocks, Bonds, Bills and Inflation 1926-2009-Ibboston SBBI 2010 Valuation Yearbook”, pp. 44-46, 86, Table 7-2 (Exhibit EO-13).

625Compass Lexecon Rebuttal Report, ¶¶60-67; Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1051:9-1051:16, quoting Damodaran.

626J. Tarbell, “The Small Company Risk Premium: Does it Really Exist?” American Society of Appraisers, 18th Annual Advanced Business Valuation Conference, New Orleans, Louisiana, 1999 (Exhibit C-247). This piece was actually dated 1999 and not 2012, as referred to in the Compass Lexecon Rebuttal Report, ¶63. Dr Abdala noted this mistake during the hearings and corrected it (See Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1130).

627Also, in accordance with Mr Abdala, even if any of those items existed, the size premium would not be used automatically, as its potential application would become a matter of judgment (see Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1132). Mr Abdala noted that in more than 150 valuations he had only used size premium in one or two cases in which very severe illiquidity situations were present (see Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1130:6-1130-12).

628See, for instance, Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1122:15-1122:23; 1123:1- 1123:5.

629Econ One Second Report, ¶¶126-135.

630Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1229:25-1230:5.

631Claimants’ Post-Hearing Brief, ¶137.

632The Respondent notes that Fama and French’s position was taken two years after the relevant date for valuation (see Respondent’s Post-Hearing Brief, ¶140; and Flores’ Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1239-1242). Professor Damodaran stated in April 2011 that he refuses to use the “Fama-French model or added a small premium cap to a CAPM model in intrinsic valuation” (A. Damodaran, “Alternatives to the CAPM: Part 2: Proxy Models”, 20 April 2011, p.3 (Exhibit C-370)), but Dr Flores disagrees with Professor Damodaran’s approach (Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1243:12-1243:13; 1253:11-1253:15). See also Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1292-1293.

633Claimants’ Post-Hearing Brief, ¶¶138-139.

634Claimants’ Post-Hearing Brief, ¶141.

635Claimants’ Post-Hearing Brief, ¶145; Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1243:8- 1248:6. However, when redirected, Dr Flores brought new arguments related to the need to sacrifice the “granulate” effect to statistic strength (Flores’ Cross-Examination, Transcript (English) Day 5, 8 April 2013, 1291-1292).

636Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1132:4-1132:16..

637Dr Abdala holds a totally opposite view with the Respondent as to the point that, if a single item is applicable, the size premium would be justified (Abdala’s Cross-Examination, Transcript (English), Day 5, 8 April 2013, 1131-1132).

638A. Damodaran, “Comatose Markets: What If Liquidity Is Not The Norm?”, Stern School of Business, December 2010, pp. 53-54 (Exhibit C-268).

639A. Damodaran, “Comatose Markets: What If Liquidity Is Not The Norm?”, Stern School of Business, December 2010, pp. 55-56 (Exhibit C-268).

640Statement of Claim, ¶238.

641Compass Lexecon Report, ¶98.

642Statement of Claim,. ¶¶241-242.

643Econ One Report, ¶136

644Claimants’ Post-Hearing Brief, ¶¶176-177.

645Statement of Defence, ¶¶288-289.

646Respondent Post-Hearing Brief, ¶¶168-169.

647Available at: and in the document called "MONEDA Y MERCADO 2010" (available at ). At that website, one can see that the "TASAS DE INTERES ACTIVAS ANUALES" in foreign currenccy as at May 2010 were, for commercial bank loans: nominal (5,474092%) and effective (5,633331%).