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Crystallex v. Venezuela (Facts (Crystallex (CAN) obtained auth in 2002 to…
Crystallex v. Venezuela
Facts
- Crystallex (CAN) obtained auth in 2002 to explore, exploit and sell fold at Las Cristinas from CVG
- Mine Operations Contract (MOC) was signed for a 20 + 10 +10 years operation
- Auth to affect natural resources(Permit) required Crystallex to obtain Land Occupation Permit, Feasibility Study, Environmental Impact Study and a guarantee bond for environmental taxes
- On 2008, Ministry of Environment rejected the Permit on the grounds that it was concerned with indigenous people and the environment
- Chávez announced took control of Las Cristinas and started exploring it through a Russina/Venezuelan company
- CVG assured Crystallex that the MOC was still valid
- 2010, CVG informed that the MOC was rescinded for reasons of opportunity and convenience and due to the cessation of activities for more than 1 year
Issues
- Should the jursdiciton be bifurcated
Denial of the Permit and rescission of the MOC were separate disputes, and there were no amicable settlement to MOC question
MOC was a conctract claims, not subjected to the investment treaty tribunal
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Negligent or arbitrary conduct, lack of due process, transparency and consistency
- Failure to provide full protection and security (which includes legal security)
- Article II(1) - indirect expropriation, rescission of the MOC and transfer of all assets to CVG
Rules
- Jurisdiction: the issues were related to the same "subject matter" (CMS v Arg and Teinver v. ARG, and Swisslion v. MAC), and the existence of a contract doesn't mean that there isn't a treaty claim
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Proctection of legitimate expectations, protection against arbitrary and discriminatory treatment, transparency and consistency
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- Over legitimate expectatitions
Promise or representation to an investor as to a substantive benefit on which the investor has relied in making its investment
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Economic rationality, reasonableness and proportionality
- Full protection and security - dismissed
Treaty included contractual rights as investment, therefore the MOC contained rights capable of being expropriated
Public purpose, due processo of law, non-discriminatory manner, and against prompt, adequate and effective compensation