TEAM CODE:14R

IN THE PERMANANENT COURT OF ARBITRATION,

THE PEACE PALACE, THE HAGUE, NETHERLANDS

UNDER THE PERMANENT COURT OF ARBITRATION OPTIONAL RULES FOR

ARBITRATING DISPUTES BETWEEN TWO STATES, 1992

REPUBLIC OF MIRAGEA
(CLAIMANT)
V.
REPUBLIC OF SHANDORA
(RESPONDENT)

MEMORANDUM FILED ON THE BEHALF OF REPUBLIC OF SHANDORA

(RESPONDENT)
 TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................... 1

TABLE OF ABBREVIATIONS ................................................................................................ 2
LIST OF REFERENCES AND CASES .................................................................................... 3
STATEMENT OF JURISDICTION .......................................................................................... 5
STATEMENT OF FACTS ......................................................................................................... 6
STATEMENT OF ISSUES ........................................................................................................ 8
SUMMARY OF PLEADINGS .................................................................................................. 9
DETAILED PLEADINGS ....................................................................................................... 10
I. WHETHER THE PERMANENT COURT OF ARBITRATION (PCA) HAS THE
JURISDICTION TO DECIDE ON THE DISPUTE BETWEEN THE TWO PARTIES. ... 10
A. SSDS Is Not Permissible Under the S–M BIT and Cannot Be Imported via the
MFN Clause ...................................................................................................................... 10
B. In Arguendo, Arbitration Is Inadmissible as the Claimant Failed to Satisfy the
Mandatory Pre-Arbitral Conditions under Article 31 of the Shandora - U-SAM BIT..... 13
II. WHETHER SHANDORA IS LIABLE FOR THE PROTECTION OF INVESTMENT
EVEN BEFORE THE 2023 AGREEMENT RELATED TO THE CESSION OF KARAI
BARI?................................................................................................................................... 15
A. Non-retroactivity of the BIT over the territory of Shandora.................................... 15
B. Shandora lacked any rationale personae to protect Miragean investors before 2023
17
C. Shandora had no de jure sovereignty over the territory ........................................... 18
III. WHETHER STARSPARK QUALIFIES AS AN ‘INVESTOR’ UNDER THE
SHANDORA-MIRAGE BIT, AND WHETHER THE RECHARACTERIZATION OF
MIRAGEA AS STARSPARK’S HOME STATE SOLELY TO INITIATE STATE–STATE
ARBITRATION CONSTITUTES AN ABUSE OF PROCESS UNDER
INTERNATIONAL LAW AND THE APPLICABLE BIT FRAMEWORK. ...................... 20
A. StarSparks does not qualify as an investor under the S-M BIT framework ............ 20
B. The arrangement for third party funding constitutes an unethical practice. ............ 23
PRAYER .....................................................................................................................25

Page 1 of 26
 TABLE OF ABBREVIATIONS

Abbreviations Full Form

& And

§ Section

Art. Article

v. Versus

BIT Bilateral Investment Treaty

S-M BIT Shandora-Miragea BIT

CIL Customary International Law

ICSID International Centre for Settlement of Investment

Disputes

IMS International Minimum Standard

SSDS State-State Dispute settlement

PCA Permanent Court of Arbitration

SS-MSM Star Spark-Miragea State Mining Joint Venture

TPF Third Party Funding

UN United Nations

UNGA United Nations General Assembly

VCLT Vienna Convention on the Law of Treaties

VCSST Vienna Convention on Succession of States in respect of

Treaties

Page 2 of 26
 LIST OF REFERENCES AND CASES

CASES

S.No. Case Citation

1. Salini Costruttori S.p.A. v. Kingdom of Morocco, ICSID Case No.
ARB/00/4, Decision on Jurisdiction (July 23, 2001).
2. Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No.
ARB/03/24, Decision on Jurisdiction (Feb. 8, 2005).
3. Wintershall Aktiengesellschaft v. Argentina, ICSID Case No.
ARB/04/14, Award (Dec. 8, 2008).
4. ICS Inspection & Control Services Ltd. v. Argentina, ICSID Case No.
ARB/10/9, Award on Jurisdiction (Feb. 10, 2012)
5. Daimler Financial Services AG v. Argentina, ICSID Case No. ARB/05/1,
Award (Aug. 22, 2012)
6. Kilic İnşaat İthalat İhracat Sanayi ve Ticaret Anonim Şirketi v.
Turkmenistan, ICSID Case No. ARB/10/1, Award (July 2, 2013).
7. Philip Morris Brands Sàrl v. Uruguay, ICSID Case No. ARB/10/7, Award
(July 8, 2016).
8. BG Group plc v. Argentina, 572 U.S. 25 (2014).
9. Murphy Exploration & Production Co. International v. Ecuador, ICSID
Case No. ARB/08/4, Award on Jurisdiction (Dec. 15, 2010).
10. Mondev International Ltd. v. United States, ICSID Case No.
ARB(AF)/99/2, Award (Oct. 11, 2002).
11. Astrida Benita Carrizosa v. Colombia, ICSID Case No. ARB/18/5,
Award (Apr. 19, 2021).
12. ST-AD GmbH v. Bulgaria, PCA Case No. 2011-06, Award on
Jurisdiction (July 18, 2013).
13. Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on
Jurisdiction (Apr. 29, 2004)
14. CMS Gas Transmission Co. v. Argentina, ICSID Case No. ARB/01/8,
Award (May 12, 2005).
15. Archer Daniels Midland Co. v. Mexico, ICSID Case No. ARB(AF)/04/5,
Correction to Award (June 21, 2008).
16. Abaclat v. Argentina, ICSID Case No. ARB/07/5, PCA Case No. IR
2011/1, Secretary-General's Decision (Aug. 4, 2011).
17. Caratube International Oil Co. LLP v. Kazakhstan, ICSID Case No.
ARB/08/12, Award (June 5, 2012).
18. Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5,
Award (Apr. 15, 2009).

TREATISES AND INTERNATIONAL INSTRUMENTS

S.No. Treaties
1. Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S.
331.

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2. Vienna Convention on Succession of States in Respect of Treaties, Aug.
23, 1978, 1946 U.N.T.S. 3.
3. Convention on the Settlement of Investment Disputes Between States and
Nationals of Other States (ICSID Convention), Mar. 18, 1965, 575
U.N.T.S. 159.
4. Shandora-Miragea BIT, (Mar. 1, 2005) (Moot Proposition).
5. Draft Articles on Responsibility of States for Internationally Wrongful
Acts, arts. 1, 2, 28 & pt. II, [2001] 2 Y.B. Int’l L. Comm’n 26, U.N. Doc.
A/56/10.
6. International Law Commission, Draft Articles on Most-Favoured-
Nation Clause with Commentaries, II Y.B. Int'l L. Comm'n, pt. 2, 20
(1978)
7. PCA Arbitration Rules, U.N. Doc. PCA/ARB/12/1, annex (Dec. 17,
2012).
8. PCA Optional Conciliation Rules, U.N. Doc. PCA/CONC/96/1, annex
(1996).

BOOKS & COMMENTARIES

S.No. Books
1. James Crawford, Brownlie’s Principles of Public International Law (9th
ed., Oxford Univ. Press 2019).
2. Brian D. Lepard, Customary International Law: A New Theory with
Practical Applications (Cambridge Univ. Press 2010).
3. Malcolm N. Shaw, International Law (9th ed., Cambridge Univ. Press
2021).
4. Sean D. Murphy, Principles of International Law (3d ed., West Academic
Publishing 2018).

JOURNALS AND ARTICLES

S.No. Journals and Articles

1. Gary Born & Marija Šćekić, Pre-Arbitration Procedural Requirements:
'A Dismal Swamp', in Practising Virtue: Inside International Arbitration
(2015).
2. Dyalá Jiménez Figueres, Multi-Tiered Dispute Resolution Clauses in
ICC Arbitration, 14 ICC Bull. 1 (2003).
3. Maryam Salehijam, The Role of the New York Convention in
Remedying the Pitfalls of Multi-Tiered Dispute Resolution Clauses
(2019).

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 STATEMENT OF JURISDICTION

The Republic of Miragea (“Miragea/Claimant”) and the Republic of Shandora

(“Shandora/Respondent”) appear before the Permanent Court of Arbitration regarding the
Claimant’s assertions under the Shandora–Miragea BIT. The Respondent respectfully submits
that the Tribunal lacks jurisdiction: the Shandora–Miragea BIT contains no provision for State–
State arbitration, and its MFN clause in Article 4(2) is limited to substantive treatment of
investors and cannot import a dispute-resolution mechanism from the Shandora–U-SAM BIT.

Accordingly, the Republic of Shandora requests that the court decline jurisdiction in the instant
matter.

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 STATEMENT OF FACTS

I. Background of the Host State and Formation of Investment

Miragea is a developing nation rich in untapped diamond reserves, yet plagued by the
poor labour standards, especially in the northern province of Karai Bari, this region is
infamous for the systemic exploitation of the Seeris, a minority ethnic group, through
forced labour in sweatshops largely operated by foreign investors. Recognising the
economic potential of the region, StarSpark Mines, a globally renowned diamond
mining corporation headquartered in Zephyria, entered a joint-venture with the Miragea
State Mining Company (MSM) in 2010. The joint-venture, named SS-MSM, was
structured with 60% shareholding vested in StarSpark and 40% in MSM, and the profits
to be shared in a 70:30 ratio in favour of StarSpark. StarSpark invested approximately
USD 8 million in mining operations over five years in Karai Bari.
II. Political Reactions and Introduction of Retrospective Taxation
Though the exploitation of Seeris labour attracted sporadic opposition criticism, the
Miragean government remained largely indifferent until mounting public dissent and
upcoming elections prompted a shift in policy. In 2015, Miragea passed a retrospective
taxation law targeting only foreign investors for alleged violations of labour standards
from 2010 to 2015 in Karai Bari, exempting domestic entities. SS-MSM was thereby
obligated to pay USD 3 million in retrospective tax. Despite this financial imposition,
the State did not interfere with SS-MSM’s licenses, equipment, or ongoing operations.
III. Regional Conflict and Suspension of Operations
During the same period, migration of Seeris into neighbouring Shandora created
internal unrest and strained bilateral relations. After unsuccessful diplomatic
negotiations in 2011, 2013, and 2015, Shandora initiated military action in late 2015
and occupied parts of Karai Bari. Miragea's efforts to resist the incursion were
unsuccessful. Shandora suspended all commercial activity in the occupied area for two
years. The newly occupied territories by Shandora were soon recognised by at least 25
countries as part of Shandora, and some of them even initiated the process to open a
consulate in the occupied territories.
IV. Armed Conflict and Loss of Investment
Owing to failure of Diplomatic exchange and for the Security interest and resulting

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 illegal migration of Seeris to Shandora, Miragea’s northern neighbour, tensions
escalated. Shandora, facing internal disorder and diplomatic frustrations, launched a
military offensive in 2015 and occupied parts of Karai Bari. Miragea failed to repel the
invasion. Consequently, Shandora stopped all commercial activities in the newly
occupied territory for two years to stop the prospects of any rebellion. Though Miragea
raised the matter before the UNGA and UNSC, no action could be taken due to a veto
by U-SAM. However, UNGA passed a resolution affirming Miragea’s territorial
integrity. Following prolonged negotiations, Miragea agreed to cede 100 sq. km. of
occupied territory to Shandora in 2023 for USD 1 million per sq. km, thereby
recognising Shandora’s sovereignty over the region.
V. Investment Loss and Rejection of Compensation
The ceded territory encompassed SS-MSM’s primary mining operations. During the
conflict and the two-year commercial suspension, StarSpark’s investments comprising
over USD 20 million in rough and uncut diamonds and mining machinery were either
stolen or destroyed. StarSpark’s request for compensation was rejected by the newly
installed Shandoran government, which claimed that it only recognised investments
made after its occupation and that it bore no obligation towards earlier foreign investors
under international law.
VI. Invocation of International Arbitration
Following the loss of its investment, StarSpark approached its home State, Zephyria,
for diplomatic support. After diplomatic consultations and negotiations, Miragea agreed
to initiate arbitration proceedings on behalf of affected investors. As a result of these
negotiations, Miragea assumed the position of host State and filed a claim before the
Permanent Court of Arbitration (PCA) against Shandora, seeking damages for the loss
of investments suffered by both domestic and foreign entities that had operated in the
now-ceded territory.

Hence this matter before this Hon’ble Tribunal

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 STATEMENT OF ISSUES

I. WHETHER THE PERMANENT COURT OF ARBITRATION (PCA) HAS

THE JURISDICTION TO DECIDE ON THE DISPUTE
BETWEEN THE TWO PARTIES

A. SSDS Is Not Permissible Under the S–M BIT and Cannot Be Imported via
the MFN Clause.
B. In Arguendo, Arbitration Is Inadmissible as the Claimant Failed to Satisfy
the Mandatory Pre-Arbitral Conditions under Article 31 of the Shandora
- U-SAM BIT.

II. WHETHER SHANDORA IS LIABLE FOR THE PROTECTION OF

INVESTMENT EVEN BEFORE THE 2023 AGREEMENT RELATED TO
THE CESSION OF KARAI BARI?

A. Non-retroactivity of the BIT over the territory of Shandora

B. Shandora lacked any rationale personae to protect Miragean investors
before 2023
C. Shandora had no de jure sovereignty over the territory

III. WHETHER STARSPARK QUALIFIES AS AN ‘INVESTOR’ WITH A

VALID ‘INVESTMENT’ UNDER THE MIRAGEA–SHANDORA BIT, AND
WHETHER THE RECHARACTERIZATION OF MIRAGEA AS
STARSPARK’S HOME STATE TO INITIATE STATE–STATE
ARBITRATION CONSTITUTES AN ABUSE OF PROCESS UNDER
INTERNATIONAL LAW AND THE APPLICABLE BIT FRAMEWORK

A. StarSparks does not qualify as an investor under the S-M BIT framework
B. The arrangement for third party funding constitutes an unethical practice.

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 SUMMARY OF PLEADINGS

I. WHETHER THE PERMANENT COURT OF ARBITRATION (PCA) HAS THE

JURISDICTION TO DECIDE ON THE DISPUTE BETWEEN THE TWO
PARTIES.
The Respondents submit that the Tribunal lacks jurisdiction on two grounds. First, the BIT only
permits investor-state arbitration (ISDS), not state-state arbitration (SSDS), and jurisdiction
requires express consent, Second, the MFN clause cannot import SSDS from other treaties, as
procedural rights are excluded unless expressly included (Plama, Wintershall). The claim also
fails for non-compliance with pre-arbitration requirements. The Respondents request dismissal
for lack of jurisdiction or inadmissibility.

II. WHETHER SHANDORA IS LIABLE FOR THE PROTECTION OF

INVESTMENT EVEN BEFORE THE 2023 AGREEMENT RELATED TO THE
CESSION OF KARAI BARI?
The Respondent submits that the Tribunal lacks jurisdiction over pre-2023 investments in Karai
Bari on three grounds: (1) the BIT does not apply retroactively to investments made before its
entry into force; (2) the claimants did not qualify as protected foreign investors under the BIT
prior to 2023; and (3) Shandora had no treaty obligations concerning Karai Bari before
acquiring sovereignty in 2023. The Respondent therefore requests the Tribunal to decline
jurisdiction.

III. WHETHER STARSPARK QUALIFIES AS AN ‘INVESTOR’ UNDER THE

SHANDORA-MIRAGE BIT, AND WHETHER THE
RECHARACTERIZATION OF MIRAGEA AS STARSPARK’S HOME STATE
SOLELY TO INITIATE STATE–STATE ARBITRATION CONSTITUTES AN
ABUSE OF PROCESS UNDER INTERNATIONAL LAW AND THE
APPLICABLE BIT FRAMEWORK.
The Respondent argues with 2 fold argument StarSpark fails as a qualifying investor under the
BIT (1) its Zephyrian incorporation excludes it under Article 1(2), and its investment violated
Shandoran law; and (2) Miragea’s opaque third-party funding arrangement constitutes abusive
treaty shopping, distorting jurisdiction and undermining arbitration’s integrity. The Tribunal
should reject this abusive recharacterization.

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 DETAILED PLEADINGS

I. WHETHER THE PERMANENT COURT OF ARBITRATION (PCA) HAS THE

JURISDICTION TO DECIDE ON THE DISPUTE BETWEEN THE TWO
PARTIES.

1. The Respondents respectfully submit that this Tribunal lacks jurisdiction over the
present dispute for the following reasons: Firstly, the Shandora–Miragea BIT does not
permit State-State arbitration, and the MFN clause cannot import such a
mechanism[1.1], and secondly, in arguendo, even if such importation were to be
allowed, the Claimant failed to comply with mandatory pre-arbitration negotiations
under Article 31 of the Shandora–U-SAM BIT, rendering the claim inadmissible [1.2].
Thus, the Respondents therefore request that the Tribunal dismiss the case for lack of
jurisdiction or, alternatively, inadmissibility.

A. SSDS Is Not Permissible Under the S–M BIT and Cannot Be Imported via the
MFN Clause

2. The Respondents most respectfully submit that this Tribunal lacks jurisdiction to
adjudicate the present dispute. The S–M BIT only provides for investor–state dispute
resolution only, and does not allow SSDS.
3. It is submitted that the S–M BIT was intended solely to facilitate investor–state
arbitration. Article 7 of the S-M BIT sets out a comprehensive framework under which
“investors” may bring claims against the host State. Nowhere does the BIT contemplate
a mechanism by which the Contracting Parties themselves, i.e., Miragea and Shandora,
may institute State–State proceedings under the BIT. To permit Miragea to bring a claim
on behalf of its investor via SSDS is to read into the BIT what is not there and override
the basic requirement of treaty consent.
4. Miragea’s attempt to bypass this framework and invoke PCA jurisdiction directly
contravenes the BIT’s text and foundational principles of treaty consent.Consent to
international adjudication must be unequivocal and explicit. Furthermore, by
unilaterally initiating a state-state claim at the PCA, Miragea seeks to invent a
jurisdictional avenue that the parties never agreed to. What needs to be borne in mind
is that, where a BIT allows for the choice of a particular dispute-settlement method or
system, then the making of that choice implies acceptance of the procedures for

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 initiating a claim under the chosen method or system.
5. In the matter of Salini v. Morocco,1 the same contention was raised before ICSID and
the Tribunal held that BIT provisions are addressed to disputes “in which the respective
parties are necessarily an investor and a State,” thus, the disputes addressed by the
provisions of BIT are those in which the respective parties are necessarily an investor
and a State. The compulsory attempt to come to a settlement applies to only such
parties. Therefore, investors are the only capable party to settle claims and not the state.
6. Furthermore, it is also submitted that the MFN clause in the S–M BIT does not permit
the importation of SSDS provisions from the Shandora–U-SAM BIT. The accepted
view in international jurisprudence is that MFN clauses are generally restricted to
substantive protections, and not procedural rights such as dispute resolution, unless the
language of the clause clearly indicates otherwise.
7. It is further submitted that Article 4(2) of the Shandora–Miragea BIT, while providing
for MFN treatment, cannot be interpreted to incorporate procedural rights such as SSDS
from a third-party treaty. Jurisprudence confirms that MFN clauses are not a carte
blanche to import dispute resolution clauses unless expressly worded to permit such
incorporation.
8. In the matter of Plama Consortium Ltd. v. Republic of Bulgaria2, the Tribunal held
that the MFN clause could not be used to import broader dispute resolution provisions.
It reasoned that “to invoke the MFN clause to embrace the method of dispute resolution
was to subvert the intention of the parties to the basic treaty,” and would lead to
uncertainty and instability in treaty application. In the present matter, both Shandora
and Miragea chose not to include an SSDS clause in their BIT. That silence must be
respected, and cannot be overridden by importing provisions from a separate treaty that
reflects a different intention.
9. It is further submitted, that in the matter of Wintershall v. Argentina3, the Tribunal
rejected the invocation of the MFN clause to bypass procedural limitations, holding that
a wide interpretation “would generate both uncertainty and instability.” The MFN
clause must be read “in good faith in accordance with the ordinary meaning to be given

1
Salini Costruttori S.p.A. v. Kingdom of Mor., ICSID Case No. ARB/00/4, Decision on Jurisdiction (July 23,
2001).
2
Plama Consortium Ltd. v. Republic of Bulg., ICSID Case No. ARB/03/24, Decision on Jurisdiction (Feb. 8,
2005).
3
Wintershall Aktiengesellschaft v. Arg. Republic, ICSID Case No. ARB/04/14, Award (Dec. 8, 2008).

Page 11 of 26
 to the terms of the treaty in their context and in light of its object and purpose”.4 The
ordinary meaning of “treatment” under Article 4(2) of the Shandora–Miragea BIT
refers to substantive guarantees for investments, not procedural mechanisms for dispute
resolution.
10. It is submitted that, the Tribunal in ICS Inspection and Control Services Ltd v.
Argentina5, held that MFN clauses “do not encompass dispute settlement rights unless
expressly stated,” and that importing dispute resolution mechanisms from third-party
BITs would undermine the procedural architecture agreed upon by the contracting
parties.
11. Furthermore, it is submitted that in the matter of Daimler v. Argentina6, the Tribunal
refused to allow the claimant to bypass the established procedure through an MFN
clause. It held that the treaty signalled an intention to limit MFN treatment to
substantive, territorial matters, not procedural rights. A similar stance was seen in the
matter of Kilic v. Turkmenistan7, where the Tribunal found that the MFN clause’s
narrow wording was restricted to the “treatment” of investments and could not be
interpreted to import dispute-settlement provisions. The Tribunal noted that only a
broader formulation, covering “all matters”, would have sufficed to extend MFN
treatment to procedural rights
12. It is also submitted that the International Centre for Settlement of Investment Disputes
(ICSID) Convention itself does not authorise disputes between two Contracting States
in a treaty which is only governed by ISDS. Article 25(1) of the Convention provides
that there is no “jurisdiction over disputes between two or more Contracting States”8
and when the parties have given their consent, no party may withdraw its consent
unilaterally.9
13. Moreover, only the precise form of consent agreed upon by the parties in a BIT can
serve as the basis for jurisdiction.10 Treaty shopping or importing broader dispute
mechanisms from unrelated treaties is impermissible. The PCA Tribunal in the matter

4
Vienna Convention on the Law of Treaties art. 31, May 23, 1969, 1155 U.N.T.S. 331.
5
ICS Inspection & Control Servs. Ltd. v. Arg. Republic, ICSID Case No. ARB/10/9, Award on Jurisdiction (Feb.
10, 2012).
6
Daimler Fin. Servs. AG v. Arg. Republic, ICSID Case No. ARB/05/1, Award (Aug. 22, 2012).
7
Kilic İnşaat İthalat İhracat Sanayi ve Ticaret Anonim Şirketi v. Turkmen., ICSID Case No. ARB/10/1, Award
(July 2, 2013).
8
Convention on the Settlement of Investment Disputes Between States and Nationals of Other States art. 25(1),
Mar. 18, 1965, 575 U.N.T.S. 159
9
Christoph Schreuer, The ICSID Convention: A Commentary 342 (2d ed. 2009).
10
Slovak Republic v. Achmea B.V., Case C-284/16, ECLI:EU:C:2018:158 (Mar. 6, 2018).

Page 12 of 26
 of ST-AD GmbH v. Bulgaria11, held that “no participant in the international
community… has an inherent right of access to a jurisdictional recourse. For such a
right to come into existence, specific consent has to be given”. The Claimant has failed
to establish such specific consent to SSDS jurisdiction in the present matter and hence,
there exists no jurisdiction.

B. In Arguendo, Arbitration Is Inadmissible as the Claimant Failed to Satisfy the

Mandatory Pre-Arbitral Conditions under Article 31 of the Shandora - U-SAM
BIT

14. In the instant matter, the CLAIMANT failed to satisfy the pre-arbitral negotiation
requirement before filing its Request for Arbitration against the RESPONDENT. The
arbitration commenced under the SSDS outlined in Art. 31 of the Shandora - U-SAM
BIT, which prescribes a multi-tier dispute resolution process, outlining consultation,
mediation, negotiation, or any such other mechanisms between the two contracting
parties to resolve the dispute as a precondition to arbitration.
15. Such dispute resolution in the present case is a condition precedent to arbitration as per
the arbitration agreement entered into by the parties. Thus, by directly resorting to
arbitration, the CLAIMANT has violated the arbitration agreement.
16. The unequivocal language enshrined in Art. 31 of the Shandora - U-SAM BIT provides
for an enforceable dispute resolution clause. A condition precedent is defined as a fact
or an event that must exist or occur before a duty of immediate performance arises.12 A
pre-arbitral provision, when expressed in unequivocal terms, constitutes a mandatory
requirement and functions as a condition precedent to arbitration.13Furthermore, under
Article 31 of the Vienna Convention on the Law of Treaties, treaty provisions must be
interpreted in good faith in accordance with their ordinary meaning, context, and object
and purpose.14
17. The use of obligatory terms such as “shall” in amicable dispute resolution clauses
renders the provision binding and compulsory for the parties before arbitration is

11
ST-AD GmbH v. Republic of Bulg., PCA Case No. 2011-06, Award on Jurisdiction ¶ 337 (July 18, 2013).
12
Chirichella v. Erwin, 270 Md. 178 (1973).
13
Gary B. Born, International Commercial Arbitration (3d ed. 2021).
14
Vienna Convention on the Law of Treaties art. 31, May 23, 1969, 1155 U.N.T.S. 331.

Page 13 of 26
 pursued.15 Courts have consistently upheld such clauses, affirming the mandatory
nature of “shall” in pre-arbitral contractual preconditions.16 The usage of “shall” clearly
indicates that these procedures must be complied with and not ignored.
18. Courts have also held that when the terms of a conciliation agreement are sufficiently
certain, parties may be compelled to participate in the process.17 Art. 31.2 of the
Shandora - U-SAM BIT provides that if a dispute cannot be settled within six months
from the time it arose, it "shall upon the request of either Party be submitted to an
arbitral tribunal." The use of "shall" in this context denotes a mandatory obligation,
establishing that arbitration is permissible only after the Parties have made genuine
efforts to resolve the dispute through the prescribed amicable means. Therefore, the
CLAIMANT was bound by an obligation to initiate negotiation before resorting to
arbitration owing to the clear language used in Art. 31 of the enforceable negotiation
clause.18
19. Agreements to resolve disputes in a particular manner for a specific period of time
introduce elements of certainty that cannot be regarded as purely aspirational, like in
the instant matter, a period of 6 months is given before resorting to arbitration.
20. The parties’ intention at the time of the conclusion of the arbitration agreement plays
an essential role in determining the nature of the pre-arbitral clause19. Courts are bound
to identify and enforce the parties’ intent, and, in doing so, note whether the arbitration
agreement explicitly required initiating proceedings before arbitration.20
21. The inclusion of ADR-based preconditions, is rooted in the principles of party
autonomy and party consent. These principles grant parties the freedom to structure
their dispute resolution process.21 Contractual preconditions reflect the mutual
agreement and intent of the parties to amicably settle disputes.22 Disregarding the
parties’ express intention to resolve disputes is against the provisions of the treaty,

15
Gary Born & Marija Šćekić, Pre-Arbitration Procedural Requirements: 'A Dismal Swamp', in Practising Virtue:
Inside International Arbitration (Oxford Academic 2015); Dyalá Jiménez Figueres, Multi-Tiered Dispute
Resolution Clauses in ICC Arbitration, 14 ICC Bull. 1 (2003); Maryam Salehijam, The Role of the New York
Convention in Remedying the Pitfalls of Multi-Tiered Dispute Resolution Clauses (Wolters Kluwer 2019).
16
Nirman Sindia v. Indal Electromelts Ltd., 1999 SCC OnLine Ker 149.
17
Hooper Bailie Associated Ltd v. Natcon Group Ltd, Supreme Court of New South Wales, [1992] 28 NSWLR
194.
18
Hooper Bailie Associated Ltd. v. Natcon Group Pty Ltd., 28 NSWLR 194 (1992)
19
Philip Morris Brands Sàrl v. Oriental Republic of Ur., ICSID Case No. ARB/10/7, Award (July 8, 2016).
20
BG Group plc v. Republic of Arg., 572 U.S. 25 (2014).
21
Lucent Techs. Inc. v. ICICI Bank Ltd., 2009 SCC OnLine Del 3213; Datar Switchgears Ltd. v. Tata Fin. Ltd.,
(2000) 8 SCC 151.
22
S.B.P. & Co. v. Patel Eng'g Ltd., (2005) 6 SCC 288.

Page 14 of 26
 thereby amounting to a refusal of their agreed framework.23 Where the parties intended
to make arbitration a dispute resolution mechanism of last resort24, arbitration would be
the last resort which can only be triggered if the controversy in question cannot be
resolved by the preliminary ADR steps.25
22. The dispute resolution mechanism in the present dispute constitutes a fundamental
requirement that the CLAIMANT had to comply with before submitting the request for
arbitration.26 Therefore, the parties were required to participate in the mandatory
conditions before arbitration.27

II. WHETHER SHANDORA IS LIABLE FOR THE PROTECTION OF

INVESTMENT EVEN BEFORE THE 2023 AGREEMENT RELATED TO THE
CESSION OF KARAI BARI?

23. It is most humbly submitted before the Hon’ble tribunal that succession of the territory
to Shandora by Miragea does not bind it to the protection of investment made before
2023 cession agreement under Bilateral Investment Treaty. The Respondent is
contending its position through three fold arguments, [A]Non-retroactivity of the BIT
over the territory of Shandora. [B] Shandora lacked any rationale personae to protect
Miragean investors before 2023. [C] Shandora had no de jure sovereignty over the
territory.

A. Non-retroactivity of the BIT over the territory of Shandora

24. It is respectfully submitted that Shandora cannot be held liable under the S–M BIT for
any investment losses suffered before the formal cession of Karai Bari in 2023. First,
the treaty’s non-retroactivity bars retrospective application to pre-cession events.
Article 28 of the Vienna Convention on the Law of Treaties28 provides that “a
treaty’s provisions do not bind a party in relation to any act or fact which took place

23
Didem Kayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, 27 J. Int'l Arb. 6 (2010).
24
Kemiron Atl., Inc. v. Aguakem Int'l, Inc., 218 F. Supp. 2d 199 (S.D. Fla. 2002).
25
Didem Kayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, 27 J. Int'l Arb. 6 (2010).
26
Murphy Expl. & Prod. Co. Int'l v. Republic of Ecuador, ICSID Case No. ARB/08/4, Award on Jurisdiction (Dec.
15, 2010).
27
D. Jason File, United States: Multi-Step Dispute Resolution Clauses, WilmerHale (2015), available at
[https://docslib.org/doc/5149337/united-states-multi-step-dispute-resolution-clauses-d-jason-file-wilmerhale-
london-jason-file-wilmerhale-com].
28
Vienna Convention on the Law of Treaties art. 28, May 23, 1969, 1155 U.N.T.S. 331.

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 before the date of the entry into force of the treaty”.
25. Investment-treaty tribunals consistently apply this rule: as the Mondev v. United States
tribunal noted, events predating a State’s treaty obligations lie outside its jurisdiction
ratione temporis. While a breach of the BIT cannot occur before the BIT’s entry into
force, events or conduct prior to that date may be considered for the purpose of
establishing breaches that occurred thereafter tribunal noted ‘events or conduct prior to
the entry into force of an obligation for the respondent State may be relevant in
determining whether the State has subsequently committed a breach of the obligation.
But it must still be possible to point to conduct of the State after that date which is itself
a breach’29
26. Treaties are not retroactive; that is, unless a contrary intention is established, parties are
only bound in respect of acts or facts taking place after the treaty has entered into force
for the party in question.30
27. In Generation Ukraine Inc v Ukraine, the hon’ble the rule of nonretroactivity required
identifying when the ‘cause of action’ arose, since ‘a cause of action based on one of
the BIT standards of protection must have arisen after’ the BIT’s entry into force. 31 In
the present matter the BIT entered into the force after the 2023 agreement, so no case
of protection has arisen under S-M BIT.
28. It has been reported that the tribunals have held in the Belbek and PJSC CB PrivatBank
cases that Russia ‘had obligations to protect Ukrainian investors in Crimea under the
Ukraine-Russia BIT from the date of 21 March 2014 onward’ (ie the date of the formal
incorporation of Crimea into the Russian Federation)32
29. The Tribunal in Astrida Benita Carrizosa33 stated: “It is indeed uncontroversial that,
pursuant to the customary international law rule about non-retroactivity, a treaty does
not bind the Contracting States in respect of their pre-treaty actions or omissions,
unless it provides otherwise.” In ST-AD v Bulgaria, Tribunal referred to such an
approach as ‘mirroring’ events that occurred at an earlier time, which the Tribunal found
to be unacceptable,34 the Tribunal stated that ‘“if a claimant, before coming under the

29
Mondev Int'l Ltd. v. United States, ICSID Case No. ARB(AF)/99/2, Award, ¶ 127 (Oct. 11, 2002).
30
VCLT art. 28, May 23, 1969, 1155 U.N.T.S. 331; Mark E. Villiger, Commentary on the 1969 Vienna Convention
on the Law of Treaties 379-86 (2009); Olivier Corten & Pierre Klein, The Vienna Conventions on the Law of
Treaties: A Commentary 718-30 (2011).
31
Vienna Convention on the Law of Treaties art. 28, May 23, 1969, 1155 U.N.T.S. 331.
32
IAReporter, In Jurisdiction Ruling, Arbitrators Rule That Russia is Obliged under BIT to Protect Ukrainian
Investors in Crimea Following Annexation (Mar. 9, 2017).
33
Astrida Benita Carrizosa v. Republic of Colom., ICSID Case No. ARB/18/5, Award ¶¶ 124, 126 (Apr. 19, 2021).
34
ST-AD GmbH v. Republic of Bulg., PCA Case No. 2011-06, Award on Jurisdiction (July 18, 2013).

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 protection of a given BIT, had asked for and been refused a license, it could not simply
purport to create an event posterior to it becoming a protected investor by presenting
the very same request for a license that would, no doubt, be similarly refused”

B. Shandora lacked any rationale personae to protect Miragean investors before 2023

30. It is most humbly submitted before this hon’ble tribunal that Shandora lacked any
rationale personae to protect Miragean investors before 2023. Article 25(1) ICSID35
confines jurisdiction to disputes “between a Contracting State … and a national of
another Contracting State”. Until the cession, all investments in Karai Bari were held
by Miragean nationals in Miragean territory; those investors did not satisfy the BIT’s
nationality requirement vis-à-vis Shandora and thus could not invoke its protections36
before they became “foreign investors” upon cession.37
31. It is most respectfully submitted that the Claimants do not satisfy the requirement of
ratione personae as mandated by Article 25 of the ICSID Convention, and thus fall
outside the personal jurisdiction of this Hon’ble Tribunal. The test for determining
investor nationality under Article 25(1) and (2)(b) is strict and must be satisfied at the
time of consent to arbitration. In Tokios Tokelés v. Ukraine,38 the Tribunal observed
that “the determination of nationality must be based on the formal legal test set out in
the ICSID Convention, and rejected attempts to dilute this requirement through
functional or effective control doctrines.”
32. Similarly, in CMS Gas Transmission v. Argentina39, the Tribunal held that “while the
Convention permits some flexibility under the foreign control clause in Article 25(2)(b),
this exception does not override the need for the investor to be a “national of another
Contracting State” at the relevant point in time.” In the instant case, the investors were
nationals of Miragea during the period of alleged interference with their investments
and did not become “foreign” investors in relation to Shandora until after the formal
cession of Karai Bari in 2023. As such, they were not “investors” entitled to protection
under the Shandora–Miragea BIT at the time the alleged losses occurred, and Shandora
owed them no treaty-based obligations. This Tribunal therefore lacks jurisdiction to

35
Convention on the Settlement of Investment Disputes Between States and Nationals of Other States art. 25(1),
Mar. 18, 1965, 575 U.N.T.S. 159.
36
UNCTAD, Dispute Settlement: Investor-State, U.N. Doc. UNCTAD/EDM/Misc.232/Add.3 (2003).
37
Christoph Schreuer, The ICSID Convention: A Commentary ¶¶ 145-149, at 150-52 (2001).
38
Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction (Apr. 29, 2004).
39
CMS Gas Transmission Co. v. Arg. Republic, ICSID Case No. ARB/01/8, Award (May 12, 2005).

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 hear the claims advanced by the Claimants on the basis of their nationality
33. It is humbly submitted that under the principle of privity in treaty law, a BIT cannot
create rights or obligations for non-contracting parties. Article 34 of the Vienna
Convention on the Law of Treaties40 provides that “a treaty does not create either
obligations or rights for a third State without its consent,” and investment-treaty
tribunals have consistently required explicit consent for jurisdiction ratione personae,
rejecting attempts to extend treaty protections beyond the parties and their designated
investors. Accordingly, Shandora incurred no obligation to pre-2023 Miragean
investors under the S–M BIT and cannot be held liable for their wartime losses. The
maxim pacta tertiis nec nocent nec prosunt expresses the fundamental principle that a
treaty applies only between the parties to it. 41
34. It is submitted that the BIT applies only to investments within the host State’s territory
(ratione loci). ICSID tribunals require a genuine territorial link between the investment
and the forum State, refusing jurisdiction where that link is absent, in Archer Daniels
Midland Company and Tate & Lyle Ingredients America, Inc. v. The United Mexican
States, it was held that reinforces that only the parties and their designated investors
can invoke BIT protections; third-party or retrospective expansion is barred.42 Karai
Bari remained Miragean sovereign soil until 2023, so no pre-cession investment fell
within Shandora’s territorial ambit.

C. Shandora had no de jure sovereignty over the territory

35. The treaty obligations follow lawful (de jure) sovereignty, not mere military or
administrative control. Article 29 of VCLT43 presumes that a treaty “is binding upon
each party in respect of its entire territory” only once that territory legitimately belongs
to the State. While Shandora may have exercised de facto control, neither the Moving
Treaty Frontiers rule under Article 15 VCST nor Article 29 VCLT extends treaty
obligations until a valid cession has occurred.44

40
Vienna Convention on the Law of Treaties art. 34, May 23, 1969, 1155 U.N.T.S. 331.
41
Vienna Convention on the Law of Treaties arts. 34-38, May 23, 1969, 1155 U.N.T.S. 331; ILC, Draft Articles
on the Law of Treaties with Commentaries, [1964] II Y.B. Int'l L. Comm'n 180-85; [1966] II Y.B. Int'l L. Comm'n
226-31
42
Archer Daniels Midland Co. v. United Mex. States, ICSID Case No. ARB(AF)/04/5, Correction to Award (June
21, 2008).
43
Vienna Convention on the Law of Treaties art. 29, May 23, 1969, 1155 U.N.T.S. 331.
44
Syméon Karagiannis, Article 29: Territorial Scope of Treaties, in Olivier Corten & Pierre Klein (eds.), The
Vienna Conventions on the Law of Treaties: A Commentary (2011).

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 36. It is submitted that in the present matter there is no obligation to protect the investment
made prior to the cession agreement. Before 2023, the Respondent had no sovereignty
over the territory in accordance with international law. Even as per S-M BIT the
territorial application of the treaty under Article 1 (4)45 is limited to the territory over
which Shandora exercises, in conformity with international law, sovereignty, sovereign
rights or jurisdiction.
37. It is undisputed fact that Shandora succeeded the territory of Karai Bari after the cession
agreement and all rights and obligations actually arise after that, it was Miragea who
was responsible to protect its investors. In Abaclat v. Argentina, the investment location
is determined not merely by administrative control but by a meaningful legal
connection to the host State’s territory—where the economic benefit and regulatory
reach of the host State are exerted.46
38. In Caratube International Oil Company LLP v. Republic of Kazakhstan, the Tribunal
confirmed that de facto control, absent formal de jure sovereignty, is insufficient to
trigger the territorial application of a BIT. 47
39. The application of the BIT is only limited to investors of each contracting party and not
to any other foreign investor who does not belong to either of the contracting states. In
the present matter the investor on whose behalf the claim is filed is not a foreign investor
for the Respondent, so non applicability of the treaty makes the whole contention of
Claimant infructuous.
40. It is submitted that as per ILC Articles on State Responsibility, Shandora incurred no
internationally wrongful act under the BIT before assuming sovereignty. Article 1
ARSIWA48 provides that “every internationally wrongful act of a State entails the
international responsibility of that State” only when an obligation is breached, and
Article 31 ARSIWA49 requires full reparation for such breaches. Before 2023,
Shandora owed no BIT duties in Karai Bari and thus committed no wrongful act
obliging compensation.
41. In light of the above submissions, it is respectfully prayed that the Hon’ble Tribunal
find that Shandora is not liable under the S–M BIT for any losses arising prior to the

45
Shandora-Miragea BIT art. 1(4) (Mar. 1, 2005), Moot Proposition
46
Abaclat v. Arg. Republic, ICSID Case No. ARB/07/5, PCA Case No. IR 2011/1, Secretary-General's Decision
(Aug. 4, 2011).
47
Caratube Int'l Oil Co. LLP v. Republic of Kazakh., ICSID Case No. ARB/08/12, Award (June 5, 2012).
48
ILC, Articles on Responsibility of States for Internationally Wrongful Acts art. 1, U.N. Doc. A/56/10 (2001).
49
ILC, Articles on Responsibility of States for Internationally Wrongful Acts art. 31, U.N. Doc. A/56/10 (2001).

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 2023 cession of Karai Bari. The claims fail to meet the jurisdictional thresholds of
ratione temporis, ratione personae, and ratione loci, and Shandora had no de jure
sovereignty or treaty obligation over the territory at the relevant time. Accordingly, the
Tribunal is requested to decline jurisdiction and dismiss the claims in their entirety.

III. WHETHER STARSPARK QUALIFIES AS AN ‘INVESTOR’ UNDER THE

SHANDORA-MIRAGE BIT, AND WHETHER THE
RECHARACTERIZATION OF MIRAGEA AS STARSPARK’S HOME STATE
SOLELY TO INITIATE STATE–STATE ARBITRATION CONSTITUTES AN
ABUSE OF PROCESS UNDER INTERNATIONAL LAW AND THE
APPLICABLE BIT FRAMEWORK.

42. It is most humbly submitted before this Hon’ble tribunal that StarSparks does not
qualify as an investor under S-M BIT. It is also submitted that recharacterization of
Miragea as StarSpark’s home State solely to initiate State–State arbitration constitutes
an abuse of process under international law and the applicable BIT framework. The
Respondent is contending its contention through two folds arguments. [A] StarSparks
does not qualify as an investor under the S-M BIT framework [B] The arrangement for
third party funding constitutes an unethical practice.

A. StarSparks does not qualify as an investor under the S-M BIT framework

43. It is most humbly submitted before this tribunal that StarkSpark does not qualify as an
"Investor" under the BIT. Article 1(2) of the BIT defines an "investor" as: "any natural
or legal person of one Contracting Party that has made an investment in the territory
of the other Contracting Party."
44. It is an undisputed fact that StarSpark is incorporated under the laws of Zephyria, a state
that is not a party to the S–M BIT. Therefore, StarSpark does not meet the nationality
requirement stipulated in the BIT that investor can only be the investor form the
contracting party hence StarSpark cannot be considered an "investor" entitled to invoke
its protections.
45. Moreover, the principle of pacta tertiis nec nocent nec prosunt—enshrined in Article
34 of the Vienna Convention on the Law of Treaties (1969)—dictates that a treaty
neither imposes obligations nor confers rights upon third States without their consent.

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 The International Court of Justice in the Free Zones of Upper Savoy and the District
of Gex (France v. Switzerland)50 the case emphasized this principle, affirming that: "A
treaty cannot create obligations or rights for a third State without its consent."
46. Moreover This fundamental doctrine has been reaffirmed in several investor-State
arbitrations, including Methanex Corp. v. United States of America, where the
UNCITRAL tribunal declined jurisdiction over a claim brought by a Canadian investor
under NAFTA, holding that the claimant could not invoke treaty protections it was not
party to, based on third-State status.51 Therefore, StarSpark, being a corporate national
of Zephyria—a non-Contracting Party—is a tertius under the BIT and cannot
unilaterally invoke its protections or dispute resolution mechanism. Granting treaty
standing to such an entity would violate the foundational structure of consent-based
international obligations.
47. Furthermore, investment arbitration tribunals have consistently held that corporate
nationality is determined by the place of incorporation and cannot be modified
retroactively to gain access to treaty protections. In Phoenix Action Ltd. v. Czech
Republic,52 the tribunal emphasized: "The nationality of the investor is determined at
the time of the investment and cannot be changed retroactively to gain access to treaty
protections."
48. Thus, StarSpark’s Zephyrian incorporation at the relevant time conclusively bars it from
qualifying as an “investor” under the Shandora–Miragea BIT.
49. It is most humbly submitted that the Starksparks does not hold a valid investment as
per the BIT. In addition to lacking standing as an “investor,” StarSpark Mines Ltd. has
not made a valid “investment” as defined under Article 1(1) of the S–M BIT. The said
provision stipulates that: "The term 'investment' shall comprise every kind of asset
invested in connection with economic activities by an investor of one Contracting Party
in the territory of the other Contracting Party in accordance with the laws and
regulations of the latter..."
50. The threshold condition of “in accordance with the laws and regulations of the host
State” is a jurisdictional requirement that must be fulfilled ab initio. However, in the
present matter, StarSpark's operations specifically, the establishment and expansion of

50
Free Zones of Upper Savoy and the District of Gex (Fr. v. Switz.), 1932 P.C.I.J. (ser. A/B) No. 46, at 228 (June
7).
51
Sanford E. Gaines, Methanex Corp. v. United States, 100 Am. J. Int’l L. 683 (2006).
52
Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award (Apr. 15, 2009).

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 diamond mining infrastructure were conducted at a time when Shandora did not
exercise recognized sovereignty over the territory in question. These activities were not
sanctioned by any Shandoran domestic legal framework, nor were they supported by
licenses, permits, or any regulatory approval issued by the State.
51. StarSpark’s mining infrastructure was established while the territory was still officially
under Miragean jurisdiction. Following Shandora’s military occupation and eventual
cession agreement in 2023, the Claimant failed to regularize its presence or apply for
investment registration under Shandoran law. Consequently, any claim to lawful
investment status under the BIT is devoid of legal foundation.
52. The jurisprudence of international investment arbitration underscores the necessity of
host-State legality. In Fraport AG v. Philippines, the ICSID tribunal held that an
investment must comply with the legal regime of the host State, and failure to do so
would bar treaty protection53: "An investment which is made in breach of the law of the
host State is not protected under the ICSID Convention or the relevant BIT."
53. Furthermore, the Tribunal in Phoenix Action Ltd. v. Czech Republic54 emphasized that
the legality of the investment is both a jurisdictional and substantive condition:
“Only investments made in accordance with the law of the host State may benefit from
treaty protections”
54. StarSpark’s failure to seek regulatory authorization from Shandora, combined with its
lack of registration or compliance with investment entry procedures, establishes that it
has not made an investment “in accordance with the laws and regulations” of the
Republic of Shandora. Consequently, its claim falls outside the scope of the BIT and
must be dismissed for lack of jurisdiction ratione materiae.
55. It is an established principle of international law that treaty obligations, including
investment protections, do not automatically extend to actions undertaken before a State
acquires sovereignty over a given territory.
56. According to the factual matrix provided in the moot proposition, StarSpark established
its mining infrastructure and commenced economic operations in the disputed region
while the area was under the control of Miragea. Shandora did not exercise recognized
sovereignty over the territory at that time. As such, the BIT between Shandora and

53
Fraport AG Frankfurt Airport Servs. Worldwide v. Republic of the Phil., ICSID Case No. ARB/03/25, Award
(Aug. 16, 2007).
54
Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award (Apr. 15, 2009).

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 Miragea was not applicable to StarSpark’s activities during that period.
57. It is respectfully submitted that the BIT protections cannot apply retroactively to
investments made prior to Shandora acquiring sovereign authority over the territory. In
the absence of any express provision or transitional arrangement whereby Shandora
agreed to uphold the investment protections of the BIT with respect to pre-cession
activities, there exists no legal basis for extending the BIT’s temporal scope. The
doctrine of non-retroactivity further affirms that no investment treaty can cover acts
or investments that occurred prior to its temporal application or jurisdiction. This
position is well-supported by international law.
58. Arbitral tribunals have upheld this position. In Ambatielos Claim (Greece v. United
Kingdom)55, the ICJ emphasized that:
“Treaty provisions cannot be extended to periods prior to the treaty’s entry into force
or outside its temporal scope unless the treaty expressly provides for such retroactive
application.”
59. Accordingly, StarSpark cannot derive any rights or protections under the BIT for
activities conducted in a territory that, at the relevant time, was not subject to Shandoran
sovereignty or legal framework. The post-facto acquisition of territory by Shandora
does not legalize or validate activities carried out under Miragean jurisdiction, nor does
it create retrospective obligations under the BIT.

B. The arrangement for third party funding constitutes an unethical practice.

60. It is most humbly submitted that the inclusion of StarSparks as the domestic investor
by the Claimant amounts to unethical practice, this conduct reflects the non-
transparency in the dispute settlement process. The Claimant tried to hide the very fact
of third party funding by claiming the compensation on behalf of StarSparks as its home
state. Third party funding has many ethical concerns, arbitration is valued for its
confidentiality. However, third-party funding adds an additional level of complexity to
the equation, opening a debate surrounding the disclosure of third-party funding
agreements. If undisclosed, it could lead to conflicts of interest, potentially resulting in
challenging the arbitrator’s appointment or requests for security for costs.56

55
Claim (Greece v. U.K.), 1956 I.C.J. 107 (May 2).
56
Norton Rose Fulbright, The third-party funding debate – we look at the risks (September 2016). Available at
[https://www.nortonrosefulbright.com/en/knowledge/publications/...]

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 61. Notably, some stakeholders have argued that disclosing funding relationships will
encourage frivolous arbitrator challenges and requests for security for costs, which may
prolong the arbitration process or otherwise increase costs. Having a third-party funder
involved can make settlement negotiations more complicated. Funders looking to
maximize their return may discourage parties from accepting fair settlement offers in
the early stages of the proceedings. This approach can impact the duration of disputes
and increase costs, consequently potentially resulting in less favorable outcomes.57
62. In Muhammet Cap & Sehil Insaat Endustri ve Ticaret Ltd Sti v Turkmenistan 58and
South American Silver v Bolivia, where the tribunals ordered the Claimants to disclose
not only the identities of their funders, but also the terms of their funding agreements.
The tribunals based their orders on the need to preserve the rights of the parties to an
impartial tribunal and the integrity of the process more generally.59
63. TPF enables parties to shop for the most favorable forum by funding cases around treaty
gaps. The IBA’s recent commentary on “forum shopping” highlights how funders can
manipulate procedural choices to suit their economic interests. 60 As one commentator
explained, a TPLF investor is “a purely profit-seeking actor engaged in a form of
gambling for profit, untethered to any ethical or professional interest in justice
generally, or in the personal circumstances of the plaintiff in particular61
64. Here, Miragea’s reliance on TPF to recast StarSpark originally a Zephyrian company
as a protected investor under the S–M BIT is a textbook case of recharacterization,
facilitated by hidden funding that masks the real claimant’s nationality.

57
Broderick, Bozimo & Company, Third-Party Funding in Arbitration: Pros and Cons (24 October 2023).
58
Muhammet Çap & Sehil İnşaat Endustri ve Ticaret Ltd. Şti. v. Turkmenistan, ICSID Case No. ARB/12/6,
Procedural Order No. 3 (June 12, 2015).
59
South Am. Silver Ltd. v. Bolivia, PCA Case No. 2013-15, Procedural Order No. 10 (Jan. 11, 2016).
60
Marlen Estevez Sanz, Forum Shopping: Strategy or Abuse? Roca Junyent, SLP (Apr. 4,
2025).[https://www.ibanet.org/forum-shopping-strategy-or-abuse]
61
Paul Taylor, Disclosing High Roller Bankrolling in the Patent Litigation Casino: The Need to Regulate Third
Party Litigation Financing, 103 J. Pat. & Trademark Off. Soc’y 21 (2023).

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 PRAYER

In light of the issues raised, arguments advanced and authorities cited, the counsel for the
Respondent (“Republic of Shandora”), humbly prays that the Hon'ble Tribunal be pleased to
adjudge, hold and declare:
1. Declare the PCA lacks jurisdiction as the S-M BIT excludes State-State arbitration and
the MFN clause cannot import it;
2. Dismiss the claim for inadmissibility due to Claimant's failure to exhaust pre-arbitration
negotiations under Article 31;
3. Hold the BIT non-retroactive, barring claims for pre-2023 investments in Karai Bari;
4. Hold Respondent owed no protections before acquiring sovereignty in 2023 in respect
to investors;
5. Rule StarSparks ineligible as investor being originally a Zephyrian entity under third-
state laws;

And pass any order that this Hon'ble Tribunal may deem fit in the interest of equity, justice and
good conscience. And for this act of kindness, the counsel for the petitioner shall duty bound
forever pray.
Respectfully submitted,
[Counsel for the Respondent, Republic of Shandora]

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