Aefasgvdsvavwrevrsvsvsrvwevwevw

Ala-Too Moot Court Competition 2024 International Digital Law Moot

MEMORANDUM

FOR RESPONDENT

TEAM #105

ON BEHALF OF:	AGAINST:
Aurora Hospitality Group LLC Capital City, Republic of Bugu CLAIMANT	National Security Agency of Tumar Susar, Republic of Tumar RESPONDENT

TABLE OF CONTENTS

LIST OF AUTHORITIES.........................................................................................................................3

STATEMENT OF FACTS.........................................................................................................................4

SUMMARY OF ARGUMENT..................................................................................................................6

ARGUMENT ..............................................................................................................................................8

CONCLUSION…………………………………………………………………………………….........14

REQUEST FOR RELIEF……………………………………………………………………………….15

LIST OF AUTHORITIES

1. Charter for European Security (OSCE 1999)

2. Helsinki Final Act from 1975

3. Vienna Conventions on the Law of Treaties (VCLT)

4. Good Environmental Governance principles

5. 1975 Helsinki Final Act.

6. 1992 Helsinki Document

7. 2003 OSCE Strategy Document for the Economic and Environmental Dimension

8. 2007 Madrid Declaration on Environment and Security

9. 2013 Kyiv Ministerial Council Decision on Improving the Environmental Footprint of Energy-Related Activities in the OSCE Region

10. 2014 Basel Ministerial Council Decision on Enhancing Disaster Risk Reduction

11. International Centre for Settlement of Investment Disputes Convention 1965 (ICSID Convention)

12. General Data Protection Regulation (GDPR)

13. Bilateral Investment Treaty (BIT)

STATEMENT OF FACTS

The Parties to this Arbitration are Republic of Tumar (hereinafter referred to as the "RESPONDENT") and Aurora Hospitality Group LLC (hereinafter referred to as the "CLAIMANT"). The RESPONDENT is represented by the National Security Agency of Tumar, which is responsible for ensuring national security and public safety in the Republic of Tumar. The CLAIMANT, Aurora Hospitality Group LLC, is a foreign investment company based in the Republic of Bugu, operating in the hospitality sector.

1. Background of the Dispute

The CLAIMANT, a prominent hospitality business led by Mr. Erlan Tynybekov, a businessman holding dual citizenship in the states of Teke and the Republic of Bugu, decided to expand its operations to the Republic of Tumar. Mr. Tynybekov established Aurora Hospitality Group LLC in Tumar, where he holds 51% of the shares. The company was registered to operate in the hospitality industry, with a focus on hotel management.

The CLAIMANT acquired a prime plot of land in Susar, the capital city of Tumar, to build a hotel. By securing the necessary construction and operating licenses from the Susar Municipal Authority, the CLAIMANT moved forward with the project.

However, the construction site in Susar was home to the rare Aulie-Ata plant, which is listed under Tumar’s national environmental protection laws. Despite public opposition, and legal concerns regarding the environmental impact, the CLAIMANT proceeded with the hotel construction project.

1. The National Security Situation

In response to escalating political tensions in the Republic of Tumar, intelligence reports indicated a potential coup, leading to an intensification of surveillance measures by the National Security Agency of Tumar (hereinafter referred to as "NSA"). As part of these heightened security measures, the NSA sought comprehensive access to the customer data of all hotels operating in Tumar, including those owned by Aurora Hospitality Group LLC.

The NSA made an official request to the CLAIMANT, demanding unrestricted access to all customer data held by Aurora Hospitality Group LLC. This included data on both local and international guests, collected through its global operations, without distinguishing between local and international clientele. The CLAIMANT refused to comply with this demand, citing concerns over privacy regulations, particularly in light of General Data Protection Regulation (GDPR) standards.

1. CLAIMANT’s Refusal and the License Revocation

The CLAIMANT's refusal to grant the NSA access to customer data was based on concerns about violating international privacy norms. The CLAIMANT maintained that it would not compromise the privacy of its clients, especially those from foreign countries, and insisted that national security concerns could not justify such an invasive demand.

As a result of this refusal, the local authorities in Susar, adhering to the legal procedures outlined under Tumar’s laws, revoked the operating license of Aurora Hospitality Group LLC. The revocation was justified on the grounds of non-compliance with national laws, including the requirement to cooperate with security measures. Despite the CLAIMANT’s argument that a fine would be a more proportionate and fair sanction, the local authorities maintained that revocation was the appropriate measure.

1. Legal Challenges and ICSID Arbitration

Following the revocation of the operating license, the CLAIMANT sought to challenge the decision through local administrative courts. However, the administrative court of Tumar upheld the decision, citing the broad discretionary powers of the local authorities in determining appropriate sanctions for legal violations.

The CLAIMANT, dissatisfied with the administrative court’s ruling and the indefinite suspension of its operations, decided to escalate the matter by initiating ICSID arbitration under the Bilateral Investment Treaty (BIT) between the Republic of Bugu and the Republic of Tumar. The CLAIMANT seeks compensation for the financial and reputational losses incurred due to the revocation of its operating license and the alleged violation of its investment rights.

1. International Legal Obligations and Environmental Concerns

The Republic of Tumar, a party to several international legal frameworks, including the OSCE and Vienna Conventions on the Law of Treaties, maintains a strong commitment to environmental protection and the protection of human rights. These commitments include the recognition of the Good Environmental Governance principles, as well as the continued efforts to align domestic laws with international standards, particularly in areas relating to national security and data protection.

The Bilateral Investment Treaty between the Republic of Bugu and the Republic of Tumar also provides a clear framework for addressing disputes between foreign investors and the host state, ensuring the protection of investments made by nationals of one party in the territory of the other. However, the RESPONDENT maintains that its actions were in full compliance with international law, particularly the right to protect national security and the public interest..

SUMMARY OF ARGUMENT

The Republic of Tumar (RESPONDENT) asserts that its actions, including the revocation of the operating license of Aurora Hospitality Group LLC (CLAIMANT), were lawful, proportionate, and necessary to protect national security interests. The claims by CLAIMANT regarding the violation of its rights under the Bilateral Investment Treaty (BIT) and international law are without merit, as the actions taken by Tumar were grounded in legitimate national security concerns and adherence to domestic legal requirements.
Part I: Jurisdiction of the ICSID Tribunal The ICSID Tribunal has no jurisdiction to hear this dispute. The case concerns a matter of national security, which falls outside the scope of investment-related claims under the Bilateral Investment Treaty (BIT) between the Republic of Bugu and the Republic of Tumar. The BIT provides protections for foreign investments, but according to article 7: National Secutity Exceptions of BIT national security measures are generally excluded from investment protection frameworks. The actions of the National Security Agency of Tumar, including the demand for access to customer data, were necessary to safeguard the state's security interests , and such measures are not subject to investment dispute resolution mechanisms.

Part II: Environmental Violations and Ethical Oversight Aurora Hospitality Group LLC violated local environmental laws by constructing a hotel on a protected site, home to the rare Aulie-Ata plant, listed under Tumar's national legislation and violated article 6 paragraph 2 of BIT. While the authorities initially granted permission for construction, Claimant failed to meet environmental regulations and disregarded the potential ecological impact. The Respondent asserts that these violations were a contributing factor to the revocation of the operating license. The environmental concerns were legitimate and in line with Tumar's commitment to international environmental protection standards.
Part III: No Entitlement to Compensation

Claimant is not entitled to compensation for the financial and reputational damages it alleges to have incurred. The actions of Respondent were lawful and proportionate, grounded in the need to protect national security and enforce local environmental regulations. The BIT permits measures that are necessary for public safety and national security, and the revocation of the operating license was a response to Claimant's failure to comply with such requirements. Furthermore, the revocation was based on legal grounds and was not arbitrary. The Claimant’s losses were a direct result of its own actions, and as such, no compensation is warranted under the BIT or international law.

ARGUMENT

PART I: THE ICSID TRIBUNAL DOES NOT HAVE JURISDICTION OVER THIS DISPUTE

The Republic of Tumar asserts that the ICSID Tribunal does not have jurisdiction to hear the dispute as the case concerns matters of national security, which fall outside the scope of investment protection under the Bilateral Investment Treaty (BIT) between the Republic of Bugu and the Republic of Tumar. The BIT provides protections for foreign investments, but it allows for exceptions in cases involving national security according to article 7. The dispute between the parties does not relate to an investment dispute, but rather to actions taken by the Republic of Tumar to protect its national security interests in the face of rising political instability. The measures taken by Tumar in this case were designed to address immediate threats to national stability. Tumar, like all sovereign republics, retains the right to take measures necessary to protect its national security. Under customary international law, actions taken in the interest of national security are not subject to investment arbitration, as they pertain to a state's inherent sovereign powers. Therefore, the jurisdiction of the ICSID Tribunal is limited and does not extend to matters of national security.

1. GDPR Article 83:

The proportionality of fines and other sanctions is mentioned as a fundamental principle:
"Each administrative fine... shall be effective, proportionate, and dissuasive."
This applies in the context of data protection, where national measures must be proportionate to the violation.

1. ICCPR Article 17:

Includes a prohibition on arbitrary or disproportionate interference:
"No one shall be subjected to arbitrary or unlawful interference with their privacy, family, home, or correspondence..."

This principle obligates states to take measures that are necessary, based on clear legal frameworks, and do not exceed the required degree of intervention.

1. ICCPR Article 4:

"In times of emergency... states may take measures that deviate from their obligations, provided that such measures are strictly necessary."

The threat of a coup in Tumar provides the basis for such actions.

1. BIT Article 7:

"Nothing in this Agreement shall prevent a party from taking measures necessary to protect its national interests."

National security is within the exclusive competence of the state, which excludes arbitration intervention.

1. ICSID Convention (1965):

The arbitration jurisdiction applies only to investment disputes. Here, the dispute concerns issues of national security, rather than economic damage to investments.

1. Charter for European Security (OSCE, 1999):

"States have the right to take measures necessary to ensure national security, provided they respect international law."
The data request and license revocation were made in order to protect sovereignty and prevent security threats.

1. Helsinki Final Act (1975):
   "States are obliged to respect each other's territorial integrity and sovereignty, including the right to take internal measures to ensure security."

PART II: ENVIRONMENTAL VIOLATIONS AND ETHICAL CONCERNS BY AURORA HOSPITALITY GROUP LLC

Aurora Hospitality Group LLC constructed its hotel in Susar on a site designated as environmentally protected, where the rare Aulie-Ata plant is located. Despite obtaining initial permits, the company failed to comply with environmental regulations, which mandated the preservation of this protected site. The environmental violations, including disregard for the local laws designed to protect endangered species and ecosystems, were a contributing factor in the revocation of the company’s operating license. Tumar’s legal framework for environmental protection is robust, and it is clear that Aurora Hospitality Group LLC failed to meet its obligations under these laws. The revocation of the operating license was, in part, a response to these significant ecological concerns.

1. BIT Article 6:

"Investments cannot be made in areas protected for the purpose of environmental protection."
Construction on the site of the rare plant (Aulie-Ata) constitutes a violation of national legislation and international obligations.

1. OSCE Principles on Sustainable Development:
   Environmental responsibility of investors is mandatory for long-term development.

2. OSCE Strategy Document for the Economic and Environmental Dimension (2003):
   Emphasizes the need to maintain a balance between economic development and environmental protection.

3. Basel Ministerial Council Decision (2014):
   Calls on countries to consider environmental risks and minimize harm to the environment.

4. OSCE Kyiv Ministerial Council Decision (2013):
   "States are obligated to improve environmental policy and follow the principles of sustainable development."

5. Helsinki Final Act (1975):
   Emphasizes the importance of joint efforts to maintain environmental sustainability and security.

6. Madrid Declaration (2007):
   Calls on states to minimize environmental harm and ensure sustainable development.

PART III: CLAIMANT IS NOT ENTITLED TO COMPENSATION FOR ITS LOSSES

Any financial and reputational damage suffered by Aurora Hospitality Group LLC was a direct result of its own actions, including its refusal to comply with Tumar’s legal requests regarding data sharing and its environmental violations. The claimant’s failure to adhere to both national security laws and environmental protection requirements led to the revocation of its operating license. Therefore, any losses suffered by the claimant should not be compensated, as they were self-inflicted due to non-compliance with Tumar’s legal obligations. The actions of Tumar were taken in accordance with international norms governing national security and environmental protection. While the claimant may argue that the revocation of its operating license was a disproportionate response, it is clear that Tumar’s actions were grounded in legitimate state interests, including the protection of national security and the environment. International law permits such measures when necessary to protect public interests, and the claimant is not entitled to compensation for losses that arose from its own failure to comply with these laws.

1. BIT Article 3:

"Regulatory measures aimed at protecting public interests, such as national security, are allowed if they are non-discriminatory and in accordance with the law."
The revocation of the license was provided for by local legislation, and the company had been repeatedly warned.

1. BIT Article 4:

Provisions on indirect expropriation are not applicable, as Tumar's actions were not aimed at depriving the company of all economic benefits, but were focused on ensuring compliance with national security.

1. BIT Article 8:

"The parties shall seek a peaceful settlement of the dispute."
Aurora rejected all attempts to resolve the dispute and created a confrontational situation.
The company chose confrontation over compromise, which demonstrates a lack of respect for the host state.

1. BIT Article 9:

"Investors are required to comply with the national legislation of the host state."
The company did not implement an adequate data storage system, which jeopardized both national and international security.

1. GDPR Article 32:

"Data controllers are required to implement technical and organizational measures to ensure data security." Aurora failed to take appropriate measures to protect its customers' data, creating risks for national security.

1. GDPR Article 3:

The GDPR applies only to the processing of data of EU citizens. The data collected by Aurora concerns local guests of Tumar, not EU citizens. Aurora Hospitality Group mistakenly claims a GDPR violation, as the Republic of Tumar is not a member of the European Union and is not obligated to follow its regulations.

CONCLUSION

The Republic of Tumar respectfully submits that its actions, including the revocation of the operating license of Aurora Hospitality Group LLC, were lawful, justified, and necessary to protect national security and public order. The measures taken were proportional, consistent with international law, and based on the claimant’s failure to comply with legal obligations in Tumar. As such, the claimant’s claims for compensation are without merit, and the Tribunal should dismiss the case in its entirety.

REQUEST FOR RELIEF

Based on the above, RESPONDENT respectfully requests the Tribunal to grant the relief set out below:

1. To declare that the ICSID Tribunal does not have jurisdiction to hear the case, as it concerns matters of national security that fall outside the scope of protection under the Bilateral Investment Treaty (BIT)

2. To declare that the actions taken by the Republic of Tumar, including the revocation of the operating license of Aurora Hospitality Group LLC, were lawful, necessary, and proportionate to protect national security and public order according to article 7 of BIT.

3. To deny the Claimant’s request for compensation, as the losses suffered by Aurora Hospitality Group LLC are the result of its own actions, including violation of article 9 of BIT and its refusal to comply with national laws, specifically those relating to national security and environmental protection according to article 6 of BIT.

The Republic of Tumar respectfully submits that the claim brought by Aurora Hospitality Group LLC is without merit and requests the Tribunal to dismiss the claim in full.