Summary

Introduction

1. The Claimant's Statement of Costs is made pursuant to Procedural Order No.6 and in accordance with the Tribunal's oral instructions at the Hearing on Jurisdiction.1

2. The Claimant recalls that, in relation to objections to jurisdiction, Article 25(4) of Chapter 11 of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) states as follows:

"The tribunal may, if warranted, award the prevailing party reasonable costs and fees incurred in submitting or opposing the objection. In determining whether such an award is warranted, the tribunal shall consider whether either the claim or the objection was frivolous or manifestly without merit, and shall provide the disputing parties a reasonable opportunity to comment."

3. It is evident from this provision that, in relation to jurisdictional objections, the Tribunal has discretion to award the prevailing party its reasonable costs, consistent with the "costs follow the event" principle usually applied in both Australia and Singapore. When exercising this discretion, the Tribunal is to consider the merits of the claim or the objection.

4. In the Claimant's submission, this clause is consistent with Articles 40-42 of the UNCITRAL Arbitration Rules 2021, pursuant to which reasonable costs of the arbitration shall in principle be borne by the unsuccessful party, but the Tribunal retains discretion to apportion costs as it considers reasonable in the circumstances of the case (Article 42).

5. The Claimant confirms that, if it is successful in the jurisdiction phase of the arbitration, it claims all its costs associated with that phase of the proceedings.

The Claimant submits these costs are reasonable for the reasons set out below and awarding such costs is warranted in the circumstances given the unnecessary expense and delay the Claimant has been put to in answering the Respondent's objections. In the Claimant's view, the Respondent's objections lack merit for the reasons that have been set out in its submissions on jurisdiction. In particular:

a. The Respondent's abuse of right objection should not have been maintained following the Respondent's (correct) admission that the Amendment Act was unforeseeable.

b. Similarly, the overwhelming evidence of the existence of the Claimant's business in Singapore renders the Respondent's denial of benefits claim manifestly without merit.

c. Finally, the Respondent's objection regarding the requirement that an investor must make an active contribution should be dismissed in light of the authorities on this issue. This is also the case for the Respondent's related argument that a (Salini-style) contribution is an inherent requirement for an investment, even in a corporate restructuring situation.

Given this lack of merit, an award of costs in favour of the Claimant is warranted.

6. The Claimant also submits that, if it is successful in the jurisdiction phase, there are no circumstances that would warrant the Tribunal departing from the usual "costs follow the event" principle expressed in the UNCITRAL Rules (and consistent with Article 25(4) of the AANZFTA). The Claimant avers that this principle should be applied and the Claimant awarded its reasonable costs as set out below.

7. Should the Tribunal deny jurisdiction, the Claimant submits that cost considerations must take account of: (i) the strong merits of the Claimant's underlying claims;2 (ii) the egregious nature of the Respondent's underlying conduct; and (iii) the extent to which each of the Respondent's objections have been accepted (or not) by the Tribunal.

8. To this end, if the Respondent is successful, the strength of the Claimant's merits claims (to which no defence has been offered) militates against any cost award in accordance with Article 25(4). However, if the Tribunal determines that an award of costs is warranted, such costs should reflect the extent that the Respondent prevailed on each objection. Any costs awarded should also be adjusted to take account of the Claimant's success in its position on the seat of the arbitration.

9. The degree of success is often a factor considered by tribunals in allocating costs and it is particularly pertinent in the present case where four separate objections were raised by the Respondent, each of which required a separate answer. Moreover, the Respondent's jurisdictional objections were lengthy, based on vast quantities of irrelevant (and no doubt expensive) evidence; requiring a commensurate detailed response from the Claimant. To the extent that some of those objections proved unfounded, deductions should be made from any cost allocation. As noted above, tribunals routinely take account of the level of parties' success and it is submitted that it would be appropriate to do so in the present case, if jurisdiction is denied.3

10. Such an approach is also consistent with the costs follow the event principle as it allows costs to be apportioned equitably, reflecting the mixed outcome of the jurisdictional phase. Costs may follow the event, but only to the extent of a party's success.

11. The Claimant reserves its right to object to the reasonableness of the Respondent's costs.

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Footnotes omitted