FDI MOOT CASE 2017

Table of Documents
Notice of Arbitration
Notice of Arbitration Exhibit 1
PCA First Letter
5 Response to Notice of Arbitration
PCA Letter re Second Arbitrator
PCA Letter re Constitution of Tribunal
PCA Letter re PO1
Procedural Order No 1
10 PO1 Statement of Uncontested Facts
PO1 Annex 1
PO1 Annex 2
PO1 Annex 3
PO1 Annex 4
15 PO2 (ca 26 June 2017)
PO3 (ca 28 August 2017)

Clarifications
20 Registered teams may submit requests for clarification of the case, e.g. of factual ambiguities,
if the States have ratified a particular convention, etc. Please strictly observe the instructions
for clarification requests on the website.

25 The 2017 case was elaborated by Daniel Artaza, Nikoletta Chalikopoulou, Lynnette Lee,
Anand Mohan, and Liana Stoica under the supervision of the FDI Moots Directors and
Advisory Board.

30 FDI Moot CENTER FOR INTERNATIONAL LEGAL STUDIES

1
 NOTICE OF ARBITRATION

UNDER THE PERMANENT COURT OF ARBITRATION

ARBITRATION RULES 2012

ATTON BORO LIMITED

35 (Claimant)

AND

REPUBLIC OF MERCURIA
40 (Respondent)

7 November 2016

Claimant:
Atton Boro Limited,
45 22 Faraway Str.
Basheera

Legal Representative of Claimant:

Allama Iqbal
50 Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023
Reef
A power of attorney is attached [intentionally not reproduced here] .
55

Respondent:
Republic of Mercuria
Trade Law Bureau (JLT),
Department of Foreign Affairs and International Trade Mercuria
60 LBP Building,
50, ABC Avenue
Stoica 03035
Mercuria

2
 NOTICE OF ARBITRATION

Submission of the Dispute to Arbitration

65 1. Pursuant to Article 3 of the PCA Arbitration Rules 2012 (the PCA Arbitration
Rules), the Claimant Atton Boro Limited (Atton Boro or the Claimant), a
private company with limited liability incorporated under the laws of the Kingdom of
Basheera (Basheera), hereby initiates arbitration against the Respondent, the
Republic of Mercuria (Mercuria or the Respondent).
70 2. In accordance with Article 3(3)(a) of the PCA Arbitration Rules, Atton Boro demands
that the dispute or disputes between the Claimant and the Respondent described herein
be referred to arbitration.
Terms of the Arbitration Agreement
3. Atton Boro submits this Notice of Arbitration to accept the standing offer made by
75 Mercuria to resolve through arbitration investment disputes with investors from
Basheera, which is articulated in Article 8 of the bilateral investment protection
agreement between Mercuria and Basheera dated 11 January 1998 (BIT) as
reproduced below:
Article 8
80 Settlement of Investment Disputes between a Contracting Party and an
Investor of the other Contracting Party
1. Any dispute between an investor of one Contracting Party and the
other Contracting Party arising out of or in relation to this Agreement, or
the existence, interpretation, application, breach, termination, or invalidity
85 thereof, shall, failing settlement through amicable negotiations, be settled
by arbitration
2. A disputing investor may submit a dispute referred to in paragraph 1 to
arbitration in accordance with:
a. the [...] ICSID Convention; or
90 b. the Rules Governing the Additional Facility [...]; or
c. the Permanent Court of Arbitration Optional Rules for
Arbitrating Disputes between Two Parties of Which Only
One Is a State, as in effect on the date of submission of
dispute to arbitration.
95 3. The number of arbitrators shall be three. The place of arbitration shall
be Panchotta. The language to be used in the arbitral proceedings shall be
English or French.

4. Atton Boro is an investor of Mercuria as defined under Article 1(2) of the BIT. All
100 attempts at amicable settlement of these disputes with Mercuria have failed. Mercuria,
through its Foreign Ministry, was notified on 20 September 2016 of the Claimants
intent to initiate arbitration. No response to the letter has been received from Mercuria.

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 NOTICE OF ARBITRATION

Summary of the Dispute

105 Circumstances
5. The Claimant, Atton Boro Limited, has been engaged in the manufacture and sale of
pharmaceutical products since its incorporation in 1998. Through its emphasis on
strategic financing, constant investment in innovation and forging of public-private
partnerships, Atton Boro has become synonymous with the movement to secure
110 sustainable access to essential medicines for patients across the developing world.
6. On 25 November 2004, Atton Boro and the Mercuria National Health Authority
(NHA) entered into a Long-Term Agreement (LTA) for supply of Atton Boros
blockbuster greyscale-treatment drug, Sanior, at a fixed discounted rate. Sanior
contains the active ingredient, Valtervite, for which compound Atton Boro holds the
115 Mercurian Patent No. 0187204 granted on 21 February 1998.
7. Accordingly, Atton Boro set up its manufacturing unit for Sanior in Mercuria and
commenced production in 2005. Sanior was successfully deployed across healthcare
centers and was in progressively greater demand in Mercuria with each passing year.
Anticipating a further upsurge, Atton Boro scaled up its operations in Mercuria to
120 ensure timely supply of the required quantities of medicine.
8. In early 2008, the NHA began demanding further discounts of 40% for Sanior, and
refused to engage in a reasonable negotiation even upon being told that such a
discount would reduce Atton Boros margins to virtually nothing.
Mercurias Actions
125 9. On 10 June 2008, the NHA unilaterally terminated the LTA. Atton Boro challenged
the termination by invoking arbitration under the LTA, and obtained an award (the
Award) in its favor. The Award directed the NHA to pay Atton Boro USD
40,000,000 in damages for breach of the LTA.
10. On 3 March 2009, Atton Boro filed enforcement proceedings before the High Court of
130 Mercuria (the Court). However, the Court indulged every delay tactic employed by
the NHA, granted adjournments for the asking and entertained applications that were
clearly lacking in merit, causing the Award to remain unenforced even as on the date
of this Notice.1 Mercuria, as a party to the New York Convention, cannot explain
away a seven-year delay in enforcement of an award rendered in the territory of
135 another State party to the Convention.2
11. On 10 October 2009, the President of Mercuria promulgated National Legislation for
its Intellectual Property Law, introducing a provision for use of patented inventions
without the authorization of the owner (Law No. 8458/09).
12. In November 2009, HG-Pharma, a Mercurian generic drug manufacturer, filed an
140 application before the High Court for grant of a license to manufacture Atton Boros
patented active ingredient, Valtervite. The Court heard the matter through a fast-
tracked process, and granted HG-Pharma the license on 1 April 2010 to manufacture

1
Exhibit I
2
Convention of the Recognition and Enforcement of Foreign Arbitral Awards 1958
4
 NOTICE OF ARBITRATION

and market the drug by paying a mere 1% royalty of its total revenues to Atton Boro.
Atton Boro has not received any payment under the license.
145 Claims

13. Mercurias acts constitute an infringement of the protections guaranteed to Atton Boro
under the BIT. Mercuria breached its obligation towards Atton Boro by unilaterally
terminating the LTA. Further, the issuance of the license for Valtervite pursuant to the
enactment of Law No. 8458/09 disregards international covenants such as the
150 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which
bind Mercuria, and violates Atton Boros legitimate expectations. Finally, the
unreasonable delay of over seven years in disposing of enforcement proceedings in
relation to the Award plainly shows that Mercuria failed to provide any effective
means to Atton Boro of asserting its rights. These acts of the Respondent have resulted
155 in the evisceration of Atton Boros investment in Mercuria.
Requests for Relief
14. The Claimant, Atton Boro, hereby requests the Tribunal to:
1. Declare that the Respondent is liable for violations of the BIT, including failure to
accord fair and equitable treatment to the Claimant and failure to observe its
160 obligation towards the Claimants investment;
2. Order the Respondent to pay damages to the Claimant for the losses caused as a
consequence of the violation valued at no less than USD 1,540,000,000;
3. Find that Claimant is entitled to all costs associated with these proceedings,
including all legal and other professional fees and disbursements;
165 4. Order payment of pre-award interest and post-award interest at a rate to be fixed
by the Tribunal; and
5. Grant such further relief as counsel may advise and that the Tribunal deems
appropriate.

170 Procedural Issues

6. In accordance with Article 9(1) of the PCA Arbitration Rules, the Claimant hereby
nominates Professor Eli Barr-Sinoussi as one of the arbitrators.

175 Copied to : Prof. Eli Barr-Sinoussi (by e-mail: eli@[Link])

180
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 NOTICE OF ARBITRATION

Delivered To:
Republic of Mercuria
Trade Law Bureau (JLT)
Department of Foreign Affairs and International Trade Mercuria
185 LBP Building,
50, ABC Avenue
Stoica 03035
Mercuria

190

Courier receipts are attached [intentionally not reproduced here] .

For and on behalf of Atton Boro Limited
Allama Iqbal
195 Bronze & Knut LLP

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 NOTICE OF ARBITRATION

Exhibit I
Timeline of the Proceedings in Enforcement Application No.873/2009
Before the Honble High Court of Mercuria3
1. 3 March 2009 Atton Boros application for enforcement of the Award was filed in the
200 High Court of Mercuria.

2. 16 March 2009 Atton Boros application was heard. The Court ordered that the NHA
be given notice of the application, returnable on 11 May 2009.

3. 11 May 2009 The Judge was on leave. Matter adjourned to 22 September 2009.

4. 22 September 2009 The NHA was absent. Atton Boro submitted that the NHAs
205 absence from court without good reason had breached Mercurian procedural law, but
the Court remained silent about the objection. Matter adjourned to 15 January 2010.

5. 15 January 2010 The NHA was not present. The Court recorded that it would hear
the matter ex-parte if the NHA was absent at the next date of hearing. Matter
adjourned to 2 March 2010.

210 6. 2 March 2010 The NHA entered an appearance and submitted that it would resist the
application. The Court directed the NHA to file a short response before the next date
of hearing. Matter adjourned to 10 June 2010.

7. 10 June 2010 The NHA sought an extension of six weeks for filing its response.
Extension granted. Matter adjourned to 2 October 2010.

215 8. 2 October 2010 The NHA sought further extension for filing its response. Extension
granted. Matter adjourned to 1 January 2011.

9. 1 January 2011 The matter was not heard due to lengthy arguments in several cases
listed that day. Matter adjourned to 23 February 2011.

10. 23 February 2011 The NHA submitted that it had filed its response on 20 February
220 2011, and had served a copy on Atton Boro. Atton Boro sought leave to file a reply to
NHAs response before the next date of hearing. Leave granted. Matter adjourned to 2
May 2011.

3
Certified copies of all orders of the Court as well as copies of the notifications dated 2 December 2013 are
attached. [intentionally not reproduced here]

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 NOTICE OF ARBITRATION

11. 2 May 2011 Atton Boro informed the Court that it had filed its reply on 30 April 2010
and served a copy on the NHA on the same date. The NHA sought leave to file a
225 rejoinder to the reply before the next date of hearing. Request granted. The Court
ordered that the matter be listed on 3 September 2011.

12. 3 September 2011 The NHA sought an adjournment on the ground that its counsel
was traveling at the time. Matter adjourned to 5 October 2011.

13. 5 October 2011 The Counsel for the NHA submitted that he had been unable to
230 contact his client with regards to the rejoinder, and requested time to be able to obtain
instructions. Atton Boro argued that the NHA was deliberately delaying proceedings
without cause. The Judge informed the NHA that their protest had been noted. Matter
adjourned to 8 November 2011.

14. 8 November 2011 The NHA submitted that it had filed its rejoinder on 30 October
235 2011. Atton Boro informed the Court that the NHA had not served the rejoinder on
them and submitted that by failing to do so, the NHA had breached Mercurian
procedural law. The Judge, addressing the Counsel for Atton Boro, stated: private
parties ought to be more accommodating of their public counterparts who have
limited resources at their disposal. A delay in service of one rejoinder will hardly run
240 a billion dollar corporation into the ground. He ordered a copy of the rejoinder to be
served on Atton Boro within two weeks from 8 November 2011, and to have the
matter listed on 2 January 2012.

15. 2 January 2012 The matter was not heard due to lengthy arguments in other cases.
Matter adjourned to 27 March 2012.

245 16. 27 March 2012 The NHA sought leave to amend its written submissions in light of
recent decisions of the Supreme Court of Mercuria (Amendment Application).
Atton Boro objected to the request on the ground that any new decision would not
apply to pending proceedings, and therefore could not be a valid ground for grant of
leave to amend submissions. The Court directed both parties to file notes setting out
250 their respective positions on the issue. Matter adjourned to 30 April 2012.

17. 30 April 2012 The NHA requested the Court to grant an extension of 4 weeks on the
ground that its counsel was on corporate retreat. Atton Boro referred the Court to two
judgements of the Supreme Court of Mercuria (Supreme Court), both on 12 April
2012, upholding decisions rendered by the newly constituted Commercial Bench of

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 NOTICE OF ARBITRATION

255 the High Court in applications for enforcement of arbitral awards. Atton Boro argued
that the Supreme Court had thereby affirmed that the Commercial Bench had
exclusive jurisdiction to hear enforcement applications. Atton Boro requested the
Court to transfer the case accordingly. The Court recorded Atton Boros request and
adjourned the matter to 14 June 2012.

260 18. 14 June 2012 Atton Boros application for enforcement, along with the NHAs
Amendment Application, was transferred to a Commercial Bench of the Court and
parties were notified that the matter was listed for hearing on 4 September 2012.

19. 4 September 2012 The NHA was absent. Atton Boro confirmed that it had been
served a copy of the NHAs note and furnished an affidavit of service of its note on
265 the NHA. Atton Boro submitted that the NHAs absence from court without good
reason had breached Mercurian procedural law again, but the Court remained silent
about it. The Court ordered the matter to be listed on 17 October 2012 for arguments
on the application for amendment.

20. 17 October 2012 The matter was not heard due to lengthy arguments in other cases.
270 Matter adjourned to 8 November 2011.

21. 8 November 2012 The NHA was absent. Atton Boro objected to the conduct of the
NHA, and requested for strict measures to be taken. The Court recorded that it would
be constrained to take adverse measures if the NHA did not appear at the next date of
hearing. Matter adjourned to 8 January 2013.

275 22. 8 January 2013 The NHA tendered a formal apology to the Court. The NHA made
oral submissions urging the Court to allow its Amendment Application, and requested
time to make further submissions. Request granted. Matter adjourned to 15 April
2013.
23. 15 April 2013 The NHA concluded its oral submissions. Atton Boro requested a
280 hearing within a short time. The Court ordered that the matter be listed for hearing on
15 May 2013.

24. 15 May 2013 The matter was not heard due to lengthy arguments in other cases.
Matter adjourned to 29 June 2013.

25. 29 June 2013 Atton Boro made its oral submissions opposing the Amendment
285 Application, and requested one more hearing to conclude its submissions. Request
granted. Matter adjourned to 17 September 2013.

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 NOTICE OF ARBITRATION

26. 17 September 2013 The NHA submitted that it objected to the jurisdiction of the
Commercial Bench to hear the present dispute on the ground that the Commercial
Courts Act 2012 only applied to commercial suits and not to enforcement proceedings.
290 The Court questioned why such an objection should be entertained when it had not
been raised on any previous occasion. The NHA submitted that the basis for its
objection was a decision of the Supreme Court dated 1 September 2013. The Court
asked the parties to make their submissions on jurisdiction on the limited aspect of the
Supreme Court decision. Matter adjourned to 25 October 2013.

295 27. 25 October 2013 The parties made their submissions on the applicability of the 1
September 2013 decision. The Court ruled that it had jurisdiction to hear enforcement
applications under the Commercial Courts Act 2012. It held that the decision rendered
on 1 September 2013 did not state any reasons for deviating from the decisions of the
Supreme Court dated 12 April 2012 relied on by Atton Boro. Matter adjourned to 2
300 January 2014.

28. 2 December 2013 A notification was posted on the High Court website which read
In a judgment rendered on 1 September 2013, the Supreme Court of Mercuria has
clarified the interpretation of several provisions of the Commercial Courts Act 2012.
The decision confirms that Commercial Benches formed under the Act only have
305 jurisdiction to entertain original commercial suits and not enforcement proceedings of
arbitral awards. All enforcement applications shall be reassigned to regular benches
of the Court forthwith.

29. 2 January 2014 Atton Boros application was transferred to a regular bench of the
High Court and posted for hearing on 20 February 2014.

310 30. 20 February 2014 The Court stated that it had examined the both parties written
submissions on whether NHAs Amendment Application ought to be allowed, and
posted the matter for arguments on 20 March 2014.

31. 20 March 2014 The NHA made its oral submissions and requested time to make
further submissions. Allowing the request, the Court posted the matter for 20 May
315 2014.

32. 20 May 2014 The NHA concluded its oral submissions. Atton Boro requested a
hearing within a short time. The Court explained that it had an overwhelming caseload

10
 NOTICE OF ARBITRATION

following the transfer of enforcement applications, and posted the matter for hearing
on 6 August 2014

320 33. 6 August 2014 The Judge was on leave attending a workshop organized for officers of
the Mercurian judiciary. Matter adjourned to 9 September 2014.

34. 9 September 2014 The NHA was absent. Atton Boro submitted that the NHAs
absence from court without good reason had breached Mercurian procedural law, but
the Court merely acknowledged the objection, and posted the matter for hearing on 28
325 November 2014.

35. 28 November 2014 Atton Boro concluded its oral submissions. Matter posted on 31
January 2015 for a decision on the Amendment Application.

36. 31 January 2015 The Court allowed the NHAs application to amend its written
submissions, and ordered that the amended submissions be filed within six weeks.
330 Matter adjourned to 5 March 2015.

37. 5 March 2015 The NHA sought an extension to file the amended submission on the
ground that its Counsel had to present for an urgent hearing before the Supreme Court.
Atton Boro protested that this was a further attempt to delay the proceedings.
Recording that no further extension would be granted, the Court ordered that the
335 matter be listed on 28 May 2015.

38. 28 May 2015 The NHA informed the Court that it had filed its amended submissions
on 1 May 2015 and had served a copy on Atton Boro on the same day. The Court
directed Atton Boro to file its response to the amended submissions before the next
date of hearing. Matter adjourned to 25 July 2015.

340 39. 25 July 2015 The NHA was not present. Atton Boro furnished its affidavit of service
of its reply on the NHA. The matter was posted for arguments on merits on 10
November 2015.

40. 10 November 2015 The matter was not heard due to lengthy arguments in other cases.
Matter adjourned to 15 January 2016.

345 41. 15 January 2016 The NHA made its oral submissions and requested time to make
further submissions. Request granted. Matter adjourned to 5 March 2016.

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 NOTICE OF ARBITRATION

42. 5 March 2016 The NHA sought an adjournment stating that its counsel was unwell
and furnished a medical certificate stating the same. Matter adjourned to 30 September
2015.

350 43. 30 September 2016 The NHA requested for an adjournment on the ground that the
parties sought to attempt amicable settlement of the matter. Atton Boro confirmed this.
Matter adjourned to 30 October 2016.

44. 30 October 2016 The NHA was absent. Atton Boro informed the Court that attempts
to settle the dispute amicably had failed. Matter adjourned to 2 January 2017.

355

---xx---xx---

12
 Allama Iqbal
360 Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023
Reef
Counsel for the Investor
365 BY E-MAIL: [Link]@[Link]

Trade Law Bureau (JLT)

Department of Foreign Affairs and International Trade Mercuria
LBP Building, 50 ABC Avenue
370 Stoica 03035, Mercuria

BY E-MAIL: DIRECTOR@[Link]
FACSIMILE (2 PAGES): (2) 943-38037
AND COURIER
375

DIRECT DIAL: +31 12 345 6789 November 9, 2016

E-MAIL: BWILLIAMS@[Link]
RE: PCA CASE NO. 2016-74
ATTON BORO LIMITED (KINGDOM OF BASHEERA) V. THE REPUBLIC OF
MERCURIA

380 Dear Madams/Sirs,

1. The International Bureau of the Permanent Court of Arbitration (PCA)

acknowledges receipt of a Notice of Arbitration dated November 7, 2016 (Notice),
filed by Atton Boro Limited (Claimant) pursuant to Article 3 of the PCA
Arbitration Rules 2012 (PCA Rules). The PCA has received electronic and hard
385 copies of the Notice and accompanying exhibits.
2. By its Notice, the Claimant has initiated arbitral proceedings against the Republic of
Mercuria (Respondent) to resolve a dispute or disputes arising under, out of and in
connection with the Agreement for the Promotion and Reciprocal Protection of
Investments between the Republic of Mercuria and the Kingdom of Basheera
390 (BIT) between the Claimant and the Respondent.
 PCA Rules 2012 First Letter to Parties
November 9, 2016
Page 2 of 2
395 3. Article 8(1) of the BIT provides as follows:
Any dispute between an investor of one Contracting Party and the other
Contracting Party arising out of or in relation to this Agreement, or the
existence, interpretation, application, breach, termination, or invalidity
thereof, shall, failing settlement through amicable negotiations, be settled by
400 arbitration

4. In accordance with Article 8(3) of the BIT and Article 9(1) of the PCA Rules, the
Claimant has nominated as arbitrator Professor Eli Barr-Sinoussi of the Kingdom of
Basheera.
5. The PCA notes that Article 9(2) of the PCA Rules provides:
405 If within 30 days after the receipt of a partys notification of the appointment
of an arbitrator the other party has not notified the first party of the arbitrator
it has appointed, the first party may request the appointing authority to appoint
the second arbitrator.
6. Within thirty days after the date of receipt of the Notice, Respondent is kindly
410 requested to notify the Claimant and the PCA of its appointed arbitrator.
7. The Respondent is also invited to inform the PCA of the names and addresses of any
persons appointed to represent or assist the Respondent in connection with this
arbitration.
8. If you have any questions concerning this letter, please do not hesitate to contact me
415 (+31 12 345 6789; bwilliams@[Link]) or my colleague Ms. Sheila Jones,
Assistant Legal Counsel (+31 12 345 6780; sjones@[Link]).

Yours sincerely,
420 [signed]
Bruce Williams
Legal Counsel

cc: Professor Eli Barr-Sinoussi (by e-mail: eli@[Link] )

 RESPONSE TO THE NOTICE OF ARBITRATION

425 UNDER THE PERMANENT COURT OF ARBITRATION

ARBITRATION RULES 2012

ATTON BORO LIMITED

(Claimant)
430
AND

REPUBLIC OF MERCURIA
(Respondent)

435

Claimant: Atton Boro Limited,

22 Faraway Str.
Basheera

440 Legal Representative of the Claimant:

Allama Iqbal
Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023
445 Reef

Respondent: Republic of Mercuria

Trade Law Bureau (JLT)
Department of Foreign Affairs and International Trade Mercuria
450 LBP Building,
50, ABC Avenue
Stoica 03035
Mercuria

455 Legal Representative of the Respondent:

Jeff Lang
Payne & Pakajing LLP
39 Lee Street
Stoica 03035
460 Mercuria
A power of attorney is attached [intentionally not reproduced here]

15
 RESPONSE TO THE NOTICE OF ARBITRATION

26 November 2016

1. The Republic of Mercuria (Mercuria or the Respondent) hereby submits its

Response to the Claimants Notice of Arbitration dated 7 November 2016 pursuant to
465 Article 4 of the PCA Arbitration Rules.
2. The Respondent respectfully submits that the version of facts presented by Atton Boro
in its Notice is incomplete, if not wholly incorrect and unsubstantiated, and coloured
by its objectives in this arbitration.
3. Mercuria denies all claims and allegations advanced by Atton Boro. Further, Mercuria
470 contests this Tribunals jurisdiction over the case and argues that, in any case, Atton
Boro is not entitled to invoke the Mercuria-Basheera BIT of 11 January 1998 (the
BIT).
Objections
4. Mercuria submits that the Tribunal has no jurisdiction to adjudicate any claims in
475 relation to the enforcement of the Award dated 20 January 2009. This is because an
arbitral award does not qualify as an investment within the meaning of the BIT.
5. In any case, Mercuria, in exercise of the prerogative enshrined in Article 2 of the BIT,
submits that all of Atton Boros claims are inadmissible because the benefits of the
BIT are not available to Atton Boro. Atton Boro is a mere mailbox company set up
480 in Basheera by investors of a third state - The Peoples Republic of Reef. Atton Boro
is an investment vehicle controlled by the Atton Boro Group, with no commercial
activity in the territory of Basheera, and therefore not a proper investor from a
contracting party to the BIT.
6. Mercuria, in any event, avers that it has not violated any substantive protections of the
485 BIT. Greyscale is a severe and pervasive epidemic which threatens the well-being of
thousands of working-age individuals in Mercuria. Mercuria has acted responsibly,
and in accordance with due process of law, in introducing measures necessary to
safeguard the health of its people. No reasonable investor can expect that Mercuria
would not reform its legal framework in legitimate exercise of its police powers when
490 faced with a public health crisis; particularly where nothing in the BIT guarantees
investors that the Contracting Parties' laws and regulations will remain immutable
regardless of whatever crises their respective governments are forced to confront.
7. Atton Boro has no standing to bring claims relying on obligations contained in the
TRIPS Agreement before a tribunal deciding an investment dispute; those obligations
495 exist only between member States inter se, and disputes arising out of them fall within
the exclusive domain of the World Trade Organizations Dispute Settlement
Understanding.
Notwithstanding the foregoing, Mercurias actions are consistent with international
covenants and norms governing intellectual property.

500 8. Further, the Long-Term Agreement (LTA) was a purely commercial supply
arrangement between Mercurias National Health Authority (NHA) and Atton Boro,
and the termination of the LTA was NHAs decision acting as a purchaser.
Obligations under a commercial contract are distinct from those under an investment
agreement, and there can be no attribution of international responsibility to Mercuria
16
 RESPONSE TO THE NOTICE OF ARBITRATION

505 for acts done by the NHA in a commercial capacity. This view is only furthered by the
fact that the LTA provided for recourse to a specific dispute resolution forum which,
by Atton Boros own admission, has conclusively decided the matter.
9. Finally, Mercuria contends that Atton Boros claim in relation to enforcement of the
Award falls far short of the high threshold for constituting an internationally wrongful
510 act on the part of a national court. Atton Boro must be presumed to have been aware
that Mercuria is a developing country with an overburdened judiciary struggling to
cater to its population of 67 million people. In this context, a courts conduct can only
be deemed unfair or inequitable under international law when there is clear and
convincing evidence of egregious violation of due process and/or manifest
515 arbitrariness that resulted in a total failure of the judicial system. Atton Boros claim is
based solely on pendency or mere delay of proceedings, and therefore must fail.
Prayers for relief
10. Mercuria hereby requests the Tribunal to:
1. Find that it lacks jurisdiction over any claims in relation to enforcement of the
520 Award;
2. Declare that Atton Boro cannot avail itself of the benefits of the BIT by virtue of
application of Article 2 of the BIT;
3. Where the Tribunal does not grant the second prayer, declare that no act of
Mercurias violates the substantive protections of the BIT;
525 4. Find that Mercuria is entitled to restitution by Atton Boro of all costs related to
these proceedings; and
5. Grant such further relief as counsel may advise and that the Tribunal deems
appropriate.
Appointment of Arbitrator
530 11. In accordance with Article 9(1) of the PCA Rules, Atton Boro hereby nominates Ms.
Lilly Montagnier (by e-mail: lilly@[Link]) as one of the arbitrators.
Incorporation of Rules on Transparency
12. In the interest of promoting practices that facilitate good governance, accountability,
and fair and efficient settlement of international investment disputes, Mercuria
535 proposes that the UNCITRAL Rules on Transparency in Treaty-based Investor-State
Arbitration be applied in the proceedings.

For the Republic of Mercuria

Jeff Lang
540 Payne & Pakajing LLP
39 Lee Street
Stoica 03035
Mercuria

17
 PCA Rules 2012 Letter Re Appointment of Second Arbitrator
November 286, 2016
Page 2 of 2

545 Allama Iqbal

Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023
Reef
550 Counsel for the Investor
BY E-MAIL: [Link]@[Link]

Trade Law Bureau (JLT)

Department of Foreign Affairs and International Trade Mercuria
555 LBP Building, 50 ABC Avenue
Stoica 03035, Mercuria

BY E-MAIL: DIRECTOR@[Link],
FACSIMILE (2 PAGES): (2) 943-38037
560 AND COURIER

DIRECT DIAL: +31 12 345 6789 November 28 2016

E-MAIL: BWILLIAMS@[Link]
RE: PCA CASE NO. 2016-74
ATTON BORO LIMITED (KINGDOM OF BASHEERA) V. THE REPUBLIC OF
MERCURIA
565

Dear Madams/Sirs,

1. Appointment of Second Arbitrator

(a) Please be advised that in accordance with Article 8(3) of the BIT and Article 9(1) of
570 the PCA Rules, the Respondent has today appointed Ms. Lilly Montagnier as the
second arbitrator in the above-referenced matter.
(b) Pursuant to Article 9(3) of the PCA Rules, the co-arbitrators have thirty days from the
appointment of the second arbitrator to agree on the choice of the presiding arbitrator.
A copy of the appointment instrument and an index of the correspondence to date, as
575 sent to Ms. Lilly Montagnier, as well as a copy of Ms. Lilly Montagniers CV and
declaration of acceptance and statement of impartiality and independence are
enclosed.

18
 PCA Rules 2012 Letter Re Appointment of Second Arbitrator
November 286, 2016
Page 2 of 2

580 2. Request for Initial Deposit

(a) Pursuant to Article 43(1) of the PCA Rules, the International Bureau of the PCA
hereby requests that the Parties make an initial deposit of 120,000 (60,000 from
each Party) as an advance for the preliminary costs of the arbitration by Wednesday,
November 30, 2016 to the following PCA account:
585
Bank : ABC Bank N.V.
Kneuterdijk 8, 2514 EN, Den Haag, The
Netherlands
Bank Identifier Code : ABDEFG
(BIC)
Account number : 0480 4373 51
IBAN : NL56 ABCD 0480 4373 51
Beneficiary : Permanent Court of Arbitration
Reference : PCA Case No. 2016-74

If you have any questions concerning this letter, please do not hesitate to contact me (+31 12
345 6780; sjones@[Link]) or my colleague Mr. Bruce Williams, Legal Counsel, (+31 70
302 6789; bwilliams@[Link]).
590 Yours sincerely,
[signed]
Sheila Jones
Assistant Legal Counsel

595 Encl.: Appointment of Second Arbitrator

List of correspondence
Curriculum Vitae of Ms. Lilly Montagnier
Declaration of Acceptance and Statement of Impartiality and Independence
[enclosures intentionally not reproduced here]

600

cc: Eli Barr-Sinoussi (by e-mail: eli@[Link])

Ms. Lilly Montagnier (by e-mail lilly@[Link])

19
 PCA Rules 2012 Letter Re Constitution of Tribunal
December 8, 2016
Page 2 of 2

605 Allama Iqbal

Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023
Reef
610 Counsel for the Investor
BY E-MAIL: [Link]@[Link]

Trade Law Bureau (JLT)

Department of Foreign Affairs and International Trade Mercuria
615 LBP Building, 50 ABC Avenue
Stoica 03035, Mercuria

BY E-MAIL: DIRECTOR@[Link]
FACSIMILE (2 PAGES): (2) 943-38037
620 AND COURIER

DIRECT DIAL: +31 12 345 6789 December 8, 2016

E-MAIL: BWILLIAMS@[Link]

RE: PCA CASE NO. 2016-74

ATTON BORO LIMITED (KINGDOM OF BASHEERA) V. THE REPUBLIC OF
625 MERCURIA
Dear Madams/Sirs,
1. On behalf of Professor Eli Barr-Sinoussi and Ms Lilly Montagnier, the two party-
appointed arbitrators in the above-referenced arbitration, I am pleased to inform you of
their agreement, in accordance with Article 9(1) of the PCA Rules, that Mr Bob Gallo
630 shall serve as the presiding arbitrator in this case.
2. Mr Gallo has confirmed his willingness to accept the appointment and has declared
that he is not aware of any conflicts of interest or other circumstances that would
prevent him from serving as arbitrator in the present proceedings. Enclosed with this
letter are his signed Statement of Impartiality and Independence, a curriculum vitae,
635 and a list of relevant correspondence provided to Mr Gallo by the PCA.
3. Mr Gallos contact details are as follows:
Mr Bob Gallo
Athos Chambers
Gaolloway Place, 99 Bob Way
640 Goau T8D11, Sorti Aupuni

20
 PCA Rules 2012 Letter Re Constitution of Tribunal
December 8, 2016
Page 2 of 2

Email: bob@[Link]

4. The constitution of the Tribunal in this arbitration has thus been completed
within the period of thirty days after the appointment of the second arbitrator on
645 November 26, 2016, as set forth in Article 9(1) of the PCA Rules.
5. The PCA and the Tribunal look forward to working with the Parties in this case and
will be in contact shortly to set a date for a preliminary procedural conference.
Yours sincerely,
[signed]
650 Bruce Williams
Legal Counsel

Encl.: Signed Declaration of Acceptance and Statement of Impartiality and Independence

Curriculum Vitae of Mr. Bob Gallo List of Correspondence
655 [enclosures intentionally not reproduced here]

cc: Mr Bob Gallo (by e-mail: bob@[Link])

Eli Barr-Sinoussi (by e-mail: eli@[Link])
Ms. Lilly Montagnier (by e-mail lilly@[Link])
660

21
 PCA Rules 2012 Letter Re Procedural Order No 1
January 10, 2017
Page 2 of 2

Allama Iqbal
Bronze & Knut LLP
665 123 Law Firm Lane
Chalikopoulou, KB 023
Reef
Counsel for the Investor
BY E-MAIL: [Link]@[Link]
670

Trade Law Bureau (JLT)

Department of Foreign Affairs and International Trade Mercuria
LBP Building, 50 ABC Avenue
Stoica 03035, Mercuria
675 BY E-MAIL: DIRECTOR@[Link]
FACSIMILE (2 PAGES): (2) 943-38037
AND COURIER

DIRECT DIAL: +31 12 345 6789 January 10, 2016

E-MAIL: BWILLIAMS@[Link]

680 RE: PCA CASE NO. 2016-74

ATTON BORO LIMITED (KINGDOM OF BASHEERA) V. THE REPUBLIC OF
MERCURIA
Dear Madams/Sirs,
1. At the instruction of the Tribunal, please find enclosed Procedural Order No. 1, dated
685 January 10, 2017, in the above-referenced arbitration.
2. The PCA also takes this opportunity to inform the Parties that the Terms of
Appointment have now been signed by both Parties and by the Tribunal. Signed hard
copies of the Terms of Appointment will be distributed to all concerned in due course.

22
 PCA Rules 2012 Letter Re Procedural Order No 1
January 10, 2017
Page 2 of 2

690

3. If you have any questions concerning this letter, please do not hesitate to contact me
(+31 12 345 6789; bwilliams@[Link]) or my colleague Ms. Sheila Jones,
Assistant Legal Counsel (+31 12 345 6780; sjones@[Link]).

695 Yours sincerely,

[signed]
Bruce Williams
Legal Counsel
Encl.: Procedural Order No. 1 dated January 10, 2017
700 cc: Mr Bob Gallo (by e-mail: bob@[Link])
Eli Barr-Sinoussi (by e-mail: eli@[Link])
Ms. Lilly Montagnier (by e-mail lilly@[Link])

23
 PCA Rules 2012 Letter Re Procedural Order No 1
January 10, 2017
Page 2 of 2

705 ARBITRATION UNDER

THE MERCURIA-BASHEERA BIT,
THE PCA ARBITRATION RULES 2012
[AND THE OFFICIAL RULES AND INSTRUCTIONS OF THE FDI MOOT]

710 BETWEEN

ATTON BORO LIMITED

(Claimant)

715 AND

THE REPUBLIC OF MERCURIA

(Respondent)

720 PCA CASE NO. 2016-74

PROCEDURAL ORDER NO. 1

10 January, 2016
725
ARBITRAL TRIBUNAL

Mr. Bob Gallo (President)

Professor Eli Barr-Sinoussi
730 Ms. Lilly Montagnier

24
 1. Whereas this first order sets out the procedural rules which shall govern this
arbitration.
A) THE TRIBUNAL AND THE PARTIES
a) Constitution of the Arbitral Tribunal
735
2. The disputing parties agree and confirm that the Arbitral Tribunal has been duly
constituted in accordance with Article 8 of the BIT.
3. The disputing parties confirm that they waive any possible objection to the
constitution of the Arbitral Tribunal and to the appointment of the Arbitrators on the
740 grounds of conflict of interest and/or lack of independence or impartiality in respect of
matters known to them at the date of signature of this Procedural Order.
4. Contact details of each Member of the Arbitral Tribunal are as follows:
Mr. Bob Gallo
Athos Chambers
745 Gaolloway Place, 99 Bob Way
Goau T8D11, Sorti Aupuni
Email: bob@[Link]
Professor Eli Barr-Sinoussi
Aramis Law School
750 74 avenue de Sinoussi
833387 Fizik, Cemeg
Email: eli@[Link]
Lilly Montagnier
Porthos LLP
755 Bulvar McGill, 102
28309 Kartof
Email: lilly@[Link]
b) Representation of the disputing parties
5. The Claimant is represented by:
760 Allama Iqbal
Bronze & Knut LLP
123 Law Firm Lane
Chalikopoulou, KB 023 Reef
Tel: (212) 123-4567
765 Fax: (212) 123-8910
Email: [Link]@[Link]
6. The Respondent is represented by:
Meg Jo
Senior General Counsel and Director General,
770 Trade Law Bureau (JLT)
Department of Foreign Affairs and International Trade,
Stoica 03035, Mercuria
Tel: (2) 943-29086
25
 Fax: (2) 943-38037
775 Email: jo@[Link]
Jeff Lang
Barrister & Solicitor
Payne & Pakajing LLP
39 Lee Street
780 Stoica 86298, Mercuria
Tel: (2) 125-29086
Fax: (2) 125-38037
Email: [Link]@[Link]
c) Administrative Services
785 7. The Permanent Court of Arbitration (PCA) shall administer the arbitral proceedings
and will provide registry services and administrative support. The cost of the PCAs
services will be calculated in accordance with the PCAs Schedule of Fees & Costs
and shall be included in the costs of the arbitration.
B) PLACE OF ARBITRATION AND LOCATION OF HEARINGS
790 8. The seat of arbitration is Panchotta.
9. The venue of arbitration shall be decided by the Arbitral Tribunal on a hearing-by-
hearing basis after consultation with the parties.
10. The Arbitral Tribunal may deliberate at any convenient location, without consultation
with the parties.
795 C) APPLICABLE LAW AND ARBITRATION RULES
11. The governing law of this dispute is the Mercuria-Basheera BIT, read with applicable
rules of international law.
12. The applicable arbitration rules are the PCA Arbitration Rules 2012 (PCA
Arbitration Rules) and the Official Rules of the Foreign Direct Investment
800 International Arbitration Moot (FDI Moot Official Rules) (together, the Rules).
In the event of any inconsistency between the Rules, the FDI Moot Official Rules
shall prevail to the extent of the inconsistency.
D) LANGUAGE
13. The arbitration shall be conducted in English.
805 E) CONFIDENTIALITY
14. In its Response to the Notice of Arbitration dated 26 November 2016, the Respondent
proposed that the UNCITRAL Rules on Transparency in Treaty-based investor-State
Arbitration be applied in the present proceedings. At the first procedural hearing in
Panchotta on 30 December 2016, the Claimants counsel conveyed its rejection of this
810 proposal. Since neither the BIT nor the PCA Arbitration Rules mandate application of
the Rules on Transparency, these Rules cannot be applied in the absence of agreement
between the parties.
15. Subject to Article 34 (5) of the PCA Arbitration Rules, the record of this arbitration
may only be disclosed with the consent of both parties.
815
26
 F) ORGANISATION OF HEARINGS
16. The issues raised in this arbitration shall be addressed in a Main Stage, followed by
a Costs Stage. The Main Stage will address:
a) whether the Arbitral Tribunal has jurisdiction over the claims in
820 relation to Award;
b) whether the Claimant has been denied the benefits of the Mercuria-
Basheera BIT by virtue of the Respondents invocation of Article 2 of the BIT;
c) whether the enactment of Law No. 8458/09 and/or the grant of a
license for the Claimants invention amount to a breach of the Mercuria-
825 Basheera BIT, in particular, the Fair and Equitable Treatment standard;
d) whether Mercuria is liable under Article 3 of the BIT for the conduct of
its judiciary in relation to the enforcement proceedings; and
e) whether termination of the Long-Term Agreement by the Respondents
National Health Authority amounts to a violation of Article 3(3) of the BIT.

830 17. During the Main Stage, the Arbitral Tribunal will hold a hearing on the issues of
Jurisdiction, Liability and any Remedies that may follow. The Arbitral Tribunal will
then render its Award.
18. The subsequent Costs Stage will address the costs of the proceedings and their
allocation among the Claimant and Respondent. On conclusion, the Arbitral Tribunal
835 will issue a Separate Award on Costs.
19. This Procedural Order is issued in Panchotta, this 10 January, 2017.

[signed] [signed] [signed]

Bob Gallo Professor Eli Barr-Sinoussi Lilly Montagnier

27
 STATEMENT OF UNCONTESTED FACTS

840 1. On 11 January 1998, the Republic of Mercuria (Mercuria) and the Kingdom of
Basheera (Basheera) concluded an Agreement for the Promotion and Reciprocal
Protection of Investments (the BIT).4 The BIT was one of several international
agreements concluded by Basheera, a trend that was attributed to the governments
new outward-looking economic policy.
845 2. Atton Boro and Company is a corporation organized under the laws of the Peoples
Republic of Reef (Reef) and acts as the primary holding company for Atton Boro
Group, a leading drug discovery and development enterprise with over a hundred years
of operational experience to its credit. While Atton Boro Groups operations span
fields as diverse as neuroscience, endocrinology, oncology, and animal health, its most
850 pioneering efforts have been in the arena of critical epidemic diseases that threaten
populations in the developing world AIDS, cancer, tuberculosis, malaria and
greyscale.
3. After years of intensive pre-clinical study, clinical trials and regulatory clearances,
Atton Boro Group synthesized a compound called Valtervite, which it claimed would
855 radically improve treatment for greyscale patients. After first securing patent
protection for Valtervite in Reef in 1997, Atton Boro and Company went on to obtain
patents in 50 jurisdictions, including Mercuria (Mercurian Patent No. 0187204,
granted on 21 February 1998).
4. In April 1998, Atton Boro Group incorporated a wholly owned subsidiary in Basheera,
860 Atton Boro Limited (Atton Boro), as a vehicle for carrying on business in South
American and African countries. For this purpose, a number of patents were assigned
to Atton Boro, including the Mercurian patent for Valtervite. Atton Boro Group had an
established presence in Basheeras pharmaceutical market. Atton Boro rented out an
office space, opened a bank account, hired a manager and an accountant, and
865 commenced business.
5. Atton Boros principal dealings involved long-term public-private collaborations with
States and State agencies for the manufacture and supply of essential medicines at
competitive rates. It entered the Mercurian market by concluding several such
agreements with its government and with Mercurias newly set up National Health
870 Authority (the NHA). Atton Boro set up a robust manufacturing base in Mercuria,
and eventually expanded into other verticals in the pharmaceutical sector in Mercuria.
6. In 2003, the NHAs annual report to the Ministry of Health of Mercuria highlighted
that the imminent public health concern was the increasing incidence of greyscale
among working-age individuals across the country, and cautioned that the situation
875 could spiral into a national crisis within a decade unless aggressive measures were
taken to combat it. The report observed that the treatment currently available in
Mercuria was only effective if the infection was detected at very early stages, and even
then, it required taking 5 to 7 pills every day. This fell far short of global standards of

4
Annex No.1
28
 treatment for greyscale, since many parts of the world had moved to the novel fixed-
880 dose combinations (FDC) contained in a single pill.
7. Acting on the recommendations in the report, the Ministry of Health directed the NHA
to estimate the requirement in Mercuria and invited offers from pharmaceutical
companies for long-term strategic supply of FDC greyscale medicines at discounted
rates.
885 8. In a press statement issued on 19 January 2004, the Minister for Health of Mercuria
lauded the success of the Mercuria Comprehensive HIV/AIDS Partnership, a Product
Development Partnership between Atton Boro and NHA as a part of its five-year
health plan (1999-2004).5 The following day, the President of Mercuria shared this
statement on the micro-blogging platform Twitter with the words Mercuria will do
890 away with red tape and roll out the red carpet for investors.
9. In May 2004, the NHA wrote an invitation to Atton Boro to make an offer for
supplying its FDC drug, which it marketed under the brand name of Sanior. Following
a protracted negotiation process and evaluation of competing offers, the NHA and
Atton Boro entered into a Long-Term Agreement (LTA).
895 10. Under the LTA, the NHA would purchase Sanior from Atton Boro at a 25%
discounted rate by periodically placing purchase orders. Clause 5 of the LTA
stipulated the minimum guaranteed annual order-value. Clause 6, titled Validity of
the Agreement read This Agreement shall be valid for a period of 10 years effective
from commencement date subject to the Suppliers satisfactory performance.
900 11. Atton Boro set up its manufacturing unit for Sanior in Mercuria and delivered its first
consignment by June 2005. The NHA began distribution across Mercuria. By the end
of 2006 about a third of all greyscale patients were being treated using Sanior.
12. Since 2003, the NHA had been engaged in parallel efforts to promote prevention of
sexually transmitted diseases like greyscale. The NHA campaign involved actively
905 conducting awareness workshops in educational institutions and workplaces to
encourage people to be tested regularly.
13. The NHA annual report 2006 estimated that nearly 50% of all adults were getting
themselves tested every six months, as compared to just over 17% in 2003.
14. On 26 December 2006, the Minister for Health called a press conference to discuss the
910 NHA report. She termed the success of the NHA workshops as a triumph with a sting
in the tail, and expressed concern that the incidence and prevalence of greyscale
emerging from the data far exceeded even liberal estimates projected by the NHA.6
Emphasizing the need for more rigorous campaigning and research to unearth the full
extent of the crisis, she stated that the government would take every measure it
915 deemed necessary to make ensure that patients of greyscale could avail treatment.
15. As the number of patients coming into care grew, the order value for Sanior doubled
with each quarter in 2007. Atton Boro purchased land and machinery to bolster its
production setup. In early 2008, the NHA informed Atton Boro that it would need to

5
Annex No.2
6
Annex No.3
29
 renegotiate the price for Sanior, stating that it had grossly underestimated the number
920 of greyscale cases in Mercuria and needed to supply medicines for nearly twice the
number of patients. Atton Boro wrote back reassuring the NHA that it had built
capacity to meet the rising demand, and offered a further discount of 10% for the
remaining period of the LTA. The NHA rejected this offer, and demanded an
additional discount of 40%, stating that it would be compelled to terminate the
925 agreement if its terms were not met.
16. On 15 May 2008, the Minister for Health and the President of Mercuria met privately
with the Director of the NHA. Newspapers carried reports that the agenda for the
meeting was to resolve budgetary problems that had arisen in several government
healthcare programs. The reports alluded to a reliable source close to the Director.
930 17. On 10 June 2008, the NHA terminated the LTA, citing unsatisfactory performance by
Atton Boro. Atton Boro invoked arbitration against the NHA under the LTA. In
January 2009, a Tribunal seated in Reef passed an award (the Award) in favour of
the Claimant, finding that the NHA had breached the LTA by terminating it
prematurely.
935 18. On 3 March 2009, Atton Boro filed enforcement proceedings before the High Court of
Mercuria. The NHA filed its response in the matter, requesting the Court to decline
enforcement of the Award on the ground that it was contrary to public policy.
19. On 10 January 2012, the Parliament of Mercuria passed the Commercial Courts Act
directing the High Court to constitute special benches that could expeditiously dispose
940 of commercial matters. In September 2013, a ruling by the Supreme Court of Mercuria
clarified that benches constituted under the Commercial Courts Act had jurisdiction
only to hear original commercial suits and not enforcement proceedings. All
enforcement matters were returned to be heard before regular benches of the Court.
20. On 10 October 2009, the President of Mercuria promulgated National Legislation for
945 its Intellectual Property Law (Law No. 8458/09), which introduced a provision
allowing for the use of patented inventions without the authorization of the owner.7
21. In November 2009, HG-Pharma, a Mercurian generic drug manufacturer, filed an
application before the High Court under the new provision, seeking grant of a licence
to manufacture Valtervite. The Court heard the matter through a fast-tracked process
950 and granted HG-Pharma a licence on 17 April of 2010 to manufacture Valtervite until
greyscale was no longer a threat to public health in Mercuria. The Court fixed the
royalty to be paid to Atton Boro at 1% of total earnings.
22. In January 2012, the director of the NHA disclosed in an interview that the use of
generic drugs reduced costs of purchasing medicines by as much as 80%, resulting in
955 over 1.2 billion USD in savings annually.
23. Between May and August of 2013, the websites of three neighbouring States of
Mercuria carried letters from their respective government offices expressing gratitude
for the greyscale medicines received in the form of humanitarian aid from Mercuria.

7
Annex No.4
30
 24. By 2014, Atton Boro had lost nearly two-thirds of its market share to the generic FDC
960 pill. Several distributors with whom Atton Boro had long-standing relationships began
indicating their intention to switch to the more cost effective alternative once the
extant contracts with Atton Boro expired.
25. In February 2015, the head of Atton Boros Mercuria division announced that the
company would no longer be dealing in Sanior in Mercuria, stating that . . . an
965 innovative drug developer with billions of dollars to recoup before turning a profit
cannot sustain a price war with a generic company which never invested a dime into
risky R & D . . . and while Atton Boro intends to continue pursuing every available
legal recourse against this usurping of its intellectual property, it will ensure that the
people of Mercuria can continue to benefit from its range of other health and lifestyle
970 products.

31
 ANNEX NO. 1

AGREEMENT BETWEEN THE REPUBLIC OF MERCURIA AND

THE KINGDOM OF BASHEERA FOR THE PROMOTION AND RECIPROCAL
PROTECTION OF INVESTMENTS

975 The Republic of Mercuria and the Kingdom of Basheera (hereinafter referred to as the
Contracting Parties),
Desiring to promote greater economic cooperation between them with respect to investment
by nationals and enterprises of one Contracting Party in the territory of the other Contracting
Party;
980 Recognizing that agreement on the treatment to be accorded to such investment will stimulate
the flow of private capital and the economic development of the Contracting Parties;
Recognizing the importance of providing effective means of asserting claims and enforcing
rights with respect to investment under national law as well as through international
arbitration;
985 Building on their respective rights and obligations under the Marrakesh Agreement
Establishing the World Trade Organization and other multilateral, regional, and bilateral
agreements and arrangements to which they are both parties; and
Desiring to achieve these objectives in a manner consistent with the protection of health,
safety, and the environment, and the promotion of internationally recognized labor rights;
990 Have agreed as follows:

Article 1
Definitions
For the purposes of this Agreement:
1. the term investment means any kind of asset held or invested either directly, or
995 indirectly through an investor of a third state, by an investor of one Contracting Party in
the territory of the other Contracting Party in accordance with the latters laws and, in
particular, though not exclusively, includes:
(a) movable and immovable property and any related property rights, such as
mortgages, liens or pledges;
1000 (b) shares, stock, bonds and debentures or any other form of participation in a
company, business enterprise or joint venture;
(c) claims to money, and claims to performance under contract having a financial
value;
(d) intellectual property rights, including rights with respect to copyrights, patents,
1005 trademarks as well as trade names, industrial designs, good will, trade secrets and
knowhow; or

32
 ANNEX NO. 1

(e) rights, conferred by law or under contract, to undertake any economic and
commercial activity, including any rights to search for, cultivate, extract or exploit
natural resources.
1010 Any change in the form of an investment does not affect its character as an investment.
2. the term investor means::
(a) any natural person having the nationality of either Contracting Party in
accordance with its laws.
(b) any corporation, partnership, trust, joint venture, organization, association or
1015 enterprise incorporated or duly constituted in accordance with the applicable laws of
that Contracting Party.
3. The term returns means all amounts yielded by an investment and in particular,
though not exclusively, includes profits, interest, capital gains, dividends, royalties, fees,
returns in kind or other current income.
1020 4. The term territory shall mean:
(a) in respect of the Republic of Mercuria, the territory of the Republic of
Mercuria over which it exercises sovereignty, sovereign rights and jurisdiction in
accordance with international law.
(b) in respect of the Kingdom of Basheera, the territory of the Kingdom of
1025 Basheera over which it exercises sovereignty, sovereign rights and jurisdiction in
accordance with international law.

Article 2
Denial of Benefits
Each Contracting Party reserves the right to deny the advantages of this Agreement to:

1030 1. a legal entity, if citizens or nationals of a third state own or control such entity and if
that entity has no substantial business activities in the territory of the Contracting Party
in which it is organized; or
2. an investment, if the denying Contracting Party establishes that such investment is an
investment of an investor of a third state with or as to which the denying Contracting
1035 Party:
(a) does not maintain a diplomatic relationship; or
(b) adopts or maintains measures that:
i) prohibit transactions with Investors of that state; or
ii) would be violated or circumvented if the benefits of this Part were
1040 accorded to Investors of that state or to their Investments.

Article 3
Promotion and Protection of Investment and Returns
1. Each Contracting Party shall encourage and create favourable conditions for investors of
the other Contracting Party to make investments in its territory, and, subject to its right

33
 ANNEX NO. 1

1045 to exercise powers conferred by its laws and investment policies, shall admit such
investments.
2. Investments and returns of investors of each Contracting Party shall at all times be
accorded fair and equitable treatment and shall enjoy full protection and security in the
territory of the other Contracting Party. Neither Contracting Party shall, without
1050 prejudice to its laws, in any way impair by unreasonable or discriminatory measures the
management, maintenance, use, enjoyment or disposal of investments in its territory of
investors of the other Contracting Party.
3. Each Contracting Party shall observe any obligation it may have entered into with
regard to investments of investors of the other Contracting Party.
1055 4. This Agreement shall not prevent an investor of one Contracting Party from taking
advantage of the provisions of any law or policy of the other Contracting Party which
are more favourable than the provisions of this Agreement.

Article 4
Treatment of Investments
1060 1. Neither Contracting Party shall in its territory subject investments or returns of investors
of the other Contracting Party to treatment less favourable than that which it accords to
investments or returns of investors of any other State.
2. Neither Contracting Party shall in its territory subject investors of the other Contracting
Party, as regards their management, maintenance, use, enjoyment or disposal of their
1065 investments, including in connection with intellectual property rights, and the raising of
funds, the purchase and sale of foreign exchange, and transfers under Article 8 of this
Agreement, to treatment less favourable than that which it accords to investors of any
other State.
3. Subject to its laws applicable from time to time, each Contracting Party shall permit
1070 investors of the other Contracting Party who have made investments in the first
Contracting Partys area to employ within its area, key technical and managerial
personnel of their choice, and permit physical persons who are investors of the other
Contracting Party and personnel employed by companies of that other Contracting Party
to enter and remain in its area for the purpose of engaging in activities related to
1075 investments. Such personnel employed from abroad shall be entitled to transfer abroad,
subject to the provisions of Article 8 of this Agreement, unspent earnings and other
remuneration in connection with investments.

Article 5
Compensation for Losses
1080 1. Investors of one Contracting Party whose investments in the area of the other
Contracting Party suffer losses owing to war or other armed conflict, revolution, a state
of national emergency, revolt, insurrection, riot or other similar events in the area of the
latter Contracting Party shall be accorded by the latter Contracting Party treatment, as
regards restitution, indemnification, compensation or other settlement, no less
1085 favourable than that which the latter Contracting Party accords to investors of any other
State. Resulting payments shall be made in a freely convertible currency.

34
 ANNEX NO. 1

2. Without prejudice to paragraph (1) of this Article, investors of one Contracting Party
who in any of the situations referred to in that paragraph suffer losses in the area of the
other Contracting Party resulting from:
1090 (a) requisitioning of their property by its forces or authorities, or
(b) destruction of their property by its forces or authorities which was not caused
in combat action or was not required by the necessity of the situation, shall be
accorded restitution or reasonable compensation. Resulting payments shall be made in
a freely convertible currency.

1095 Article 6
Expropriation and Compensation
1. The investments to which this Agreement relates shall not be subject to any measure
which might limit permanently or temporarily their joined rights of ownership,
possession, control or enjoyment, save where specifically provided by law and by
1100 judgments or orders issued by Courts or Tribunals having jurisdiction.
2. Investments of investors of one Contracting Party shall not be directly or indirectly
nationalized, expropriated, requisitioned or subjected to any measures having similar
effects in the territory of the other Contracting Party, except for public purposes, or
national interest, against immediate full and effective compensation, and on condition
1105 that these measures are taken on a non-discriminatory basis and in conformity with all
legal provisions and procedures.
3. The just compensation shall be equivalent to the real market value of the investment
immediately prior to the moment in which the decision to nationalize or expropriate is
announced or made public, and shall be calculated according to internationally
1110 acknowledged evaluation standards. Whenever there are difficulties in ascertaining the
market value the compensation shall be calculated on the basis of a fair appraisal of the
establishment's constitutive and distinctive elements as well as of the firms activities
components and results. Compensation shall include interest calculated on a six-month
LIBOR basis accruing from the date of nationalization or expropriation to the date of
1115 payment. In the event of failure to reach an agreement between the investor and the
Contracting Party having liability, the amount of the compensation shall he calculated
following the settlement of dispute procedure provided by Article 9 of this Agreement.
Once the compensation has been determined it shall be paid promptly and authorization
for its repatriation in convertible currency issued.
1120 4. Non-discriminatory measures of a Contracting Party that are designated and applied to
protect legitimate public welfare objectives, such as public health, safety and the
environment, do not constitute an indirect expropriation under this Article.

Article 7
Subrogation
1125 1. If a Contracting Party or an agency of a Contracting Party makes a payment to an
investor of that Contracting Party under a guarantee, a contract of insurance or other
form of indemnity it has granted in respect of an investment, the other Contracting Party
shall recognise the transfer of any right or title in respect of such investment. The

35
 ANNEX NO. 1

subrogated right or claim shall not be greater than the original right or claim of the
1130 investor.
2. Where a Contracting Party has made a payment to its investor and has taken over rights
and claims of the investor, that investor shall not, unless authorised to act on behalf of
the Contracting Party making the payment, pursue those rights and claims against the
other Contracting Party.
1135 3. A Contracting Party shall not assert, as a defence, counter-claim, right of set-off or
otherwise, in any proceeding involving a dispute relating to an investment, that the
investor concerned has received or will receive, pursuant to an insurance or guarantee
contract, indemnification or other compensation for all or part of any alleged loss.

Article 8
1140 Settlement of Investment Disputes between a Contracting Party and an Investor of the
other Contracting Party
1. Any dispute between an investor of one Contracting Party and the other Contracting
Party arising out of or in relation to this Agreement, or the existence, interpretation,
application, breach, termination, or invalidity thereof, shall, failing settlement through
1145 amicable negotiations, be settled by arbitration
2. A disputing investor may submit a dispute referred to in paragraph 1 to arbitration in
accordance with:
(a)the Convention on the Settlement of Investment Disputes between States and
Nationals of Other States (ICSID Convention), done at Washington, March 18,
1150 1965, and the ICSID Rules of Procedure for Arbitration Proceedings, provided that
both the disputing Party and the Party of the investor are parties to the ICSID
Convention; or
(b) the Rules Governing the Additional Facility for the Administration of
Proceedings by the Secretariat of the International Centre for Settlement of
1155 Investment Disputes Additional Facility Rules of ICSID, provided that either the
disputing Contracting Party or the Contracting Party of the investor, but not both,
is a party to the ICSID Convention; or
(c)the Permanent Court of Arbitration Optional Rules for Arbitrating Disputes
between Two Parties of Which Only One Is a State, as in effect on the date of
1160 submission of dispute to arbitration.
3. The number of arbitrators shall be three. The place of arbitration shall be Panchotta. The
language to be used in the arbitral proceedings shall be English or French.

Article 9
Settlement of Disputes between the Contracting Parties
1165 1. Any dispute between the Contracting Parties concerning the interpretation or application
of this Agreement that is not resolved through consultations or other diplomatic
channels shall be submitted on the request of either Contracting Party to arbitration for a
binding decision or award by a tribunal in accordance with applicable rules of
international law. In the absence of an agreement by the parties to the contrary, the

36
 ANNEX NO. 1

1170 UNCITRAL Arbitration Rules shall govern, except as modified by the Parties or this
Agreement.
2. Unless the Contracting Parties otherwise agree, the tribunal shall comprise three
arbitrators, one arbitrator appointed by each Contracting Party and the third, who shall
be the presiding arbitrator, appointed by agreement of the Contracting Parties. If a
1175 tribunal has not been constituted within 75 days from the date that a claim is submitted
to arbitration under this Section, the President of the International Court of Justice, on
the request of either Contracting Party, shall appoint, in his or her discretion, the
arbitrator or arbitrators not yet appointed.
3. Expenses incurred by the arbitrators, and other costs of the proceedings, shall be paid
1180 for equally by the Contracting Parties. However, the tribunal may, in its discretion,
direct that a higher proportion of the costs be paid by one of the Contracting Parties.
4. The tribunal shall have the authority to accept and consider amicus curiae submissions
from a person or entity that is not a disputing party.
5. The respondent shall, after receiving the following documents, promptly transmit them
1185 to the non-disputing party and make them available to the public:
(a) the notice of intent;
(b) the notice of arbitration;
(c) pleadings, memorials, and briefs submitted to the tribunal by a disputing party
and any written submissions submitted by another non-disputing party;
1190 (d) minutes or transcripts of hearings of the tribunal, where available; and (e)
orders, awards, and decisions of the tribunal.
6. A joint decision of the Contracting Parties, each acting through its representative
designated for purposes of this Article, declaring their interpretation of a provision of
this Agreement shall be binding on a tribunal, and any decision or award issued by a
1195 tribunal must be consistent with that joint decision.

Article 10
Transfer of Investments and Returns
1. Subject to its laws and policies, each Contracting Party shall in respect of investments
guarantee to investors of the other Contracting Party the right to transfer abroad their
1200 investments and returns.
2. Transfers of currency including payments in compensation for losses in accordance with
Article 5 of this Agreement shall be permitted without undue delay in any freely
convertible currency. Unless otherwise agreed by the investor transfers shall be made at
the rate of exchange applicable on the date of transfer.
1205 3. A Contracting Party may protect the rights of creditors, or ensure the satisfaction of
judgements in adjudicatory proceedings, through the equitable, non-discriminatory and
good faith application of its law.

37
 ANNEX NO. 1

Article 11
Application of Other Rules
1210 If the provisions of law of either Contracting Party or obligations under international law
existing at present or established hereafter between the Contracting Parties in addition to the
present Agreement contain rules, whether general or specific, entitling investments by
investors of the other Contracting Party to a treatment more favourable than is provided for
by this Agreement, such rules shall to the extent that they are more favourable prevail over
1215 this Agreement.

Article 12
Essential Security Interests
Nothing in this Agreement shall be construed as preventing a Contracting Party from taking
any action necessary for the protection of its essential security interests in time of war or
1220 armed conflict, or other emergency in international relations.

Article 13
Application
This Agreement shall apply to any investment made by an investor of one Contracting Party
in the territory of the other Contracting Party on or after the date of its entry into force.

1225 Article 14
Entry into Force, Duration and Termination
1. This Agreement shall enter into force thirty days after the date of exchange of
instruments of ratification. It shall remain in force for a period of ten years and shall
continue in force thereafter unless terminated in accordance with paragraph 2.
1230 2. A Contracting Party may terminate this Agreement at the end of the initial ten-year
period or at any time thereafter by giving one years written notice to the other
Contracting Party.
3. For ten years from the date of termination, all other Articles shall continue to apply to
covered investments established or acquired prior to the date of termination, except
1235 insofar as those Articles extend to the establishment or acquisition of covered
investments

IN WITNESS THEREOF, the undersigned duly authorized have signed this Agreement.
DONE in duplicate at the Republic of Mercuria this day of January 11 1998 in Mercur,
1240 Basheer and English languages, all texts being equally authoritative.

For the Republic of Mercuria For the Kingdom of Basheera

[Intentionally omitted] [Intentionally omitted]

Minister of Finance Minister of Finance

38
 ANNEX NO. 2

PRESS INFORMATION BUREAU

1245 GOVERNMENT OF MERCURIA
* * * * * *

Statement by the Minister for Health Mr. Joseph Bell concerning the five-year health
plan 1999-2004
January 19,
1250 2004
Artaza, Mercuria

1. Following is the statement by Union Minister for Health, Mr. Joseph Bell:

1255 2. "In 1998, the Central Government set up the National Health Authority (NHA) to
pursue its goal of securing universal healthcare for its people, as envisioned by the
Constitution of Mercuria. Today, data from health centres across the country bears
testimony to the success of all 5 of the NHAs innovative initiatives under the
umbrella of its pilot five-year health plan 1999-2004 to tackle critical diseases in
1260 Mercuria.

3. Particularly evident is the impact of NHAs Comprehensive HIV/AIDS Partnership

with a consortium of pharmaceutical companies led by Atton Boro Limited. The
program has allowed 30,000 new patients to obtain access to ARV treatment while
reducing cost of treatment by as much as 50% for all existing patients.

1265 4. The success of these programs buttresses the view that public-private partnerships
must be at the forefront of our strategy to tackle critical diseases. A stable, progressive
IPR regime is essential to such endeavours. Patents are the cornerstone of the
innovative pharmaceutical industry because of distinctive features of the drug
development life-cycle. Rather than abridge these rights through myopic measures,
1270 Mercuria reaffirms its commitment to empower and engage right holders in order to
pave the way forward and secure access to healthcare for all."

* * * * * *

39
 ANNEX NO. 3

1275 NATIONAL HEALTH AUTHORITY

MERCURIA

1280 ANNUAL REPORT

2006
(Executive Summary)

1285

1290

40
 ANNEX NO. 3

1295 CHAPTER VII - GREYSCALE

Background

Early in the 1980s, several cases of what appeared to be a new chronic disease were reported
from Central and South America. The disease was named greyscale due to the cracking and
1300 flaking of the skin observed on patients bodies. Other symptoms included progressively
stiffening muscles, swollen limbs, and severe joint pain. A study published in 1985 by the
World Health Organization confirmed the occurrence of greyscale in 43 countries, including
Mercuria, with increasing incidence observed in many.

In June 1990, a team of researchers at the Zaphod Institute isolated and identified a virus as
1305 the cause of the greyscale infection. The researchers described the disease as chronic, non-
fatal and incurable. The disease attracted the attention of government as well as private
research bodies and in 1993, the first drug to treat greyscale received regulatory approval. By
the late 1990s, treatment involving a combination of drugs could be availed to retard the
progress of the disease for several years. Some of the more advanced treatment could even
1310 mute the symptoms completely for the initial few years.

Greyscale Response in Mercuria

When Mercuria witnessed an upsurge in the prevalence of greyscale in 2002, the government
followed a standard public health approach, which emphasized case reporting through the
1315 medical system. The findings transformed perceptions and raised awareness that the disease
posed a threat to the working-age population in Mercuria. When pressed to respond to the
threat in 2003, the government acted decisively, launching a nationwide campaign focused on
prevention and mitigation of greyscale.

The key elements of the program were a massive public information campaign launched
1320 through the media, government, and NGOs and the procurement of medicines at discounted
rates. The response was led by a multi-sectoral think tank, chaired by the Minister for Health
of Mercuria that actively engaged private corporations, NGOs and civil society. The results
were dramatic.

41
 ANNEX NO. 3

1325

Progress Highlights (2003-2006)

Total population of Mercuria A marginal increase observed from 66,955,100 in 2003 to

67,150,133 in 2006.

1330 Vulnerable demographic The population of the vulnerable demographic for greyscale
i.e. working age individuals (15 49 years) has marginally decreased from 48,200,243 in
2003 to 48,198,864 in 2006.

Success of awareness campaigns A drastic increase was observed in the percentage of

1335 working age individuals who got themselves tested at least once in six months, from 17%
in 2003 to 65% in 2006.

Number of confirmed cases of greyscale A sharp increase in the number of confirmed

cases of persons living with greyscale was observed, from 20,485 in 2003 to a total of
1340 266,298 cases as of 2006.

Number of estimated cases of greyscale (15-49 years) The estimated maximum number
of cases has increased drastically from 216,900 persons in 2003, to 578,390 persons in
2006.
1345

Key concerns

Detection While the response to awareness campaigns has been positive, a significant
proportion of the vulnerable population remains untested.
1350
Access and affordability A majority of patients in Mercuria have successfully
transitioned from the multiple-pill therapy to the Fixed-dose Combination (FDC)
treatment. However, even at a 25% discounted rate, a single FDC pill costs USD 27, and
the annual cost of FDC medicine per patient nearly USD 10,000.
1355

42
 ANNEX NO. 3

As of 2005, 10,012 out of the total number of greyscale patients depended solely on
1360 public health schemes to obtain medicines for treatment. The number of such patients is
estimated to have risen to 100,000 in 2006.

At current prices, it would cost 1 billion USD, or nearly a third of the overall health
budget and 500% of the greyscale program budget, to provide drugs for a single year of
1365 FDC just to the poorest 100,000. Additionally, several patients who dont fall within the
poorest group struggle with the costs of treatment as well.

Those costs would be for the first year. Assuming that these therapies continue to raise the
survival of patients, they must be subsidized in the following years as well.
1370
Finally, such disparity between need and access deters Mercurias goal of achieving
universal free healthcare.

It is recommended that the current pricing policy be revisited to address these concerns.

43
 ANNEX NO. 4

1375 THE GOVERNMENT GAZETTE

MERCURIA

OFFICE OF THE PRESIDENT

1380
No. 23/09 October 10, 2009

It is hereby notified that the President has assented to the following Law which is hereby
published for general information:-

Law No. 8458/09

1385 NATIONAL LEGISLATION

To Amend Intellectual Property Law, 1976 (Law No. 232/76)

Insertion of Section 23 C in Law No. 232/76

The following section is hereby inserted in the principal Law after section 23B:

1390 23 C. Non-voluntary licences

1) At any time after the expiration of three years from the date of the grant of a patent,
any person interested may make an application to the High Court of Mercuria for grant
of a non-voluntary licence on the patent on any of the following grounds, namely
(a) that the reasonable requirements of the public with respect to the patented
1395 invention have not been satisfied; or
(b) that the patented invention is not available to the public at a reasonably affordable
price; or
(c) that the patented invention is not worked in the territory of Mercuria.

2) Every application under sub-section (1) shall contain a statement setting out the nature
1400 of the applicant's interest together with such particulars as may be prescribed and the
facts upon which the application is based.
3) The Court, if satisfied that any ground specified in subsection (1) is met, may grant a
licence upon such terms as it may deem fit.
4) In considering the application filed under this section, the Court shall take into
1405 account,
(a) the nature of the invention, the time which has elapsed since the sealing of the
patent and the measures already taken by the patentee or any licensee to make full
use of the invention;

44
 ANNEX NO. 4

(b) the ability of the applicant to work the invention to the public advantage;
1410 (c) the capacity of the applicant to undertake the risk in providing capital and
working the invention, if the application were granted; and
(d) whether the applicant has made efforts to obtain a licence from the patentee on
reasonable terms and conditions and such efforts have not been successful within
a reasonable period as the Court may deem fit;
1415 Provided that this clause shall not be applicable in case of national emergency or other
circumstances of extreme urgency or in case of public non-commercial use or on
establishment of a ground of anticompetitive practices adopted by the patentee, but
shall not be required to take into account matters subsequent to the making of the
application.
1420 Explanation For the purposes of clause (d) above, "reasonable period" shall be
construed as a period not ordinarily exceeding a period of six months.

[SIGNED]

1425 President of Mercuria

[SIGNED]

Secretary to the Government of Mercuria

45