Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes whether the tribunal to be constituted in ICSID Case No. ARB/22/11, Dunmore Energy Holdings Ltd. v. Republic of Valderia, will have jurisdiction over the claims asserted by Dunmore Energy Holdings Ltd. ("DEH" or the "Claimant") against the Republic of Valderia (the "Respondent" or "Valderia") and whether those claims are admissible. The analysis is based on the applicable

II. BACKGROUND FACTS The following factual summary is based on information provided by the Claimant, documents in the firm's possession, and publicly available information. All facts remain subject to verification and may be supplemented as the evidentiary record develops. A. The Claimant — Dunmore Energy Holdings Ltd. The Claimant is Dunmore Energy Holdings Ltd. ("DEH"), an exempted company incorporated under the la

1. Exploration Phase (2013–2016): DVU drilled seven exploration wells, of which five were found to be commercially viable. The exploration program confirmed the presence of significant hydrocarbon accumulations in the Orinoco Sur concession area and provided the technical basis for proceeding to the development phase.

2. Development Phase (2016–2019): DVU drilled twenty-two development wells and constructed the CPF and gathering pipeline system. The development phase brought the concession from an exploration asset to a producing asset capable of generating substantial revenue.

3. Production Phase (2019–2021): Commercial production commenced in 2019 and continued until the Respondent's expropriatory measures in 2021 brought operations to a halt. Reserves. As of December 31, 2020, the Bloque Orinoco Sur concession held proved reserves of 87.4 million barrels of oil equivalent ("mmboe") and probable reserves of 42.1 mmboe, as certified by Ridgewell Subsurface Consultants Ltd., an independent

III. JURISDICTIONAL ANALYSIS A. Article 25(1) of the ICSID Convention — Framework

Article 25(1) of the ICSID Convention establishes the jurisdictional requirements for access to the Centre. It provides, in relevant part: "The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State

1. DEH's Nationality: Cayman Islands / United Kingdom

Article 25(2)(b) of the ICSID Convention defines "national of another Contracting State" to include "any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration." The nationality of a juridical person is typically determined by its place of incorporation or the seat of i

Article 1 of the UK-Valderia BIT defines "companies" to include, inter alia, "any body corporate, firm or association incorporated or constituted under the law in force in any part of the United Kingdom or in any territory to which this Agreement is extended in accordance with the provisions of Article 12." Article 12 of the BIT provides for territorial extension by declaration of the United Kingdom. On February 14,

2. Analysis of Ultimate Beneficial Ownership Although the place-of-incorporation test is the primary criterion for establishing the nationality of a juridical person under both the ICSID Convention and the BIT, we anticipate that the Respondent may seek to challenge DEH's nationality by looking beyond its place of incorporation to the nationality of its ultimate beneficial owners. This anticipated objection is addres

1. Definition of "Investment" Under the BIT

Article 1 of the UK-Valderia BIT defines "investment" in broad, inclusive, and asset-based terms. Consistent with the standard formulation found in the United Kingdom's model BIT, Article 1 provides that "investment" means "every kind of asset," and includes without limitation: (a) movable and immovable property and any other property rights such as mortgages, liens or pledges; (b) shares in and stock and debentures

2. The "Salini" / Objective Criteria Test Even if the tribunal were to apply the more restrictive "Salini" test — derived from the decision of the ICSID tribunal in Salini Costruttori S.p.A. v. Kingdom of Morocco (ICSID Case No. ARB/00/4) — which identifies four objective criteria that an investment must satisfy (contribution, duration, risk, and contribution to the economic development of the host state), DEH's inve

3. DEH's Investment Through DVU An important structural feature of DEH's investment is that it was made through DVU, the wholly-owned Valderian subsidiary. The question arises whether DEH, as the foreign parent company, has standing to bring a claim in respect of an investment held through a local subsidiary. ICSID jurisprudence has addressed this question extensively, and the prevailing approach is permissive. Tribu

1. The Respondent's Standing Offer of Consent

Article 8 of the UK-Valderia BIT provides for the resolution of investment disputes between a Contracting Party and a national of the other Contracting Party. Article 8 provides, in relevant part, that an investor may, after complying with the procedural prerequisites set forth therein (including the six-month cooling-off period), submit the dispute to arbitration under the ICSID Convention, provided that both the ho

Article 8 of the UK-Valderia BIT constitutes precisely such a standing offer. The Republic of Valderia, by entering into the BIT and including Article 8, consented in advance to the submission of qualifying investment disputes to ICSID arbitration. This consent is irrevocable under Article 25(1) of the ICSID Convention once accepted by the investor.

2. Scope of Consent The scope of the Respondent's consent under Article 8 extends to disputes "concerning an investment" between a Contracting Party and a national of the other Contracting Party. The formulation "concerning an investment" is broad and encompasses any dispute that has a sufficient connection to the investor's protected investment. There is no carve-out, limitation, or reservation in Article 8 that wou

3. The BIT's Entry Into Force and Territorial Extension The perfection of consent in the present case depends on the BIT having been in force at the relevant time and having been applicable to investors from the Cayman Islands. Both conditions are satisfied: • The UK-Valderia BIT was signed on May 22, 2006 and entered into force on November 1, 2006. • The United Kingdom's territorial extension declaration of February

IV. ADMISSIBILITY Distinct from the question of jurisdiction, the admissibility of a claim concerns whether the procedural prerequisites for the exercise of an otherwise-established jurisdiction have been satisfied. The principal admissibility issues in the present case are: (A) compliance with the cooling-off period; (B) the absence of parallel proceedings; (C) the absence of a requirement to exhaust local remedies;

Article 8 of the UK-Valderia BIT requires that, before an investor may submit a dispute to ICSID arbitration, it must provide written notice of the dispute to the host state, following which a six-month "cooling-off" period must elapse to allow the parties an opportunity to resolve the dispute amicably. Only if the dispute remains unresolved at the expiry of this period may the investor proceed to arbitration. Factua

1. Registration occurred close to the expiry date. The ICSID Secretary-General did not register the Request for Arbitration until April 8, 2022 — only six days before the cooling-off period expired on April 14, 2022. Registration is an administrative act performed by the Secretary-General upon being satisfied that the Request is not manifestly outside the Centre's jurisdiction. While registration is not itself the co

2. The tribunal has not been constituted. The proceedings have been dormant since June 2022, and the tribunal has not been constituted. By the time the tribunal is constituted and the proceedings are active, the cooling-off period will have long expired. Any theoretical deficiency has been fully cured by the passage of time.

3. No prejudice to the Respondent. The Republic of Valderia has not been prejudiced by the premature filing. During the entire cooling-off period — and indeed from the date of the Notice of Dispute through the present day — the Respondent has made no substantive response to the Notice, has not proposed settlement discussions, and has not expressed any willingness to resolve the dispute amicably. The purpose of the co

4. Substantial compliance. DEH substantially complied with the cooling-off requirement: it gave proper written notice to the appropriate government officials; it allowed more than five months to elapse before filing the Request; and the full six-month period expired before registration and long before any further procedural steps in the arbitration. Conclusion: The premature filing of the Request for Arbitration does

Article 8 of the UK-Valderia BIT does not require the exhaustion of local remedies as a condition precedent to the submission of a dispute to ICSID arbitration. The absence of such a requirement in the BIT is consistent with the general approach of UK model BITs, which provide for direct access to international arbitration without a prior requirement to pursue domestic proceedings. In any event, Article 26 of the ICS

V. ANTICIPATED JURISDICTIONAL OBJECTIONS BY THE RESPONDENT Based on our experience with ICSID proceedings, our familiarity with the arguments typically advanced by respondent states in investment arbitrations involving the extractive industries, and our assessment of the specific facts of this case, we anticipate that the Respondent — likely through its international counsel, Harcastle Fenton LLP (Charles Winterbotto