This case study is based on a historic decree signed by Cleopatra VII of Egypt on 23 February 33 BC.  However, in putting together the scenario for this moot we have taken some liberties, in particular as regards the constitutional system of the Republic of Rome.

In the first century BC, disputes regarding the protection of investors and investment were solved between host and home state.  As we know from Caesar’s writings, countermeasures and reprisals involving the use of force were still considered a lawful response to infringements of the rights of investors (cf. De bello Gallico, VII 28).

The case study promotes a more civilised approach to dispute resolution.  Though the facts of the case and the proceedings take place in the 1st century BC, treaties, customary public international law and case law are those of the 21st century.

Fictional personalities are fictional.  Historic personalities have died too long ago to raise claims.

For convenience, years are referred to in the form of the Gregorian Calendar.


Background of the case

 The Treaties

On 2 March 44 BC, Caius Iulius Caesar signed an Agreement for the Promotion and Protection of Investments between the Republic of Rome and the Kingdom of Egypt.  As Caesar was preparing to set off for Parthia less than two weeks later, the treaty was ratified and promulgated in record time.  It entered into force in accordance with its Article 13 on 14 March 44 BC (the BIT).

On 5 March 44 BC, a group of international advisers finally prevailed in persuading Caesar to sign the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States and the instrument of accession to the Grain Charter Treaty (GCT) promoting investment in the agricultural sector.  However, ratification of both treaties in the assembly was delayed.  Sicilian farmers protested against the Charter voicing their fears of price dumping by Egyptian and Mesopotamian agro-industrial conglomerates.  Veterans of the Gallic wars protested against the ratification of the Washington Convention because of its Article 27.

In the aftermath of Caesar’s assassination, Rome had other things to worry about than investment protection.  Both treaties were neither ratified, nor were signatures revoked.

However, when grain shortages were impending in late 44 BC, the Senate wrote to the Secretariat of the Grain Charter Organisation assuring the Secretariat that the Republic of Rome would apply the Charter provisionally in accordance with its Article 45 and asked for the other member states understanding that the current state of affairs in the city of Rome made it impossible to call an assembly of the people for a vote on ratification.

The Roman Republic continues to apply the Grain Charter Treaty.  Most other countries of the known world are member states to the GCT, notably Egypt, Mauretania, Parthia and Punt.  The GCT applies not only to grain, but all investments connected with agricultural products of all kinds including incense and wine.


The Investment

Publius Canidius Crassus Consularis was a close friend and supporter of Marcus Antonius.  In 34 BC he acquired considerable amounts of arable land in Egypt on which he farmed wheat for export to Rome.  He also ran a wine merchant house in Alexandria, importing wines from Gallia and Greece that he sold on to the Gulf States and as far as India.  For tax reasons, he holds both the lands and his wine business through an off-shore company called Middle East Fine Wines and Spirits Ltd. registered in Punt.  100% of its registered capital was held by Mr. Crassus Consularis.

Mr Crassus was a well-advised businessman.  Before he accepted a commission in the army of Marcus Antonius he obtained a decree by Cleopatra containing certain guarantees for his business (Royal Decree).


The Aftermath of the Battle of Actium

Mr. Crassus had a good hand with fine wines and grain but he was less lucky in his military career.  Although he was in charge of the land forces at the Battle of Actium he could not dissuade Marcus Antonius from engaging the enemy at sea.  The result is history.

In August 30 BC, both Marcus Antonius and Cleopatra committed suicide.

Publius Canidius Crassus Consularis was executed on order by Octavius, called Caesar. His son Publius Canidius Crassus Filius fled to Germania.

The lands and the assets of the wine business in Alexandria are put under administration as hereditas iacens.  Although Publius Canidius Crassus Consularis was proscribed, no formal expropriation order is issued.  Dividends and profits are paid into a trust fund held by the Praefectus Aegypti, Caius Cornelius Gallus, on behalf of the estate.  However, Gallus revokes the tax and duties exemption.  Taxes and customs duties are now withheld.  Workers at the farm south of Giza are drafted for compulsory service (road and dam works).  The workers are threatened with execution in case of non-compliance.  One worker is severely injured when an accident happens at the dam works.  The administrator of the estate continues to pay wages to the workers and an allowance as well as reimbursement for costs of medical treatment to the injured worker.  No payment by the state is made to the estate for the man-hours of the workers.  Ships used for transporting the wheat up the Nile and wines down the Nile are requisitioned for military use.


 

The Dispute

 

From his exile in Germany, Publius Canidius Crassus Filius requests the hand-over of the estate.  The request is denied.

Publius Canidius Crassus Filius seeks legal advice from Pseudogorgias, his local lawyer in Alexandria.

In September 30 BC, Pseudogorgias writes to the prefect requesting:

 - that the estate is handed over to Publius Canidius Crassus Filius as rightful heir of Publius Canidius Crassus Consularis;

 - that taxes and customs duties are reimbursed to the estate;

 - the tax and duties exemption is reinstated;

 - the workers are released;

 - compensation is paid for the services rendered and damages for injuries of the worker;

 - that there will be no compulsory labour in the future;

 - the ships are returned and – if necessary – repaired at the expense of the Praefectus Aegypti

 - the letter contains the following phrase: “the treatment of the property of Publius Canidius Crassus is in violation of the undertakings in the Royal Decree and of Egyptian and ius gentium”

 - The letter invites negotiations with a view of solving the dispute amicably.

Gallus submits a report to the office of the Princeps in Rome.  He includes a copy of the Royal Decree.  A month later, the reply is received (31 October 30 BC):

“Caius Iulius Caesar Divi filius debitionem pecuniae solvere ad Kalendas Graecas iussit.” [The princeps] ordered the debt of money to be paid on the Greek Kalendae.[1]

Gallus forwards a copy of the letter to Pseudogorgias.

No payments are made.  The administration is not lifted.

In December 30 BC, Pseudogorgias combines his annual skiing trip to Switzerland with a visit to the ASA Conference on “Best Practices in Investment Treaty Arbitration –Trends for the New Saeculum”.  Listening to the talks and conversations between the high and mighty (and sipping a number of Bloody Caesars), Pseudogorgias forms an idea.

He discusses his case with a few people (who warn Pseudogorgias of the difficulties).  Pseudogorgias reports to his client (leaving out most of the difficulties).

On 30 December 30 BC, a Request for Arbitration both on behalf of Crassus Filius and Middle East Fine Wines and Spirits Ltd. under the UNCITRAL Rules is sent to:

“The Kingdom of Egypt

Either continuing in its existence and represented by

Caius Cornelius Gallus

Praefectus Aegypti

Or succeeded by the Republic of Rome represented by the same

Caius Cornelius Gallus

Praefectus Aegypti

Alexandria

Egypt.”

In that Request he relies on breaches of the Royal decree, the Roman-Egyptian BIT and the GCT.  Claimants name Professor Melo of the Sugambri as arbitrator.

The Request is received by Gallus on the same day.

Three weeks later, Gallus sends the following letter to Pseudogorgias:

“Dear Sir,

The Kingdom of Egypt has ceased to exist as of 1 January [29 BC].  There is no Respondent.  The territory formerly known as the Kingdom of Egypt has become a private dominion of the Princeps. It is not a part of the Republic of Rome and the Senate is not involved in its administration.  The territory formerly known as the Kingdom of Egypt has a special status which must be recognised by public international law.  It is administered by Praefectus Aegypti, appointed by Princeps, from the ranks of the knights.  In cultural matters the Praefectus whose office I have the honour to perform is perceived by Egyptians as successor of the pharao in his ritual functions.  He also is in command over troops and in charge of judicial functions.  The prefect allocates the taxes due for each district.  Taxes are – as you are well aware of - collected by publicani under concession agreements.

Without prejudice to its objections to jurisdiction which will be explained in detail in the Statement of Defence, I appoint Marcus Tullius Tiro as arbitrator.

Yours faithfully,

Gallus

Praefectus”

 

Tiro, Cicero’s freedman and friend, and Melo fail to agree on a president of the tribunal.  Pseudogorgias applies to the Permanent Court of Arbitration under Articles 7 (3), 6 (2) of the UNCITRAL Rules for appointment of an appointing institution.  The PCA designates ICSID as appointing authority.  ICSID, despite vociferous protests from the Respondent, appoints Professor Umbratix, a leading arbitration practitioner, as president of the tribunal.   Respondent challenges Umbratix immediately after having been notified of his appointment: “Umbratix is from Gaul and therefore automatically has an axe to grind with the Romans.”

The request for challenge is denied.  The tribunal is constituted and after a procedural hearing in Londinium which was agreed by the parties to be a neutral venue, issues a procedural order determining inter alia:

“The Parties have agreed on Frankfurt am Main as the place of arbitration.  Hearings will be held at the seat of the Frankfurt International Arbitration Center, or any other place the tribunals deems appropriate after consultation with the Parties.  The language of the proceedings is English.”

Statement of Defence lists the following objections to jurisdiction:

1.     Egypt has ceased to exist.  It has not been succeeded by the Republic of Rome.

2.     To the extent that Crassus Filius directs his claim against the Republic of Rome, he is no investor of another Contracting State but a Roman.  Therefore there is no divergence of nationality between Crassus Filius and the Republic of Rome.  In relation to Middle East Fine Wines and Spirits Ltd.  Article 17 of the GCT applies.

3.     The Praefectus Aegypti is a personal agent of the Princeps.  His actions are not attributable to the Republic of Rome, nor to Egypt (which has ceased to exist).

4.     The actions of publicani are acts of private parties and not attributable to any state.

5.     Claimants have not respected the six months waiting period under Article 9 the BIT and the three months waiting period under Article 26 (2) of the GCT.  The letter sent by Pseudogorgias was not even a “cooling-off letter” as it refers to ius gentium which is the Roman national law on foreigners which has no bearing of the case.  The letter does refer neither to the BIT or the GCT.Claimants cannot rely on Article 3 of the BIT to import the dispute resolution clause from the Tripartite Treaty of Amity between the Republic of Rome, the Kingdom of Egypt and the Kingdom of Mauretania which does not have a cooling-off period.

6.     As the Respondent disputes the Tribunal’s competence to hear claims under Article 12 (2) of the BIT which is not a so-called “umbrella clause”.  In particular, it denies that claims arising out of or in connection with the Royal Decree which is a purely commercial act by the Respondent fall under Article 12 (2) of the BIT and Article 10 (1) of the GCT.  Contractual claims are not within the scope of jurisdiction of the Tribunal.

7.     The facts presented by the Claimants do not disclose a prima facie case of expropriation.

After receipt of the Statement of Defence by the Respondent, the Tribunal decides to bifurcate the proceedings and orders to hold a hearing at Frankfurt, Germany, on 15 and 16 February 2008 on the objections to jurisdictions raised in the Statement of Defence.


[1]There are no Greek Kalendae.  Augustus used that phrase when he meant “never”.



Additional Materials and Information

     1. Timeline

  • 51 BC: Death of Ptolemaios XII Auletes, Cleopatra VII and brother Ptolemaios XIII are instituted as Queen and King of Egypt
  • 48 BC: Cleopatra VII first expelled then reinstituted as queen following an “arbitration award” issued by Caius Iulius Caesar
  • 23 February 33 BC: Royal Decree granting of tax exemption and exemption from public services, as well as ex- and import privileges to Publius Canidius Crassus
  • 2 September 31 BC: Battle of Actium
  • 1 August 30 BC: Fall of Alexandria
  • 12 August 30 BC: Suicide of Cleopatra
  • 30 BC: Canidius is executed.
  • 1 January 29 BC: Egypt becomes Roman province outside the normal administration as private dominion of the Princeps

 

     2. The Treaties

The text of the Agreement for the Promotion and Protection of Investments between the Republic of Rome and the Kingdom of Egypt is identical with the text of the Agreement for the Promotion and Protection of Investments between the Republic of Italy and the Arab Republic of Egypt.

The GCT is identical with the ECT save that it applies to investments in the agricultural sector; wine and wheat are agricultural products within the meaning of the GCT.

Tripartite Treaty of Amity between the Republic of Rome, the Kingdom of Egypt and the Kingdom of Mauretania contains an ICSID Additional Facility arbitration clause without waiting period.  The treaty is irrelevant in all other respects.

 

    3. The Royal Decree

"We have granted to Publius Canidius and his heirs the annual exportation of 10,000 artabas [300 tons] of wheat and the annual importation of 5,000 Coan amphoras [ca. 34,500 gallons] of wine without anyone exacting anything in taxes from him or any other expense whatsoever. We have also granted tax exemption on all the land he owns in Egypt on the understanding that he shall not pay any taxes, either to the state account or to the account of me and my children, in any way in perpetuity. We have also granted that all his tenants are exempt from personal liabilities and from taxes without anyone exacting anything from them,not even contributing to the occasional assessments in the nomes or paying for expenses for soldiers or officers. We have also granted that the animals used for plowing and sowing as well as the beasts of burden and the ships used for the transportation [down the Nile] of the wheat are likewise exempt from 'personal' liabilities and from taxes and cannot be commandeered [by the army]. Let it be written to those to whom it may concern, so that knowing it they can act accordingly. Make it so!"

 

Translation by Angela M. H. Schuster, Make It So! Sayeth Cleopatra, Archaeological Institute of America, Newsbrief Volume 54 Number 1, January/February 2001,  ©Archaeological Institute of America,http://www.archaeology.org/0101/newsbriefs/cleopatra.html