A Perfect Opportunity for Change

Walter Bau AG v Kingdom of Thailand Adam Richard Tanielian Institute of International Studies Ramkhamhaeng University LLD English Program Bangkok, Thailand August 2011 adam.tanielian@iis.ru.ac.th Abstract: The Crown Prince of Thailands airplane was seized in Munich. The action was authorized by the German court in pursuit of compensation from a case decided by an international arbitral tribunal in 2009. The tribunal, under UNCITRAL rules, decided in favor of an insolvent German construction firm, Walter Bau AG, which was contracted as part of a group of companies in the Kingdom of Thailand to build and operate a tollway in Bangkok starting in the late 80s. Government changes, political unrest, the 1990s Asian economic crisis, and some bad faith created financially unfavorable conditions for Bau, which was ultimately put in the position where it had to sell off its shares without a profit. Nearly 30 million was awarded to Walter Bau AG, now in liquidation, and Thailand defaulted after a reasonable time had passed. Under the NY Convention, arbitral tribunal decisions are legally binding and shall be recognized and enforced. Violations of international law and business custom have occurred, and some resolutions are necessary to protect the integrity of the international system. 1. Opening Statements In mid-July 2011, international news reports covered an international arbitration case that was previously largely unknown. The Crown Prince of Thailands Boeing 737 had been impounded at the Munich Airport on order from the German court upon application by an insolvency administrator, Werner Schneider, for enforcement of an international arbitral award rendered in favor of a German construction firm in liquidation, Walter Bau AG. The situation was politically volatile in Thailand, where the monarchy enjoys sovereign immunity and freedom from any sort of accusation or action, where in 2009, a little-known Aussie author, Harry Nicolaides, was sentenced on lese majeste charges to three years in prison for writing in his novel, which sold only seven copies, about an unnamed crown prince (BBC, 2009). A diplomatic spat ensued between Germany and Thailand. The benefits of the media exposure to this case are many, despite the temporary fallout between the Thais and Germans, or between the Thais and farang. The near future will likely bring amicable solutions to the minor bilateral crisis, but the case shows the future of international dispute resolution is under some threat by non-enforcement and non-recognition of awards. International law has been a laughing stock of the legal communities worldwide between wars, public debt panics, corruption, encroachments on foreigners freedoms, human rights, and lack of confidence in the United Nations.

Walter Bau AG v Kingdom of Thailand represents a systemic error, from bidding on contracts, to acquisition of rights, through delivery and later stages. The weaknesses of our international legal system are so many and varied, the commitment to suppression of initiatives designed to strengthen the system so entrenched, and the opposition to more harmonization of domestic laws so fierce, that it is almost impossible to believe that one could successfully pitch the authorities and general public on some solutions. On one hand the possibilities in international law are essentially endless, and on the other hand it is essentially impossible to accomplish anything entirely given the conflicting interests among nations. Theory and practice are remarkably different at the international level. If we want to capitalize on opportunities to draw attention to issues, to make commentary on the weaknesses and threats of our international system, and to strengthen the integrity, structure and function of the system, we should first open communication, research, and discuss facts as they are and have been. This report features a detailed history of the Walter Bau case in sections 2 and 3. Analysis of the surrounding issues is made in section 4. Acceptance of the system as it is today is necessary, as we must accept those things which are static in the immediate moment, or those things which we cannot change. Section 5 features references to relevant international conventions and treaties, and the relationship between application of international law and the present case. Upon understanding facts and laws related to a specific case, or a set of circumstances or cases, or relating to the system as a whole, we will likely find several contradictions between theory and practice, or between the letter of the law and enforcement thereof. Interpretation of words would not likely be the only conflict one could find in this case, nor in others. There are generally-accepted meanings to words, and it is evident that certain parties in cases and in general simply choose to debate semantics in efforts to rationalize and justify their actions which were made in a departure from generally-accepted meanings of plain words found in laws and treaties. The wisest conclusion, then, after we have established that the current framework has been insufficient in checking and balancing various interests of parties and entities, and that noncompliance and lack of remedies for consistent violations are features of the present systems weaknesses, is to try to change the system. This research only brushes upon well-known troubles at the international level. Legal professionals from around the globe have and shall continue to write volumes about the intricacies of the problems, and the apparent lack of some solutions, or the most suitable options for specific and general situations. This research finds that the process by which changes are made is too inefficient to affirm that a perfect world legal system is probable within any foreseeable time frame. An adequate system is needed, and it is not the opinion of this author that the worlds legal professionals have been handed an adequate system today. This author shall refrain from making suggestions which give the appearance of remote desktop legislation. A general change of mind is requested, for the benefit of all, and in the present case, at the loss of a few. The present case, unlike future ones, and unlike various related issues, however, has been decided already. The easy part is accepting and affirming

the decisions of other qualified professionals; getting other people to accept and comply is where we find the difficulty. 2. Case History The history of the case can be found in an arbitration report, hereinafter referred to as AR, which was made available to the public upon consent of both parties under UNCITRAL rules (Walter Bau AG v Kingdom of Thailand, 2009). For the purposes of the arbitral tribunal hearing the case, Dyckerhoff & Widmann AG, Dywidag International GmbH, and Walter Bau AG were considered one entity as the Claimant (2.1-2.5AR). The Kingdom of Thailand in all of its government departments, ministries, and offices was the Respondent. After a 1986 Department of Highways report by the Respondent, the Claimant pursued a profitable investment with a Thai joint venture partner, Delta Engineering Construction Co. Ltd. The joint venture, Don Muang Tollway Co. Ltd. (DMT), was 51% owned by Delta and 49% by the Claimant (2.17AR). DMT submitted a bid to the Respondent for construction of the Don Muang Tollway. 2.1 Proposal and Acceptance In 1988, there were several issues covered regarding the technical details of the construction, such as the conversion of flyovers, and administrative conditions regarding the length of concession period, toll fare, and status of the investment with the Board of Investment, etc. (2.12-2.19AR). On 20 September 1988, one version of the Claimants proposals was accepted. The proposal accepted involved turning two pre-existing four flyovers on the highway, a 20 Baht fare for 4-wheeled vehicles with 5 Baht toll increases in the 9th and 14th year, and a 25 year concession term wherein the Claimants joint venture would be the sole operator of the Tollway (2.19AR). After 25 years the concessionaire was to hand over the Tollway to the Respondent without compensation (2.22AR). The only income DMT would have the only opportunity to recover costs of construction and operation would be from tolls paid by motorists using the Tollway during the 25 years of concessions. The 1987 Guidelines for proposals, issued by the Respondents Department of Highways (DoH), stated that the toll fees need be justifiable but apparently did not specify a monetary value (2.9AR). Initial estimates calculated by the Claimants financial advisors showed expected returns of about 15% in the worst case scenario (2.21,2.23,2.30AR). The Claimant entered into the contract with the view that the project was a long-term investment, and that the DMT project would be profitable. 2.2 Financing In 1989, both Thai and foreign investors were attracted to DMT (2.27AR). DMTs equity investors, including the Claimant, were expected to supply capital annually between 1989 and 1993, while DMT also drew loans to finance to construction of the toll road. The Tollway was expected to commence partial operation in late 1992 or early 1993, at which time it would start generating revenues. In 1993, the Tollway would open fully, and immediately it was expected to provide profits from operations. DMT was expected to start

repaying its debts in 1995, and continue doing so for 8 to 10 years. After 2 or more years of profiting from operations, after having legal reserves built up, DMT was expected to have positive retained earnings, and was then expected to begin paying dividends to shareholders, which was forecasted to happen in 1996 or 1997. Around 2004 to 2010, DMT was expected to have fully repaid its loans to banks, and was then expected to pay significantly higher dividends to shareholders. Between 2010 and 2014, dividends would be reduced and the Respondent was to start sharing revenue (2.29AR). The Claimant supplied 18% of the equity investment, or 23.58 million German Deutschmarks (2.32AR). 2.3 Finalization of the Agreement and Commencement On 17 August 1989, a contract was signed between DMT and a construction collective (DMC) Dywidag, Delta, and Dywidag Thailand Co. Ltd. The concession agreement between DMT and Respondents DoH was signed on 21 August 1989. As agreed upon previously, DMT was to finance, design, construct, operate, and maintain the Tollway for 25 years, after which time the Respondent would take over for no cost (2.35,2.36AR). The Respondent had an option to assume ownership prior to the end of the concession period if it paid compensation in the amount that was invested in equity, plus that which was considered a reasonable return, plus profits and other costs (2.38AR). The 21 Aug 1989 agreement specified rates, planned for increases at certain times, and included provisions for DMT to seek toll increases, which could only be implemented if approved by the Respondent (2.37AR). An arbitration clause (clause 31) required disputes be settled within 60 days, or within an agreed upon time frame, or to be arbitrated in Bangkok under the Thai Arbitration Act with two party-appointed arbitrators and a third appointed by the Thai Chamber of Commerce. Thai law was to be the law governing the contract. Dywidag and Delta agreed to hold not less than 30% of the shares in DMT between them for the construction period. Some profit-sharing rights were granted to the Respondent in the case of profits exceeding a certain level. The agreement could be further amended by written agreement. DoH was to coordinate the concessionaires activities with authorities, public utility organization owners of adjacent land, users of roads in the construction area, and to provide support and assistance with permits, licenses, etc. (2.39AR). Financing the project took more than 1 year. The loan period was to be 10 years including construction time. DMT gained Board of Investment (BoI) approval in October 1990 by agreeing to an extended profit-sharing arrangement with the Respondent, which was not included in the concession agreement of August 1989. Loan documents were signed on 16 Nov 1990 with expected IRREs between 14.67% and 20.61%, and another shareholders agreement was signed on 21 Nov 1990 (3.3-3.5AR). 2.4 Delays and Complications An initial promotional certificate was issued by BoI on 16 May 1991, and construction commenced 29 June 1991 (3.6AR). Several delays and complications followed. Perhaps the most glaring controversy in this case is the Hopewell Project.

Hopewell In November 1990, shortly after DMT signed loan agreements, the Respondents Minister of Transport, which oversaw the DoH, signed an additional concession agreement with a Hong Kong firm named Hopewell for a 60km long elevated tollway which ran parallel to the Don Muang Tollway for a distance of 12km, roughly 50 meters to the west of the tollway DMT/DMC was to construct. A number of freestanding concrete pillars are still present at the scene of the Hopewell Project, which failed in 1998. Had the Claimant and DMT known of the Hopewell Project, which would have provided heavy competition at very close proximity to the Don Muang Tollway, prior to signing the concession agreement and loan documents, it is unlikely that DMT and the Claimant would have entered into the contracts. Thus, this show of bad faith on the part of the Respondents Ministry not only draws very reasonable suspicion about the Respondents intentions with the Claimant and DMT, very early on in the concession period, but also essentially places the Respondent in breach upon award of the concession to DMT. The Hopewell Project led to the enactment of new regulations on State contracts in 1992 (3.11-3.13AR). Flyovers Political demonstrations against turning of the two flyovers occurred, and in March 1992 the Minister of Transport was required to enter into negotiations with DMT to amend the concession agreement. In exchange for the amendment, DMT was to receive benefits from the northern extension of the Tollway, though the proposal for the northern extension was not made until 1995. The Respondent clearly agreed to the turning of two flyovers in the original agreement (3.14-3.15AR). Eventually the Respondent allowed flyovers to be turned, but upon suspension of tolls for the period when they were being turned 21 Apr to 7 July 1996 which cost DMT approximately 2.34 million Baht per day (4.1AR). Land Use DMT was unable to obtain rights to use land owned by Kasetsart University, nor was DMT able to obtain a right-of-way over the land used by the Hopewell Project. The Respondent agreed to provide land, including for flyovers (3.16AR). VAT Tax After the concession agreement was signed, the Respondent imposed a general VAT tax, but did not allow DMT to raise tolls affected by the tax. DMT repeatedly attempted to raise tolls, but the Respondent would not authorize increases (3.17-3.19AR). 2.5 Opening the Tollway On 14 Dec 1994 the tollway opened without the turned flyovers, which were opened on 7 July 1996. The delays and complications concerned foreign banks which were financing the project, and in 1993 credit lines were frozen. The Claimant granted DMT interim financing while DMT refinanced with lenders. In late 1993, the Claimant, DMT, and investing banks signed an agreement which held the Claimant directly responsible for delays and budget

overages. The final refinancing agreement was signed on 27 May 1994, and on 29 Dec 1994 the lead financier of the project forced DMT into a potential default when it pressured DMT to take action against DoH to force the Respondent to assure compliance with the agreement regarding the flyovers, and to protect against future revenue losses (4.1-4.6AR). Financiers were especially concerned about the Hopewell project (4.7AR). 2.6 The Northern Extension The respondent decided to contract the Northern Extension to DMT. DMT saw the extension as the only way to save their project. On 15 Sept 1995, DMT notified the Respondent that it wished to terminate the concession agreement, and on 18 Dec 1995, DMT notified the Respondent it wished to enter into arbitration under the agreement clause 31. On 26 Dec 1995, DMT submitted a 7-point proposal to the DoH, including request for a 500 million Baht soft loan at 3% interest with a 2-year grace period, an extension of the concession agreement, rights to construct the northern extension, and a toll increase. DMT stated it would waive all of its claims because of the breaches of contract by the government in return for assistance (4.8-4.13AR). A revision to the 26 Dec 1995 proposal was made by DMT on 13 May 1996 after the loan and exemption from the VAT were not approved by the Respondent. On 22 May 1996, the Minister of Finance wrote a letter to a special committee on the project and stated that the DoH had failed to fulfill its contractual obligations, which significantly delayed the project and caused problems (4.15-4.16AR). On 29 Mar 1996, the Ministry of Finance recorded DMTs claim of estimated losses of 9,773.6 million Baht, which the Respondent interpreted as the cause for the request for the loan, which was not perceived by the Respondent as a loan so much as compensation for the estimated losses (4.13-4.14AR). On 26 July 1996, DMT received a formal request to propose the northern extension project (4.19AR). Negotiations on details of the plan lingered until 29 Nov 1996, when the parties signed a MoA, the second since the start of the construction project. By October 1996, foreign banks were demanding they be paid in full, though the Claimant was then planning to finance a new project in the Northern Extension (4.21-4.23AR). MoA2 MoA2 amended both the 21 Aug 1989 concession agreement and the 27 Aug 1995 MoA1. The details of the first MoA are not entirely important given the other circumstances and facts leading to the MoA2. The preamble of the MoA2 stated that DMT suffered financial troubles due to the governments inability to comply with the terms and conditions stipulated in the Tollway Concessions Agreement (4.28AR). Major points from MoA2 were as follows:
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The Respondent was to put 3 billion Baht of new share capital into the Northern Extension, giving the Respondent the largest share in DMT, with nearly 40% (5.29AR). An additional 700,000 Baht in cash from operations was to fund the new addition to the Tollway. The Respondent was to provide a soft loan of 8.5 billion Baht.

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1.5226 billion Baht was to be added by private shareholders to pay on loans outstanding. The concessions period was to remain 25 years, but started again on 29 Nov 1996. The northern extension was to have a fare of 15 Baht, and the toll fees for the original Tollway were to be increased by 10 Baht upon completion of DoH uturns by the DoH (not DMT), and upon completion of the extension. Toll fees for the original highway were to increase by 10 Baht every five years, and increases of 5 Baht every 5 years were to be implemented on the northern extension. All claims relating to the original agreement were nullified. Changes to the airport usage, construction of u-turns, and traffic management were not to be considered competition or government-caused vehicle loss. (4.29AR)

Asian Crisis On 19 Jun 1997, DMT entered into a mixed currency loan arrangement with various financiers and did not enter into the MoA2 loan arrangements. This change was made due to the Respondents inability to grant such a loan denominated entirely in Thai Baht, though the information available on this point is not clear (5.4-5.9AR). Between May and June 1997, the Respondent made arrangements with DMT to acquire over 3 billion shares in DMT to fund the Northern Extension, and the Claimant added nearly 200 million Baht, though the Claimants share in DMT was reduced to 9.87% due to the increased shareholding by the Respondent (5.10-5.11AR). When the Asian Economic Crisis hit, several effects were noticed by DMT, which by 31 Dec 1997 had nearly doubled its foreign currency-based debt due to Baht devaluation. Daily toll income decreased from 3.5 million Baht to 2 million Baht and construction costs for the new extension increased (5.125.13AR). Tolls MoA2 stated that tolls were to increase upon completion of the u-turns by DoH, which was scheduled to occur on 1 Oct 1997, though did not actually happen until 28 Dec 1998. In December 1997, DMT proposed a 10 Baht increase in tolls starting on 1 Mar 1998, under clause 25 of the concession agreement, citing basic economic factors as compelling reason (5.14-5.17AR). On 20 Apr 1998, the 10 Baht increase was approved by a special committee, though the decision had no binding effect and the raise was not made (5.18AR). MoA2 showed an expected return on equity of 13.35% for DMT, and after a DoH-requested bank study related to the increase of tolls, it was decided in August 1998 that an increase to 16.50 Baht per vehicle in addition to the 20 Baht per vehicle increase expected upon completion of the u-turns was necessary to bring returns back to the forecasted levels (5.20AR). Multiple requests for toll increases were made to DoH by DMT between 6 Oct 1998 and 3 Dec 1998, when the main Northern Extension was completed (5.21-5.23AR), and by 16 June 1999 all

works on the Northern Extension were completed with the exception of a ramp which the Airport Authority had delayed (5.32AR). Around December 1998, a new local road was opened about 50 meters west of the Tollway along the Hopewell line (5.27AR). On 18 Jan 1999, the DMT directors met and discussed the competing toll-free roadways, which presented threats to DMTs operations (5.29AR), though such complaints were clearly invalid under the waiver included in MoA2. The claimant submitted that as a minority shareholder of DMT, it was not a party to MoA2, or that the Claimant was alternatively under duress exerted within DMT by the Respondent when MoA2 was signed, and thus the Claimant contested that the waiver clause was inoperative (4.27AR). On 21 Apr 1999, representatives of DMTs private shareholders wrote to DoH upon finding that toll rises were not feasible due to an automatic further reduction of the usage of the tollway (5.31AR). On 24 June 1999, shortly after completion of all but ramp 4, DMT wrote the Minister of Finance and Minister of Transport to propose a temporary toll reduction (5.34AR). On 30 July 1999, with the assistance of the German Ambassador, DMT met the Ministers to discuss DMTs financial position, but the meeting was inconclusive (5.35AR). 2.7 Financial Problems In 1999, the construction of ramp 4, which was supposed to lead into the airport, was delayed indefinitely. In early 2000, representatives of DMTs foreign shareholders proposed deletion of the ramp, and the Attorney Generals office representative agreed, as did the DoH upon condition that toll rate adjustments would not be made without Cabinet resolution (5.42AR). Around the same time, DMTs lenders warned the main private Thai shareholders representative that bankruptcy action would result if DMT did not restructure before March of 2000, since DMT had not been able to pay roughly 50% of its interest debt. A refinancing agreement, which the Claimants representative did not approve of, was made on 14 July 2000 (5.45AR). Prior to that meeting, DMT submitted to DoH a financial damages assessment report upon request, which claimed damages of 34.541 billion (5.49AR). Between mid-2000 and 2001, the Claimant and other private investors in DMT attempted to design a profitable strategy for the concession, but shareholders did not consider the MoA2 sufficient to create profits that were previously forecasted. The Claimant and its French joint venture partner lobbied at both political and diplomatic levels. The issue was furthered by the German Ambassador who on 29 Oct 2001 submitted a memo prepared by the Claimant, which contained a mention to the possibility of arbitration, to the Thai Prime Minister (5.505.55AR). By 8 Nov 2002, the negotiations over tolls, control of the operations of the projects, and financial strategies were stalled, the Claimant feeling out-voted and excluded by the majority of shareholders who were Thai, and an updated damage report was given to the Minister of Transport claiming that if progress was not made soon to repair the financial position, that the inaction would mean an eventual expropriation of [shareholders] investment, without compensation, without any fault on their part. The Minister of Transport gave a press interview in which he said he did not pay attention to DMTs proposal, and mentioned his interest to buy back the concession at a low price (5.58-5.59AR).

Government changeovers complicated matters further. By 2003, the Thai Deputy Prime Minister stated that the Walter Bau problem was inherited from the previous government. Foreign investors, seeking to minimize their losses given the then-presently hopeless scenario, asked the representative of Thai shareholders to refrain from negotiating on lower toll fees, and suggested the only way to solve the problem would be for the government to buy back the concession and compensate investors (5.61AR). DMT reviewed a Ministers toll reduction strategy in April 2003, and found that DMT would stand to lose 9 billion Baht in revenues. Foreign investors, including the Claimant, then requested in writing that privately-held shares in DMT be re-purchased (5.65AR). On 27 June and 26 Nov 2003, DMT sent letters to DoH requesting contractual toll increases mentioned in MoA2 (5.66,5.70AR). Legal options were considered by the DMT board of private shareholders. A fight over control of DMT ensued between private Thai and foreign shareholders, and the Claimant wrote the Minister of Finance declaring that if the Respondent as shareholder supported the Thai shareholders plans, the Claimant would view that as an act of the government against private shareholders in conflict with earlier assurances (5.72AR). By 2004, Cabinet approval for the deletion of ramp 4 had still not occurred, though approval was established in 2000, and the contractual increase of tolls was contingent upon the Cabinets approval (5.73AR). The in-fight among private shareholders continued to complicate the direction of DMT, with Thai-foreign conflicts resulting in a refusal by foreign shareholders to sign DMT proposals sent to the Minister of Transport (5.76AR). 2.8 Formation of Dispute In February 2004, the Thai Minister of Transport met with the German Ambassador and a buy-back was discussed, but at a low price of 8 Baht per share (5.78AR). On 17 Mar 2004, DMT notified DoH of a dispute under clause 31 of the concession agreement, relating to the Respondents failure to approve toll increases (5.80AR). In September 2004, DMTs board resolved to initiate arbitration proceedings against the Thai government (5.83AR). On 17 Nov 2004, the Germany Minister of Economic Affairs visited the Thai Prime Minister and Minister of Finance, when the Claimants case was mentioned (5.85AR). The dispute was clearly founded upon legitimate business concerns. Modern international businesses such as the Claimants, are private entities which do not enjoy the luxuries of government-sponsored enterprises. International construction projects in the colonial era may have been less privatized, and losses more easily expunged, but today companies have to operate with precision and meet very narrow margins to compete in the field of government contracting. The slightest delay or added variable or fixed cost, the least loss of revenue, and the smallest decrease in profit margin can throw a company completely off course in these modern projects. Banks are serious businesses, and investors today dont have time or patience to wait around and hope for the best in conditions of failure and breach. International business of the past may have been about culture exchange, diplomacy, goodwill, and even religious conviction, but since globalization has started, since the 1980s and 90s at least, international business is about making profit, and not about a groovy

experience overseas, at least not officially as a primary objective. Tourists take a loss, but businesspeople are expected to minimize risks and generate returns, or there cannot be international business. Delay of Toll Increases Key components of the delay of toll increases included the failure by the Cabinet to approve of the deletion of ramp 4, which was approved by the special committee in February 2000. Cancellation of ramp 4 was not approved until a 3rd MoA was signed in September 2007, when toll increases were finally approved. The Northern Extension had been open for about 9 years prior to MoA3. DoH recommended MoA3 in August 2006 when it found that non-construction of ramp no. 4 [would] cause DMT to lose toll revenues for the concession period pursuant to MoA2 1996 in the amount of approximately THB756 million while in comparison construction costs would only have amounted to THB32.5 million (5.865.88AR). Trial period Reductions of Tolls At the last DMT board meeting of 2004, the 8 Thai directors, including 4 governmentappointed directors, voted for 10 Baht reduction of toll fees on the original highway and tollfree use of the northern extension for 3 months, a period lasting until after the Feb 2005 Parliamentary elections. Foreign shareholder representatives voted against the resolution and contested that the action would amount to breach of obligations to lenders, whom the directors did not consult (6.1-6.6AR). The Claimant filed for arbitration under the 2002 BIT immediately in 2005 (6.9AR). After the first 3-month toll reduction period expired, DoH requested another 3 months from the DMT board, which approved despite the objections from foreign directors, which happened more than once in 2005-2006 (6.10AR). Other board proposals were objected to by the foreign shareholders, who as a minority could not make a sufficient impact to sway the opinion of the board at DMT, which had the Respondent the perceived cause of problems in project as the largest shareholder. State-Assistance In August 2005, the Claimant and delegates of the German Ministry of Economic Affairs met with the Thai Minister of Finance at the Thai Embassy in Berlin, Germany (6.15AR). A letter from the German Minister to the former Deputy Prime Minister of Thailand followed, but that letter remained unanswered, as did the Claimants letters (6.19AR). MoA3 On 28 Dec 2005, the DMT shareholders approved of MoA3 against the votes of the Claimants representatives. The effects of MoA3 were as follows:
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Move repayment of the investment back 10 years from the MoA2 date, from 2012 to 2022, and decreased IRRE from 9.15% as calculated from MoA2 to 5.98% (6.21AR).

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Extend the concession period by 12 years to 2034 and provided a new schedule of toll rates. DMT was entitled to increase tolls unilaterally in accordance with the toll schedule, so there was no danger of further stalls or interference by the Respondent. Cancel all existing claims, law suits filed with courts and/or submissions of disputes to arbitration relating to: construction of the local road; disapproval of toll fee increases; failure to arrange a soft loan at the agreed terms in the past; construction of detour lines; delayed returns on bonds; construction of flyovers; relocation of the main international airport to Suwanaboom; construction of ramp 4.

Last Resort Some tolls were re-introduced to the tollway in April 2006, after a long 3-month trial reduction period still present from December 2004, though the 2006 fare increase did not match the level existing at the start of the 15-month reduction period (6.22AR). In December 2006, the Claimant agreed to sell its shares in DMT to the main Thai private shareholder for the price of 10 million. The shares were acquired by an Australian investor in October 2007 for 13.7 million (6.24AR). 3. Procedural History 3.1 Submission of the Dispute and Initial Actions On 21 Sept 2005 the Claimant through its insolvency administrator brought its claim to arbitration under Article 10 of the 2002 Bilateral Investment Treaty (BIT). The Claimant alleged that the Respondent breached obligations to the Claimant as an investor and shareholder in DMT (1.1-1.5AR). Co-arbitrators and Terms The Claimant appointed a Canadian co-arbitrator in the request for arbitration. The Respondent appointed a Thai co-arbitrator on 30 Nov 2005 (1.11-1.12AR). The coarbitrators were unable to agree on appointment of a chairman and requested the President of the ICC Court appoint the third arbitrator, under the 2002 BIT (1.12AR). The ICC Court President appointed a New Zealander chairman to the Tribunal on 27 Feb 2006 (1.15AR). On 15 Mar 2006, the Tribunal and party counsel held a telephone conference regarding the venue and date of the arbitration, terms of reference and appointment of the Tribunal. An 8 Jun 2006 procedural conference in Montreal, Quebec, Canada for the Tribunal, counsel, and party representatives was scheduled in the phone conference. Terms of reference and terms of appointment of the tribunal were agreed upon at the conference. English was the language of the arbitration (1.16-1.17AR). Terms were finalized on 20 Jul 2006, and parties deposited their share of the costs in advance with the London Court of

International Arbitration. Both parties signed the terms of reference and deposited the advance on costs by 1 Sep 2006 (1.19-1.20AR). The Claimant wrote the ICC Court on 10 Feb 2006 regarding the impartiality of the Thai-appointed co-arbitrator, though no formal challenge was made nor did the BIT offer a means to resolve such concerns about impartiality (1.13-1.14AR). The Respondent later agreed with the Claimants contest. The co-arbitrator under review removed himself, and was replaced (1.36-1.45AR). Applicable Law, Rules and Venue The applicable law was public international law according to the terms of reference. Some issues relating to national law were expected, and so both the Thai law and German law were to be considered, though due to the location of the contracts and nature of the dispute, the Thai law was more applicable. The Tribunal was to determine which law or laws would be applied when a question existed. The juridical seat of the arbitration was Geneva, Switzerland (1.25AR). UNCITRAL Arbitration Rules were the basic outline, with some supplemental provisions from the BIT and/or specific orders agreed upon by the parties (1.26AR). No strict rules on taking evidence were written into the terms of reference, though the 1999 Rules on Taking of Evidence in International Commercial Arbitration by the International Bar Association were noted as appropriate if such rules were needed (1.27AR). Contest to Jurisdiction The Respondent wished to contest the Tribunals jurisdiction on claims for BIT protection (1.18AR). On 2 Oct 2006 the Respondent submitted a formal request for bifurcation, and sought an order for security for costs against the Claimant. On 21 Dec 2006 the Tribunal and counsels held a telephone conference which resulted in the chairman granting the Respondents application (1.30AR). A jurisdictional hearing was scheduled for 20-21 Mar 2007 in Kuala Lumpur, Malaysia (1.31AR). The Tribunal refused to issue an order for security for costs, though discussion was held with the insolvency administrator regarding availability of funds (1.32,1.53AR). After the change of co-arbitrators, the jurisdictional hearing was rescheduled and relocated, to Hong Kong on 31 Jul 1 Aug 2007, a location reflecting the Respondents wishes to have the hearing in Asia whereas the Claimant preferred London or Paris (1.45AR). Representatives and counsel for each party attended the hearing, where expert witnesses were cross-examined and re-examined, and various documents were reviewed (1.49AR). Subsequent Hearing On 5 Oct 2007 the Tribunal determined that another hearing on further jurisdiction objections and merits would be held (1.51AR). Between 6 and 17 Oct 2008, at the Hong Kong International Arbitration Centre, the hearing took place (1.57AR). The terms of reference and constitution of the Tribunal, and the award amount had all been amended by

that time. Expert witnesses were cross-examined by party counsel and questioned by the Tribunal (1.59AR). The hearing adjourned before noon on 17 Oct 2008 (1.71AR). 3.2 Following the Hearings The Tribunal received a letter from a Bangkok law firm claiming to have written on behalf of the Respondent (1.73AR). The primary Thai private shareholder of DMT, who bought the Claimants shares, was stated to have commenced ICC arbitration against the Claimants insolvency administrator, regarding the sale of the Claimants shares in DMT (1.74AR). The letter stated that the insolvency administrator had violated an agreement in sales of the shares, then that the administrator had proceeded with the arbitration in bad faith, and that the ICC Tribunal was requested to instruct the administrator to withdraw from the present arbitration (1.76AR). The Tribunal chairman, on 25 Apr 2009, notified the other Tribunal members that the time for entering or receiving of evidence had long since passed, that the letter was not a proper application to admit further evidence, and that the letter should be ignored by the Tribunal (1.77-1.85AR). Preparation of the Award The Tribunal met in London, UK on 4 May 2009. A request was issued for further information and calculations from accounting experts, who agreed to respond by 13 May 2009 (1.87AR). 3.3 The Award, Costs, and Reasons The Claimant was denied on claims of creeping expropriation, and upon rights to pursue claims with the Tribunal under the 1961 BIT. The Tribunal found that there was no expropriation of the Claimants contractual rights as a shareholder of DMT (10.13AR), nor did the Tribunal find deprivation of the investors control of the investment sufficient to warrant a decision of expropriation, having cited PSEG Global v Turkey (2007) as a standard, though it was noted that many things wrongly handled, while insufficient to justify a finding of expropriation, was not explicitly lacking in this case (10.16-10.17AR). The Claimant was, however, found to have been deprived of fair and equitable treatment (FET) by the Respondent in a number of instances, which was a violation of the 2002 BIT. Breaches of FET obligations included the lengthy refusal to raise tolls as required by MoA2; changes to the roading network which went well beyond what can be considered traffic management; the short term total closure of Don Muang Airport (12.4312.44AR). The Claimant had a legitimate expectation that it would profit from the investment, and that it would be able to pay debts on time, which meant it expected the forecasted rates of return would be achieved, or that returns close to the forecasted amounts would be achieved, and such a profitable scenario was an understanding between the parties (12.1AR). No explicit rate of return was guaranteed, though that having been an understanding between the two parties, the Tribunal decided that the Claimant agreed to all conditions in the original concessions agreement, and to MoA2, with the legitimate

expectation that it would make a profit, and the failure to fulfill that reasonable expectation was considered a breach on the Respondents FET obligations (12.3-12.4, 12.31AR). Formal Award The Tribunal, having rejected consideration of claims prior to the 2002 BIT coming into force (9.69AR), and having rejected claims of de facto expropriation (10.12AR), used estimated losses for the concession period between October 2004 and 2 July 2021 (14.29AR). Recalling that MoA2 extended the concession by 25 years from 2 July 1996, and considering initial and interim forecasted returns, which were to be accrued through a payment of dividends, after consideration also of multiple accounting techniques used to calculate losses the Claimant suffered, the Tribunal found that after subtraction of the discounted value of the Claimants shares, which were sold on 3 Dec 2006, the damages amounted to 29.21 million (14.43-14.44, 17.1AR). The Tribunal ordered the Respondent to pay the Claimant interest on the award at a specified rate and method of compounding, beginning on 3 Dec 2006 until the date of payment of the award (16.1AR). The Claimant suffered more than 2.5 times the arbitration costs of the Respondent (5,606,443 to 1,993,331), and so to balance that out more fairly, in view of the award in favor of the Claimant, the Tribunal ordered the Claimant to pay half the Respondents costs and the Respondent to pay half the Claimants costs (15.515.8, 17.1AR). 4. Enforcement Action and Resulting Controversy 4.1 Seizure of a Boeing 737 in Munich, Germany On 13 July 2011, news publications featured articles about the Claimants insolvency administrator, Werner Schneider, having requested a Boeing 737 in Munich be impounded in pursuit of debt enforcement on the Tribunals July 2009 award (Jolly, 2011). The German creditors reportedly claimed that the plane was registered to the Thai government according to aviation registries, which made it a target for collection on the debt (Baetz J. , 2011). The Thai debtors reportedly maintained that the plane was off-limits because it was the private property of the Crown Prince personally, and not that of the government (Bangkok Post, 2011). The Thai government demanded the plane be released, and Werner Schneider was said to have been placed on the persona non grata list, banning him from entering Thailand (Puangthong, 2011). The Thai Attorney General then reportedly said Walter Bau must bring the case to the Thai domestic court for enforcement (The Nation, 2011). Meanwhile, the German Court ordered the plane released upon condition that the Thai government provide a 20 million bank guarantee (France-Presse Agence, 2011), having declined a request by the Thai government for a release of the plane without such security on the debt, and apparently not convinced that the plane was not the property of the Thai government (The Nation, 2011). The German Embassy in Bangkok issued a press release online dated 22 July 2011, which was shortly thereafter removed, which stated that the competent German Regional Court in Landshut ruled on the plane, authorizing its release after the security payment, and

that the Thai Government [had] since declared that it does not intend to secure the release of the aircraft by paying the bond. Further proceedings in Landshut were scheduled for late August. The German Embassy urged the Thai Government to fulfill its obligation under the judgment as soon as possible, referring to the arbitral award rendered in 2009. The report included a brief summary of the case, and encouraged the Thai government to send out a positive message about the further development of German-Thai relations by paying the award (German Embassy, 2011). Back in Deutschland, the Thai Crown Prince had a second jet flown to Munich after the first was seized, and a German tabloid quoted Schneider as saying that he was considering seizing the second plane (Bryan, 2011). 4.2 Confirmation in New York The Embassy press release found that reports in the Thai media about ongoing proceedings in New Yorkare misleadingthe proceedings in New York merely concern the question as to whether compulsory enforcement is also possible in the US[which] will do nothing to alter Thailands obligation to pay compensation. Indeed, some of the news media reports have been misleading, or have in some way communicated a message which is not entirely accurate, and certain journalist agencies have shown their lack of expertise in the field of law by printing lay-commentary, representing an incorrect interpretation of the facts and law as they appear to be. Schneider did petition the US District Court in Southern New York for confirmation of the arbitral award. Thailand presented two arguments as to why the petition should have been dismissed: (1) the Arbitrators improperly asserted jurisdiction as the Parties did not agree to arbitrate; (2) forum non conveniens considering that Thailand had no assets in the USA. Thailand argued that the US Court should conduct a de novo review of the arbitration proceedings and award, citing a First Options case which the Court found inapplicable. The Court noted that given the apparent facts and applicable laws, even upon a de novo review, there is doubt that Thailand may be able to overturn the Arbitrators well-reasoned award. The question of arbitrability was raised by Thailand on the basis of lack of a Thai Certificate of Approval (CA) for the investment, which Thailand argued was necessary, along with Board of Investment (BOI) approval, for the BIT arbitration clause to apply. The Court noted that only 8 CAs had been issued in a 40 year period of German-Thai investments, and none of those applicants had BOI approval, and so there were zero examples of a German investor in Thailand who had both the BOI certificate and the CA. The project was approved at various levels of the Thai government, and Thailand was found to have never given the Claimant any notice or indication that the CA was required, yet the CA requirement was invoked upon the Claimants application for BIT protection, which the Court found unjust. This objection to the petition was therefore rejected. On the forum non conveniens objection, the Court noted that the petitioners choice of the US forum received less deference than if the petitioner were a domestic one, yet some

deference was afforded to the petitioner. The petitioner was not found to have been motivated by forum-shopping considerations. The Court also clearly stated that the Claimant was not seeking to resolve any dispute or conduct extensive trial proceedings; instead it [sought] only to confirm its Award. The Court assumed Thailand would be an adequate alternative forum, though presence of an adequate alternative forum did not prohibit the US from retaining jurisdiction. Private interest factors were not in favor of, and were against, a forum non conveniens dismissal because the dispute was already resolved in arbitration and was merely awaiting confirmation in the US Court. Thailand attempted to interpret confirmation as litigation where new evidence was introduced, involving a de novo review, which appears to have been a misinterpretation of the process and lack of clear understanding of the Courts capacity to make any changes to the actual award. Public interest factors were more evenly balanced, and ultimately found to be neutral. Factors against dismissal included that the American courts have an interest in recognizing and enforcing arbitration agreements in international contracts, and that no additional evidence or foreign legal issues were required to consider confirmation. Thailand was not found to have been burdened in any way by proceedings in the USA. Factors which were not against dismissal included the loose connection of the case and both parties to the USA, except that both parties to the case and the USA are NY Convention signatories. Lack of Thai assets in the USA weighed in favor of dismissal. The Claimant argued that Thailand may have assets in the US in the future. Based on numerous considerations of fact and law, the US Court denied Thailands cross-motions, and affirmed Schneiders petition. The award was confirmed, but not enforced, nor was enforcement sought as it was known prior to petitioning the Court that Thailand had no assets in the USA (USDCSNY, 2011). Inaccurate or Misleading News Reports The news media stated that Schneider/Bau sought payment under the New York Convention through the US Court, though the Courts report clearly shows payment in the US was not sought, but only confirmation was sought (Nation, 2011). Further reports stated that according to the then-outgoing Thai Prime Minister, Thailand was planning to continue defending against the charges in legal cases overseas (BKK Post, 2011). However, despite the appearance in the news written by both Thai local and some international agencies, Thailand has very few, if any, options to contest the actual award. The confirmation decision is in appeals, but some news agencies have made it appear as though the award were being appealed, which it is not because it cannot under law. 4.3 Apparent underlying Dispute in the Aircraft Issue The German Revolution and founding of the Weinmar Republic in 1918-1919 coincided with the abolition of monarchy in Germany. After WWII, the Federal Republic of Germany and German Democratic Republic divided the nation, which was merged in 1990. The word

republic is defined as a State in which the supreme power is held by the people and their elected representatives, and which has an elected or nominated president rather than a monarch (Oxford, 2011). Constitutional Monarchy In the 20th century, many absolute monarchies were overthrown, abolished, or significantly altered to accommodate the growing demand for rights to self-determination of people and more participative government. With the passing of Western colonial rule, many nations chose to adopt the experimental Constitutional Monarchy structure of government, where, as the British government stated, a king or queen reigns, with limits to their power, alongside a governing body, Parliament (Directgov, n.d.). Other nations with longstanding sovereign absolute monarchies transitioned to the new model independently as times changed. The constitutional system acknowledges a hereditary or elected monarch as head of statea constitutional monarchys executive authority is vested in the head of state (Government of Bermuda, n.d.). Much disagreement and some controversy have resulted in the interpretation of the role of the monarchy in the government of States with the constitutional monarchy system. Some commentators would maintain that the king or queen in the constitutional monarchy have no power whatsoever, while both the official government interpretation and alternative private opinion find there is certainly some, or a great deal of quantifiable power which monarchies still hold, even under the constitutional monarchy system. The United Kingdom, for example, offers a royal.gov.uk website. The inclusion of the .gov domain suffix following the word royal, which leads to a number of web pages dedicated to the British monarchy, suggests that the monarchy is inseparable from government, and thus is not a private body per se. In the royal.gov.uk websites, readers can learn about the role the Queen plays in government, from symbolic traditional practices, to duties including opening new sessions of Parliament, and dissolving Parliament prior to elections, approving Orders and Proclamations through the Privy Council, etc. The Queen also has exclusive access to the government via regular meetings with the Prime Minister (British Monarchy, 2011). 2007 Thai Constitution The 2007 Thai Constitution places the King as the Head of State in section 2, and as the head of the armed forces under section 10. According to section 3, the King may exercise power through the National Assembly, the Council of Ministers and the Courts in accordance with the Constitution. The King selects and appoints the President of the Privy Council and up to 18 Privy Councilors, who consult and advise the King (s12). It is the duty of the Thai people to uphold the King and the Constitutional Monarchy (s70). The kings signature is required to pass any bill into law (s90). The King may refuse to sign or simply not return the bill within 90 days, which prompts the Assembly to reconsider the bill, and upon a second failed attempt to obtain the Kings signature, the Prime Minister calls the bill to be promulgated as an Act in the Gazette as if the King had signed it (s151).

The King may dissolve the House and calls general elections in both the House and Senate (s108,107). Within the laws, the King appoints the Leader of the Opposition in the House (s110), and the President and Vice President(s) of the House and Senate (s124), and the Prime Minister (s171), and military and civil service officers (s193), and judges (s200), and Constitutional Court judges (s204), and election commissioners (s229), and ombudsmen (s242), and National Counter Corruption Commissioners (s246), and State Audit Commissioners (s252), and National Human Rights Commissioners (s256). The King may remove a Minister upon advice from the Prime Minister (s183), or remove military and civil service officers (s193), or remove judges (s200). The King convokes the National Assembly, opens and prorogues its session, though the king may have the Heir to the Throne who is sui juris or any other person perform the ceremony as a representative (s128). The King may issue Royal Decrees in line with laws (s187), and may declare and lift the martial law (s188), and declare war (s189), and conclude a treaty (s190), and grant pardons (s191), and remove titles and recall decorations (s192). Ministers must make a solemn declaration of allegiance to the King prior to taking office (s175), and so must judges swear a declaration of loyalty to the King prior to taking office (s201). Court proceedings are in the name of the King (s197). The enumerated duties, privileges, and powers given to the King in Thailand under the Constitution (Kingdom of Thailand, 2007) suggest that while there is a law guiding and constraining the power of the monarchy, the monarchy is still a very active and influential institution, as does the King as an individual have a very active role in the administration of the government. The Prince HRH Vajiralongkorn is a military pilot with the rank of Air Chief Marshal (Baetz J. , 2011). The Prince is also a General in the Army and Navy (Thai PRD, 2002). Together with his sisters, the Prince has often acted as the representative of the King, State, and monarchy (Golden Jubilee Network, 2000). As per section 128 of the 2007 Thai Constitution, HRH Vajiralongkorn opened Parliament within the month following the seizure of the Royal jet (O'Brien, 2011). The founder of the Royal Thai Air Force was a Prince (RATF , n.d.), and so the title of HRH is likely inseparable from the branch of service. The Apparent underlying Dispute From the standpoint of a citizen or court of a Republic, which does not recognize the legal capacity or authority of a monarchy in its domestic government, the line separating the public and private capacity of any figure of a monarchy, be it under the absolute or constitutional model, is likely very blurry. The Thai Constitution, like the official rules, laws, and regulations in the UK, like the procedures and customs in all constitutional monarchies, makes the operation of government entirely impossible without the consistent actions of the Head of State who is the King or Queen. To complicate matters further, third-party spectators, who are unfamiliar with the culture and beliefs of citizens of States under constitutional monarchy, may not be able to easily separate the State from the Government which many Brits most notably have done related to their Queens supposed utter lack of

any power whatsoever. Such a contradiction between the literal meaning of words and the perceived practical value is insufferable to many people, and thus it is not likely to ever be the consensus, nor even strong majority, view that the Head of State is not a Government figure. Given that it is a plausible argument to consider the Royals of this world as government actors in some capacity, however limited and symbolic it may be depending on the jurisdiction, we can then move on to the next conflict, which is regarding private property rights among government officials. Here we need to, again, draw clear distinction between the general assemblies, the elected and appointed officials, and the anomalous figures of monarchies. Kings and Queens are featured on money worldwide, which is a privilege not afforded to other living officials. Royals are certainly entitled to privacy and private property, but these rights are not likely to be identical to those of other civilians and other public servants. An aircraft bearing the Royal insignia and government markings, and in this case, according to news reports, an aviation registry in the name of the Air Force, whether coowned or showing such registry in error, is likely to fall into a gray area at very least. The German court, having no lese majeste law, nor having any requirement of oath of allegiance to a Koenig or system of monarchy prior to entry into office, representing the citizens of a republic, was obviously able to consider arguments and applications which were far outside of the scope of the Thai law, where such a seizure would have clearly been a crime. The 2002 BIT, however, did not exclude such unilateral action, nor did it require a harmonization of national laws to facilitate application of that treaty or others. 5. Applicable Laws, Rules, Conventions, Treaties, and Standards 5.1 International Law & Treaty The most relevant Convention at the post-award stage of international dispute resolution is the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards the New York Convention which entered into force in Thailand in 1960 and in Germany in 1961. The Convention is also in force in Hong Kong SAR, Malaysia, Canada, New Zealand, the UK, USA, and Switzerland, so any question about the applicability related to the various jurisdictions involved in the arbitration are covered. The Treaty is valid and binding at the national levels in both Thailand and Germany. The dispute was brought under Articles 9 and 10 of the 2002 Treaty between the Kingdom of Thailand and the Federal Republic of Germany concerning the Encouragement and Reciprocal Protection of Investments (previously mentioned as BIT). Article 1 of the BIT defines investments as every kind of asset. Article 2(3) sets out the fair and equitable treatment requirements. Article 3 provides for national and most-favoured-nation treatment. Article 8 provided for application to approved investments made prior to [the 2002 BITs] entry into force. Article 10(2) stated the award shall be enforced in accordance with domestic law (Thailand-Germany, 2002).

Article 10(4) of the BIT stated that if both parties were members of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, disputes would be submitted for arbitration under the ICSID. 157 States have signed the ICSID, and Thailand is one, however Thailand is also one of 10 States that has not deposited instruments of ratification. Germany has signed and ratified the Convention, and it has entered into force (ICSID, 2011). Germany is a member State to the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG), though Thailand is not (UN-CITRAL, 2011). Germany adopted the 1985 UNCITRAL Model Law on International Commercial Arbitration in 1998, and in 2002 Thailand adopted the Model Law (United Nations, 2011). The arbitration was brought under the BIT and the procedure followed UNCITRAL rules. The 1969 Vienna Convention on the Law of Treaties Article 28 non-retroactivity rule was applied to deny claims for damages present before the 2002 BIT entered into force (United Nations, 1969). The Tribunal considered the events, facts, and claims from times prior to the 2002 BIT entry into force, but no award was based on damages incurred prior to the 2002 BIT entry into force 20 Oct 2004 (9.67-9.69AR). Germany ratified the Vienna Convention in 1987, though the UN did not report any signature or ratification for Thailand (UNTREATY, 2011). 5.2 Potential for Non-recognition or Vacation of the Award Under Article V of the NY Convention, recognition and enforcement may be refused upon limited grounds: (1) if the parties had no legal capacity, or if the agreement was invalid in the nation where the award was made; (2) if the party against whom the award was rendered was not given proper notice of arbitrator appointments or proceedings, or if such party was not present in the arbitration; (3) if the award was rendered for reasons or upon grounds removed from or beyond the agreed upon subject matter of the arbitration; (4) if the Tribunal was not composed as agreed upon by the parties; (5) if the award was suspended by the competent authority under the applicable law, prior to the award taking binding effect; (6) if the subject matter of the dispute is not capable of settlement under the applicable law; (7) if the recognition or enforcement of the award would be contrary to public policy in the country where the award was recognized and or enforced. Section 2(b), concerning public policy conflicts, may be invoked in Thailand, but elsewhere that option is not likely available considering that the dominant public interest in these matters is application of the Convention (UN, 1958). However, even in Thailand, the NY Convention should be a powerful motivator to recognize and enforce the award. The UNCITRAL Arbitration Rules allow for interpretation (art35), correction (art36), and addition to (art37) the award, but no provisions are made for cancellation, revocation, vacation, or annulment. Article 32(2) does state very clearly that awards shall be final and binding on the partiesthe parties undertake to carry out the award without delay (UNCITRAL, 1976).

Article 36 of the UNCITRAL Model Law on International Commercial Arbitration gives grounds for refusing recognition or enforcement of awards, which are merely a restatement of the NY Convention exceptions. Article 35 states that an arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced (United Nations, 1994). Other international arbitration models, such as the ICSID in Chapter VII, offer options for annulment of the award, though there are limited grounds: (a) the Tribunal was not properly constituted; (b) the Tribunal has manifestly exceeded its powers; (c) there was corruption on the part of a member of the Tribunal; (d) there was a serious departure from a fundamental rule of procedure; (e) the award has failed to state the reasons on which it is based. The ICSID Convention references the final and binding nature of arbitral Tribunal decisions in its preamble, in Article 53-54, and throughout the Convention and Rules texts. It is exceedingly doubtful that Thailand could prove that any such circumstances exist or have existed which could lead to annulment of the award, and even if such a claim were proven the ICSID model was not the applicable rule or system used in the arbitration. 5.3 Collection HRH Vajiralongkorn offered to pay the bank deposit to retrieve the plane (France-Presse, 2011). The 20 million deposit is not the full award. The ongoing dispute has drawn attention not only to Royal politics, bad debts, breaches of contracts, and alluded to corruption, but it has also shown the weakest part of the international arbitration law: enforcement. The Claimant likely chose not to apply for enforcement in Thailand because it would have been considered a waste of money. The Thai government is obligate to recognize and enforce the award under the NY Convention. The dispute is regarding a commercial contract, so sovereign immunity is not a defense, and restrictive immunity has been removed by the arbitral tribunal. The seizure of the jet was a last option, and further court decisions will determine the eventual outcome of this case, but until the creditor collects, the case is a loss for the Claimant and for international law. 6. Closing Statements The Claimant signed on with the concessionaire group because it wanted to capitalize on the opportunity to make a profit. The contract was a likely a dream come true, though it turned into a nightmare for the foreign investors within 10 years, and attempts at lucid dreaming to redirect the project did not work out prior to the Claimant selling off its shares in the collective. FET obligations under the 2002 BIT, and terms of the contract(s) were breached by the Respondent. Two years after the arbitral tribunals award was rendered, the Respondent takes on the appearance of the recalcitrant debtor with attempts to deny the validity of the award. As member nations of the UNCITRAL Model Law and NY Convention, the Respondent has a duty under international law to pay. Of course the timing of regulations on government

contracts written after the Hopewell project may also seem to allude to the potential that the Claimant had engaged in bribery during the bidding and selection process, but that issue was not explicitly addressed. Of course the 2006 military coup and other unorthodox government changes before and after initiation of the arbitration affected the case. Of course there are likely questions within the Respondents many departments and agencies regarding the legal capacity of post-coup representatives to the arbitration, and the government turmoil on the Thai side most likely led to valid complaints about the representation through the arbitration process. However, the Respondent must somehow accept its own actions and deal with the anomalous political structure in the Kingdom of Thailand. Faith in the international process and system is necessary for the system to function. When and where there are problems, excessive presence of loopholes, contradictory clauses and features, then a collective effort is needed to change anything. One cannot change the all, nor is it realistic that all should have to suffer through the attempts by one to change the whole against the wishes of the overwhelming majority. If and when changes are necessary, there should be accompanying public and private outcry, and some consensus is required. After resolution to propose and pursue changes, a process must be satisfied. We cannot engage in hasty, unorthodox, and unplanned, unstructured government at the international level as some nations seem to have engaged in at the domestic level. The simple fact remains today that international arbitral tribunal awards are final and binding. There is no appeal. The lack of appeals is what makes the arbitration route attractive to many parties. Litigation is the route which needs to be taken if a party desires an appeal, but litigation is far more adversarial, more rigid, often more expensive than arbitration, and there is no real world court which handles cases between private parties and nations. The ICJ may handle some cases involving commercial subject matter, but all cases are between states. Arbitration offers much-needed rights for private investors to bring claims against States, and the NY Convention offers much-needed enforcement and recognition protection for private interests. The Kingdom of Thailand is a developing nation without a great deal of technological innovation or expertise when compared to some other nations. States like Thailand need FDI, technology transfer and licensing-in to compete in the highly technical global economy. Thailand is not a nation like Germany, Singapore, Korea, Japan, or China (increasingly) which can afford, to some greater extent, to alienate investors who have the power in the relationship by broader standards - outside of the secular State jurisdiction. Thailand likely contracted out to the Claimant because the Claimant offered the best price for the level of quality Thailand desired. If Thai construction firms were capable of going it alone, there would have never been a reason to contract out to foreigners. The breaches of contract and treaty on the part of the Respondent not only represented an unreasonable departure of pacta sunda servanda, but in plain terms constituted a commercial nightmare. Walter Bau AG may not be insolvent today if the Respondent would have only kept to its agreements. There are, in probably every case, things left unsaid, and things which could have been said differently or better, and regrets about past actions of one party or the other or both.

People are not generally perfect. Some deviation from contracts is often acceptable so long as the basic objective can still be accomplished. In this case, the objective on the part of the Claimant to make a profit was not realized, and the failure to accomplish that very simple financial goal was determined to have been largely due to the breaches of contract and obligations on the part of the Respondent. On the merits of the case, on the facts, and within the law, the Tribunal rendered the award in favor of the Claimant. The Respondent is obligated to recognize and enforce the award, regardless of to whom the plane belongs, regardless of whether the monetary payment is sought in a constitutional monarchy or republic. Today is a perfect opportunity to recognize the facts about this law.

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