"The nationals, corporations and associations of either High Contracting Party shall not be subjected to arbitrary or discriminatory
measures within the territories of the other High Contracting Party
resulting particularly in: (a) preventing their effective control and
management of enterprises which they have been permitted to establish or acquire therein; or, (b)impairing their other legally acquired
rights and interests in such enterprises or in the investments which
they have made, whether in the form of funds (loans, shares or otherwise), materials, equipment, services, processes, patents, techniques
or otherwise. Each High Contracting Party undertakes not to discriminate against nationals, corporations and associations of the other
High Contracting Party as to their obtaining under normal terms the
capital, manufacturing processes, skills and technology which may
be needed for economic development."
The United States bases its claims upon allegations that measures were
taken which were both "arbitrary" and "discriminatory" in the sense of
this text.
121. The Applicant pressed strongly the claim that the requisition was
an arbitrary or discriminatory act which violated both the "(a)" and the
"(b)"clauses of the Article. The requisition, it is said, clearly prevented
Raytheon and Machlett from exercising their control and management of
ELSI and also resulted in an impairment of their legally acquired rights
and interests in ELSI, inasmuch as it prevented the voluntary liquidation
of ELSI and caused it to file for bankruptcy. To the claim as it is presented
in those terms, however, the Chamber has already given its answer: the
absence of a sufficiently palpable connection between the effects of the
requisition and the failure of ELSI to carry out its planned orderly liquidation (paragraph 101 above). Accordingly, it cannot be said that it was the
requisition per se which either prevented Raytheon's effective control and
management of ELSI, or which resulted in impairing legally acquired
rights, in the sense of the clauses called "(a)" and "(b)"in Article 1 of the
Supplementary Agreement. Yet, although this is an answer to the claim as
it is presented in terms of those clauses of Article 1, it is not the end of the
matter. The effect of the word "particularly", introducing the clauses "(a)'"
and "(b)",suggests that the prohibition of arbitrary (and discriminatory)
acts is not confined to those resulting in the situations described in "(a)"
and "(b)",but is in effect a prohibition of such acts whether or not they
produce such results. It is necessary, therefore, to examine whether the
requisition was, or was not, an arbitrary or discriminatory act of itself.
122. The allegation of the United States that Raytheon and Machlett
were subjected to "discriminatory" measures can be dealt with shortly. It
is common ground that the requisition order was not made because of the
nationality of the shareholders; there have been many cases of requisition