Date of dispatch to the parties: October 2, 2006 INTERNATIONAL CENTRE FOR SETTLEMENT OF INVES ‘MENT DISPUTES D Case No. ARB/03/16 ADC Affiliate Limited ~ and - ADC & ADMC Management Limited Claimants The Republic of Hungary Respondent Award of the Tribunal TRIBUNAL ‘The Hon. Charles Brower Professor Albert Jan van den Berg Neil Kaplan CBE QC (President) Secretary of the Tribunal Ucheora OnwuamaegbuTable of Content I. THE PARTIES... A. The Claimants. B. The Respondent... Il. PROCEDURAL HISTORY A. Arbitration Agreement and Constitution of Arbitration Tribunal. B. Proceedings. C. The Hearing TIL, FACTS....secssssssere HE TENDER PROCESS... 1. First Phas 2, Second Phase... 3. Third Phase. D. NEGOTIATION OF THE AGREEME! 2, The Project Agreements.. Credit Agreement. HE CLAIMANTS’ INVESTM) 1. ADC Affiliate’s Investment... 2. ADC & ADMC Management’s Investment. F. Construction of Terminal 2/B... G. Business Planning Process for the Project Company H. Project Company’s Financial Result I. Project Company’s Operations from 1999 through 2001 ... J. Transformation of the ATAA, Legislative Amendments and the Decrees. K. Developments after the Decree 1. Separation of the Functions of the ATAA 2. Passenger Traffic... 36 3. Parking Facility. 36 4. Terminal Expansion and Reconstruction. 36 L. The Privatization of Budapest Airport Brought by the Project Company ENTIONS OF THE PARTI A. Contentions of the Claimants. B. Contentions of the Respondent, V. RELIEF SOUGHT BY THE PARTIES A. Relief Sought by the Claimant: B. Relief Sought by the Respondent. VI. FINDINGS OF FACT, A. Credibility of Witnesses. B. The Nature of the Claimants’ Investment C. Complaints about the construction of the Termin; D. Attempted Reasons for and Justification of the DecretVII. ISSUES TO BE CONSIDERED AL B, Jurisdiction sssmismsnsnnnnaiemnenesse THE AWARD... . Return of the Shares and Promissory Note: . Costs. THIS ARBITRATION.............. Applicable Law. 1. Is the Nature of the Dispute Governed by the BIT or Contractual in Nature?. 2. Did the Claimants Make Any Investment in Hungary within the Definition of the BIT and the ICSTD Conventio 3. Does the Dispute Arise “Directly” out of An Inv by the ICSID Convention? 4. Does the dispute involve “investors” under the BIT who are nationals of a Contracting State to the ICSID Convention’ 5. Does the dispute fall within the scope of Art. 7 of the BIT?. 6. Conclusion on Jurisdiction Expropriation Miscellaneous Points Raised by the Responden 1. Is the Operating Period Lease Invalid “Due to the Inappropriate Legal Form of the Project Company’ 2, Are the Project Agreements Invalid “Due to the Missing Approval” of a Quotaholders’ Meeting of the Project Company 3. Is There “a Grossly Unfair Difference in Value” Regarding the Service Rendered and Consideration for That Service? 4, Did the Conclusion of the Terminal Management Agreement Violate the Public Procurement Act and Therefore Became “Unlawful”? sme Conclusion on Matters Other Than Quantum. Quantum 1. The Applicable Standard for Damages Assessment. 2. Discounted Cash Flow (DCF) Method y. Balancing Payment Method. 3. The Respondent’s Other Attacks on the I 4. Conclusion on Quantification . 5. The Amount of Compensation Payable to the Claimants... sstment as Required 'G Reports 1. Principl 2, Quantum.