The tribunal concluded that BIVAC met both the definition of investment in the BIT and Article 25 of the ICSID Convention. Specifically, it agreed that BIVAC's rights under the contract were granted under public law, within the meaning of Article 1(a)(v) of the BIT. BIVAC carried out functions that had previously been carried out by the customs authorities of the state. Although the production of certificates of inspection and related activities may have been described in the contract as "technical services" rendered by a private enterprise, the factual and legal reality was that they were interwoven with the function of the state in its public capacity.

The tribunal rejected Paraguay's argument that the acts undertaken by BIVAC under the contract did not meet the criteria for the definition of investment in the ICSID Convention. The definition of investment in the BIT was consistent with the requirements of the ICSID Convention. Moreover, the tribunals in SGS v Pakistan and SGS v Philippines had had little hesitation in finding that equivalent contractual arrangements gave rise to an investment. The tribunal was not persuaded that it should reach a different conclusion.

The tribunal also rejected Paraguay's argument that, if there was an investment, its performance was to be made abroad, rather than "in the territory of Paraguay", as required by Article 9(2) of the BIT. There appeared to be no dispute that BIVAC injected money and industry into the project to render the technical services and also set up a structure and created know-how in Paraguay. Further, the tribunal agreed with the approach of the tribunals in SGS v Pakistan and SGS v Philippines in finding that the services rendered abroad and in Paraguay were inseparable and that BIVAC's investment was made in the territory of Paraguay.

The tribunal held that it had no jurisdiction over the claim for expropriation under Article 6 of the BIT. It agreed with the decision of the tribunal in SGS v Philippines that a mere refusal to pay a debt cannot amount to an expropriation where remedies exist in respect of that refusal. In this case, there was no dispute that the alleged contractual dispute continued to exist, or that the forum for resolution of contractual disputes remained available. The fact that BIVAC had chosen, for whatever reason, not to pursue the available contractual remedies could not contribute to a claim for expropriation.

The tribunal held that it had jurisdiction over the claim and that the claim was admissible. In doing so, it distinguished the decision in SGS v Philippines. In that case, the tribunal held that an unjustified refusal to pay sums due under a contract raised arguable issues regarding fair and equitable treatment, but that the claim was not yet admissible because there was an unresolved dispute regarding the outstanding amount. Here, there was no apparent unresolved dispute as to the amount payable, so the tribunal would have jurisdiction.

The tribunal could see no other bar to the admissibility of the claim. In particular, the fact that the contract provided for an agreed forum for the resolution of disputes under the contract (the Asuncion courts) was irrelevant for the purposes of a claim for fair and equitable treatment. The fundamental basis for the claim under Article 3(1) turned on the interpretation and application of that provision, not on the interpretation of the contract, even though there may some overlap in the factual issues. Therefore, this was not a claim which the parties to the contract had agreed to refer to the exclusive jurisdiction of the Asuncion courts.

The tribunal also took the opportunity to clarify that to succeed in its claim of breach of Article 3(1), BIVAC would have to establish that the damage suffered was a consequence of Paraguay's acting in breach of its BIT obligations, rather than its obligations as a party to the contract.

The tribunal concluded that it had jurisdiction over a claim that arose from or was produced directly in relation to the contract, on the basis that Article 3(4) of the BIT established an international obligation for Paraguay to observe contractual obligations with respect to investors. The tribunal took the "plain meaning" approach followed by the tribunal in SGS v Philippines, placing particular significance on the broad wording of the clause, which referred to "any obligation": this was all-encompassing and was certainly capable of being read to include the contractual arrangement in this case.

However, that was not the end of the matter: there was also an issue of admissibility. If Article 3(4) imported the obligations under the contract into the BIT, then that must include not only the obligation to pay invoices, but also all other obligations under the contract. Parties to a contract could not pick and choose those parts of a contract that they wished to incorporate to the exclusion of others. The obligations in this case included, in Article 9(1) of the contract, an exclusive jurisdiction clause in respect of any claim arising from or produced in relation to the contract. The existence of that exclusive jurisdiction clause acted as a bar to the exercise of the tribunal's jurisdiction under Article 3(4) of the BIT, making the claim inadmissible.

The tribunal agreed with the tribunal in SGS v Philippines that a party should not be able to rely on a contract as the basis of its claim when the contract referred that claim exclusively to another forum, unless there were good reasons, such as force majeure, which prevented the claimant from complying with the contract. There was no evidence of any good reasons in this case. Further, it was significant that the parties entered into the contract two years after the BIT came into force, as both parties must have known of the BIT and the protections that it provided (including the ICSID arbitration clause). The parties' failure to specify in the contract that the obligations in the exclusive jurisdiction clause were without prejudice to any rights under the BIT indicated that they intended the jurisdiction of the courts of Asuncion to be absolute.

The tribunal rejected BIVAC's argument that, by exercising its jurisdiction under the umbrella clause, the tribunal would only be interpreting the BIT, not the contract. BIVAC argued that the tribunal would be considering a free-standing treaty obligation into which the contractual obligations would have been incorporated. However, there was no such free-standing treaty obligation, under the BIT or elsewhere, which would allow the tribunal to determine whether Paraguay's acts breached Article 3(4) of the BIT. The reality was that the tribunal would have to interpret and apply the contract to determine whether Paraguay was in breach of its obligation to pay invoices.

The tribunal's conclusion, therefore, was that although it had jurisdiction over the claim under the umbrella clause, that claim was not admissible because the parties had agreed to refer it to the exclusive jurisdiction of the Asuncion courts. It deferred to the merits phase the question whether the claim should be dismissed or stayed, having heard no submissions from the parties as to what should happen if the claim were found to be inadmissible.