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TABLE OF SELECTED ABBREVIATIONS

Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
BSAM Bridgestone Americas, Inc.
BSJ Bridgestone Corporation
BSLS Bridgestone Licensing Services, Inc.
Cl. Reg. Letter Claimants' Letter during Registration of Request for Arbitration, dated 25 October 2016
Cl. Res. Exp. Obj. Claimants' Response on Expedited Objections, dated 24 July 2017
Cl. Rej. Exp. Obj. Claimants' Rejoinder on Expedited Objections, dated 14 August 2017
Cl. PHB Exp. Obj. Claimants' Post-Hearing Brief on Expedited Objections, dated 11 October 2017
Cl. Costs Exp. Obj. Claimants' Statement of Costs, dated 6 November 2017
Cl. Mem. Claimants' Memorial, dated 11 May 2018
Cl. Reply Claimants' Reply, dated 22 March 2019
Cl. Reply Supp. Claimants' Supplemental Reply, dated 30 April 2019
Cl. PHB Claimants' Post-Hearing Brief, dated 16 October 2019 (and corrected 30 October 2019)
Cl. Costs Claimants' Statement of Costs, dated 8 November 2019
C-[#] Claimants' Exhibit
CER Claimants' Expert Report
CER-Arjona First Expert Report of Mr. Adán A. Arjona, dated 6 May 2018
CER-Arjona Second Second Expert Report of Mr. Adán A. Arjona, dated 22 March 2019
CER-Arjona Third Third Expert Report of Mr. Adán A. Arjona, dated 30 April 2019
CER-Daniel First Expert Report of Mr. Brian M. Daniel, dated 11 May 2018
CER-Daniel Second Second Expert Report of Mr. Brian M. Daniel, dated 22 March 2019
CER-Jacobs-Meadway First Expert Report of Ms. Roberta Jacobs-Meadway, dated 11 May 2018
CER-Jacobs-Meadway Second Second Expert Report of Ms. Roberta Jacobs- Meadway, dated 22 March 2019
CER-Molino Expert Report of Mr. Edwin Molino, dated 22 March 2019
CLA-[#] Claimants' Legal Authority
CWS Claimants' Witness Statement
CWS-Akey Witness Statement of Mr. Steven Akey, dated 30 April 2018
CWS-Calderon Witness Statement of Mr. Erick Calderon, dated 22 July 2017
CWS-Hidalgo Witness Statement of Mr. Roger Hidalgo, dated 22 July 2017
CWS-Hyman First Witness Statement of Ms. Katie Hyman, dated 29 October 2018
CWS-Hyman Second Second Witness Statement of Ms. Katie Hyman, dated 16 November 2018
CWS-Kingsbury First Witness Statement of Mr. Thomas R. Kingsbury, dated 21 July 2017
CWS-Kingsbury Second Second Witness Statement of Mr. Thomas R. Kingsbury, dated 14 August 2017
CWS-Kingsbury Third Third Witness Statement of Mr. Thomas R. Kingsbury, dated 11 May 2018
CWS-Lightfoot Witness Statement of Mr. Jeffrey Lightfoot, dated 9 May 2018
CWS-Williams Witness Statement of Ms. Audrey Williams, dated 13 August 2017
Hearing Exp. Obj. Hearing on Expedited Objections, held on 3-6 September 2017
Hearing Hearing on the Merits, held from 29 July to 2 August 2019, and 28 August 2019
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965
ICSID or the Centre International Centre for Settlement of Investment Disputes
Muresa Muresa Intertrade, S.A.
Request for Arbitration Claimants' Request for Arbitration, dated 7 October 2016
Resp. Exp. Obj. Respondent's Expedited Objections, dated 30 May 2017
Resp. Reply Exp. Obj. Respondent's Reply on Expedited Objections, dated 7 August 2017
Resp. PHB Exp. Obj. Respondent's Post-Hearing Brief on Expedited Objections, dated 11 October 2017
Resp. Costs Exp. Obj. Respondent's Statement of Costs, dated 6 November 2017
Resp. C-Mem. Respondent's Counter-Memorial, dated 14 September 2018
Resp. Rej. Respondent's Rejoinder, dated 17 June 2019
Resp. PHB Respondent's Post-Hearing Brief, dated 16 October 2019 (and corrected 30 October 2019)
Resp. Costs Respondent's Statement of Costs, dated 8 November 2019
R-[#] Respondent's Exhibit
RER Respondent's Expert Report
RER-Fried Expert Report of Mr. Gabriel Fried, dated 17 June 2019
RER-Jacobson First First Expert Report of Ms. Nadine H. Jacobson, dated 14 September 2018
RER-Jacobson Second Second Expert Report of Ms. Nadine H. Jacobson, dated 17 June 2019
RER-Lasso First First Expert Report of Ms. Marissa Lasso de la Vega Ferrari, dated 14 September 2018
RER-Lasso Second Second Expert Report of Ms. Marissa Lasso de la Vega Ferrari, dated 14 June 2019
RER-Lee First First Expert Report of Mr. Jorge F. Lee, dated 14 September 2018
RER-Lee Second Second Expert Report of Mr. Jorge F. Lee, dated 17 June 2019
RER-Paulsson Expert Report of Mr. Jan Paulsson, dated 17 June 2019
RER-Shopp First First Expert Report of Mr. Matthew D. Shopp, dated 14 September 2018
RER-Shopp Second Second Expert Report of Mr. Matthew D. Shopp, dated 17 June 2019
RLA-[#] Respondent's Legal Authority
RWS Respondent's Witness Statement
RWS-Gonzalez-Revilla Witness Statement of Ambassador Emanuel Gonzalez-Revilla, dated 10 September 2018
RWS-Lee First Witness Statement of Mr. Jorge F. Lee, dated 9 November 2018
RWS-Lee Second Second Witness Statement of Mr. Jorge F. Lee, dated 27 November 2018
Supreme Court Judgment Judgment of the Civil Chamber of the Supreme Court of Justice of the Republic of Panama (28 May 2014) (C-027/R-034)
TGFL Tire Group of Factories Ltd., Inc.
TPA United States-Panama Trade Promotion Agreement signed on 28 June 2007, in force on 31 October 2012
Tr. Exp. Obj., Day [#], [page:line] (Speaker(s)) Transcript of the Hearing on Expedited Objections held on 3-6 September 2017 (as revised by the Parties on 6 October 2017)
Tr., Day [#], [page:line] (Speaker(s)) Transcript of the Hearing on the Merits 29 July to 2 August 2019 and 28 August 2019 (as revised by the Parties on 23 October 2019)
Tribunal Arbitral tribunal constituted on 27 April 2017
U.S. First Sub. United States Written Submission, pursuant to Article 10.20.2 of the TPA, dated 28 August 2017
U.S. Second Sub. United States Supplemental Written Submission, pursuant to Article 10.20.2 of the TPA, dated 25 September 2017
U.S. Third Sub. United States Third Written Submission, pursuant to Article 10.20.2 of the TPA, dated 7 December 2018

I. INTRODUCTION AND PARTIES

1.
This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the United States-Panama Trade Promotion Agreement signed on 28 June 2007, in force on 31 October 2012 (the "TPA"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").
2.
The Claimants are Bridgestone Licensing Services, Inc. ("BSLS"), a company incorporated in the State of Delaware, United States; and Bridgestone Americas, Inc. ("BSAM"), a company incorporated in the State of Nevada, United States (together, the "Claimants").1
3.
The Respondent is the Republic of Panama ("Panama" or the "Respondent").
4.
The Claimants and the Respondent are collectively referred to in this ruling as the "Parties," and the term "Party" is used to refer to either the Claimants or the Respondent.2 The Parties' representatives and their addresses are listed above on page (i).

II. PROCEDURAL HISTORY

A. Registration and Constitution of the Tribunal

5.
On 7 October 2016, ICSID received a request for arbitration dated 7 October 2016 from the Claimants against the Respondent (the "Request for Arbitration"). The Request for Arbitration was accompanied with Exhibits C-001 to C-043.
6.
On 19 October 2016, the ICSID Secretariat requested the Claimants to provide certain additional information and clarifications concerning the Request for Arbitration.
7.
On 25 October 2016, the Claimants filed a communication in response to the ICSID Secretariat's request of 19 October 2016. This submission was accompanied by Exhibits C-044 to C-050.
8.
On 28 October 2016, the Acting Secretary-General of ICSID registered the Request for Arbitration, as supplemented by letter of 25 October 2016, in accordance with Article 36(3) of the ICSID Convention, and notified the Parties of the registration. In the Notice of Registration, the Acting Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of ICSID's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings (the "Institution Rules").
9.
In accordance with Article 37(2)(a) of the ICSID Convention, the Parties agreed to constitute the Tribunal as follows: three arbitrators, one to be appointed by each Party and the third, presiding arbitrator, to be appointed by agreement of the two co-arbitrators.
10.
The Tribunal is composed of Lord Nicholas Phillips Baron of Worth Matravers, a British national, President, appointed by the co-arbitrators; Mr. Horacio A. Grigera Naón, an Argentine national, appointed by the Claimants; and Mr. J. Christopher Thomas, QC, a Canadian national, appointed by the Respondent.
11.
On 27 April 2017, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), the Secretary-General notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted on that date. Ms. Luisa Fernanda Torres, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.

B. The Expedited Objections Phase

1. The First Session, the Parties' Written Submissions and Procedural Applications on Expedited Objections

12.
On 30 May 2017, the Respondent filed Expedited Objections pursuant to Article 10.20.5 of the TPA (the "Expedited Objections"). The objections were accompanied by Exhibits R-001 to R-014; and Legal Authorities RLA-001 to RLA-044. On 5 June 2017, the Respondent transmitted Annex A to its Expedited Objections and its supporting materials.
13.
In accordance with ICSID Arbitration Rule 13(1), on 6 June 2017, the Tribunal held a first session with the Parties by videoconference.
14.
Following the first session, the Tribunal and the Parties exchanged various communications concerning the procedural calendar for the expedited phase. The Tribunal received: communications from each Party, respectively, on 22 June 2017; communications from each Party, respectively, on 26 June 2017; a communication from the Claimants on 29 June 2017, and a communication from the Respondent on 30 June 2017. The Tribunal sent to the Parties communications dated 20, 23, 28 June 2017 and 2 July 2017. In this last communication of 2 July 2017, the Tribunal notified the Parties of its decision regarding the procedural calendar.
15.
On 11 July 2017, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 1 embodying the agreement of the Parties on procedural matters and the decision of the Tribunal on the disputed issues. Procedural Order No. 1 provides, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006 except to the extent modified by the TPA, that the procedural language would be English, and that the place of proceeding would be Washington, DC, United States. Procedural Order No. 1 also included the schedule for the Expedited Objections phase of the proceedings.
16.
On 24 July 2017, the Claimants filed their Response to the Expedited Objections pursuant to Article 10.20.5 of the TPA (the "Response on Expedited Objections"), accompanied by: three witness statements, by Mr. Erick Calderón, Mr. Roger Hidalgo and Mr. Thomas R. Kingsbury, respectively; Exhibits C-051 to C-118;3 and Legal Authorities CLA-001 to CLA-037. The Response on Expedited Objections included an application for a stay of the expedited proceeding until the Respondent paid the first advance of funds requested in this case; but following a letter dated 25 July 2017 confirming that the Respondent's payment had been received by ICSID on 21 July 2017, the Claimants' application was withdrawn by letter dated 26 July 2017.
17.
Having previously consulted with the Parties, on 4 August 2017, the Tribunal (i) informed the TPA "non-disputing Party," i.e., the United States of America ("United States" or "U.S.")4 of the scheduled date for the Hearing on Expedited Objections (the "Hearing on Expedited Objections"), and (ii) invited the United States to indicate whether it intended to make any written or oral submission pursuant to Article 10.20.2 of the TPA, setting a deadline for such submission.
18.
On 7 August 2017, the Respondent filed its Reply on Expedited Objections pursuant to Article 10.20.5 of the TPA (the "Reply on Expedited Objections"), accompanied by: Exhibits R-015 to R-018; and Legal Authorities RLA-001 (REV) and RLA-002 (REV), and RLA-045 to RLA-068.
19.
On 14 August 2017, the Claimants filed their Rejoinder on Expedited Objections pursuant to Article 10.20.5 of the TPA (the "Rejoinder on Expedited Objections"), accompanied by: two witness statements, by Ms. Audrey Williams, and Mr. Thomas R. Kingsbury, respectively; Exhibits C-119 to C-126; and Legal Authority CLA-038.
20.
On 14 August 2017, the Tribunal invited the Parties to make certain submissions in anticipation of the Pre-Hearing Call.
21.
On 17 August 2017, the Parties made joint and individual submissions in anticipation of the Pre-Hearing Call.
22.
On 18 August 2017, pursuant to Section 20.1 of Procedural Order No. 1, a pre-Hearing organizational call between the Parties and the President of the Tribunal was held by telephone conference (the "Pre-Hearing Call"), in preparation for the Hearing on Expedited Objections. During the Pre-Hearing Call, a matter was raised by the President and discussed with the Parties concerning the timing for oral submissions regarding certain procedural evidentiary issues arising out of the Parties' written submissions, and for a determination by the Tribunal regarding the impact of those issues on the conduct of the Hearing on Expedited Objections.
23.
On 21 August 2017, following the Pre-Hearing Call, the Respondent submitted (i) an application under Section 5.2 of Procedural Order No. 1, for reconsideration by the full Tribunal of the Respondent's procedural request made during the Pre-Hearing Call that the session between the Parties and the full Tribunal to resolve the procedural evidentiary issues and their impact on the conduct of the Hearing on Expedited Objections be held before the first day of the Hearing (the "Request for Reconsideration"); and (ii) a request for a formal order from the full Tribunal identifying the specific questions that the Tribunal wanted the Parties to address before opening arguments at the Hearing on Expedited Objections (the "Request for Questions").
24.
On 24 August 2017, the full Tribunal issued Procedural Order No. 2, addressing the Respondent's Request for Questions. In the same order, the Claimants were invited to file observations on the Respondent's Request for Reconsideration.
25.
On 24 August 2017, the United States confirmed their intent to file a written submission, pursuant to Article 10.20.2 of the TPA; and it informed the Tribunal that it was still considering whether it would make an oral submission at the Hearing on Expedited Objections as well.
26.
On 25 August 2017, the Claimants filed observations on the Respondent's Request for Reconsideration of 21 August 2017.
27.
On 28 August 2017, in accordance with the deadline established by the Tribunal, the United States filed a written submission, pursuant to Article 10.20.2 of the TPA ("U.S. First Written Submission").
28.
On 29 August 2017, the full Tribunal issued Procedural Order No. 3, concerning the Respondent's Request for Reconsideration of 21 August 2017, and the organization of the Hearing on Expedited Objections.
29.
Also on 29 August 2017, the Claimants asked the Tribunal to order the Respondent to provide a supplementary translation of Legal Authority RLA-013. The Claimants' application attached a supplementary translation of RLA-013 already provided by the Respondent voluntarily, and requested an order for a further translation. The Respondent filed observations on this application also on 29 August 2017.
30.
On 30 August 2017, the Tribunal ruled on the Claimants' application of 29 August 2017. That same day, the Respondent sent a further communication in response to the Tribunal's ruling.
31.
On 1 September 2017, each Party filed observations on the tentative Agenda for the Hearing on Expedited Objections, and on a few logistical and procedural matters pertaining to the organization of that Hearing.
32.
On 2 September 2017, the Tribunal approved the Parties' agreements of 1 September 2017, and indicated that it would resolve the limited areas of disagreement at the start of the Hearing on Expedited Objections.

2. The Oral Procedure on Expedited Objections

33.
A Hearing on Expedited Objections was held in Washington, DC from 3 to 6 September 2017 (the "Hearing on Expedited Objections"). The following persons were present:

Tribunal :
Lord Nicholas Phillips President
Mr. Horacio A. Grigera Naón Arbitrator
Mr. J. Christopher Thomas, QC Arbitrator

ICSID Secretariat :
Ms. Luisa Fernanda Torres Secretary of the Tribunal

For the Claimants :
Mr. Justin Williams Akin Gump Strauss Hauer & Feld
Mr. Stephen Kho Akin Gump Strauss Hauer & Feld
Ms. Katie Hyman Akin Gump Strauss Hauer & Feld
Mr. Johann Strauss Akin Gump Strauss Hauer & Feld
Ms. Katherine Afzal Akin Gump Strauss Hauer & Feld
Mr. Kevin McClintock-Batista Akin Gump Strauss Hauer & Feld
Mr. Thomas R. Kingsbury (*) BSAM and BSLS, Witness
Ms. Audrey Williams (via video link) (*) Benedetti & Benedetti, Witness

For the Respondent :
Mr. E. Whitney Debevoise Arnold & Porter Kaye Scholer LLP
Ms. Gaela Gehring Flores Arnold & Porter Kaye Scholer LLP
Ms. Mallory Silberman Arnold & Porter Kaye Scholer LLP
Ms. Amy Endicott Arnold & Porter Kaye Scholer LLP
Ms. Katelyn Horne Arnold & Porter Kaye Scholer LLP
Mr. Kelby Ballena Arnold & Porter Kaye Scholer LLP
Ms. Bailey Roe Arnold & Porter Kaye Scholer LLP
Ms. Sara Ureña Arnold & Porter Kaye Scholer LLP
Ms. Karla González Embassy of Panama in the U.S.
Ms. Geniva Escobar (via video link) Ministry of Economy and Finances
Mr. Norman Harris Ministry of Commerce and Industry
Mr. Francisco Olivardia Embassy of Panama in the U.S.
Ms. Marissa Lasso de la Vega Ferrari Alfaro, Ferrer & Ramírez, non-testifying independent Panamanian Law Expert

For the United States :5
Ms. Nicole Thornton U.S. Department of State
Mr. Matthew Olmsted U.S. Department of State
Mr. John Blanck U.S. Department of State
Ms. Amanda Blunt Office of the U.S. Trade Representative

Court Reporter(s) :
Mr. David Kasdan B&B Reporters

(*) present during his/her examination

34.
The following persons were examined during the Hearing on Expedited Objections:

On behalf of the Claimants :
Mr. Thomas R. Kingsbury Witness
Ms. Audrey Williams (via video link) Witness

35.
In accordance with Article 10.21.2 of the TPA, and Section 21.6 of Procedural Order No. 1, the Hearing on Expedited Objections was made public via real-time streaming on the ICSID Website.
36.
On 3 September 2017, having heard the Parties' oral arguments on the preliminary evidentiary issues, the full Tribunal issued Procedural Order No. 4.
37.
On 5 September 2017, the Tribunal communicated in writing to the Parties certain questions to be addressed during closing arguments at the Hearing on Expedited Objections.
38.
During the Hearing on Expedited Objections, the Parties introduced the following materials into the record:

Claimants : Demonstrative Exhibits CD-001 to CD-002; Exhibits C-127 to C-129; Legal Authorities CLA-039 to CLA-047.

Respondent : Demonstrative Exhibits RD-001 to RD-003.

3. The Post-Hearing Procedure on Expedited Objections

39.
On 13 September 2017, following an invitation from the Tribunal during the Hearing on Expedited Objections, the United States confirmed their intent to file a supplementary written submission.
40.
On 25 September 2017, within the deadline set forth by the Tribunal, the United States filed a supplementary written submission, pursuant to Article 10.20.2 of the TPA ("U.S. Second Written Submission").
41.
On 28 September 2017, following communications from both Parties, the Tribunal amended the deadline for the Post-Hearing Briefs, and confirmed the due dates for other post-Hearing procedural steps. In that same communication, the Tribunal provided further guidance concerning the statements of costs.
42.
On 6 October 2017, the Parties filed agreed corrections to the transcript of the Hearing on Expedited Objections.
43.
On 11 October 2017, the Parties filed their respective Post-Hearing Briefs on the Expedited Objections.
44.
On 6 November 2017, the Parties filed their respective Statements of Costs for the Expedited Objections phase.
45.
On 20 November 2017, the Tribunal inquired whether the Parties would agree to application of the "extraordinary cause" provision of Article 10.20.5 of the TPA authorizing extension of the 180-day deadline for issuance of the ruling on the Expedited Objections, for an additional brief period no longer than 30 days. Both Parties confirmed their agreement on the same day.
46.
On 13 December 2017, the Tribunal issued its Decision on Expedited Objections, which constitutes an integral part of this Award and is hereby incorporated by reference.

C. The Merits Phase

1. The Parties' Written Submissions and Procedural Applications

47.
On 5 January 2018, following an invitation from the Tribunal, the Parties filed a joint proposal for the Procedural Calendar for the remainder of the proceeding, which also identified certain areas of disagreement and set forth the Parties' respective positions on such areas.
48.
On 8 January 2018, the Tribunal ruled on the areas of disagreement concerning the Procedural Calendar, and it invited the Parties to confirm their availability for the Hearing.
49.
On 30 January 2018, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 5, memorializing the Tribunal's prior ruling concerning the Procedural Calendar for the remainder of the proceeding, and establishing the Hearing dates.
50.
On 6 February 2018, following a joint communication from the Parties, the Tribunal issued an amended Procedural Calendar (Amendment No. 2). On that same day, the Tribunal informed the United States of the Hearing dates, as well as of the deadline for the United States to submit an eventual written submission for the merits phase pursuant to Article 10.20.2 of the TPA.
51.
On 6 May 2018, the Claimants filed an application seeking an extension for the deadline to file their Memorial originally due on 7 May 2018. On 7 May 2018, the Respondent filed its observations regarding the Claimants' application. On that same day, the Tribunal granted the extension and fixed the deadline to file the Claimants' Memorial on 11 May 2018. Thereafter, on 9 May 2018, the Tribunal invited the Parties to provide a joint proposal for further required modifications to the Procedural Calendar.
52.
On 11 May 2018, the Claimants filed their Memorial (the "Memorial") accompanied by: three witness statements, by Mr. Steven Akey, Mr. Jeffrey Lightfoot and Mr. Thomas R. Kingsbury, respectively; three expert reports by Mr. Adán A. Arjona, Mr. Brian M. Daniel, and Ms. Roberta Jacobs-Meadway, respectively; Exhibits C-128 to C-261; and Legal Authorities CLA-048 to CLA-131.
53.
On 18 May 2018, following a joint proposal by the Parties, the Tribunal issued an amended Procedural Calendar (Amendment No. 3).
54.
On 27 August 2018, the United States requested an extension of the deadline for their written submission pursuant to Article 10.20.2 of the TPA. That same day, both Parties confirmed their agreement with the request. Accordingly, on 28 August 2018, the Tribunal approved the extension and issued an amended Procedural Calendar ("Amendment No. 4").
55.
On 14 September 2018, the Respondent filed its Counter-Memorial (the "Counter-Memorial") accompanied by: one witness statement by Ambassador Emanuel Gonzalez-Revilla; four expert reports by Mr. Jorge F. Lee, Ms. Marissa Lasso de la Vega Ferrari, Ms. Nadine H. Jacobson, and Mr. Matthew D. Shopp of Versant Partners, LLC, respectively, the latter accompanied by Exhibits VP-001 to VP-023; Exhibits R-019 to R-086, and Legal Authorities RLA-001, RLA-027, RL-069 to RLA-168. In the Counter-Memorial, inter alia, the Respondent asked the Tribunal to exercise its discretion under ICSID Arbitration Rule 41(2) to dismiss all of BSAM's claims, as well as BSLS's claims under Articles 10.3 and 10.4 of the TPA, should the Claimants fail to withdraw those claims within 30 days.6
56.
On 21 September 2018, the Parties jointly proposed certain amendments to the filing procedures established in Procedural Order No. 1. On 24 September 2018, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 6 approving the proposed amendments.
57.
On 15 October 2018, the Claimants filed observations to the Respondent's request in the Counter-Memorial that the Tribunal exercise its discretion under ICSID Arbitration Rule 41(2) to dismiss all of BSAM's claims and certain of BSLS's claims. The Claimants refused to withdraw any of their claims, and argued that the Tribunal was not required to make any immediate determination, given that the Respondent had not presented an objection under ICSID Arbitration Rule 41(1) or Article 10.20.4 of the TPA. The Claimants further opposed the Respondent's request that the Tribunal exercise its discretion under ICSID Arbitration Rule 41(2) to consider whether certain claims where within the Tribunal's jurisdiction, and argued that "the Respondent's new objections should […] be dealt with at th[e] merits hearing […]."7
58.
On 22 October 2018, the Respondent filed a reply to the Claimants' letter of 15 October 2018, reiterating its request that the Tribunal "dismiss Claimants' national treatment and most-favored-nation treatment claims and [BSAM]'s denial of justice claim in accordance with ICSID Rule 41(2)."8
59.
On 29 October 2018, the Claimants filed an Application to Remove the Respondent's Expert Witness as to Panamanian Law, Mr. Jorge F. Lee ("Application to Remove Mr.Lee"), accompanied by: a witness statement by Ms. Katie Hyman; Exhibits C-262 to C-264; and Legal Authorities CLA-132 to CLA-136.
60.
On 9 November 2018, the Respondent filed its Response to the Claimants' Application to Remove Mr. Lee, accompanied by: Appendix A; a witness statement by Mr. Jorge F. Lee; Exhibits R-087 to R-093; and Legal Authority RLA-169.
61.
On 16 November 2018, the Claimants filed their Reply on the Application to Remove Mr. Lee, accompanied by: a second witness statement by Ms. Katie Hyman; and Exhibits C-265 to C-267.
62.
On 27 November 2018, the Respondent filed its Rejoinder on the Application to Remove Mr. Lee, accompanied by: a second witness statement by Mr. Jorge F. Lee; and Legal Authorities RLA-170 and RLA-171.
63.
On 29 November 2018, pursuant to Section 16.2.4 of Procedural Order No. 1, the Claimants filed their complete Production of Documents Redfern Schedule (including Requests, Objections, and Replies) accompanied by Legal Authorities CLA-137 to CLA-141. On that same day, the Respondent filed its complete Production of Documents Redfern Schedule (including Requests, Objections, Replies) accompanied by Annexes A to M.
64.
On 7 December 2018, in accordance with the deadline established by the Tribunal, the United States filed their third written submission, pursuant to Article 10.20.2 of the TPA ("U.S. Third Written Submission").
65.
On 13 December 2018, the Tribunal issued its Ruling on the Application to Remove Mr. Lee as an Expert Witness. The Tribunal dismissed the application. It further decided that "the Claimants should pay the Respondent its reasonable costs in relation to the Application," but left the assessment of these costs to be made at the time of the Award.9
66.
On 11 January 2019, the Respondent submitted a communication concerning its Document Production Request No. 6. On 15 January 2019, the Claimants filed a response; and on 16 January 2019, the Respondent filed a reply. In its reply of 16 January 2019, the Respondent indicated that it was considering the proposal made by the Claimants in connection with this issue, and that it would return to the Tribunal for assistance should it conclude that the proposal was not acceptable. On 17 January 2019, the Tribunal informed the Parties that in light of the Respondent's reply of 16 January 2019, the Tribunal would await further communication from the Parties in connection with this matter.
67.
On 15 January 2019, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 7 with its respective Annexes A and B, containing the Tribunal's decisions on the Parties' respective Requests for Production of Documents.
68.
On 29 January 2019, in response to Procedural Order No. 7, the Claimants filed a communication concerning the Respondent's Requests for Production of Documents No. 5(e), 8 and 9.
69.
On 14 and 19 February 2019, in response to Procedural Order No. 7, the Respondent filed communications concerning the Claimants' Requests for Production of Documents No. 2, 6, 7 and 9.
70.
On 27 February 2019, the Claimants filed a communication alleging delays and deficiencies in the Respondent's compliance with Procedural Order No. 7, and anticipating a possible request for modification of the Procedural Calendar as a result. Thereafter, on 12 March 2019, the Claimants filed an application regarding the Respondent's compliance with Procedural Order No. 7, accompanied by Appendix A ("Application of 12 March 2019"). The Application sought several orders from the Tribunal in connection with Requests No. 2, 6, 7 and 9, and an extension of time for the filing of the Claimants' Reply.
71.
On 14 March 2019, the Tribunal (i) invited the Respondent to file observations on the Claimants' Application of 12 March 2019; (ii) directed the Claimants to file their Reply no later than 22 March 2019, and (iii) granted the Claimants leave to apply to the Tribunal for authorization to file a Supplementary Reply if necessary to address any potential further document production by the Respondent.
72.
On 21 March 2019, the Respondent filed its Response to the Claimants' Application of 12 March 2019 accompanied by Annexes A, B and C.
73.
On 22 March 2019, the Claimants filed their Reply (the "Reply") accompanied by: four expert reports by Mr. Adán A. Arjona, Mr. Brian M. Daniel, Ms. Roberta Jacobs‐Meadway, and Mr. Edwin Molino, respectively; Exhibits C-268 to C-281, C-285, C-287, C-289, C-291 to C-296 and C-298; and Legal Authorities CLA-142 to CLA-166.
74.
On 29 March 2019, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 8 addressing the Respondent's compliance with Procedural Order No. 7, particularly, in connection with the Claimants' Document Production Requests No. 2, 6, 7 and 9. Among others, the Tribunal invited the Parties to agree on the terms for the disclosure to the Claimants' counsel of certain documents in connection with Requests No. 6, 7 and 9.
75.
On 4 April 2019, following communications from both Parties, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 9 endorsing the Parties' agreement regarding the terms for the disclosure and the confidentiality regime applicable to the production of the documents ordered by Procedural Order No. 8, which were designated as "Restricted Information."
76.
On 11 April 2019, the United States filed a communication seeking an extension of the deadline to inform the Tribunal of their intention to make an oral submission at the Hearing pursuant to Article 10.20.2 of the TPA. On 14 April 2019, the Tribunal granted the extension.
77.
On 12 April 2019, the Claimants filed an application seeking (i) a modification of the terms of Procedural Order No. 9 to broaden access to the Restricted Information to two additional individuals (Mr. Thomas R. Kingsbury and Mr. Adán A. Arjona); and (ii) asking for leave to file a Supplemental Reply to address the Restricted Information produced by the Respondent on 4 April 2019. On 18 April 2019, the Respondent filed a response to this application, accompanied by Annexes A to J. On 23 April 2019, the Claimants filed a communication related to this application, confirming Mr. Arjona's role as the Claimants' expert on Panamanian law.
78.
Also on 12 April 2019, the Respondent filed a communication in response to information requested by the Tribunal in Procedural Order No. 8, in connection with the Claimants' Document Production Request No. 2. The communication was accompanied by Annexes A to C. On 17 April 2019, the Claimants reacted by filing an application concerning the Respondent's compliance with Procedural Order No. 8. The Claimants asked that the Tribunal gave further orders in relation to the Claimants' Document Production Request No. 2.
79.
On 23 April 2019, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 10 addressing the differences between the Parties in relation to the implementation of Procedural Orders No. 8 and 9. The Tribunal granted to the Claimants leave to file a Supplemental Reply, which would be subject to the same confidentiality regime as the Restricted Information; authorized access to the Restricted Information to Mr. Kingsbury and Mr. Arjona; and gave directions regarding further necessary amendments to the Procedural Calendar.
80.
Thereafter, on 26 April 2019, the Respondent submitted a further communication addressing the Claimants' communication of 17 April 2019 and the terms of Procedural Order No. 10. The Tribunal provided a response on 29 April 2019.
81.
On 30 April 2019, the Claimants filed a Supplemental Reply (the "Supplemental Reply") accompanied by: one expert report by Mr. Adan A. Arjona; and Exhibits C-299 to C-312.
82.
On 6 May 2019, and pursuant to Procedural Order No. 10, the Respondent filed a communication proposing amendments to the Procedural Calendar. The communication also recalled that Ambassador Gonzalez-Revilla was not available to appear to testify on the scheduled dates of the Hearing as he had informed in his witness statement of 10 September 2018, and asked the Claimants to confirm whether the Ambassador would be called to give oral testimony, in order to make the appropriate alternative arrangements. On 8 May 2019, the Claimants filed a response. Following an invitation from the Tribunal, on 14 May 2019, the Respondent filed reply observations on these two subjects. In response to an inquiry from the Tribunal, on 17 May 2019, the Respondent filed further clarifications concerning the dates of unavailability of the Ambassador. On 20 May 2019, the Claimants filed a rejoinder on the issue of the Ambassador's oral testimony. On 24 May 2019, the Respondent filed a further communication addressing, inter alia, the availability of Ambassador Gonzalez-Revilla in late July and early August 2019.
83.
On 10 May 2019, the Respondent filed an application seeking the partial redaction of Procedural Order No. 10 prior to its publication pursuant Section 25 of Procedural Order No. 1. On 14 May 2019, the Claimants filed a response, asking the Tribunal to dismiss the Respondent's application. On 16 May 2019, the Respondent filed a reply on this subject; on 17 May 2019, the Claimants filed a rejoinder. On 20 May 2019, the Tribunal wrote to the Parties observing that there was an agreement in principle between the Parties concerning the deferral publication of Procedural Order No. 10, and it invited the Parties to confer and inform the Tribunal of the length of the deferral. On 24 May 2019, the Respondent filed a communication clarifying its position on the matter of publication of Procedural Order No. 10.
84.
On 21 May 2019, having considered the Parties' positions, the Tribunal decided to grant the Respondent an extension to file its Rejoinder, and it issued an amended Procedural Calendar ("Amendment No. 5").
85.
On 30 May 2019, the Tribunal ruled on the matters of (i) Ambassador Gonzales-Revilla's oral testimony; and (ii) the publication of Procedural Order No. 10. The Tribunal authorized that Ambassador Gonzales-Revilla's oral testimony be conducted in a separate day after the scheduled Hearing dates, and proposed alternatives to the Parties asking them to confer and attempt to agree on the way forward. The Tribunal further directed that Procedural Order No. 10 be redacted partially prior to publication, adding that either Party was free to apply to the Tribunal to lift the redactions at a later stage.
86.
On 14 June 2019, each Party filed a further communication on the issue of the oral testimony of Ambassador Gonzalez-Revilla. On 21 June 2019, the Tribunal confirmed that the examination would be conducted by videoconference on 28 August 2019, and provided further directions concerning the arrangements for the Ambassador's oral testimony. On 25 June 2019, the Parties submitted further communications on this matter, and on 28 June 2019, the Tribunal provided further directions. On 5 July 2019, both Parties filed further communications regarding the arrangements for this testimony.
87.
On 17 June 2019, the Respondent filed its Rejoinder (the "Rejoinder") accompanied by: Annex A; six expert reports by Mr. Gabriel Fried, Ms. Nadine H. Jacobson, Ms. Marissa Lasso de la Vega Ferrari, Mr. Jorge F. Lee, Prof. Jan Paulsson, and Mr. Matthew D. Shopp of Versant Partners LLC, respectively, the latter accompanied by Exhibits VP-025 to VP-049; Exhibits R-066, R-069, and R-094 to R-208; and Legal Authorities RLA-172 to RLA-223. On 3 July 2019, the Respondent submitted certain errata in connection with the Rejoinder, adding inter alia, a revised translation of Exhibit R-040.
88.
On 19 June 2019, in accordance with the Procedural Calendar, the Respondent notified the Tribunal and the Claimants of the witnesses and experts called for cross-examination at the Hearing.
89.
On 20 June 2019, the Claimants filed an application asking the Tribunal to (i) deem Prof. Paulsson's report as a submission by co-counsel, and not evidence, or in the alternative, to exclude the report from the record; and (ii) to exclude Mr. Fried's expert report from the record. On 25 June 2019, the Respondent filed a response to this application.
90.
On 28 June 2019, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 11 concerning the Claimants' application of 20 June 2019. The Tribunal dismissed the application to exclude Mr. Fried's report, and decided that Prof. Paulsson's expert report would not be treated as a submission by co-counsel, and it would remain on the record.
91.
On 2 July 2019, in accordance with the Procedural Calendar, the Claimants notified the Tribunal and the Respondent of the witnesses and experts called for cross-examination at the Hearing.
92.
Also on 2 July 2019, the United States notified the Tribunal and the Parties of their intention to make an oral submission at the Hearing, pursuant to Article 10.20.2 of the TPA.
93.
On 8 July 2019, pursuant to Section 20.1 of Procedural Order No. 1, a pre-Hearing organizational call between the Parties and the President of the Tribunal was held by telephone conference (the "Pre-Hearing Call"), in preparation for the Hearing scheduled for 29 July to 2 August 2019.
94.
On 11 July 2019, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 12 embodying the Parties' agreements on procedural matters pertaining to the organization of the Hearing and the Tribunal's decisions on the disputed issues.
95.
On 16 July 2019, pursuant to Procedural Order No. 12, the United States were informed of the agenda for the Hearing, and of the additional videoconference session scheduled to conduct the witness examination of Ambassador Gonzalez-Revilla.
96.
On 16 July 2019, pursuant to Procedural Order No. 12, the Parties submitted a Joint Electronic Core Bundle for use at the Hearing. On 19 July 2019, the Parties submitted a corrected version of the Electronic Core Bundle.
97.
On 26 July 2019, the Parties informed the Tribunal of their agreement to replace certain Exhibits on the record with new versions, and to submit further Exhibits and Legal Authorities into the record inadvertently omitted from the Parties' previous submissions. Accordingly, on 27 July 2019, the Tribunal approved the submission of the following to the record:

• Revised Exhibits: C‐271‐REV (ENG); R‐095‐REV (ENG); VP‐042‐REV (ENG).

• New Exhibits: C‐313 to C‐316; R‐209 to R‐210.

• New Legal Authorities: RLA‐224.

98.
On 28 July 2019, the Parties informed the Tribunal of their agreement to add new Exhibits C-317 and C-318 into the record. The Parties further agreed that the Respondent would be permitted to submit into the record as Exhibits any documents related to C-318 that it had received from the Claimants during document production. The Tribunal confirmed the admission of Exhibits C-317 and C-318 into the record during Day 1 of the Hearing.10

2. The Oral Procedure

99.
A Hearing on the Merits was held in Washington, DC from 29 July to 2 August 2019 (the "Hearing"). The following persons were present:

Tribunal :
Lord Nicholas Phillips President
Mr. Horacio A. Grigera Naón Arbitrator
Mr. J. Christopher Thomas, QC Arbitrator

ICSID Secretariat :
Ms. Luisa Fernanda Torres Secretary of the Tribunal

For the Claimants :

Counsel: Akin Gump Strauss Hauer & Feld
Ms. Karol Kepchar Akin Gump Strauss Hauer & Feld
Mr. Stephen Kho Akin Gump Strauss Hauer & Feld
Mr. Justin Williams Akin Gump Strauss Hauer & Feld
Ms. Katie Hyman Akin Gump Strauss Hauer & Feld
Mr. Johann Strauss Akin Gump Strauss Hauer & Feld
Ms. Adriana Ramirez Mateo (paralegal) Akin Gump Strauss Hauer & Feld

Parties:
Mr. Michinobu Matsumoto Bridgestone Licensing Services, Inc.
Ms. Akane Mori Bridgestone Licensing Services, Inc.

Witness: (*)
Mr. Thomas R. Kingsbury Bridgestone Licensing Services, Inc.

Experts:
Mr. Adán A. Arjona Galindo, Arias & Lopez
Mr. Edwin Molino Jimenez, Molino y Moreno
Ms. Roberta Jacobs-Meadway
Mr. Brian M. Daniel Charles River Associates

For the Respondent :
Counsel:
Mr. E. Whitney Debevoise Arnold & Porter Kaye Scholer LLP
Ms. Gaela Gehring Flores Arnold & Porter Kaye Scholer LLP
Ms. Mallory Silberman Arnold & Porter Kaye Scholer LLP
Ms. Katelyn Horne Arnold & Porter Kaye Scholer LLP
Mr. Brian Vaca Arnold & Porter Kaye Scholer LLP
Mr. Michael Rodriguez Arnold & Porter Kaye Scholer LLP
Ms. Natalia Giraldo-Carrillo Arnold & Porter Kaye Scholer LLP
Mr. Kelby Ballena (paralegal) Arnold & Porter Kaye Scholer LLP
Ms. Gabriela Guillen (paralegal) Arnold & Porter Kaye Scholer LLP

Experts:
Ms. Marissa Lasso de la Vega Ferrari Alfaro, Ferrer & Ramírez
Mr. Gabriel Fried Hilco Streambank
Ms. Nadine H. Jacobson Fross Zelnick Lehrman & Zissu, P.C.
Mr. Jorge F. Lee Alemán, Cordero, Galindo & Lee
Mr. Matthew D. Shopp Versant Partners
Ms. Yelena Aleksandrovich Versant Partners

For the United States :
Ms. Lisa Grosh11 U.S. Department of State
Ms. Nicole Thornton U.S. Department of State
Mr. John Blanck U.S. Department of State
Ms. Amanda Blunt Office of the U.S. Trade Representative
Mr. Khalil Gharbieh Office of the U.S. Trade Representative
Ms. Catherine Gibson Office of the U.S. Trade Representative
Mr. Colin Halvey U.S. Department of Treasury
Mr. Jonathan Liebman U.S. Department of Treasury
Mr. John Rodriguez U.S. Patent and Trademark Office

Court Reporter(s) and Interpreters :
Mr. David Kasdan B&B Reporters (English)
Ms. Elizabeth Cicorria D-R Esteno (Spanish)
Ms. Silvia Colla Interpreter
Mr. Daniel Giglio Interpreter
Mr. Charles Roberts Interpreter

(*) not present before his/her examination

100.
The following persons were examined during the Hearing:

On behalf of the Claimants :
Mr. Thomas R. Kingsbury Witness
Mr. Adán A. Arjona Expert
Mr. Edwin Molino Expert
Ms. Roberta Jacobs-Meadway Expert
Mr. Brian M. Daniel Expert

On behalf of the Respondent :
Ms. Marissa Lasso de la Vega Ferrari Expert
Mr. Gabriel Fried Expert
Ms. Nadine H. Jacobson Expert
Mr. Jorge F. Lee Expert
Mr. Matthew D. Shopp Expert

101.
In accordance with Article 10.21.2 of the TPA, and Section 21.6 of Procedural Order No. 1, the Hearing was made public via real-time streaming on the ICSID Website.
102.
During Day 1 of the Hearing, the Claimants applied for authorization to introduce two further Legal Authorities into the record, and the Respondent opposed.12 Having heard both Parties' submissions on the application, the Tribunal authorized the submission of one Legal Authority,13 which was later added to the record as CLA-171.
103.
In addition, during the Hearing, the Parties introduced the following additional materials into the record:

Claimants : Demonstrative Exhibits CD-003 to CD-007; corrections to Mr. Edwin Molino's First Expert Report.14

Respondent : Demonstrative Exhibits RD-004 to RD-010; corrections to Mr. Mathew D. Shopp's Second Expert Report.15

104.
A further session was held by videoconference on 28 August 2019 (the "VC Hearing"), to conduct the examination of a witness (Ambassador Emanuel Gonzalez-Revilla). The following persons participated:

Tribunal :
Lord Nicholas Phillips President (VC/London)
Mr. Horacio A. Grigera Naón Arbitrator (VC/DC ICSID)
Mr. J. Christopher Thomas, QC Arbitrator (VC/Vancouver)

ICSID Secretariat :
Ms. Celeste Salinas ICSID Legal Counsel (VC/DC ICSID)
(in the absence of the Secretary)

For the Claimants :
Counsel:
Mr. Justin Williams Akin Gump Strauss Hauer & Feld (VC/London)
Ms. Karol Kepchar Akin Gump Strauss Hauer & Feld (VC/DC ICSID)
Mr. Stephen Kho Akin Gump Strauss Hauer & Feld (VC/DC ICSID)
Ms. Katie Hyman Akin Gump Strauss Hauer & Feld (VC/DC ICSID)
Ms. Adriana Ramirez (paralegal) Akin Gump Strauss Hauer & Feld (VC/DC ICSID)

For the Respondent :
Counsel:
Mr. E. Whitney Debevoise Arnold & Porter Kaye Scholer LLP (VC/Panama)
Ms. Gaela Gehring Flores Arnold & Porter Kaye Scholer LLP (VC/Panama)
Ms. Mallory Silberman Arnold & Porter Kaye Scholer LLP (VC/DC ICSID)
Ms. Katelyn Horne Arnold & Porter Kaye Scholer LLP (VC/DC ICSID)
Mr. Brian Vaca Arnold & Porter Kaye Scholer LLP (VC/DC ICSID)
Mr. Michael Rodriguez Arnold & Porter Kaye Scholer LLP (VC/DC ICSID)

Parties:
Mr. Aristides Valdonedo Ministry of Economy and Finance (VC/Panama)
Ms. Germaine Perret Ministry of Economy and Finance (VC/Panama)

Witness: (*)
Amb. Emanuel Gonzalez-Revilla (VC/Panama)
(*) not present before his/her examination

3. The Post-Hearing Procedure

105.
Following authorization of the Tribunal during the Hearing,16 on 21 August 2019, the Respondent submitted an index of a Chronological Bundle of the Exhibits deriving from the Panama court proceedings at issue in this case; and on 26 August 2019, it dispatched copies of this Chronological Bundle.
106.
On 27 August 2019, the Respondent filed an application arguing that after the Hearing the Claimants' merits case was unclear; and asking the Tribunal to instruct the Claimants to clarify their merits theory, and in particular, to provide a brief summary of the elements of their denial of justice claim. The application was further discussed at the conclusion of the VC Hearing on 28 August 2019, in the course of which the Claimants provided their observations to the Respondent's application.17 Thereafter, by letter of 28 August 2019, the Tribunal communicated to the Parties its decision not to accede to the Respondent's application.
107.
On 30 August 2019, the Parties filed agreed corrections to the transcript of the Hearing.
108.
On 9 September 2019, the Parties filed agreed corrections to the transcript of the VC Hearing.
109.
On 12 September 2019, the Respondent filed an application seeking leave to add two further legal authorities to the record, arguing that these were responsive to a new theory raised by the Claimants at the Hearing. On 19 September 2019, the Claimants provided a response opposing the application. On 23 September 2019, the Tribunal decided (i) to grant the Respondent's application; (ii) to afford the Claimants an opportunity to produce no more than two responsive legal authorities following receipt of the Respondent's new authorities; and (iii) to amend the due date of Post-Hearing Briefs to fall after receipt of the Claimants' additional authorities.
110.
On 24 September 2019, the Respondent added Legal Authorities RLA-225 and RLA-226 to the record. On 9 October 2019, the Claimants informed the Tribunal that they had elected not to submit any additional Legal Authorities in response.
111.
On 15 October 2019, following a joint request by the Parties, the Tribunal also extended the deadline for submission of the Parties' Statements of Costs.
112.
On 16 October 2019, the Parties filed their respective Post-Hearing Briefs.
113.
On 23 October 2019, following a request from the Tribunal, the Parties filed combined versions of their agreed corrections to the transcript of the Hearing and the VC Hearing.
114.
On 30 October 2019, following authorization from the Tribunal, the Parties filed corrected versions of their respective Post-Hearing Briefs, which updated the citations to the Hearing and VC Hearing transcripts to refer to the final versions.
115.
On 8 November 2019, the Parties filed their respective Statements of Costs.
116.
On 29 January 2020, the Parties filed their agreed redacted versions of the transcripts for the Hearing and the VC Hearing.
117.
On 27 July 2020, both Parties informed the Tribunal that they did not request the transmission of the draft Award pursuant to Article 10.20.9(a) of the TPA. The proceeding was closed on 4 August 2020.

III. FACTUAL BACKGROUND AND OVERVIEW

118.
These proceedings put in issue the competence and the integrity of the Supreme Court of the Republic of Panama.
119.
Many of the relevant background facts are set out in the Tribunal's Decision on Expedited Objections, dated 13 December 2017 ("the Decision on Expedited Objections"). This Award should be read with the Decision on Expedited Objections and what follows is a brief summary of those facts. The most relevant facts are set out in much greater detail later in this Award (see infra, Section VI.B).
120.
The Claimants, BSLS and BSAM, are United States subsidiaries of a Japanese company, BSJ. As such they are part of the "Bridgestone Group" of companies. The major part of the business of the Bridgestone Group, which is carried on internationally, is the manufacture and sale of tires under the trademarks FIRESTONE and BRIDGESTONE. Those trademarks have been registered in Panama.
121.
BSLS is the owner of those of the FIRESTONE trademarks that are registered outside the United States; and BSLS has granted to BSAM a license to use these trademarks.18 Thus, BSAM has a license to use the FIRESTONE trademark in Panama that is owned by BSLS.
122.
A wholly owned subsidiary of BSAM called Bridgestone/Firestone North American Tire LCC, subsequently Bridgestone American Tire Operations, LLC ("BATO"), has been granted by BSJ a license, inter alia, to sell tires bearing the BRIDGESTONE mark in Panama.19
123.
In the Decision on Expedited Objections the Tribunal ruled that BSAM's ownership of a license to use the FIRESTONE trademark constituted an "investment" in Panama for the purposes of the TPA and the ICSID Convention.20 There was no dispute during the Expedited Objections phase that BSLS's ownership of the FIRESTONE mark in Panama constituted an "investment" for the purposes of the TPA and the ICSID Convention.21
124.
In the Decision on Expedited Objections the Tribunal further ruled that BATO's license to use the BRIDGESTONE trademark in Panama constituted an investment in Panama indirectly owned and controlled by BSAM for the purposes of the TPA.22
125.
In or about 2001 the Luque Group of companies began to market in Panama and elsewhere tires manufactured in China bearing the mark RIVERSTONE. Panama appears to be the administrative centre for this Group, as evidenced by the fact that a number of the administrators of the group are Panamanian citizens living in Panama and sharing the name Luque.
126.
On 6 May 2002, Muresa Intertrade S.A. ("Muresa"), a member of the Luque Group, applied to register the RIVERSTONE trademark for tires in Panama.23 This application was not gazetted until some three years later,24 whereupon BSJ and BSLS, as owners of the FIRESTONE and BRIDGESTONE trademarks registered in Panama, issued proceedings ("the Trademark Opposition Proceeding") opposing the registration of the RIVERSTONE mark, on the ground that the similarity between the rival trademarks would give rise to grave risk of confusion.25
127.
The Trademark Opposition Proceeding was unsuccessful.26 BSJ and BSLS filed an appeal against its rejection but then withdrew this on 5 September 2006.27
128.
Just over a year later, on 12 September 2007, Muresa and Tire Group of Factories Ltd. Inc. ("TGFL"), a distributor of RIVERSTONE tires, filed in Panama against BSJ and BSLS a civil tort claim for US $5 million, being losses allegedly suffered in consequence of having to cease selling RIVERSTONE tires as a result of the Trademark Opposition Proceeding ("the Civil Proceeding").28 This claim was dismissed at first instance,29 and on appeal.30 The decision in favour of BSJ and BSLS was then reversed by the Supreme Court, in a majority judgment dated 28 May 2014 ("the Supreme Court Judgment"), which awarded US $5 million in damages, plus legal costs, against BSJ and BSLS.31
129.
In the Decision on Expedited Objections, the Tribunal summarised the Claimants' claims as they then stood.32 The claims are brought in respect of the investments consisting of the FIRESTONE trademark, and the licences to use the FIRESTONE and BRIDGESTONE trademarks. The foundation of the claims is the Supreme Court Judgment. At the time of the Decision on Expedited Objections, the Claimants were advancing claims under Articles 10.3, 10.5 and 10.7 of the TPA.33 Thereafter, with the Memorial, the Claimants advanced claims under Articles 10.3, 10.4 and 10.5 of the TPA.34 In their Reply, the Claimants withdrew their claims under Articles 10.3 and 10.4, leaving as their sole claim to relief that advanced under Article 10.5 of the TPA.35
130.
The relevant parts of Article 10.5 provide:

"Article 10.5: Minimum Standard of Treatment.

1. Each Party shall accord to covered investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security.

2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments. The concepts of 'fair and equitable treatment' and 'full protection and security' do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligation in paragraph 1 to provide:

(a) 'fair and equitable treatment' includes the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world; […]."36

131.
The allegation advanced by the Claimants is that their investments were not accorded "fair and equitable treatment" in that the Supreme Court Judgment constituted a denial of justice in civil proceedings.37 This was the way in which they summarised their case in their Post-Hearing Brief:38

"[…] [T]he Supreme Court Judgment […] made findings that no honest and competent court could have made. Those incomprehensible findings permeate every element of the Supreme Court's determination, namely the Cassation Recourse, liability under Article 217 of the Judicial Code, causation and loss. Such findings, individually and/or collectively, amount to a denial of justice in breach of the TPA. […]."

132.
In short, it is the Claimants' case that the Supreme Court Judgment treated their investments in a manner that was not fair or equitable in that (i) the Judgment penalized BSLS for legitimate steps taken to protect its investment; (ii) the effect of the Judgment was to devalue the FIRESTONE and BRIDGESTONE trademarks; and (iii) the Judgment constituted a denial of justice in as much as the defects in the Supreme Court Judgment were so egregious that they lead inexorably to the conclusion that the Supreme Court was either incompetent or corrupt. As to the latter possibility, the Claimants have sought to rely upon a number of peripheral matters as rendering it plausible to conclude that the Supreme Court Judgment was procured by corruption. A more detailed summary of the Claimants' submissions is included below (see infra, Section VI.C.1.a).
133.
The losses claimed by way of damages are:

(i) the award of US$ 5,431,000 made by the Supreme Court, which is claimed by BSLS alone;39

(ii) damage to the Claimants' respective "trademark rights" alleged to have been caused by the Supreme Court Judgment, in excess of the US$ 5,431,000 above.40

134.
In short, Panama denies that it is under any liability to the Claimants. BSAM's standing to pursue a claim for denial of justice is challenged on the grounds that such a claim can only be brought by a party to the proceedings in which the alleged denial of justice occurred, and BSAM was not party to the proceedings before the Supreme Court. Quite apart from this, Panama contends that the claims advanced by the Claimants are totally without merit. Panama submits that no breach of duty to either Claimant has been established, nor has either Claimant established that it has sustained any loss. A more detailed summary of the Respondent's submissions is included below (see infra, Section VI.C.1.b).

IV. SUMMARY OF THE PARTIES' CLAIMS AND REQUESTS FOR RELIEF

135.
As noted above, the Claimants ultimately only contend that the Respondent's actions constitute violations of Article 10.5 of the TPA.41 In their Reply, the Claimants make the following request:

"For the reasons set out above and in their Memorial, BSLS and BSAM respectfully reaffirm their request that the Tribunal render an award:

(a) Declaring that Panama has violated its obligations under the TPA;

(b) Ordering Panama to pay damages of between USD 5,988,604 and USD 19,954,541;

(c) Ordering Panama to pay interest on any amount awarded to BSLS and BSAM;

(d) Ordering Panama to pay attorney's fees and expenses arising from these proceedings; and

(e) Granting any further or other relief to BSLS and BSAM that the Arbitral Tribunal shall deem just and proper."42

136.
As the Tribunal has previously observed, although the Request for Arbitration initially argued that Panama had committed violations of Article 10.3 (National Treatment), Article 10.5 (Minimum Standard of Treatment) and Article 10.7 (Expropriation) of the TPA;43 later in the Memorial, the Claimants only argued that the Respondent's actions constituted a breach of Article 10.3 (National Treatment), Article 10.4 (Most-Favoured-Nation Treatment) and Article 10.5 (Minimum Standard of Treatment) of the TPA.44 In the end, however, the claim for violation of Articles 10.3 and 10.4 of the TPA was withdrawn in the Reply.45
137.
In turn, in their Rejoinder, the Respondent makes the following request:

"289. For all of the foregoing reasons, the Republic of Panama respectfully requests that the Tribunal:

a. Dismiss [BSAM's] claim under Article10.5 of the TPA for lack of standing, or in the alternative, reject such claim for lack of merit;

b. Reject [BSLS's] claim under Article 10.5 of the TPA for lack of merit;

c. In any event, reject (1) [BSLS's] claim to recover the USD 5,431 million in damages awarded to Muresa and [TGFL]; and (2) Claimants' claim for compensation in excess of USD 5,431 million; and

290. Award to Panama, with interest, all costs of the arbitration, including all attorneys' fees, and costs and expenses of Panama."46

138.
In the Statement of Costs, the Respondent presented the following amended request for relief:

"For the reasons set forth in Panama's written and oral submissions, Panama respectfully requests that the Tribunal grant the following relief:

a. dismiss, for lack of standing or merit, [BSAM's] claim under Article 10.5 of the TPA;

b. dismiss, for lack of merit, [BSLS's] claim under Article10.5 of the TPA;

c. in any event, reject both Claimants' damages claims (1) for being untethered from any genuine injury caused by the Supreme Court Judgment to Claimants' respective investments, and (2) for exceeding the TPA's territorial limits on damages;

d. order Claimants, jointly and severally, to pay USD 600,000 to cover Panama's costs advances to ICSID, and USD 8,006,906.00 to cover the legal fees and expenses incurred by Panama during this proceeding, plus interest on these amounts at the Wall Street Journal Prime Rate plus 2% per annum from the date of the Award to the date of full payment; and

e. order Claimants to pay any additional costs, including legal fees and expenses, incurred by Panama after 31 October 2019, but before the Tribunal renders its Award, plus interest at the rate specified in sub-paragraph (d) above."47

139.
The Parties' respective positions are summarized in the sections that follow. The Tribunal emphasizes that it has considered the Parties' arguments in their written and oral submissions in their entirety, irrespective of whether an argument is referred to expressly in the summary of the Parties' positions in this Award.

V. JURISDICTION

140.
The Claimants contend that under the TPA, the Tribunal has jurisdiction over measures adopted or maintained by a TPA Party relating to investors of the other TPA Party and their covered investments;48 and note that pursuant to Article 25 of the ICSID Convention, the Centre's jurisdiction extends to "any legal dispute arising directly out of an investment."49 According to the Claimants, these requirements are met by each BSLS and BSAM.50
141.
The Claimants submit that BSLS (i) holds intellectual property rights in Panama (the FIRESTONE trademark registered in Panama) that qualify as an "investment" under the TPA;51 (ii) qualifies as an "investor" of another TPA Party, namely the United States;52 and (iii) has a dispute arising directly out of its investment as the Tribunal has already determined.53 In turn, BSAM (i) holds intellectual property rights in Panama (the licenses to use the BRIDGESTONE and FIRESTONE trademarks in Panama) that qualify as an "investment" under the TPA, as the Tribunal has already determined;54 (ii) qualifies as an "investor" of another TPA Party, namely the United States;55 and (iii) has a dispute arising directly out of its investment.56
142.
In turn, the Respondent argues that the Tribunal's jurisdiction is derived from the terms of the Parties' consent to arbitration, which in this case is found in Article 10.17 of the TPA read together with Article 10.16 of the TPA.57 Panama points out that under Article 10.17 of the TPA, consent refers to the "submission of a claim to arbitration," and Article 10.16 identifies the rules that govern the submission of a claim, three of which reveal "threshold defects" in the Claimants' case:58

First, Panama submits that under Article 10.16 of the TPA only a "claimant" is permitted to advance a claim, and a "claimant" refers to "an investor of a Party" as the term is defined in Article 10.29 of the TPA.59 It follows, the Respondent argues, that BSJ cannot advance any claims as it does not have the required nationality.60

Second, the Respondent argues that "a claimant may not assert a claim on behalf of another entity, or on the basis of another entity's investment."61 Accordingly, the Respondent says, claims made on behalf of the "Bridgestone group" are impermissible and the Tribunal must examine BSLS and BSAM's claim separately, as different entities with different investments that have different values.62

Third, Panama contends that "a claimant may not assert a claim in respect of an alleged investment outside of Panama."63 This is, the Respondent argues, because under the TPA, only a "claimant" might bring a claim, it can only do it on its own behalf, and the definition of "claimant" operates around the existence of an investment in Panama, as does the scope and coverage of Chapter 10 of the TPA.64

143.
The application of these rules, Panama says, leads to the conclusion that neither of the Claimants has "advanced a cognizable claim."65 More particularly, the Respondent submits that: (i) BSAM has failed to establish a prima facie case for a single breach of the TPA, in particular, because it cannot formulate a claim under Article 10.5 of the TPA for denial of justice on the basis of a proceeding to which it was not a party; (ii) BSAM has "failed to satisfy the jurisdictional requirement of establishing loss;" and (iii) BSLS "has failed to establish that it has 'incurred' loss" which is a "threshold jurisdictional requirement."66

A. BSAM's Standing to Advance a Claim Founded on an Allegation of Denial of Justice

1. The Parties' Positions

a. The Respondent's Position

144.
According to Panama, BSAM's claim under Article 10.5 fails "at the threshold level,"67 because BSAM cannot assert a claim for denial of justice when it made no effort to participate in the proceeding that led to the Supreme Court Judgment.68 On this basis, the Respondent asks the Tribunal to exercise its discretion under Rule 41(2) of the ICSID Arbitration Rules and dismiss BSAM's claim.69
145.
The Respondent submits that according to Article 10.16 of the TPA each Claimant must prove that it "has incurred loss or damage by reason of, or arising out of" a breach by the Respondent of an obligation in Section A of Chapter 10 of the TPA.70 More specifically, the Respondent submits that "the TPA requires that each claimant must separately prove that (1) specific 'measure[s] adopted or maintained by [Panama] relating to' the claimant's investment in Panama (2) breached an obligation set forth in Section A of TPA Chapter Ten, and (3) that each claimant has already incurred loss, (4) as a result of that breach."71
146.
According to Panama, BSAM has failed to establish that the Supreme Court Judgment (issued against two other entities) subjected BSAM to the breach of any standard of protection arising out of BSAM's investment in Panama.72 Panama submits that the Claimants have entirely failed to distinguish their denial of justice claims for BSLS and BSAM.73 For the Respondent, while the Claimants purport to present a section on BSAM's claim for denial of justice in their Reply, the argument shows that the denial of justice claim actually pertains to BSLS and BSJ.74
147.
And even if BSAM had presented a claim for denial of justice, the Respondent argues, BSAM does not have standing to bring it.75 Relying on Prof. Paulsson's expert report, the Respondent argues that, a party that has not participated or attempted to participate in the process, or presented any argument in the local proceeding cannot assert a denial of justice claim.76 Panama further recalls that it is blackletter law that "a person may not allege a denial of justice unless he has exhausted all available domestic avenues," and submits that this rule is fatal for BSAM who neglected to even attempt to participate in the local proceedings.77
148.
While the Respondent accepts that there are circumstances that might allow certain non-parties to claim a denial of justice (e.g. a parent that owns and controls a subsidiary that is a party to the local proceeding), it argues that those circumstances are not present here.78 Referring to the situation of a licensor and a licensee of a trademark at the Hearing, the Respondent argued that no exception could be made to allow the licensee who did not participate in the proceeding to bring a claim for denial of justice because (i) denial of justice is inherently procedural; and (ii) while in Panama it is the licensor who polices the mark and participates in the proceeding, the licensee can participate as well, and if it decides not to participate, it has waived its right to claim a procedural violation.79
149.
The Respondent also accepts that the Arif tribunal determined that a denial of justice claim under an autonomous fair and equitable treatment ("FET") standard could be brought by a non-party to the local proceedings at issue, but it adds that the Arif tribunal also found that this was not the case if the claim for denial of justice was made under customary international law.80 The Respondent observes that the Claimants have conceded that if BSAM were bringing a claim under customary international law, it would have no standing; although the Claimants then argue that BSAM's claim is under the FET standard in the TPA.81 Panama contends that the distinction does not assist BSAM because under the TPA a denial of justice claim for breach of the FET is a claim under customary international law, as shown by the language in Article 10.5.1. and Article 10.5.2. of the TPA.82
150.
Panama also submits that there are no grounds in this case to make an exception from the customary international law rule on standing, not only because Article 10.5 of the TPA prescribes the customary international law standard of treatment, but also because "customary international law" is the product of States' "general and consistent practice […] that they follow from a sense of legal obligation."83 As such, only States have the power to develop exceptions whether through developing new customary international law or by amending the TPA; and it would constitute an "excess of powers" for a tribunal to invent an exception.84
151.
The Respondent also takes issue with the Claimants' allegation at the Hearing that there is no need for BSAM to have been personally denied justice, so long as the denial of justice has deprived BSAM of rights; and submits that this is an untenable theory.85 Panama explains that the Claimants' allegation amounts to the contention that BSAM could prosecute a treaty breach suffered by somebody else, which is contrary to Article 10.16.1 of the TPA, which provides that BSAM may only assert a claim "on its own behalf" or "on behalf of an enterprise [of Panama] that is a juridical person that [BSAM] owns or controls;" but not on behalf of a parent or sister.86

b. The Claimants' Position

152.
According to the Claimants, the only remaining jurisdictional question is whether BSAM has standing to bring a claim for denial of justice.87
153.
The Claimants submit that BSAM is entitled to bring a claim for denial of justice under the FET standard in Article 10.5 of the TPA, even though it was not a party to the impugned local court proceeding. This is, the Claimants argue, because when the denial of justice claim is brought under a treaty's FET standard (as distinguished from a claim under customary international law), there is no need for the claimant to have been a party to the impugned local proceeding.88
154.
Relying on Arif, the Claimants submit that a claim under a treaty's FET standard is capable of being pursued by those who have a covered investment under the treaty which has been the subject of a denial of justice;89 and the protections in Article 10.5 of the TPA apply to covered investments (not to investors).90 Because BSAM's investment has a right to the protections under Article 10.5 of the TPA, the Claimants argue, if that standard is breached, BSAM has a right to be compensated for it, and "[t]here is no need for BSAM to have been personally denied justice" as "[i]t's sufficient for denial of justice to have taken place which has deprive BSAM of its rights."91
155.
The Claimants' position is that during the Expedited Objections Phase the Tribunal already concluded that BSAM is able to submit a claim on the basis of the court proceedings that led to the Supreme Court Judgment.92 This is, the Claimants argue, because the Tribunal found that BSAM has an investment in Panama which was the subject of the Supreme Court Judgment; and being "an investor in the asset the subject of the Supreme Court Judgment, BSAM is entitled to the protections of Article 10.5 of the TPA, despite not being a party to the underlying court proceedings."93
156.
The Claimants take issue with the Respondent's contention that a denial of justice claim under Article 10.5 of the TPA is a claim under customary international law given the language of Article 10.5.2 of the TPA.94
157.
First, according to the Claimants, on the language of Article 10.5. of the TPA, "it appears that the standard of treatment in the TPA is not just the customary-international-law standard," because the provision includes a modifier to the customary international law standard, namely "the obligation […] not to deny justice in accordance with the principle of due process embodied in the principal legal systems of the world."95 This said, elsewhere, the Claimants submitted that the "minimum standard under the TPA will be no greater than the minimum treatment under customary international law."96
158.
Second, in any event, the Claimants submit that the reference in Article 10.5.2 of the TPA to customary international law refers to the standard of treatment to be applied to covered investments, and it does not deal with whether an investor has standing to bring a claim (which is addressed in Articles 10.1, 10.29 and 10.16 of the TPA).97
159.
Third, the Claimants submit that there are exceptions that allow a non-party to the litigation to bring a customary international law claim for denial of justice (for example, a parent company might bring a claim on behalf of the subsidiary where the parent was a non-party to the litigation), and suggest that such exception should be recognized in a situation involving the licensor and the licensee of a trademark.98 This is, the Claimants argue, because "a denial of justice affecting BSLS's trademark rights and BSJ's trademark rights directly affect BSAM because it's the licensee of those rights," and as such, "BSAM stands in the shoes of BSLS and BSJ as the party that enjoys the fruits of the exploitation of the trademarks owned by BSLS and BSJ […]."99
160.
Therefore, the Claimants argue, even if BSAM's denial of justice claim were a customary international law claim, BSAM would have standing to bring such claim, "where its trademark rights had been the subject of legal proceedings in Panama, and where it had been denied justice because of the way […] BSJ […] and BSLS had been treated by Panama."100

2. The U.S. Submission

161.
In its Third Written Submission the United States advanced the following proposition:101

"As a threshold matter, Article 10.5.1 requires a Party to accord 'treatment' to a covered investment. Article 10.5.1 differs from other substantive obligations (e.g., 10.3, 10.4 and 10.6) in that it obligates a Party to accord treatment only to a 'covered investment.' The minimum standard of treatment under Article 10.5.1 includes the obligation to provide 'fair and equitable treatment,' which, as explained in 10.5.2(a), includes the customary international law obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings. Therefore, to establish a breach of Article 10.5.1 on the basis of denial of justice, a claimant must establish that the treatment accorded to its covered investment rose to the level of a denial of justice under customary international law."

162.
In her oral submission on behalf of the United States, Ms. Thornton emphasized that Article 10.5.1 of the TPA requires a TPA Party to accord treatment only to a "covered investment," rather than to investors.102 Thus, the obligations in Article 10.5 of the TPA, including the obligation not to deny justice only apply to treatment accorded to covered investments;103 and a denial of justice claim cannot be arbitrated under Chapter 10 of the TPA if the claim is for treatment accorded to an investor rather than a covered investment.104

3. The Tribunal's Analysis

163.
It is Panama's case that BSAM cannot assert a claim that Panama has not accorded BSAM's investments fair and equitable treatment by reason of a denial of justice unless BSAM was itself party to the proceedings in which the denial of justice occurred. In support of this case Panama relies upon the Expert Report of Professor Jan Paulsson to this effect.105
164.
Professor Paulsson states:

"Because it is intrinsically tied to the treatment afforded to aliens under municipal law, a claim for denial of justice is limited to the treatment that a party experiences over the course of a local (often judicial) proceeding. If a party does not participate in the process, I fail to see how it could assert a denial of justice claim. This is a corollary to at least two well-accepted rules. The first is that the exhaustion of local remedies is a prerequisite to a denial of justice claim; to exhaust a particular remedy, one necessarily must first pursue it. The second is the concept of waiver: If a party declines suo moto to pursue a remedy or argument, it could not properly claim to have been denied access to the courts or an opportunity to be heard. There is also a logical fallacy in the notion that a party could claim that a court violated its right to be heard when that party did not attempt to participate in the judicial proceedings at issue."106

165.
This passage accurately states the position under international law in respect of a party who asserts that it has suffered a denial of justice. The Tribunal does not, however, consider that it can automatically be applied to a complaint under the present Treaty that a "covered investment" has not been accorded fair and equitable treatment by reason of a denial of justice. As the United States have pointed out, Article 10.5.1 of the TPA is dealing with the treatment that must be accorded to the covered investment not to the investor.107 Where a covered investment is unfairly treated by reason of a denial of justice, it is likely that the investor will be party to the proceedings in which the denial of justice occurs, but this is not necessarily the case.
166.
For instance, it will not be the case where the investor owns the shares of the company that owns the investment. Where that company suffers a denial of justice to the detriment of the investment, the investor can invoke Article 10.5.1. of the TPA even though he was not party to the proceedings in which the denial of justice occurred. That was the position in Arif.
167.
In the present case, the relevant issue is not whether BSAM has suffered a denial of justice but whether the trademark licenses that constitute its investments in Panama have been denied fair and equitable treatment by reason of a denial of justice.
168.
That is precisely the same question that arises in the case of BSLS in relation to the FIRESTONE trademark that it owns and has licensed to BSAM. It seems plain to the Tribunal that the answer to each question must be the same.
169.
On the facts of this case it makes no sense to suggest that BSAM has failed to pursue, or has waived, an available remedy. The unfair treatment that it alleges has been accorded to its investment results from an alleged denial of justice in proceedings brought against the owners of the trademarks which are the source of BSAM's investment. BSAM had nothing to contribute to these proceedings nor any reason to seek to intervene in them.
170.
In Arif, Mr. Arif claimed as sole shareholder in a Moldovan company that had invested in Moldova. He claimed for various breaches of the obligations owed to that company under the relevant BIT. As the tribunal in Arif found,108 he alleged denial of justice as both a breach of the fair and equitable treatment owed in respect of his investment and as a separate breach of customary international law, and both bases were treated separately by the parties in that case.
171.
The Arif tribunal held:109

"Conversely to a free-standing claim for denial of justice which can only be brought by a person that has participated in the national court proceedings, the standard of fair and equitable treatment also protects the foreign shareholder in a local company. If the standard is breached by a denial of justice, the State will be held responsible towards the indirect investor for a breach of fair and equitable treatment."

172.
This Tribunal concurs in that conclusion. In an investment treaty arbitration where a chain of companies is involved, indirect interests in an investment are recognized, notwithstanding that this may involve lifting the veil of incorporation. If a direct investor is involved in litigation for the benefit of an investment in which an indirect investor has an interest, and a denial of justice results in damage to that investment, there seems to be no reason in principle why it should not be open to the indirect investor to invoke the denial of justice as a breach of the obligation to accord fair and equitable treatment to the covered investment.
173.
In his Expert Report of 17 June 2019,110 Professor Paulsson accepts that a parent company that was not a party to local proceedings may have locus standi to bring a claim for denial of justice, but opines that this consideration is inapposite because BSAM did not own or control either of the Bridgestone entities that participated in the local proceedings.
174.
In the Tribunal's view, the solution is found in the TPA's provisions governing the standing to bring a claim under the Treaty, not in the rules of customary international law. Whatever the customary international law rules on espousal might be, in the present case, the TPA prescribes the rules governing the bringing of claims and thus varies the otherwise applicable rules of customary international law. Under this Treaty, just as a parent company holding the requisite nationality can bring a claim for an alleged denial of justice experienced by its subsidiary (the covered "investment" as defined by Article 10.29 (Definitions)), so too can a licensee holding the requisite nationality bring a claim in respect of an alleged denial of justice experienced by its covered investment (in this case the trademark in respect of which the licensee holds rights – again as defined by the TPA). In both cases an investor/claimant seeks to rely upon duties owed to, and rights held by, its covered investment.
175.
Moreover, neither Party was able to point to any jurisprudence applicable in the present context that addressed the relationship of the owner and the licensee of a trademark. In the Decision on Expedited Objections, this Tribunal said this of the respective positions of BSAM and BSLS:111

"It seems to the Tribunal that the two claims must stand or fall together. Each claims in respect of its interest in the FIRESTONE trademark, BSLS as the owner and BSAM as the licensee. Each was benefitting from the exploitation of the trademark. BSLS' interest in the trademark was restricted to the royalties that it was to receive from BSAM for the use of the trademark. BSAM's interest was in the fruits of the exploitation of the trademark. BSAM had relied upon BSLS to protect the trademark and thus to protect BSAM's interest in the trademark. As Ms. Williams explained, BSAM as licensee could have joined with BSLS in opposing the registration of the RIVERSTONE trademark. Had it done so, it would no doubt also have been joined as a defendant in the proceedings that resulted in the Supreme Court's judgment."

176.
In these circumstances, given the way in which the TPA has prescribed the rules of standing and defined "investment," the answer is clear; there are no cogent reasons of principle to interpret the TPA as precluding BSAM from alleging a denial of justice on the part of the Supreme Court as constituting a failure to accord to its covered investment fair and equitable treatment, in the same way that it is open to BSLS to advance this case. The merits of so doing are at least as strong as exist in the case of a parent company and its subsidiary. The objection that BSAM was not a party to the relevant litigation is a technicality that has no bearing on the substance of the treaty complaint advanced by BSAM.
177.
In its Rejoinder,112 Panama sought to distinguish Arif. It argued that in that case the Tribunal had applied an "autonomous" fair and equitable treatment treaty provision that entitled it to disregard the customary international law standard when considering whether a denial of justice had infringed that provision. Panama argued that such an approach was not open to the Claimants in the present case because Article 10.5.1 of the TPA expressly emphasized that the treatment to be applied to covered investments should be "in accordance with customary international law." Furthermore Article 10.5.2 of the TPA provides that:

"For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments. The concepts of 'fair and equitable treatment' and 'full protection and security' do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligation in paragraph 1 to provide: (a) 'fair and equitable treatment' includes the obligation not to deny justice […] in accordance with the principle of due process embodied in the principal legal systems of the world […]."113

178.
The Tribunal does not believe that this passage is in point. The issue is one of locus standi, not of the standard of treatment to be applied. There is no doubt that, when considering whether there has been a denial of justice under the TPA, the standard of customary international law has to be applied. The issue is whether, having regard to the relationship between BSAM and BSLS, it is open to BSAM to invoke the delict of denial of justice in relation to litigation in which BSLS but not BSAM was a party. The TPA answers this question in the affirmative and the Tribunal must give effect to it: BSAM, an "investor," has standing to claim in respect of an alleged breach of the TPA that has caused loss or damage to its "covered investment."
179.
For the reasons given, Panama's contention that BSAM has no standing to contend that the alleged denial of justice constituted a failure to accord to its investment fair and equitable treatment is dismissed.

B. BSAM's Claims for Loss

1. The Parties' Positions

a. The Respondent's Position

180.
Panama submits that BSAM has failed "to identify or quantify any loss associated with its flawed and haphazard claims."114 Therefore, Panama says, BSAM has "failed to satisfy the jurisdictional requirement of establishing loss."115
181.
The Respondent explains that BSAM's alleged loss is premised on the supposed diminution of value of the BRIDGESTONE and FIRESTONE trademarks both in Panama and in the BSCR Region, and it argues that such contention is problematic for various reasons discussed in the sections that follow.116

(i) BSAM's Claim for Loss Outside of Panama Exceeds the Scope of this Proceeding

182.
Panama submits that BSAM's request for compensation for alleged loss outside of Panama "plainly exceeds the scope of this proceeding."117 That is, the Respondent argues, because (i) under Article 10.16.1(a) of the TPA, the only type of claim that can be submitted to arbitration is a claim that "the claimant has incurred loss or damage by reason of, or arising out of" a breach of an obligation under Section A of Chapter 10;118 and (ii) under Article 10.29 of the TPA, an entity is a "claimant" if and to the extent that it "attempts to make, is making, or has made an investment in the territory of [Panama]."119
183.
More particularly, the Respondent argues that BSAM's claim for alleged loss for diminished value of the BRIDGESTONE and FIRESTONE trademarks both in Panama and the BSCR Region (Panama, Costa Rica, Puerto Rico, Guatemala and the Dominican Republic) ignores that trademarks are territorial, and so the Costa Rican, Puerto Rican, Guatemalan and Dominican Republic trademarks are not part of BSAM's investment in Panama.120 Similar conclusion applies, the Respondent says, to BSAM's licenses to use trademarks registered outside of Panama.121
184.
The Respondent also submits that this claim was captured by the Tribunal's Decision on Expedited Objections; and that the Claimants are transparently attempting to circumvent the clear instructions in that decision.122 Panama observes that the Tribunal already determined that "there is no 'immediate cause-and-effect relationship' between the Supreme Court judgment and the alleged effects outside Panama" as "the relationship is speculative and remote;" and that "a dispute as to whether States other than Panama are likely to copy Panama's alleged abuse of the Claimants' intellectual property rights to the detriment of the Claimants is both speculative and remote from each of the Claimants' investments."123
185.
Panama goes on to submit, however, that even if this were a new damages claim not captured by the Decision on Expedited Objections, this extra-territorial claim is still premised on the hypothetical actions of courts in other States, and thus the same reasoning of the Decision on Expedited Objections would apply to dismiss the "revamped" extra-territorial damages claim.124

(ii) BSAM Has Not Identified Its Loss

186.
Panama also submits that the claim for alleged diminution of value of the BRIDGESTONE and FIRESTONE trademarks refers to the decrease in royalties that a trademark owner receives from licensees, and argues that such decrease could never be a loss to BSAM who is the trademark licensee that pays (not receives) those royalties.125 Furthermore, for Panama, BSAM is also unable to establish loss because "the value of the license to the licensee will reflect the fruits of the exploitation of the trademark," that is, the tire sales revenues, and the Claimants have admitted that the Supreme Court Judgment has not had an impact on revenues from sales.126 Moreover, the Respondent argues, BSAM's financial records confirm the absence of any injury, as they show that between 2014 and 2017 BSAM has consistently stated that there have been no impairments for any of its intangible assets.127
187.
The Respondent also submits that, contrary to the Claimants' assertion, the licensor and the licensee of a trademark do not have an undivided interest in the mark's goodwill. Rather, the licensor owns the goodwill and the licensee only has a contractual right to use the trademark;128 and the value of that right is assessed based on the income generated by it.129
188.
The Respondent goes on to explain that the Tribunal does not need to determine whether BSAM "could" establish a loss, given that the reality is that it "has not established such loss."130 For Panama, given that in addition to establishing a breach "the TPA requires such a showing of loss, the claims by [BSAM] must be rejected at the outset, without further analysis."131 Put a little differently, the Respondent argues that BSAM has not (and is unable to) show that it has suffered any injury "in connection with its investment (i.e., the trademark licenses)" as required by Article 10.16.1(a) of the TPA, and therefore, the Tribunal "need not evaluate [BSAM's] damages claim on its merits."132

b. The Claimants' Position

(i) BSAM's Claim for Loss Outside of Panama

189.
The Claimants argue that the Tribunal has already made a final determination that BSAM's dispute arises directly out of its investment insofar as the claim relates to damages suffered in Panama.133
190.
As to the claim for damages outside of Panama, the Claimants acknowledge that during the Expedited Objections phase the Tribunal concluded that BSAM's dispute did not arise directly out of its investment with respect to loss suffered outside of Panama, but they contend that such finding was made with respect to the claims formulated in the Request for Arbitration on the basis that third States were likely to copy the actions of the Panama Supreme Court.134 According to the Claimants, BSAM's current claim for damages suffered outside of Panama is premised on a different basis,135 namely, "on the diminution of value to BSAM's trademark rights (wherever that loss occurs) caused directly by the Panamanian Supreme Court Judgment;" which they submit is a dispute that arises directly out of BSAM's investment.136
191.
The Claimants argue that "the impairment to the global marks that resulted in Panama from the Supreme Court Judgment necessarily creates impairment, and the resulting economic consequences, in other relevant jurisdictions;" and for this reason their damages claim also includes impairment of rights in Panama and also "impairment of rights in the BSCR Region" (namely, Panama, Costa Rica, Puerto Rico, Guatemala, and the Dominican Republic), which is a region that BSAM treats as a "consolidated market" for advertising, promotion and manufacturing purposes.137

(ii) BSAM Has Identified Its Loss

192.
The Claimants also oppose the Respondent's allegation that BSAM's claim fails to identify or quantify any loss.
193.
According to the Claimants, where the TPA breach affects intellectual property rights, the assessment of loss and damages must be undertaken by reference to the specific features of intellectual property. They explain that BSAM's investment, namely, the trademark licenses, is "impacted by Panama's breach more in terms of a reduction in the value of the brand than in immediate loss of sales and revenue."138 This is, the Claimants argue, because if the trademark is worth less to BSLS as a licensor because the mark's enforceability is legally impaired, it is also worth less to BSAM as licensee, since "BSAM will not be able to sell tires bearing the brand for as high a price."139 According to the Claimants, these "economic impacts cannot be discounted simply because they have not yet been felt."140
194.
The Claimants submit that the Parties agree (in part) that BSAM's interest is in the profits from sales of products bearing the FIRESTONE and BRIDGESTONE trademarks.141 However, they explain that both the trademark owner and the licensee "share in the intangible benefits" namely, the goodwill and market exclusivity, such that both the owner and the licensee suffer if those rights are impaired.142 According to the Claimants, the trademark owner and licensees each have an "undivided interest in the mark's goodwill."143 It does not matter, the Claimants argue, whether the trademark owner or the licensee has the legal title ("owns") to the goodwill, because the key point is that BSAM enjoys the benefits of that goodwill for the FIRESTONE and BRIDGESTONE trademarks, and also bears any negative repercussion of damages to those brands.144
195.
Lastly, the Claimants deny that their claims have not articulated the loss of BSAM separately from that of BSLS, and they submit that their expert report has done so.145

2. The U.S. Submission

196.
At the Hearing, the United States argued that under the TPA "an investor may only recover for loss or damage that the Investor incurred in its capacity as an investor of a party;" and therefore "the Investor may only recover for damages it incurred in its capacity as an investor-seeking to make, making or having made an 'investment' in the territory of the other Party."146

3. The Tribunal's Analysis

197.
For reasons that will become apparent later in this Award, the Tribunal proposes to deal with the other submissions in relation to jurisdiction relatively briefly. Because the objections relate to jurisdiction, the Tribunal is only concerned with the allegations that the Claimants have made, not with whether they have made good those allegations.

a. BSAM's Claim for Loss Suffered Outside Panama

198.
In its Decision on Expedited Objections, the Tribunal ruled that BSAM's claims in relation to loss allegedly suffered outside Panama fell outside the jurisdiction of the Tribunal. This was on the basis that the alleged loss was founded on the allegation that courts or other organs of States outside Panama would follow the example of the Panama Supreme Court, or at least that there would be a perceived risk of their doing so, thereby adversely affecting the value of trademark rights outside Panama. This part of the dispute could not possibly be said to arise "directly out of" either Claimants' investments.147 The Tribunal went on to comment:

"BSLS will no doubt consider carefully whether to pursue a claim in relation to events outside Panama in circumstances where the Tribunal has ruled that it has no jurisdiction to entertain an identical claim by BSAM."148

199.
BSAM now purports to pursue a claim for loss suffered outside Panama "made on a different basis," as formulated in paragraphs 229 to 237 of their Memorial.149 The Tribunal has considered those paragraphs. They aver a drop in the value of the trademark rights owned by the Claimants because of uncertainty created by the Supreme Court Judgment.

"This creates uncertainty for a potential purchaser of BSLS or BSAM's trademark rights: how would future courts deal with trademark registrations by competitors? Would competitors file similar damages claims? Would future courts grant those claims, on the basis of the precedent set in the Supreme Court Judgment?"150

200.
This is not a claim made "on a different basis." It is made on the same basis as the claim that the Tribunal held to be outside its jurisdiction in its Decision on Expedited Objections. Panama is right to submit that this claim was captured by the Decision on Expedited Objections.151 It is not open to BSAM to pursue a claim for loss experienced outside Panama.

b. BSAM's Claim for Loss Inside Panama

201.
The Tribunal emphasizes again that a challenge to jurisdiction looks at the claims that the Claimants have made, not the claims that they have made good.152 Their claims are not made for alleged reductions in royalties or in earnings from the use of the trademarks. They are made for reductions in the values of their interests in the trademarks. The Claimants advanced a substantial body of evidence at the Hearing that they alleged made good their respective claims for losses. The losses alleged were not related to royalties. Panama's contention that BSAM's claim should be rejected in limine on the ground that its pleadings do not identify or quantify any loss does not succeed.

C. BSLS's Claims for Loss

1. The Parties' Positions

a. The Respondent's Position

202.
The Respondent contends that BSLS has failed to demonstrate any loss in connection with its investment, as required by Article 10.16.1(a) of the TPA, and as a result its claims fail.153 According to Panama, BSLS "has failed to establish that it has 'incurred' loss" which is a "threshold jurisdictional requirement" under the TPA.154

(i) The Claim for the Damages Award Ordered by the Supreme Court

203.
With respect to the claim for US$5,431,000 that BSJ and BSLS were ordered to pay by the Supreme Court Judgment, Panama contends that BSLS has not established that this loss has been incurred, as required by Article 10.16.1(a)(ii) of the TPA.155 The Respondent argues that BSLS has not shown that "it actually suffered any economic loss associated with the payment of" the Supreme Court Judgment, and as a result, the "inquiry can and should stop here."156
204.
The Respondent submits that BSLS was merely a "pass-through" agent for the payment of the funds to Muresa and TGFL, as demonstrated by (i) their own admission in the Request for Arbitration; (ii) Mr. Kingsbury's admission that the funds used to pay came from a loan from BSAM; and (iii) the fact that BSLS has not demonstrated that this loan was or is being repaid.157 According to Panama, the fact that BSLS paid using a cash inflow from BSAM is the best illustration that BSLS "did not incur a financial loss."158 The Respondent further submits that the evidence does not support the assertion that interest is paid on the loan, and submits that the evidence suggests instead that the loan simply rolls over every year, and that the obligation to repay it is contingent on the outcome of this arbitration.159
205.
Put another way, the Respondent argues that BSLS's claim for the payment of the judgment "must be dismissed" because "the financial loss" of the Supreme Court Judgment "was suffered by another Bridgestone entity;" and the TPA "does not allow a Claimant to submit a claim for injuries suffered entirely by another entity," but instead requires that "[e]ach Claimant must establish injury 'on its own behalf.'"160

(ii) The Claim for the Alleged Uncertainty Created by the Supreme Court Judgment

206.
First, Panama submits that BSLS has asserted that it may suffer injury from the "uncertainty" that might affect hypothetical buyers seeking to acquire trademark rights for the whole Central American region; and its expert's calculations include the decrease in value of the FIRESTONE trademark in other countries.161 But, Panama says, BSLS's claim for damages in connection with investments outside Panama "properly falls outside of the jurisdiction of this Tribunal."162 This is because the Tribunal's jurisdiction is limited by the terms of the TPA to claims concerning and loss suffered in connection with the Claimants' investments in Panama.163
207.
The Respondent appears to submit that this claim is also captured by the Tribunal's Decision on Expedited Objections, and accuses the Claimants of transparently attempting to circumvent the Tribunal's instructions there.164 Panama observes, among others, that "the Tribunal cautioned [BSLS] to 'consider carefully whether to pursue a claim in relation to events outside Panama in circumstances where the Tribunal has ruled that it has no jurisdiction to entertain an identical claim by BSAM.'"165 As in the case of BSAM, the Respondent also submits with respect to BSLS that, even if this extra-territorial damages claim were a new one (not covered by the Tribunal's prior decision), it should be dismissed as speculative and remote.166
208.
Second, as to the claim for damages inside Panama, Respondent submits that BSLS has not even argued that it has "incurr ed loss or damage" as required by the TPA, and its alleged injury is entirely hypothetical.167 For the Respondent, BSLS's claim for "hypothetical injury in Panama, […] falls outside of the jurisdiction of this Tribunal."168 According to Panama, the TPA specifically requires that the damage "has already been incurred," it requires "existing, rather than future loss;" and, therefore, "speculative injury does not fall within the jurisdictional requirements set forth in the TPA."169
209.
According to Panama, BSLS's claim relies on the alleged uncertainty to a "potential" purchaser of the FIRESTONE trademark in Panama.170 But, Panama says, in order to demonstrate that the alleged uncertainty has affected the value of its investments, BSLS would need to demonstrate a decrease in the royalties it receives for the use of the FIRESTONE trademark, yet the royalties have remained the same in the relevant period, and there has been no decrease in sale of FIRESTONE branded-tires either.171 Moreover, Respondent argues, BSLS's own financial records confirm the absence of any injury, as BSLS Financial Statements show no impairment to the trademarks or the good will.172
210.
Third, that BSLS's claims related both to its investments inside and outside of Panama encompass alleged injury for trademark rights not owned by BSLS (e.g. the BRIDGESTONE trademark), which is also impermissible under Article 10.16.1 of the TPA.173

b. The Claimants' Position

211.
The Claimants also oppose the Respondent's allegation that BSLS has not established that it incurred in the loss it claims.
212.
The Claimants explain that BSLS claims for two categories of loss: (i) the amount of damages ordered by the Panama Supreme Court; and (ii) damage to the value of the FIRESTONE trademark.174

(i) The Claim for the Damages Award Ordered by the Supreme Court

213.
With regard to this first category, the Claimants submit that the payment to Muresa under the Supreme Court Judgment was made by BSLS, and it is openly admitted that BSLS obtained a loan from BSAM for that purpose. That inter-company loan, the Claimants argue, is not suspicious, nor does it detract from the conclusion that BSLS made the payment itself because: intercompany loans are not unusual, BSAM made the loan because it is the entity responsible for the use of the BRIDGESTONE and FIRESTONE trademarks in the Americas, and BSLS pays interest to BSAM on that loan.175 Further, the Claimants add, the loan will be repayable to BSAM regardless of the result of this arbitration.176

(ii) The Claim for the Damage to the Value of the FIRESTONE Trademark

214.
The Claimants accept that their damages case includes not only impairment of rights in Panama, but also impairment of rights in the BSCR Region,177 but they argue that the "Claimants' damages claim relative to the BSCR Region is appropriate and fair."178
215.
The Claimants submit that BRIDGESTONE and FIRESTONE are "well-known" global brands entitled to heighted protection under the Paris Convention and special protections in international enforcement proceedings, and "the acquisition or loss of well-known status in one jurisdiction can be used in actions in other jurisdictions against the trademark owner or its licensee."179 It follows, the Claimants argue that, "damage to the well-known BRIDGESTONE and FIRESTONE marks in Panama (impairment enforceability and exclusivity) has consequences, realized or as yet unrealized, outside of Panama."180 More particularly, the Claimants say that, "a purchaser or investor in the BRIDGESTONE and FIRESTONE marks in Panama would likely find not only the trademark rights in Panama to be impaired by the Supreme Court Judgment, but also the trademark rights in the operationally-integrated BSCR Region," because that region is treated as a consolidated market for advertising, promotion, accounting and manufacturing.181
216.
The Claimants also deny that BSLS's claim for loss in excess of US$ 5.4 million is hypothetical. They argue that BSLS's damages case is "real" because the Supreme Court Judgment "has impaired the value of the FIRESTONE and BRIDGESTONE trademarks themselves and the licenses to use the trademarks, because of the cloud of uncertainty now cast over them by this judgment," even though its immediate impact is not necessarily seen on sales.182 They say that because the right of a trademark is a negative right, if the ability to exclude others is diminished, the value of the trademark is diminished.183 In the end, the Claimants say, the effect of the Supreme Court Judgment is that "the Claimants' trademark rights are impaired and it is as if they have become non-exclusive rights holders, from a market exclusivity perspective" and "[a] non-exclusive trademark right is obviously worth less than an exclusive right […]."184

2. The Tribunal's Analysis

a. The Damages Awarded by the Supreme Court

217.
BSLS claims the sum of US$ 5,431,000 that it paid to discharge the Supreme Court Judgment holding BSJ and BSLS jointly liable for that sum. This Tribunal clearly has jurisdiction to determine whether this claim is made out. Panama contends that this claim has not been made out because the evidence shows that the payment has been funded by other members of the Bridgestone Group. This is not a submission that BSLS has made a claim that is not within the jurisdiction of the Tribunal. Rather it is a claim that BSLS has not made out that claim on the evidence. This is not a valid challenge to the jurisdiction of the Tribunal to consider the merits of the claim. It fails for that reason.

b. The Wider Claim for Damage to BSLS's Investment

(i) Claim for Loss Sustained Outside Panama

218.
The losses that BSLS seeks to allege that it has sustained outside Panama are the same as those that the Tribunal has ruled to be outside its jurisdiction in the case of BSAM. The Tribunal upholds Panama's jurisdictional challenge to this part of BSLS's claim. It falls outside the jurisdiction of the Tribunal for the same reasons that apply in the case of BSAM.185

(ii) Claim for Loss Sustained Within Panama

219.
Panama's jurisdictional challenge to this part of BSLS's claim fails for the same reasons that the Tribunal has given in respect of BSAM's parallel claim.186

VI. LIABILITY

220.
We now reach the heart of the dispute between the Parties. Did BSJ and BSLS suffer a denial of justice at the hands of the Supreme Court of Panama, applying the standard of a denial of justice under customary international law?

A. Applicable Law

221.
Whether there has been a denial of justice falls to be determined by applying the principles and standards of customary international law.187 The Claimants found their allegation of denial of justice on the single decision of the Supreme Court in favour of Muresa and TGFL. Only in rare circumstances will a single judgment satisfy the test of denial of justice under international law. The Parties are agreed as to what those circumstances are, and the United States concur.
222.
We turn to the Expert Report of Professor Paulsson, an acknowledged expert in the field who has been cited by the Claimants in their pleadings and whose evidence on the test of denial of justice they have not sought to test by cross-examination nor, indeed, to challenge by way of submission.188 From this Report the following propositions can be derived:

(i) An erroneous decision by a national court does not constitute a denial of justice under international law. A denial of justice under international law will only occur where there is a systemic failure in the administration of justice by a State.189

(ii) International law does not vest international adjudicators with authority to act as courts of appeal from national courts.190

(iii) A bona fide error by a court, even if it results in serious injustice in the individual case, does not amount to a denial of justice under international law.191

(iv) An erroneous decision of a national court can demonstrate that there has been a denial of justice under international law if, but only if, it demonstrates that the court was guilty of bias, fraud, dishonesty, lack of impartiality or gross incompetence.192

(v) An exacting standard must be applied to the question of whether a particular judicial decision demonstrates a systemic failure that amounts to a denial of justice under international law. That standard normally requires that the decision demonstrates "a wilful disregard of due process at law […] which shocks, or at least surprises, a sense of judicial propriety."193

223.
These propositions are well supported by authority cited by Professor Paulsson, and we endorse them. Indeed, they have not been challenged by the Claimants. They also accord with the submissions of the United States.194 Both the Claimants195 and the Respondent196 cite the following proposition set out by Professor Paulsson in his work on Denial of Justice:197

"[T]he proof of the failed process is that the substance of a decision is so egregiously wrong that no honest or competent court could possibly have given it."

224.
The Claimants submit that this properly describes the decision of the Panama Supreme Court. They submit that the result achieved by the Supreme Court was simply incomprehensible. But, at the same time, the Claimants rely on a number of what are alleged to be departures from due process which, if not individually, together are alleged to add up to a denial of justice under principles of international law.
225.
To address this case the Tribunal proposes first to set out the relevant events, which consist largely of legal proceedings, with special concentration on those aspects of the proceedings that the Claimants rely upon as constituting, or adding up to, a denial of justice.

B. The Facts

1. The U.S. Trademark Proceedings

226.
The Luque Group began marketing tyres bearing the RIVERSTONE mark in 1999.198 Muresa was the exclusive owner of that trademark.199
227.
On 27 December 2001, Muresa entered into a representation and distribution agreement with L.V. International, Inc. ("L.V. International") "for the registry and commercialization" of products bearing the RIVERSTONE mark in countries that included the United States.200
228.
On 13 August 2002, L.V. International filed an application with the U.S. Patent and Trademark Office to register the RIVERSTONE trademark in the United States.201
229.
On 3 December 2003, BFS Brands, LLC and Bridgestone/Firestone North American Tire, LLC, being members of the Bridgestone Group, filed a Notice of Opposition to this application on the ground that the RIVERSTONE mark was confusingly similar to the FIRESTONE mark.202 L.V. International originally filed pleadings challenging the Notice of Opposition,203 but on 13 August 2004, L.V. International gave notice of withdrawal of its application to register the RIVERSTONE trademark,204 which was filed on 20 August 2004.205
230.
Because the withdrawal was filed unilaterally, rather than by consent, judgment was entered against L.V. International on 13 October 2004.206
231.
No reason was given for the withdrawal and none has been put in evidence in this arbitration.
232.
On 3 November 2004, Mr. Mack of the Washington office of Foley & Lardner LLP, an international law firm, wrote to Mr. Sanchelima of Sanchelima & Associates, P.A., who had acted for L.V. International in the U.S. proceedings, a letter ("the Foley Letter") in the following terms:

"As you are well aware, the Trademark Trial and Appeal Board has rendered judgment against your client, sustained our opposition and refused registration in connection with your client's application to register RIVERSTONE as a trademark for tires.

Please take notice that Bridgestone/Firestone objects not only to any registration of the RIVERSTONE mark for tires by your client, but also to any use of the mark. Although it is not aware of any current use of the RIVERSTONE mark in the United States, Bridgestone/Firestone hereby makes formal demand upon your client to refrain from any use of the RIVERSTONE trademark in the United States now or at any time in the future.

As for use of the RIVERSTONE mark in other countries, please also take notice that Bridgestone/Firestone's position – that L.V. International, Inc. should refrain from use of the RIVERSTONE mark for tires – is not limited to the United States. Without undertaking a country-by-country analysis at this time and without making any specific demand at this time directed to use of the RIVERSTONE mark in any particular foreign country, you and your client should know that Bridgestone/Firestone objects to and does not condone the use or registration anywhere in the world of the mark RIVERSTONE for tires. Hence, L.V. International, Inc. is acting at its own peril if it chooses to use the mark RIVERSTONE in other countries."207

2. The Panamanian Trademark Opposition Proceeding

233.
On 6 May 2002, Muresa filed an application to the Panamanian intellectual property office for registration of the RIVERSTONE trademark for tires.208 This was then reviewed and it was not until 4 February 2005 that the application, together with a number of others of similar vintage, was published in the Official Gazette.209 Meanwhile, L.V. International had applied for registration of the RIVERSTONE trademark in Bolivia, Costa Rica, the Dominican Republic, Nicaragua and Peru.210
234.
On 5 April 2005, BSJ and BSLS took the appropriate steps to oppose the Panamanian application. These consisted of bringing suit against Muresa in the Eighth Circuit of the First Judicial District of Panama, which has jurisdiction in trademark disputes.211 This opposition petition requested the denial of the application for registration of the RIVERSTONE trademark. BSJ and BSLS claimed as owners, respectively, of the BRIDGESTONE and FIRESTONE trademarks registered in Panama. The pleading recited that:

"The plaintiff companies are members of a single corporate group and represent a single group of economic interests, which group has made itself known for a great many years through the use of the identifiers BRIDGESTONE and FIRESTONE to identify a broad range of products in their countries of origin, in Panama, and in international trade."212

235.
The ground of the application was that the similarity of the trademark RIVERSTONE to those of BRIDGESTONE and FIRESTONE was so close as to give rise to a grave risk of confusion between them.
236.
On 20 June 2005, Muresa filed an Answer to BSJ's and BSLS's opposition petition, describing this as "the reckless lawsuit."213 This challenged, at some length, the allegation that the RIVERSTONE trademark could be confused with the BRIDGESTONE or FIRESTONE trademarks. It alleged that the RIVERSTONE products were broadly accepted in the local market whereas this was not true of the BRIDGESTONE and FIRESTONE products.214
237.
On 25 August 2005, L.V. International applied for leave to intervene as a "coadyuvante" to support Muresa,215 on the ground, inter alia, that it had a substantial relationship with Muresa,216 particulars of which were then provided.
238.
On 26 August 2005, TGFL made a similar application.217 These applications were successful, despite an appeal by the Bridgestone parties. At the evidentiary phase of the subsequent hearing the Bridgestone parties put in evidence particulars of the U.S. proceedings,218 submitting that these showed:

"[T]hat the prior-use rights held by Plaintiffs are not unknown to L.V. INTERNATIONAL, INC. and, based on what L.V. INTERNATIONAL, INC. alleged, they should also be known by Defendant MURESA INTERTRADE, S.A. by virtue of their presumed relationship. This leads to the conclusion that the companies in question are fully aware of Plaintiffs' superior rights over the BRIDGESTONE and FIRESTONE brands, and of the harm caused to Plaintiffs by using and registering a brand similar to theirs."219

239.
On 21 July 2006, the Eighth Circuit Court gave judgment rejecting BSJ's and BSLS's opposition to the registration of the RIVERSTONE trademark.220 The Court accepted that there were similarities between the respective trademarks, but concluded that these did not give rise to the risk of confusion. This conclusion was supported by the fact that the respective brands had co-existed in Panama for some while with no evidence that their co-existence had caused error, confusion, mistake, misleading or deception in the public or any detriment to the Bridgestone companies:

"The manner in which opposing trademarks' presence in the market has materialized (both the opposing and the disputed trademarks, all company trademarks) is one of the determinant factors to eliminate any likelihood of confusion between signs."221

240.
Accordingly, the Court acceded to Muresa's application to register the RIVERSTONE trademark. The Court released BSJ and BSLS from the obligation to pay attorney's fees:

"[G]iven that this administration of justice offices deems that it has acted with evident good faith, maintained and held its position in the process, submitted suitable evidence material to prove its standing in cause, all without abusing the right to litigate."222

241.
On 3 August 2006, BSJ and BSLS filed a formal notice of appeal against the judgment of the Eighth Circuit Court.223 On 5 September 2006, they formally withdrew their appeal,224 thereby incurring a modest liability in costs.

3. The Civil Proceedings

a. The Proceedings at First Instance Before the Eleventh Civil Circuit Court of the First Judicial Circuit of Panama ("the First Instance Court")

(i) The Pleadings

242.
On 12 September 2007, Muresa and TGFL225 filed in the Eleventh Circuit a civil torts claim under, inter alia, Article 1644 of the Civil Code,226 for US$ 5 million and costs against BSJ and BSLS, due to their opposition to the registration of the RIVERSTONE trademark.227 It was alleged that as a result of this damages and losses were caused to Muresa and TGFL:

"[G]iven that the product of the brand RIVERSTONE […] stopped being commercialized (sold) as a consequence of the suit filed."228

243.
On 13 October 2008, BSLS filed its Answer to the claim.229 This denied any wrongdoing and challenged the damages sought. It contended that if BSLS was to be liable for damages in consequence of a legal proceeding it was, by virtue of Article 217 of the Judicial Code,230 necessary to demonstrate that BSLS had acted recklessly or in bad faith. It had done neither, nor had it acted negligently. The Answer commented:

"It is worth noting that in a process opposing the registration of the RIVERSTONE Y DISENO brand filed by BFS BRANDS LLC and BRIDGESTONE/FIRESTONE NORTH AMERICA TIRE LLC against L.V. INTERNACIONAL, INC., in the United States of America, the latter accepted the former's claims."231

244.
On 19 August 2009, BSJ filed its Answer to the claim.232 This took the same points that had been pleaded by BSLS. It denied wrongdoing or causing damage. It alleged that, by virtue of Article 217 of the Judicial Code, liability could only be established if there had been "reckless or frivolous procedural conduct and the existence of damage derived from the said conduct," and BSJ had been guilty of neither. Indeed, BSJ and BSLS had acted "in clear good faith," as the Eighth Circuit Court had expressly found in absolving the companies from liability in costs.233
245.
On the same day, BSJ and BSLS brought before the Eleventh Circuit Court a Petition for Nullification on the ground of want of competence.234 This argued that the facts alleged gave rise to a claim under Article 217 of the Judicial Code and not to a tort claim under Article 1644 of the Civil Code. It further alleged that the proceedings concerned a trademark and therefore fell within the exclusive competence of the Eighth Circuit Court and should have been brought in the course of the Trademark Opposition Proceeding.
246.
On 14 September 2009, Muresa and TGFL replied, arguing that no issues of intellectual property were involved and the claim was properly brought as a civil claim for non-contractual damages pursuant to Article 1228 of the Civil Code.235 They alleged that the Trademark Opposition Proceeding had caused them damage because companies with which they had marketing and distribution contracts refused to market tires bearing the RIVERSTONE mark through fear of legal action.
247.
The Eleventh Circuit Court did not rule on this issue until the 25 November 2010, and its ruling was notified on 6 December 2010.236 It then held that the claim was properly brought in the Eleventh Circuit.
248.
Meanwhile the substantive action was proceeding. There were procedural steps prior to the taking of evidence ("the Notice of Evidence Phase"), described in paragraphs 88 to 93 of Panama's Counter-Memorial. These involved giving notice of the evidence that each party intended to adduce, and objections to the admissibility of some of this. The Foley Letter was not included by Muresa and TGFL in their notices of evidence.

(ii) The Evidence of Fact

249.
Evidence was taken over a period of weeks, starting on 21 April 2010. Witnesses of fact were heard between 21 April and 14 May 2010. The transcripts of the evidence given on behalf of Muresa and TGFL is summarised at some length in the Claimants' Memorial,237 and this summary has not been challenged by Panama. Panama produced its own short summary of some of this evidence in its Rejoinder,238 which equally has not been challenged by the Claimants:

"[…] [C]ommercial customers who previously had purchased RIVERSTONE tires refused to place new orders, concerned that they might get caught in the crossfire. To mitigate, Muresa, Tire Group, and L.V. International sold lower-quality replacement tires, which (1) 'were not well received, because [their] customers were already familiar with the quality of RIVERSTONE,' and (2) could only be sold 'at cost or at 50% of cost.'"

250.
The major source of this evidence was Mr. Fernan Jesus Luque Gonzalez and, on analysis, the most significant part of the evidence given by Muresa's witnesses consisted of hearsay evidence emanating from this witness. Accordingly, the Tribunal proposes to set out a short summary of the evidence that he gave.239
251.
Mr. Luque Gonzalez was Manager of Muresa and President of TGFL. The latter is dedicated exclusively to the promotion, exhibition, distribution, production and exportation of RIVERSTONE tires. These tires are all produced at factories in China. BRIDGESTONE and FIRESTONE had challenged RIVERSTONE in the United States, Argentina, Chile, the Dominican Republic, Colombia, Venezuela, South Africa, South Korea and China.
252.
Muresa and TGFL's clients did not want RIVERSTONE products to be shipped because they feared a seizure or reprisals against them, because they were aware that RIVERSTONE was being challenged in Panama by BRIDGESTONE.

"Fears of a seizure were based on the information we were given by customs agents and by some related persons that in the case of a brand registration challenge we could face seizures, and consequently, we decided to halt production, we sent a letter to our agent in China instructing him to communicate this to the factory and that we had also been notified in the Dominican Republic of the seizure of the inventory that our distributors had in that country."240

253.
Mr. Luque Gonzalez said that inferior alternatives were sold in place of RIVERSTONE products at 50% of cost, but these were not well received. From 2001, when RIVERSTONE was launched, sales were projected to grow at an annual rate of 30%. After the dispute in 2007 RIVERSTONE was re-activated but without the expected success because of the long interruption in supplying the brand. Furthermore, the factories in China initially refused to deal with them.

"Once [sic] of the main reasons for which we stopped selling the brand is that all of the factories in China and all of our customers were aware of the dispute and therefore the latter refused to buy and the former to produce."241

254.
Mr. Luque Gonzalez was asked by counsel for the defendants a question put to most of Muresa's witnesses of fact.242 Did Muresa at any time receive from BJS or BSLS any letter or communication requesting Muresa or TGFL to suspend or cease selling products carrying the RIVERSTONE brand and design in Panama? His answer was that they had received information from some customs agents and other connected businessmen that products bearing the RIVERSTONE brand were going to be seized.
255.
Faced with a leading question by the plaintiffs' representative, Mr. Jorge Albert Luque Gonzalez, the Manager of L.V. International, was more forthcoming:243

"[…] I informed Ms. LUCINDA DE LUQUE in addition to MR. EGGIS LUQUE and MR. FERNAN LUQUE of the objection that existed to the brand in the United States and of the danger that if they continued to import the tire [sic] they could be seized, this according to the letter that was sent to us by our attorney JESUS SANCHEZLIMA. In relation to the letter that he received from the attorneys for BRIDGESTONE Mr. PETER MACK of the FOLEY legal firm, where he stated that we could not register and sell the RIVERSTONE brand in any part of the world and that they could seize any tire not only in the United States but in any part of the world where the RIVERSTONE brand was sold or marketed."

(iii) The Expert Witnesses

256.
The parties had retained accounting experts – Mr. Aguilar and Ms. de Leon for Muresa and TGFL and Mr. Ochoa for the Bridgestone companies. Ms. de Gutierrez had been appointed as accounting expert to the court. They filed their Reports on 24 May 2010.
257.
Affidavits were put in evidence from Muresa's accountant, Ms. Moreira.244 In these she stated that sales had fallen by more than 5 million balboas245 in the period 2005 to 2008 "as a result of the presentation of the demand of registry opposition of the brand RIVERSTONE and design, by societies BRIGSTONE [sic] CORPORATION AND BRIGSTONE [sic] LICENSING Services Inc."246
258.
This evidence was supported by the plaintiffs' expert witnesses when they came to give oral evidence.247 They stated that for the years 2006-2008 there had been a reduction in Muresa's sales of RIVERSTONE tires of B/. 3,351,731.15. In the case of TGFL the reduction was B/. 2,424,062.69. The former figure had regard to the failure to achieve a projected increase of sales; the latter was simply based on prior sales.
259.
The experts stated that they had asked Muresa why these reductions had occurred. The company referred to the Foley Letter as an explanation for this. The experts expressed the view that this, coupled with the Trademark Opposition Proceeding, was responsible for the shortfall in RIVERSTONE sales, albeit that Muresa continued to sell RIVERSTONE tires that it had in its warehouses. The experts had annexed the Foley Letter to their Report, with the following explanation:

"Also, prior to the complaint, on November 3, 2004, Foley & Lardner LLP Attorneys sent a letter that is attached with the documents submitted with the expert's report, which specifies that the position of Bridgestone/Firestone was to formally request that L.V. International Inc. abstain from using the brand RIVERSTONE, not just in the United States but also in all parts of the world."248

260.
The Court expert also annexed the Foley Letter to her Report, remarking that it was the only thing that Ms. Moreira and Mr. Medina had been able to produce when asked to produce documentation supporting their evidence that Muresa had been afraid of having problems if they continued to market tires bearing the RIVERSTONE mark. The judge subsequently upheld an objection to a question on the ground that this letter had not been admitted in evidence.249
261.
While Muresa's experts supported Muresa's case on the reduction to sales of RIVERSTONE tires caused by the opposition to the registration of the RIVERSTONE mark in Panama, invoking the Foley Letter in support, the Bridgestone companies' expert and the Court expert did not do so.
262.
Mr. Ochoa's Report250 stated, inter alia :

(i) It was not possible to obtain information supporting the veracity of Muresa's sales projections.

(ii) It was not possible to submit a professional opinion as to why the sales projections were not met, because it was not possible to obtain supporting documentation.

(iii) No documents were seen evidencing concern on the part of customers about purchasing RIVERSTONE tires.

263.
Ms. de Gutierrez's Report251 stated, inter alia :

(i) She did not see documents supporting Muresa's sales projections.

(ii) She did not see any documents that explained any limitation on achieving Muresa's sales objectives.

(iii) She saw no documentation evidencing concern on behalf of buyers in respect of the purchase of RIVERSTONE tires.

(iv) In relation to the allegation that damages were caused to Muresa because of an inability to sell RIVERSTONE tires:

"We do not have documents that indicate that they have had to suspend sales and the projections were not based on any study, also the question asks what were the damages, by not being able to sell their products, and the company did not stop selling the RIVERSTONE tires, therefore we cannot say if there were damages caused to […] Muresa […] if they existed and neither can we say what the possible causes were of those damages given that there is no information in the file that would allow us to attribute the existence of such damages."252

(iv) L.V. International's Intervention

264.
Meanwhile, on 11 May 2010, L.V. International submitted a Petition to intervene253 as a third party coadyuvante. This placed before the court the Foley Letter, and alleged that this was obviously a threat against the whole group of related companies, including Muresa and TGFL.
265.
Mr. Jorge Alberto Luque Gonzalez, the President of L.V. International, gave evidence on 14 May 2010.254 He was asked by counsel for the plaintiffs whether he informed Ms. Lucinda de Luque, legal representative of Muresa, of the objection that had been made to the RIVERSTONE brand in the United States. Counsel for the defendants unsuccessfully objected to this question. In reply Mr. Luque Gonzalez stated that he had shown the Foley Letter not only to Mr. Lucinda de Luque, but to Mr. Eggis Luque and Mr. Fernan Luque.
266.
L.V. International's Petition was defective, and a corrected version was submitted on 3 June 2010.255 This appears to have been overlooked so that the Court did not rule on this until 5 May 2011, when the Court's substantive decision was under appeal. The Court rejected the Petition on the ground that it had been filed too late in the proceedings, but this decision was reversed by the Appeal Court.256

(v) The Closing Submissions

267.
The Foley Letter featured in the parties' written closing submissions to the First Instance Court. Muresa alleged that this was the culmination of a series of threats expressing opposition to the registration, use and sale of RIVERSTONE tires anywhere in the world,257 which confirmed the "malicious acts of intimidation and threats" against the Muresa Group.
268.
Some six pages of the submissions of BSJ and BSLS were devoted to the Foley Letter.258 Most of these were directed to attacking the admissibility of the letter. It was conceded that Article 973 of the Judicial Code permitted experts to receive documents and information that were relevant to their duties, but it was alleged that the Foley Letter did not fall into that category. The experts' duties were to quantify the damage suffered by Muresa and TGFL as a matter of accountancy. The Foley Letter had no bearing on those duties. Its introduction violated Articles 871, 877 and 878 of the Judicial Code. The letter had not been filed at the proper stage of the evidentiary process. It was irrelevant.
269.
The last point raised a question of substance as well as form. It was submitted that the letter was not capable of constituting intimidation and furthermore that it was never even seen by Muresa's personnel. It had been no part of the case advanced by Muresa's witnesses that they had been influenced by the letter. It was their evidence that they had been influenced by the fear of seizure of RIVERSTONE tires as a result of the BSJ's and BSLS's opposition to the registration of the mark.
270.
More broadly, BSJ and BSLS invoked Article 217 of the Judicial Code, contending that this and not Article 1644 of the Civil Code was the basis of the plaintiffs' claim to damages. BSJ and BSLS had not been reckless. The Eighth Court had held that they had "acted with clear good faith" and this constituted res judicata. Nor had the plaintiffs established their claim to damages. It had been their case that, as a consequence of BSJ's and BSLS's Trademark Opposition Proceeding, they had ceased selling RIVERSTONE tires, but the evidence had not supported this case. Insofar as they had stopped selling RIVERSTONE tires this was in no way attributable to the Trademark Opposition Proceeding.

(vi) The Judgment

271.
On 25 November 2010, the First Instance Court rejected BSJ's and BSLS's Petition for Nullification.259 It held that the plaintiffs' claim was for extra-contractual liability pursuant to Article 1644 of the Civil Code and did not fall within the exclusive competence of the Eighth Circuit Court.260
272.
On 17 December 2010, the First Instance Court delivered judgment.261 The Court rejected the defendants' plea of res judicata on the ground that the necessary identity of parties, property and claim had not been made out. The Court then accepted a submission made by the defendants that TGFL, which had merely appeared as intervener in the Trademark Opposition Proceeding, had no legal standing in the instant suit.
273.
The First Instance Court then turned to the merits of Muresa's claim in a passage that occupied approximately four pages of the judgment. The Court observed that the US$ 5 million in damages alleged resulted from the plaintiffs having to stop selling the RIVERSTONE brand and to sell instead inferior tires, which caused customer complaints and liability under products warranties. Turning to the evidence the Court found, inter alia :

(i) The inferior tires had been sold by the plaintiffs before the Trademark Opposition Proceeding, and continued to be sold thereafter.

(ii) RIVERSTONE tires continued to be sold by Muresa after the commencement of the Trademark Opposition Proceeding.

(iii) The plaintiff's evidence was that it was fear of seizure that caused the cease of production and sales of RIVERSTONE tires, not any judicial order in the Trademark Opposition Proceeding; nor could such an order have been made in those proceedings.

(iv) The accountancy evidence, as analysed by the experts, did not reflect the losses alleged by the plaintiff. Insofar as the claim was based on projected sales for 2005 and 2006 there was no accounting basis for these projections, which were in conflict with historic sales accounts.

274.
Thus, the emphasis of the judgment was on Muresa's failure to prove loss. No mention was made of the Foley Letter, and no ruling on the objection to its admissibility. The judgment ended with a citation of "Legal Grounds." These included Article 1644 of the Civil Code but not Article 217 of the Judicial Code.
275.
Muresa's claim was accordingly dismissed with costs.

b. The Appeal to the First Superior Court of the First Judicial District of Panama ("the Appeal Court") and the Coadyuvante Petition

(i) The Pleadings

276.
On 5 January 2011, Muresa and TGFL filed an Appeal against the decision of the First Instance Court.262 They contended that the First Instance Court had been wrong to rule that TGFL lacked legal standing.
277.
The Appellants advanced a claim for US$ 5,775,793.84,263 founded on Article 1644 of the Civil Code. This dealt at some length with both liability and damages. So far as liability was concerned, the Foley Letter now featured prominently. The Appellants contended that the First Instance Court failed to have regard to the fact that BSJ and BSLS "triggered a campaign of prosecution across all countries where it was attempted to register the [RIVERSTONE] brand" and made veiled threats in the Foley Letter,264 which was referred to repeatedly.
278.
In support of the damages claimed, the Appellants quoted over twenty pages from the evidence given by their witnesses of fact and their expert witnesses in the First Instance trial.
279.
On 14 January 2011, BSJ and BSLS filed a lengthy Opposition to the Appeal.265 This took the point that the claim should properly be based on Article 217 of the Judicial Code, not Article 1644 of the Civil Code, so that Muresa had to establish recklessness or bad faith.266 Far from being able to do so, it was Muresa that had been guilty of recklessness and bad faith in adducing evidence that falsely contended that the Trademark Opposition Proceeding had prevented Muresa from selling RIVERSTONE tires, when the sale of RIVERSTONE tires had never ceased. The plaintiffs' accountancy experts had not spoken of suspension of sales, but given evidence of an alleged reduction in sales.
280.
The Opposition to the Appeal then attacked the integrity of the plaintiffs' experts, alleging that they had improperly introduced into their evidence the Foley Letter, which was extemporaneous and not an accounting document, thereby depriving the defendants of the opportunity to deal with it. The Opposition to the Appeal then alleged that the introduction of the Foley Letter offended against a number of procedural rules, namely Articles 856, 857, 871, 877 and 878 of the Civil Code.267 For all these reasons the letter should be rejected.
281.
The Opposition to the Appeal then proceeded to deal at some length with the plaintiffs' case on both causation and damages, setting out once more the respects in which introduction of the Foley Letter would violate rules of procedure.

(ii) The Coadyuvante Petition

282.
By way of entr'acte, the Appeal Court directed that the First Instance Court should rule on L.V. International's application to intervene as a third-party Coadyuvante. On 5 May 2011, the First Instance Court made an Order rejecting that application, on the ground that it had been made too late.268 On 26 May 2011, L.V. International applied to the Appeal Court to revoke that Order,269 and declare it a Coadyuvante. The defendants opposed this application, objecting to:

"[T]he form and substance of each piece of evidence submitted with the third-party coadyuvante application because they are irrelevant to the proceeding and because they are foreign documents that were not properly authenticated […]."270

283.
The Appeal Court nonetheless allowed the Appeal,271 so L.V. International was re-inserted into the proceedings.

(iii) The Decision272

284.
In the first 13 pages of its judgment, the Appeal Court sets out an accurate summary of the contentions of the respective parties, including (i) the Appellants' reliance on the Foley Letter and the defendants' challenge to its admissibility; and (ii) the defendants' contention that Article 217 of the Judicial Code, not Article 1644 of the Civil Code, governed liability.
285.
The Appeal Court then emphasises the need for a plaintiff to establish damage in order to make good a claim under Article 1644 of the Civil Code, citing jurisprudence in support of this seminal requirement. It draws the following conclusion:273

"The Appellant's disagreement inevitably leads us to exhaustively examine the body of evidence that is the basis of the claim, in accordance, of course, with the requirements to establish non-contractual liability.

In that sense one must seek to DETERMINE THE DAMAGES. As a first precondition of civil liability, we must examine the body of evidence in the file, and the Plaintiff's legal standing to claim the aforementioned damages."

286.
There follows a passage in which the Appeal Court reverses the decision of the First Instance Court by holding that TGFL has legal standing to be party to the claim.
287.
The Appeal Court then refers to the defendants' contention that recklessness or bad faith was the touchstone of liability, and concludes:274

"Consequently, one needs to verify whether the Respondents acted recklessly and [in] bad faith when they opposed the trademark registration requested by the Plaintiffs."

288.
The Appeal Court then recites that, from an examination of the record, the plaintiffs have failed to prove that the defendants were guilty of recklessness, wilful misconduct or gross negligence in opposing the plaintiffs' registration of the RIVERSTONE mark. It comments:275

"Thus, it has been understood that 'to become a source of liability, recklessness – represented by an abuse of the litigation right – should be characterized by excessive conduct, where recklessness goes beyond a mere exercise of procedural rights authorized by the law in defense of an interest.' In other words, one infers that recklessness that gives rise to compensation, as stated in Article 217 of the Judicial Code, is comparable to 'gross negligence or willful conduct' […].

[…]

Thus, if the aforementioned recklessness or willful conduct by the Respondents has not been proven, we can hardly examine whether the alleged damages – allegedly caused by a conduct consisting in exercising a right – have been proven, let alone determine their quantum."

289.
The Appeal Court accordingly confirmed the substantive decision of the First Instance Court.

c. The Cassation Proceedings

290.
Cassation is a procedure for reviewing and vacating second-instance decisions. If the Supreme Court vacates a decision on substantive grounds, it proceeds to decide the case itself.276 Article 1169 of the Judicial Code provides:

"The Cassation Recourse on the merits takes place with regards to the resolutions referred to in [A]rticle 1164, when there are grounds to determine the infringement of substantive rules of law, by any of the following concepts: direct violation, misapplication or misinterpretation of the rule of law, error of fact about the existence of the evidence and the rule of law in terms of the appreciation of the said evidence."277

The error must substantially have affected the result.

(i) The Application

291.
On 1 July 2013, Muresa and TGLF applied for Cassation of the Appeal Court's decision.278 The First Cause was stated to be:

"Breach of substantive rules of law, by error of fact as to the existence of the evidence, which has substantially influenced the operative provisions of the appealed resolution (Cause contained in Article 1169 of the Judicial Code)."279

292.
The six reasons advanced in support of this cause,280 alleged that the Appeal Court "completely ignored," "ignored by not taking into consideration," "did not value, but rather completely ignored," "ignored," "did not take into account" the following:281

(i) The Foley Letter.

(ii) The evidence of Ms. Moreira, Muresa's accountant, that Muresa and TGFL had ceased to sell RIVERSTONE tires due to the Trademark Opposition Proceeding.

(iii) The record showing that BSJ and BSLS withdrew their appeal in the Trademark Opposition Proceeding.

(iv) The evidence given to the First Instance Court by Muresa's witnesses that Muresa and TGFL could not sell RIVERSTONE tires due to the Trademark Opposition Proceeding.

(v) The evidence given to the First Instance Court by Muresa's witnesses that they were aware of the Foley Letter.

(vi) The evidence of the Muresa accountancy experts that there was a decrease in sales in the sum of US$ 5,168,270.56 due to the Trademark Opposition Proceeding.

293.
The Second Cause advanced for cassation was violation of rules of law. The particulars pleaded in support of this cause essentially duplicated those relied upon in support of the First Cause. It should be noted, however, that the plaintiffs alleged that BSJ and BSLS had directly violated Article 217 of the Judicial Code and that, as a consequence of this, Article 1644 of the Civil Code was "also directly infringed."282
294.
On 16 September 2013, BSJ and BSLS filed an Opposition to the Admission of the Cassation Appeal.283 This joined issue with the contention that the Appeal Court had ignored the various items of evidence, arguing that a mere omission to mention evidence did not prove that it had been ignored. The pleading went on to submit that none of the items allegedly ignored could have affected the result of the case, as there was no evidence as to how Bridgestone was alleged to have caused the losses. As to the Second Cause, the matters relied upon simply duplicated the First Cause. The pleading observed, without demur, that Muresa relied on Article 217 of the Judicial Code and Article 1644 of the Civil Code.

(ii) The Decision on Admissibility

295.
On 4 December 2013, the Civil Division of the Supreme Court, consisting of Judge Oydén Ortega Durán, Judge Hernán A. de León Batista and Judge Harley J. Mitchell, ruled that the First Cause was admissible but that the Second Cause was not.284

(iii) The Pleadings

296.
On 3 January 2014, Muresa and TGFL submitted their written submissions in support of Cassation to the Supreme Court.285 These repeated allegations that the Appeal Court ignored relevant evidence, including the Foley Letter. They alleged that the threats issued by the defendants' lawyers constituted reckless behaviour that caused the plaintiffs to take precautionary measures. They further alleged that there had been "seizure and challenges" against the RIVERSTONE brand in the Dominican Republic, China and other countries. Allegations of recklessness and bad faith were made repeatedly.
297.
BSJ and BSLS replied on 14 January 2014.286 They expressly relied upon the passage in which the Appeal Court had defined the "recklessness that gives rise to the compensation referred to in [A]rticle 217."287 Three pages of the pleading are then devoted to an attack on the admissibility of the Foley Letter. The pleading goes on to draw attention to the conflict between Muresa's case that it was forced to stop selling the RIVERSTONE brand with the evidence that showed that they continued to sell RIVERSTONE tires. The pleading then challenges the relevance of BSJ's and BSLS's withdrawal of their appeal in the Trademark Opposition Proceeding, arguing that this could not possibly constitute recklessness or bad faith. Finally, the pleading deals with the evidence, asserting that it establishes neither damage nor reckless behaviour on the part of BSJ and BSLS. Thus, that part of the pleading that addresses liability does so on the premise that the test of liability is recklessness or bad faith.

d. The Supreme Court Judgment

298.
The Supreme Court delivered its judgment on 28 May 2014.288 The Reporting Judge was Judge Oydén Ortega Durán, and he delivered a Majority Judgment on behalf of himself and Judge Hernán A. de León Batista. Judge Harley J. Mitchell D. delivered a Dissenting Opinion. As the Supreme Court Judgment is central to these proceedings, we annex it to this Award in its entirety.289 In order to facilitate the analysis that is to follow we propose to break down the Majority Judgment into its various elements.

(i) The Majority Judgment

(a) The Ground for Cassation

299.
At the beginning of their opinion, the Majority stated the ground upon which cassation was sought: "infringement of substantive rules of law due to factual error regarding the existence of evidence."290 They went on to explain what this ground of cassation involves:

"[…] [W]hen evidence in the proceeding was ignored by the Upper Court when issuing a decision; and when such evidence would have had an influence on the dispositive part of the decision."291

(b) The Finding that the Ground for Cassation was Made Out

300.
Before setting out their opinion, the Majority had set out the six different respects in which the plaintiffs asserted that there had been "error regarding the existence of evidence which substantially influenced the dispositive part of the Decision." Each one of these expressly alleged that the Appeal Court had "ignored" evidence. The six items of evidence alleged to have been ignored are set out at paragraph 292 supra.
301.
In a short paragraph the Majority held that, subject to the question of their impact on the dispositive decision, these grounds for cassation were made out:292

"[…] [A] thorough review of the challenged Decision shows that the evidence referred to in the Six Reasons was ignored. The Upper Court only pointed out that a review of the body of evidence did not support the Plaintiffs' claim. The Upper Court did not conduct a thorough analysis of the evidence, and did not identify any evidentiary elements referring to it in a general and global way.

[…] It has been shown that the aforementioned evidence was not assessed by the Upper Court in the challenged decision. […]."

302.
The Majority then remarked that it remained for the Chamber to determine whether the evidence in question supported the plaintiffs' claims.293

(c) The Legal Test of Liability Applied by the Supreme Court

303.
The Majority recited that the plaintiffs claimed that there had been "a violation of the provisions of Article 1644, Civil Code, in accordance with Article 217, Judicial Code" and set out the provisions of each.294 The Majority accordingly applied the test of recklessness and bad faith as being determinative of liability.

(d) The Admission of the Foley Letter and Assessment of the Evidence Alleged to Have Been Ignored

304.
The Majority referred to the fact that a Spanish translation of the Foley Letter had been introduced into the documentary evidence on two occasions,295 these being their incorporation in expert reports. After referring to other evidence in the list of six items relied upon by the plaintiff as having been ignored by the Appeal Court, the Majority commented:296

"The Chamber notes that the aforementioned evidence, on whose grounds the merits are based, was duly and timely submitted to the Court, and does not appear to have been challenged as to its authenticity and truthfulness. Thus, such evidence may be assessed jointly."

(e) The Majority Findings on Damages

305.
Before considering the allegations of negligent and reckless action taken by the Bridgestone defendants in bad faith, the Majority considered the evidence of damage allegedly sustained by the plaintiffs. In doing so, they had regard to the evidence that the plaintiffs had alleged had been ignored by the Appeal Court. They stated:297

"This Chamber fully verified the body of evidence, on which the notion of factual error is based about the existence of the evidence."

306.
The Majority accepted this evidence, the truthfulness of which they had described as unchallenged, as establishing that the Muresa plaintiffs had sustained the losses that they alleged:

"Such statements clearly and coincidentally show a sales crisis, reflected in the Plaintiffs' earnings which, despite the implementation of contingency plans, could not prevent the loss of sales or market position of the RIVERSTONE brand."298

307.
There is no indication that the Majority gave any consideration to the other evidence adduced before the First Instance Court, or even to the judgment of that Court.

(f) The Majority's Finding on Liability

308.
The Majority endorsed the finding of the Appeal Court that a finding of negligence was necessary if liability was to be established pursuant to Article 1644 of the Civil Code, but stated that they did not agree that negligence was not established.299 They went on to make findings of negligence and bad faith against BSJ and BSLS on the following basis:

(i) The Foley Letter was "obviously intimidating and reckless conduct."300

(ii) BSJ and BSLS "went to extremes to oppose the registration of a product brand that was conveniently commercially competitive. Then, after spending a significant amount of time in litigation, they withdrew the appeal [that] they had filed against an adverse Decision."301

(iii) There was strong evidence that Muresa had a legal right to market their product and BSJ and BSLS, without strong legal grounds, set out to cause damage to their commercial rivals, wishing to jeopardize Muresa's dominant market presence. This was not behaviour taken in good faith. It was negligent and caused irreversible damage to the plaintiffs' business activities.302

(ii) The Dissent of Judge Harley J. Mitchell, D.

309.
Judge Mitchell recorded that he had submitted remarks to his colleagues which were partially accepted, but that he did not agree with their decision.303 The reasons that he gave for his dissent included the following:

(i) Submitting the Foley Letter and filing the Trademark Opposition Petition were not "reckless" per se.304

(ii) The Majority Judgment did not verify the Foley Letter's origin, how it reached the proceedings, or when it was drafted or sent.305

(iii) The copies of the Foley Letter did not meet the necessary procedural requirements to be admitted as evidence.306

(iv) The plaintiffs advanced their claim on the basis that owing to the Trademark Opposition Proceeding they stopped selling RIVERSTONE products, but the Majority Judgment states that the damages were caused by a decrease in sales.307 In fact, RIVERSTONE tires were never withdrawn from the market.308

(v) The Majority did not have regard to the plaintiffs' own evidence, which showed that lower quality tires were already being marketed by Muresa before the Trademark Opposition Proceeding.309

(vi) The decrease in sales of RIVERSTONE products was attributable to a fear of seizure and not to the Trademark Opposition Proceeding.310

(vii) The Majority disregarded the finding of the Eighth Circuit Court that BSJ and BSLS had acted in evident good faith and without abuse of litigation.311

(viii) The Majority carried out no analysis to support their conclusion that a US$ 5 million loss was suffered, and ignored the evidence of the Court's expert that there was no evidence to support the damages claimed.312

310.
Judge Mitchell made it clear that what he considered to be in issue was "abuse of right, recklessness, and application of Article 217 of the Judicial Code."313

e. The Post-Cassation Proceedings

311.
BSJ and BSLS took various procedural steps, beginning on 16 June 2014 and ending on 9 May 2016, in vain attempts to reverse the Supreme Court Judgment:

(i) A Motion for Clarification and Modification.314 This was rejected.315

(ii) A Request for Judicial Review.316 This was rejected.317

(iii) An Appeal against the rejection of the Request for Judicial Review.318 This was rejected.319

(iv) A further Motion for Clarification.320 This was rejected.321

C. The Claim for Denial of Justice under Article 10.5 of the TPA

1. The Parties' Positions

a. The Claimants' Position

312.
The Claimants contend that Article 10.5 of the TPA requires Panama to provide to covered investments (including investments in intellectual property rights) fair and equitable treatment in accordance with customary international law, and it explicitly requires the Respondent not to deny justice to investors.322 The Claimants note that the TPA "specifically refers to the customary international law standard for denial of justice," but remark that the TPA also adds that the obligation is "not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world."323 In consequence, the Claimants argue, Panama's promise to an American investor is that its system of justice would not fail to meet the standards of due process well-established in the United States, one of the principal systems of the world.324
313.
The Claimants submitted in their Memorial that the Respondent's duty not to deny justice also arises from customary international law,325 but they have since emphasized that BSLS's and BSAM's claim in this case is "explicitly brought under the fair and equitable treatment standard at Article 10.5 of the TPA."326
314.
According to the Claimants, the Respondent has breached Article 10.5 of the TPA by issuing the Supreme Court Judgment of 28 May 2014, after a "deeply problematic" process.327 For the Claimants, this judgment can only be described as a "shocking, arbitrary and profoundly unjust" ruling that "[n]o honest or competent court could possibly have given […]."328 The Claimants argue that the Supreme Court Judgment "is a decision that no court in Panama, no court in the Latin American Region, in fact, no court in any country around the world has ever taken, ever;" which "undercuts one of the fundamental rights of trademarks," namely, "the right to oppose the registration of potentially confusingly similar marks."329

(i) The Standard for Denial of Justice

315.
The Claimants contend that, as established by arbitral decisions, a denial of justice may occur when there is "clear and malicious misapplication of the law;" "lack of due process" to a point which "offends a sense of judicial propriety;" a decision that is "clearly improper and discreditable" in light of all the facts; or "when it is clear that the court has […] 'administer[ed] justice in a seriously inadequate way.'"330 This said, the Claimants also submit that there is no definitive test for denial of justice under international law, given the wide range of possibilities and factual circumstances that could amount to denial of justice.331