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GLOSSARY OF TERMS AND ABBREVIATIONS

Américas I One of the two high-end mixed-use skyscrapers planned under the Guadalajara Project to be built in the city of Guadalajara, State of Jalisco
Américas II One of the two high-end mixed-use skyscrapers planned under the Guadalajara Project to be built in the city of Guadalajara, State of Jalisco
Arechederra Witness statement of Jose Arechederra
Canada Submission Non-Disputing Party Submission of the Government of Canada submitted on June 21, 2019
CM Claimant's Memorial dated March 13, 2017
CR Claimant's Reply on the Merits dated February 21, 2019
CPHB Claimant's Post-Hearing Brief dated October 1, 2019
CC Jalisco Civil Code of Jalisco
CC Nayarit Civil Code of Nayarit
C&C Capital C&C Capital, S.A. de C.V., a company owned or controlled by Sr. Cárdenas
C&C Ingeniería C&C Ingeniería y Proyectos, S.A. de C.V., a company owned or controlled by Sr. Cárdenas
Clarion Clarion Partners, L.P., a real estate investment management company founded in New York in 1982, which manages real estate investments for institutional investors
Commercial Code [of Mexico] Commercial Code of Mexico of 1889, with amendments, as under exhibit Zamora I-3
Costs of the Proceeding The fees and expenses of the members of the Tribunal and the expenses and charges of the Secretariat
CPC Jalisco Civil Procedure Code of Jalisco
Credit Agreements Three contracts signed by Lion with companies owned or controlled by Sr. Cárdenas in February, June and September 2007, making and governing the Loans
Debtors Two Mexican companies, Inmobiliaria Bains, S.A. de C.V and C&C Capital, S.A. de C.V., the borrowing party in three loans made by Lion
Defense Expenses The expenses incurred by the Parties in connection with the proceeding
First Loan Loan, in the form of a "Credit Agreement", between Lion (as Lender), Inmobiliaria Bains (as Borrower) and C&C Ingeniería, another company of Sr. Cárdenas (as joint and several obligor). It was signed on February 27, 2007, for the amount of US $15,000,000 plus interest
First Note Note issued by Inmobiliaria Bains in favor of Lion for US $15,000,000 on February 28, 2007
Juez de lo Civil The 39th Civil Court in Mexico City, before which the Foreclosing Proceedings were initiated
Foreclosure Proceedings Juicio Hipotecario; Foreclosure proceedings initiated on 3 April 2012 by Lion against the Debtors, to enforce the Nayarit Mortgage
Guadalajara Mortgage 1 Mortgage securing the Second Loan, granted by C&C Capital in favor of Lion over one of the properties pertaining to the Guadalajara Project on June 13, 2007
Guadalajara Mortgage 2 Mortgage securing the Third loan, granted by C&C Capital in favor of Lion over one of the properties pertaining to the Guadalajara Project on September 26, 2007
Guadalajara Project Real estate project that consisted of two high-end mixed-use skyscrapers (Américas I and Américas II), which were to be built by Sr. Cárdenas's companies in Guadalajara, State of Jalisco
Guadalajara Properties Real estate covered by the two Guadalajara Mortgages, where the Guadalajara Project was intended to be developed
Hearing The hearing on the Merits held at the World Bank Headquarters in Washington D.C. on July 22-14, 2019
Hendricks Witness statement of James Hendricks
HT Transcripts of the Merits Hearing
ICSID International Centre for Settlement of Investment Disputes
ICSID AF Rules International Center for Settlement of Investment Disputes Additionally Facility Rules
Inmobilaria Bains Inmobiliaria Bains, S.A. de C.V. a company owned or controlled by Cárdenas
Lion/ Claimant Claimant. Lion Mexico Consolidated L.P. is a partnership constituted under the laws of Quebec (Canada), with its main place of business in Texas (USA)
H1 Lion's Opening Statement Presentation of July 22, 2019
Loans Three loans that Lion made in 2007 to two Mexican companies owned or controlled by Sr. Cárdenas, for a principal amount of approximately US $32.8 million. The Loans were secured by the three Mortgages and the issue of three Notes
Mexico/ Respondent United Mexican States
Mortgages Mortgages that secured the three Loans given by Lion in 2007, signed before a public notary in the Spanish language and subject to Mexican Law, namely the laws of the States of Jalisco and Nayarit
NAFTA North American Free Trade Agreement between the United States, Canada and Mexico, which entered into force in January 1, 1994
Nayarit Project Real estate project to be developed by Sr. Cárdenas's companies in Bahía de Banderas, State of Nayarit, Mexico
Nayarit Property Real estate covered by the Nayarit Mortgage, where the Nayarit Project was intended to be developed
Nayarit Mortgage Mortgage granted by Inmobiliaria Bains in favor of Lion over the Nayarit Project property on April 2, 2008
Notes Notes formalizing the three Loans made by Lion in 2007, issued under Mexican law, and submitted to the exclusive jurisdiction of the courts of Mexico D.F.
Paparinskis M. Paparinskis, "The International Minimum Standard and Fair and Equitable Treatment", Oxford Monographies in International Law, 2013
Paulsson Lecture J. Paulsson, "Issues Arising from Finding of Denial of Justice," Recueil des cours / Collected Courses 405 (2020): [i]-74.
Payne I First witness statement of Onay Payne
Payne II Second witness statement of Onay Payne
Parties The Claimant and the Respondent together
PO Procedural Order
Properties The Nayarit Property and the Guadalajara Properties, together
RCM Respondent's Counter Memorial dated October 26, 2018
RfA Request for Arbitration submitted by Lion against Mexico and dated December 11, 2015
RPHB Respondent's Post-Hearing Brief dated October 1, 2019
RR Respondent's Rejoinder dated June 3, 2019
Second Loan Loan, in the form of a "Credit Agreement", between Lion (as Lender), C&C Capital (as Borrower) and Inmobiliaria Bains (as joint and several obligor). It was signed on June 13, 2007, for the amount of US $12,450,000 plus interest
Second Note Noted issued by C&C Capital in favor of Lion for US $12,450,000 on June 14, 2007
Third Loan Loan, in the form of a "Credit Agreement", between Lion (as Lender), C&C Capital (as Borrower) and Inmobiliaria Bains (as joint and several obligor). It was signed on September 26, 2007, for the amount of US $5,355,479 plus interest
Third Note Note issued by C&C Capital in favor of Lion for US $5,355,479 on September 29, 2007
USA Submission Non-Disputing Party Submission of the United States of America submitted on June 21, 2019
VCLT Vienna Convention on the Law of Treaties, adopted on 23 May 1969 and opened for signature on 23 May 1969
Zamora Hearing Presentation Claimant's expert report presentation by Mr. Rodrigo Zamora Etcharren at the Merits Hearing
Zamora I Claimant's expert report prepared by Mr. Rodrigo Zamora Etcharren dated March 6, 2017
Zamora II Claimant's expert report prepared by Mr. Rodrigo Zamora Etcharren dated October 23, 2017
Zamora III Claimant's expert report prepared by Mr. Rodrigo Zamora Etcharren dated January 18, 2018
Zamora IV Claimant's expert report prepared by Mr. Rodrigo Zamora Etcharren dated February 2, 2019

 

LIST OF CASES

 

ADC ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary, ICSID Case No. ARB/03/16, Award (27 September 2006), Exhibit CLA-212
ADF ADF Group Inc. v. United States of America, ICSID Case No. ARB (AF)/00/1, Award (9 January 2003)
Al-Bahloul Mohammad Ammar Al-Bahloul v. The Republic of Tajikistan, SCC Case No. V (064/2008) , Partial Award on Jurisdiction and Liability (2 September 2009), Exhibit CLA-220
Ambatielos The Ambatielos Claim (Greece, United Kingdom of Great Britain and Northern Ireland), Award (6 March 1956), 12 U.N.R.I.A.A. 83 at 119, Exhibit CLA-249
Ambiente Ufficio Ambiente Ufficio S.p.A. and others v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility (8 February 2013), Exhibit CLA-291
Amco Asia II Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. ARB/81/1, Award (20 November 1984), Exhibit CLA-213
Apotex Apotex Inc. v. United States of America, NAFTA/UNCITRAL, Award (June 14, 2013), Exhibit RL-061
ATA Construction ATA Construction, Industrial and Trading Company v. The Hashemite Kingdom of Jordan, ICSID Case No. ARB/08/2, Award (18 May 2010)
Azinian Robert Azinian, Kenneth Davitian, & Ellen Baca v. The United Mexican States, ICSID Case No. ARB (AF)/97/2, Award (1 November 1999), Exhibit CLA-187
Azurix Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Award (14 July 2006)
Ballistini Ballistini case, French-Venezuelan Commission (1902), Award (1905), 10 U.N.RI.A.A. 18 at 20, Exhibit CLA-253 (Unofficial Translation from French)
Barcelona Traction Case concerning the Barcelona Traction, Light and Power Company, Limited, Judgment (Merits) (5 February 1970), I.C.J. Reports 3 (1970); Exhibit CLA 235
Chattin B. E. Chattin (United States.) v. United Mexican States, General Claims Commission, Award (23 July 1927), 4 U.N.R.I.A.A. 282, Exhibit CLA-250
Chemtura Chemtura Corporation v. Government of Canada, UNCITRAL Award (2 August 2010), Exhibit CLA-139
Chevron I Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador, Partial Award on the Merits (30 March 2010), Exhibit CLA-279
Chevron II Chevron Corporation and Texaco Petroleum Corporation v. Ecuador (II), Second Partial Award on Track II dated 30 August 2018
CMS CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8, Award (12 May 2005)
Chorzów Factory Case Concerning the Factory at Chorzów (claim for indemnity) (merits), Judgment (13 September 1928), P.C.I.J. Series A No. 17, Exhibit CLA-180
 Churchill Mining Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and 12/40, Award, 6 December 2016, Exhibit RL-100  
Corona Materials Corona Materials, LLC v Dominican Republic, ICSID Case No ARB(AF)/14/3, Award on the Respondent's Expedited Preliminary Objections in Accordance with Article 10.20.5 of the DR-CAFTA, 31 May 2016, Exhibit RL-067
Cotesworth & Powell Award Pronounced in the case of Cotesworth and Powell, in H. La Fontaine, Pasicrisie Internationale: Historie Documentaire des Arbitrages Internationaux (1902), Exhibit CLA-239 and RL-103
Dan Cake Dan Cake S.A. v. Hungary, ICSID Case No. ARB/12/9, Decision on Jurisdiction and Liability (24 August 2015), Exhibit CLA-597
Diallo Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo), Judgment (Preliminary Objections) (24 May 2007), I.C.J. REPORTS 582 (2007) at p. 600, Exhibit CLA-285
Duke Energy Duke Energy Electroquil Partners and Electroquil S.A. v. Republic of Ecuador, ICSID Case No. ARB/04/19, Award of 18 August 2008
El Oro Mining El Oro Mining and Railway Company (Ltd.) (Great Britain) v. United Mexican States, Great-Britain and Mexico Claims Commission, Award (18 June 1931), 5 U.N.R.I.A.A. p. 191, Exhibit CLA-243
Eli Lilly Eli Lilly and Company v. The Government of Canada, UNCITRAL, ICSID Case No. UNCT/14/2, Final Award (16 March 2017), Exhibit CLA-564
ELSI Elettronica Sicula s.p.a., (ELSI), (United States of America v. Italy), Judgment (20 July 1989), I.C.J. REPORTS (1989), at p. 47, Exhibit CLA-234
Fabiani Case of Fabiani (France v. Venezuela), Award (30 December 1896), 5 MOORE'S HISTORY AND DIGEST OF THE ARBITRATIONS TO WHICH THE UNITED STATES HAS BEEN A PARTY 4878, Exhibit CLA-236.
Finnish Vessels Claim of Finnish shipowners against Great Britain in respect of the use of certain Finnish vessels during the war, Award (9 May 1934), 3 U.N.R.I.A.A. 1479, Exhibit CLA-649
Flughafen Flughafen Zürich A.G. and Gestión e Ingenería IDC S.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/19, Award (18 November 2014)
Gami Gami Investments Inc. v. United Mexican States, Award (15 November 2004), Exhibit CLA-616
Glamis Gold Glamis Gold, Ltd. v. The United States of America, (UNCITRAL) Award (8 June 2009), Exhibit CLA-142
Idler Jacob Idler v. The United States of Venezuela, Claim No. 2, Award, 14 July 1890, United States and Venezuelan Commission, Opinions, at pp. 155-172, Exhibit CLA-255
Interhandel Interhandel, Preliminary Objections, Judgment, I.C.J. Reports 1959
Jan de Nul Jan de Nul N. V. v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Award (6 November 2008), Exhibit CLA-240
Krederi Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Excerpts of Award dated 2 July 2018
Loewen Loewen Group, Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB(AF)/98/3, Award (23 June 2003), Exhibit CLA-168.
Merrill Merrill & Ring Forestry L.P. v Canada, (UNCITRAL) Award (31 March 2010), Exhibit CLA-615
Metalclad Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1, Award (30 August 2000), Exhibit CLA-149
Middle East Cement Middle Cement Middle East Cement Shipping and Handling Co v. Arab Republic of Egypt, ICSID Case No. ARB/99/6, Award (12 April 2012), Exhibit CLA-211
Mondev Mondev International Ltd. v United States of America, ICSID Case No. ARB(AF)/99/2, Award (11 October 2002), Exhibit CLA-086
MTD v. Chile MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award, 25 May 2004, Exhibit RL-085
Neer L. Fay, H. Neer and Pauline Neer (USA) v. United Mexican States, RIAA, Volume IV pp. 60-66, 15 October 1926, Exhibit CLA-277
Norwegian Loans Certain Norwegian Loans, Judgment, I.C.J. Reports 1957
OI OI European Group B.V. v Bolivarian Republic of Venezuela, ICSID Case No ARB/11/25, Award, 10 March 2015, Exhibit RL-068
Oostergetel Jan Oostergetel and Theodora Laurentius v. The Slovak Republic, UNCITRAL Final Award (23 April 2012), Exhibit CLA-260.
Pantechniki Pantechniki S.A. Contractors & Engineers v. Republic of Albania, ICSID Case No. ARB/07/21, Award (30 July 2009), Exhibit CLA-276
Pey Casado Victor Pey Casado and President Allende Foundation v. Republic of Chile, ICSID Case No. ARB/98/2, Final Award (8 May 2008), Exhibit CLA-202
Philip Morris v. Uruguay Philip Morris Brands Salr, Philip Morris Products S.A. and ABAL Hermanos S.A. v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016, Exhibit RL-066
Renée Rose Levy Renée Rose Levy de Levi v. Republic of Peru, ICSID Case No. ARB/10/17, Award, 26 February 2014, Exhibit RL-101
Joseph F. Rihani Joseph F. Rihani, American Mexican Claims Commission, Decision No. 27-C (1942), 1948AM. MEX. CLAIMS REP. 254, Exhibit CLA-251
Robert E. Brown Robert E. Brown (United States) v. Great Britain, Award (23 November 1923), 6 U.N.R.I.A.A. 120 at 129, Exhibit CLA-294
Saluka Saluka Investments B. V. v. The Czech Republic, UNCITRAL, Partial Award of 17 March 2006
Saipem Saipem S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/07, Award (30 June 2009), Exhibit CLA-185
Toto Construzioni Toto Construzioni Generali S.p.A. v. The Republic of Lebanon, ICSID Case No. ARB/07/12, Decision on Jurisdiction (11 September 2009), Exhibit CLA-244
Vivendi Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, Award (20 August 2007), Exhibit CLA-310
Waste Management II Waste Management v. Mexico, Case N° ARB(AF)/00/3, (30 April 2004), Exhibit CLA-200

 

I. INTRODUCTION

1.

On December 11, 2015, the International Centre for Settlement of Investment Disputes ["ICSID"] received a request for arbitration [the "RfA"] submitted by Lion Mexico Consolidated L.P. ["Lion" or "Claimant"], a company constituted under the laws of Quebec, Canada, against the United Mexican States ["Mexico" or "Respondent"].

2.

The RfA was made pursuant to Arts. 1116, 1120, and 1122 of the North American Free Trade Agreement ["NAFTA"]1. It included a request for approval of access to the Additional Facility of the Centre.

3.

On December 23, 2015, the Secretary-General registered the RfA and approved access to the Additional Facility pursuant to Art. 4 of the ICSID Additional Facility Rules ["ICSID AF Rules"].

4.
The Tribunal was officially constituted on July 26, 2016, after all the arbitrators accepted their appointments and the proceedings were deemed to have begun.
5.

At the time of this Award, the Tribunal is composed of three following members:

Mr. Juan Fernández-Armesto
Chairman - Spanish national
Appointed by agreement of the Secretary-General on July 20, 2016.
Armesto & Asociados
General Pardiñas, 102
28006 Madrid, Spain
Tel.: +34 91 562 16 25
E-mail: jfa@jfarmesto.com
Mr. David J.A. Cairns
Co-Arbitrator - British/New Zealand national
Appointed by Claimant on March 10, 2016.
Int-Arb Arbitrators & Mediators
Ponzano 6C
Madrid 28003
Spain
Tel.: +34 91 423 7200
E-mail: d.cairns@arbitration.es
Prof. Laurence Boisson de Chazournes
Co-Arbitrator - French/Swiss national
Appointed by Respondent on February 2, 2018.
University of Geneva, Faculty of Law
40, boulevard du Pont-d'Arve
1211 Geneva 4 (Switzerland)
Tel.: +41 (0) 22 379 85 44
E-mail: Laurence.BoissonDeChazournes@unige.ch

II. THE PARTIES

6.
This arbitration takes place between Lion Mexico Consolidated L.P. (Canada) and the United Mexican States, a sovereign state.

1. Claimant: Lion Mexico Consolidated L.P.

7.
Claimant is Lion Mexico Consolidated L.P., a partnership incorporated and registered under the laws of the Province of Quebec, Canada. Its main place of business and unified domicile for notifications is the following:
1717 McKinney Avenue, Suite 1900
Dallas, Texas 75202
United States of America2
8.
Claimant is represented in this arbitration by:
Onay Payne
Lion Mexico Consolidated L.P.
230 Park Avenue, 12th Floor
New York, NY 10169
T. 212.883.2507
Email: Onay.Payne@clarionpartners.com
Robert J. Kriss
Mayer Brown LLP
71 S. Wacker Drive
Chicago, Illinois, 60606
Tel. +1 312 782 0600
Email: rkriss@mayerbrown.com
Dany Khayat
Alejandro Lopez-Ortiz
José J. Caicedo
Mayer Brown
20, avenue Hoche
75008 Paris - France
Tel. +33.1.53.53.43.43
Emails: dkhayat@mayerbrown.com
alopezortiz@mayerbrown.com
jcaicedo@mayerbrown.com

2. Respondent: United Mexican States

9.
Respondent is the United Mexican States, a sovereign State.
10.
The Respondent is represented in this arbitration by the following counsel:
Samantha Atayde Arellano
Directora General de Consultoría Jurídica de Comercio Internacional
Email: samantha.atayde@economia.gob.mx
Leticia Ramírez Aguilar
Directora General Adjunta de Consultoria Jurídica de Comercio Internacional "B"
Email: leticia.ramirez@economia.gob.mx
Cindy Rayo Zapata
Directora de Consultoría Jurídica de Comercio Internacional
Email: cindy.rayo@economia.gob.mx
Geovanni Hernández Salvador
Director de Consultoría Jurídica de Comercio Internacional
Email: geovanni.hernandez@economia.gob.mx
Secretaría de Economía
Av. Paseo de la Reforma 296, piso 25, Colonia
Juárez, Delegación Cuauhtémoc, C.P. 06600
Ciudad de México, México
Aristeo López Sánchez
Embajada de México
1911 Pennsylvania Ave NW
Washington D.C. 20006
Estados Unidos de América
Email: alopez@naftamexico.net
J. Cameron Mowatt
J. Cameron Mowatt, Law Corporation
Email: cmowatt@isds-law.com
Stephan Becker
Pillsbury Winthrop Shaw Pittman
Email: stephan.becker@pillsburylaw.com
Alejandro Barragán
J. Cameron Mowatt, Law Corporation
Email: abarragan@isds-law.com
11.
Henceforth, Claimant and Respondent will together be referred to as the "Parties".

III. PROCEDURAL HISTORY

12.

On December 11, 2015, Lion submitted to the ICSID a RfA against Mexico pursuant to Art. 36 of the ICSID Convention and on the basis of the NAFTA, between the United States of America, Canada and the United Mexican States, which entered into force on January 1, 1994. On December 23, 2015, the Secretary-General of ICSID registered the RfA and approved access to the Additional Facility pursuant to Art. 4 of the ICSID AF Rules.

13.

The Tribunal was constituted on July 27, 2016, in accordance with Art. 6(3) of the ICSID AF Rules and was originally composed of Juan Fernández-Armesto a national of Spain, President, appointed by the Secretary-General pursuant to agreement of the Parties; David J.A. Cairns, a national of Great Britain and New Zealand, appointed by the Claimant; and Ricardo Ramírez Hernández, a national of Mexico, appointed by the Respondent. The Tribunal was reconstituted on February 6, 2018, with the appointment of Laurence Boisson de Chazournes, following the resignation of Ricardo Ramírez Hernández.

14.

In the course of the proceeding, the Tribunal issued a Decision on the Respondent's Preliminary Objection under Art. 45(6) of the ICSID AF Rules, dated December 12, 2016, a Decision on the Non-Disputing Party's Application, dated May 23, 2017, a Decision on Bifurcation, dated May 29, 2017, and a Decision on Jurisdiction, dated July 30, 2018. The full procedural history of this case is described in these decisions.

15.
The Decision on Jurisdiction forms part of this Award and is appended as Annex A. In the Decision on Jurisdiction, the Tribunal dismissed Respondent's jurisdictional objection and declared that3:

- the Mortgages qualify as an investment, and

- the Notes do not qualify as an investment.

16.
The procedural details of this proceeding following the Decision on Jurisdiction are summarized below.
17.

In accordance with section 17.1 of Procedural Order No. 1 ["PO 1"], Mexico submitted a document production schedule. Claimant filed its response and final version of the document production schedule containing both Parties' arguments, agreements and disagreements and requests the Tribunal to decide on the production of documents.

18.

On September 3, 2018, the Tribunal issued Procedural Order No. 6 deciding on Mexico's request for production of documents.

19.
On September 5, 2018, the updated procedural calendar (Annex A to PO 1) was transmitted to the Parties.
20.
On October 2, 2018, following the Parties' document production exchanges, the Respondent informed the Tribunal that, in light of the confidential nature of some of the documents, the Claimant requested a Confidentiality Order for the protection of confidential information. The Parties agreed on the content of such order, which they attached with their communication for the Tribunal's approval and issuance.
21.

On October 11, 2018, the Tribunal issued Procedural Order No. 7 embodying the Parties' agreement with regards to the treatment of confidential documents.

22.
On October 26, 2018, following an agreed extension, Mexico submitted its Counter-Memorial on the Merits, attaching 33 factual exhibits4, 60 legal authorities5, one witness statement (Raúl Calva Balderrama), three legal expert reports, prepared by the law firm Sánchez Devanny, Dr. Raúl Plasencia Villanueva and Dr. José Ovalle Favela, and a valuation expert report, prepared by CBRE.
23.
On November 7, 2018, as agreed by the Parties, the Tribunal issued an amended procedural calendar (Annex A to PO 1).
24.
On November 12, 2018, the Claimant submitted a document production request in accordance with section 17.1 of PO 1. On December 13, 2018, Mexico filed its response and final version of the document production schedule containing both Parties' arguments, agreements and disagreements and requests for the Tribunal to decide on the production of documents.
25.

On January 3, 2019, the Tribunal issued Procedural Order No. 8 deciding on the Claimant's requests for production of documents. On January 8, 2019, the Claimant submitted a request for the Tribunal to reconsider one of the document requests which was ruled to be overbroad. On January 29, 2019, after receiving comments from Mexico, the Tribunal rejected the Claimant's request for reconsideration.

26.
On February 7, 2019, as agreed by the Parties, the Tribunal issued an amended procedural calendar (Annex A to PO 1).
27.
On February 21, 2019, the Claimant filed its Reply on the Merits together with 40 factual exhibits6 and 218 legal authorities,7 a second witness statement of Ms. Onay Payne, a fourth legal expert report by Mr. Rodrigo Zamora (which attached 20 legal authorities) and the expert valuation report and rebuttal report of Mr. Richard Marchitelli of Cushman Wakefield.
28.
On May 28, 2019, the United States of America wrote to the Tribunal requesting permission to file a submission on questions of treaty interpretation under NAFTA Art. 1128.
29.
On June 3, 2019, following an agreed extension, the Respondent filed its Rejoinder on the Merits together with 9 factual exhibits8 and 21 legal authorities,9 a second expert report of Dr. José Ovalle Favela, and a second valuation expert report prepared by CBRE.
30.

On June 5, 2019, the ICSID Secretariat transmitted to the Parties a draft Procedural Order No. 9 ["PO 9"] concerning the organization of the hearing and inviting the Parties to confer and agree on the items addressed therein. The Parties were also informed that a pre-hearing conference would take place on June 24, 2019.

31.
On June 11, 2019, the Tribunal informed the United States that it had no objection to the proposal made on May 28, 2019 and therefore their submission should be filed by June 21, 2019.
32.
On June 14, 2019, following an agreed extension, each Party submitted the preliminary list of witnesses and experts for cross-examination at the hearing.
33.
On June 18, 2019, the Parties submitted a joint draft of PO 9 indicating the items on which they agreed and their respective positions regarding the items on which they did not agree. On June 21, 2019, the Tribunal provided the Parties the corresponding agenda of the items to be discussed in the pre-hearing conference.
34.

Also, on June 21, 2019, the United States of America and the Government of Canada each file a written submission as a non-disputing State Party pursuant to Art. 1128 of NAFTA.

35.
On June 24, 2019, the Tribunal held a pre-hearing organizational meeting with the Parties by teleconference.
36.

On June 26, 2019, the Tribunal issued PO 9 concerning the organization of the hearing.

37.
On July 4, 2019, the Claimant informed the Tribunal that it did not wish to cross-examine Dr. Raúl Plascencia (Respondent's legal expert) and Mr. Raúl Calva (Respondent's witness). The Tribunal invited Mexico to comment on Claimant's communication and on July 11, 2019, Mexico informed the Tribunal that it did not have any comments with respect to Claimant's communication of July 4, 2019. Mexico further stated that it did not wish to cross examine Mr. José Arechederra Tovar (Claimant's witness) and requested that Mr. Diego Gómez Haro and Mr. Alfonso López Lajud from the law firm Sánchez Devanny be examined by video conference.
38.
On July 15, 2019, Claimant responded to the Tribunal's invitation regarding the examination of Mr. Gómez Haro and Mr. López Lajud by videoconference and a possibility of amending the timetable for the hearing. Claimant also requested leave to introduce a new document on record.
39.
On July 17, 2019, the Tribunal transmitted to the Parties a modified schedule from Procedural Order No. 9, with regard to interrogation of the witnesses and experts. The Tribunal also informed the Parties that it would decide on Claimant's request to introduce a new document to the record at the beginning of the hearing, after hearing Respondent's position on the matter10.
40.
A hearing on the merits was held in Washington, D.C. from July 22, 2019 to July 24, 2019 [the "Hearing"]. The following persons were present at the Hearing:

"

TRIBUNAL
Prof. Juan Fernández-Armesto President
Dr. David J.A. Cairns Arbitrator
Prof. Laurence Boisson de Chazournes Arbitrator
ASSISTANT TO THE TRIBUNAL
Mr. Luis Fernando Rodríguez
ICSID SECRETARIAT
Ms. Catherine Kettlewell Legal Counsel
CLAIMANT
Counsel:
Mr. Robert J. Kriss Mayer Brown
Mr. Dany Khayat Mayer Brown
Mr. Alejandro López Ortiz Mayer Brown
Mr. José Caicedo Mayer Brown
Ms. Patricia Ugalde Mayer Brown
Mr. Emiliano Represa Mayer Brown
Mr. Timothy J. Keeler Mayer Brown
Ms. Elaine Liu Mayer Brown
Parties:
Ms. Onay Payne Clarion Partners
Ms. Renee Castro Clarion Partners
Witnesses:
Ms. Onay Payne Clarion Partners
Mr. James C. Hendricks Clarion Partners
Experts:
Mr. Rodrigo Zamora Galicia Abogados
Mr. Richard Marchitelli Cushman & Wakefield
Mr. Cory Savik Cushman & Wakefield
RESPONDENT
Counsel:
Mr. Orlando Pérez Gárate Secretaría de Economía
Ms. Cindy Rayo Zapata Secretaría de Economía
Mr. Geovanni Hernández Salvador Secretaría de Economía
Ms. Blanca del Carmen Martínez Mendoza Secretaría de Economía
Mr. Aristeo López Sánchez Secretaría de Economía
Ministro Gerardo Lameda Díaz Pérez Secretaría de Economía
Mr. Pedro de la Rosa Embajada de México
Mr. J. Cameron Mowatt Tereposky & DeRose LLP
Ms. Jennifer Radford Tereposky & DeRose LLP
Mr. Vincent DeRose Tereposky & DeRose LLP
Mr. Alejandro Barragan Tereposky & DeRose LLP
Ms. Ximena Iturriaga Tereposky & DeRose LLP
Mr. Kun Hui Tereposky & DeRose LLP
Mr. Stephan E. Becker Pillsbury Winthrop Shaw Pittman LLP
Mr. Jorge Vera Pillsbury Winthrop Shaw Pittman LLP
Experts:
Mr. José Ovalle Favela Legal Expert
Mr. Chris G. Maugeri Damages Expert (CBRE)
Mr. Alfredo Rosas Damages Expert (CBRE)
NON-DISPUTING PARTIES
Ms. Nicole Thornton U.S. Department of State
Mr. John Blanck U.S. Department of State
Mr. Khalil Gharbieh Office of the U.S. Trade Representative
Ms. Amanda Blunt Office of the U.S. Trade Representative
INTERPRETERS
Ms. Charles Roberts English-Spanish Interpreter
Ms. Judith Letendre English-Spanish Interpreter
Ms. Sonia Berah English-Spanish Interpreter
COURT REPORTERS
Mr. Dante Rinaldi Spanish Court Reporter
Mr. Dionisio Rinaldi Spanish Court Reporter
Ms. Dawn Larson English Court Reporter

41.
During the Hearing, the following witnesses and experts were examined:

On behalf of the Claimant:
Ms. Onay Payne
Mr. James C. Hendricks
Mr. Rodrigo Zamora
Mr. Richard Marchitelli (for Cushman Wakefield)

On behalf of the Respondent:
Mr. José Ovalle Favela
Mr. Alfredo Rosas (for CBRE)

42.
On August 1, 2019, the Tribunal invited the Parties to i) agree on a schedule for the next procedural steps; ii) submit electronic copies of the exhibits they agreed to introduce during the hearing; and iii) to confer and agree about the introduction of the two Supreme Court decisions that were addressed in Mr. Zamora's expert presentation. The Tribunal also posed questions to the Parties to be addressed in their post-hearing briefs.
43.
On August 6, 2019, Mexico confirmed that the electronic versions of the exhibits11 submitted during the Hearing had been uploaded to the Box folder created for this case.
44.
On August 7, 2019, the Parties informed the Tribunal on their agreement for the dates for their post-hearing briefs and statement of costs, their disagreement on the filing of replies on costs and on the introduction of the two Supreme Court decisions.
45.
On August 9, 2019, the Tribunal confirmed the Parties agreed scheduled for the filing of post-hearing briefs and statement of costs, informed them that a second round on costs was not necessary and admitted into the record the decisions of the Mexican Supreme Court and of the Tribunal Colegiado.
46.
On August 12, 2019, the Claimant confirmed that electronic versions of the exhibits12 submitted during the hearing and the Supreme Court decisions had been uploaded to the Box folder created for this case.
47.
The Parties filed simultaneous Post-Hearing Briefs13 on October 1, 2019.
48.
The Parties filed simultaneous Statement of Costs with the corresponding supporting invoices on October 22, 2019.
49.
On November 6, 2019, the Tribunal invited the Respondent to provide answer on the President of the Tribunal's proposal made during the hearing to render the Award in English, following by a subsequent Spanish translation.
50.
On November 11, 2019, Mexico informed the Tribunal that it wished for the Award to be issued simultaneously in English and Spanish in accordance with section 12.11 of PO 1.
51.
On May 14, 2020, the Centre informed the Parties that during Mr. Francisco's Grob's paternity leave, Ms. Catherine Kettlewell, ICSID Legal Counsel, would serve as Secretary of the Tribunal.
52.
On September 25, 2020, Mr. Francisco Grob returned from paternity leave.
53.
On December 11, 2020, Mr. Luis Fernando Rodríguez ceased to serve as the Assistant to the Tribunal and the Tribunal proposed that Mr. Adam Jankowski serve as the new Assistant to the Tribunal. On January 7, 2021 the Parties confirmed the appointment of Mr. Adam Jankowski as the Assistant to the Tribunal.
54.
The proceeding was closed on July 19, 2021.

IV. FACTS

55.
This section describes the factual background of the dispute, which for the most part remains undisputed between the Parties.

1. Lion's investment in Mexico

56.
Claimant, Lion Mexico Consolidated L.P., is a limited partnership constituted under the laws of Quebec (Canada), with its main place of business in Texas (USA). Lion was created and is managed by Clarion Partners, L.P. ["Clarion"], a real estate investment management company founded in New York in 1982, which manages real estate investments for institutional investors14.
57.
Lion had been making investments in Mexico for over ten years. Over that period, Lion had provided more than US $800 million of capital to entities doing business in Mexico, to be used in developing a wide array of real estate properties, such as hotels, office buildings, residences, warehouses, and resorts15. Wishing to develop further investment opportunities in Mexico, Clarion engaged a specialized broker, and through this channel Sr. Héctor Cárdenas Curiel ["Sr. Cárdenas"], a Mexican businessman, was introduced16. Sr. Cárdenas was presented as a developer seeking funding for the development of two significant real estate projects: the "Nayarit Project" and the "Guadalajara Project".

1.1 Sr. Cárdenas's Projects: Nayarit and Guadalajara

58.
Mr. Hendricks, the managing director at Clarion during the period from 2006 through 2015, confirmed in his Witness Statement that Sr. Cárdenas enjoyed the reputation of a "trusted business partner of respected developers17". However, the preliminary inquiries did not extend to Cárdenas's father-in-law, a Sr. Garsin, a person with a "big banking relationship at Bansi Bank18" and apparently a powerful figure in the State of Jalisco, who also became involved in the project.
59.
The Nayarit Project included an ocean-front residential and resort development in Bahía de Banderas, State of Nayarit19. The development plan called for a mixed-use high-end resort to be anchored by a Ritz Carlton hotel, 1,500 luxury residential units, extensive amenity offerings, and two ocean-front golf courses, to be developed on 855 hectares (2,100 acres) with 2.8 miles of ocean frontage20.
60.
The Guadalajara Project21 consisted of two high-end mixed-use skyscrapers, to be built on approximately 15,000 m2(3.74 acre) in the city of Guadalajara, State of Jalisco22.
61.
Sr. Cárdenas's plans for the development of the Nayarit and the Guadalajara Projects were preliminary and incomplete at the time he requested capital from Lion to acquire land and begin limited infrastructure development23. Lion was willing to provide capital for the development of these projects subject to certain requirements, accepted by Sr. Cárdenas, including the following:

"- The granting of mortgages to Lion over the land acquired by Sr. Cárdenas and on the subsequent improvements made on that land24; and"

- The issuance of promissory notes as unconditional commitments to repay the money owed to Lion, with certain procedural privileges under Mexican law25.

1.2 The three sets of transactions

62.
In February, June and September 2007, Lion made three loans for financing the purchase of the properties for the Nayarit Project and the Guadalajara Project [the "Loans"], as well as working capital.

A. The first set of transactions

63.
The first loan took the form of a "Credit Agreement" between Lion (as Lender), Inmobiliaria Bains, S.A. de C.V. ["Inmobiliaria Bains"] (as Borrower) and C&C Ingeniería, S.A. de C.V. ["C&C Ingeniería"] as joint and several obligor -Inmobiliaria Bains and C&C Ingeniería were two companies owned by Cárdenas. The first loan was signed on February 28, 2007 and had a term of 18 months. Its original due date was August 28, 2008. The loan was for the amount of US $15,000,000, which accrued ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of a default, a default interest rate of 25% [the "First Loan"]26.
64.
The Credit Agreement was written in English and governed by the laws of Mexico27.
65.
The contract provided for the granting of a mortgage (clause four) and the issue of a non-negotiable promissory note (clause two, 2.2(5)) to secure the loan. It enclosed an Exhibit A (with the "Form of Mortgage") and an Exhibit B (with the "Form of Note").

The First Note

66.
On the same day, Inmobiliaria Bains issued the first promissory note in favor of Lion for US $15,000,000, plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of default, an interest rate of 25% ["First Note"].
67.
The original maturity date of the First Note was August 28, 2008. The First Note was substituted four times, resulting in a final maturity date as of September 30, 200928.
68.
The First Note (as would the other two) was issued under Mexican law, drafted both in English and Spanish (with the Spanish version governing) and submitted to the exclusive and irrevocable jurisdiction of the courts of Mexico City.

The Nayarit Mortgage

69.
About one year after the signing of the Credit Agreement, on April 2, 2008, Inmobiliaria Bains granted in favor of Lion the "Nayarit Mortgage" over the Nayarit Project property, located in the Municipality of Bahía de Banderas29.
70.
The Nayarit Mortgage was drafted in Spanish and subject to the laws of the State of Nayarit30. It was recorded at the Office of the Registro Público de la Propiedad y de Comercio (Public Registry) ["Registro Público"] of Bucerías, Nayarit, on May 19, 200831.
71.
The Nayarit Mortgage in its final form would secure not just the First, but all three Loans, including both principal and interest.

B. The second set of transactions

72.
The second loan also took the form of a "Credit Agreement", between Lion (as Lender), C&C Capital, S.A. de C.V. ["C&C Capital"] another company owned by Cárdenas (as Borrower) and Inmobiliaria Bains (as joint and several obligor). It was signed on June 13, 2007, around three months after the first set of transactions, and had a term of 90 calendar days. Its original due date was September 12, 2007. The loan was for the amount of US $12,450,000 which accrued ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of a default, an interest rate of 25% [the "Second Loan"]32.
73.
The contract provided for the granting of a mortgage (clause four) and the issue of a non-negotiable promissory note (clause two, 2.2(2)) to secure the loan. It also enclosed an Exhibit A (with the "Form of Mortgage") and an Exhibit B (with the "Form of Note").
74.
The Credit Agreement was again written in English and governed by the laws of Mexico33.

The Second Note

75.
The day after the signing of the Credit Agreement, on June 14, 2007 C&C Capital issued the second note ["Second Note"] in favor of Lion for US$12,450,000 plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of default, an interest rate of 25%34.
76.
The original maturity date of the Second Note was September 14, 2007. The Second Note was substituted seven times, leading to a final maturity date of September 30, 200935.

The Guadalajara Mortgage 1

77.
The "Guadalajara Mortgage 1" secured the Second Loan, including both capital and interest. It was granted on June 13, 2007, the date of execution of the Credit Agreement, by Bansi S.A., as trustee, as per the instruction of C&C Capital, as founder and beneficiary of the trust, in favor of Lion, over one of the properties pertaining to the Guadalajara Project36.
78.
The Guadalajara Mortgage 1 was subject to the laws of the State of Jalisco and was recorded at that Registro Público about five months later, on November 23, 2007.

C. The third set of transactions

79.
The third loan again took the form of a "Credit Agreement" between Lion (as Lender), C&C Capital (as Borrower) and Inmobiliaria Bains (as joint and several obligor). It was signed on September 26, 2007 and had a term of 90 calendar days. Its original due date was December 26, 2007. The loan was for the amount of US $5,355,479, which accrued ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of default, an interest rate of 25% [the "Third Loan"]37.
80.
The contract provided for the granting of a mortgage (clause four) and the issuance of a non-negotiable promissory note (clause two, 2.1(5)) to secure the loan. It was again accompanied by an Exhibit A (the "Form of Mortgage") and an Exhibit B (the "Form of Note").
81.
The Credit Agreement was written in English and governed by the laws of Mexico38.

The Third Note

82.
C&C Capital issued the Third Note ["Third Note"] on September 26, 2007, the date of execution of the Credit Agreement, in favor of Lion for US $5,355,479 plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of a default, a default interest rate of 25%. Inmobiliaria Bains signed as joint and several obligor39.
83.
The original maturity date of the Third Note was December 25, 2007. The Third Note was substituted six times, resulting in a final maturity as of September 30, 200940.

The Guadalajara Mortgage 2

84.
The "Guadalajara Mortgage 2" secured the Third Loan, including both capital and interest. It was granted on the day of execution of the Credit Agreement, September 26, 2007, by Bansi S.A., as trustee, as per the instruction of C&C Capital, as founder and beneficiary of the trust, in favor of Lion, over one of the properties pertaining to the Guadalajara Project41.
85.
The Guadalajara Mortgage 2 was subject to the law of Jalisco and was recorded at the Registro Público of that State on December 6, 2007.

2. The defaults

86.
None of the initial deadlines for the repayment of any of the three Loans were met. Sr. Cárdenas requested and obtained a series of time extensions: from March 2008 through July 2009 Lion signed maturity date extensions on the First Loan four times42, on the Second Loan seven times43, and on the Third Loan six times44.
87.
The last payment date on the three transactions was, ultimately, September 30, 2009, and the debtors failed to satisfy the outstanding amounts by that date. All three Loans were declared in default and interest at the default rate began to accrue on October 1, 2009.
88.
Lion sent its first invoice to Sr. Cárdenas for the outstanding principal and interest payments due on April 16, 201045. The amounts due on that invoice, calculated and dated as of March 31, 2010, totaled US $26,618,972 for the Nayarit Project and US $29,649,835 for the Guadalajara Project.
89.
Subsequent invoices were sent on July 14, 201046; October 11, 201047; February 14, 201148; April 12, 201149, and July 29, 201150. The amounts due on the latest invoices sent, calculated and dated as of June 30, 2011, were US $36,041,328.45 for the Nayarit Project and US $40,065,210.38 for the Guadalajara Project51.
90.
According to Lion, no payments were ever made.

3. The negotiations between Lion and Sr. Cárdenas

91.
Lion initiated negotiations and held meetings with Sr. Cárdenas, trying to find an amicable solution to the breach and to avoid initiating formal foreclosure proceedings52. Between September and December 2011 Lion and a representative of Cárdenas discussed the restructuring of the debt according to a term sheet. Such proposal never contemplated the cancellation of the Mortgages, nor the possibility that Lion become a shareholder in Cárdenas's companies53. A restructuring term sheet was eventually signed by Sr. Cárdenas in October 2011 on behalf of the borrowers under the three Loan Agreements [the "Debtors"], but was not accepted by Lion, as it did not adhere to all the requirements advocated by Lion in the negotiations54.
92.
The discussions continued until February 2012, without Lion and Sr. Cárdenas reaching an agreement55. On February 17, 2012 Lion took a first step towards the enforcement of the Mortgages: it served the Debtors with a formal request demanding payment of the amounts owed plus interest, under penalty of initiating foreclosure actions56.

4. The Cancellation Lawsuit

93.
On March 13, 2012, unbeknown to Lion, which was still engaged in bona fide negotiations with Sr. Cárdenas57, the Debtors filed a fraudulent lawsuit [the "Cancellation Lawsuit", the proceeding will be referred to as the "Cancellation Proceeding"] against Lion before the Juez Noveno de lo Mercantil of the State of Jalisco [the "Juez de lo Mercantil].
94.
Under the applicable State laws, mortgages registered in the Registro Público can be cancelled through a judgement issued by a competent judge58. The Cancellation Lawsuit was the first step in a complex judicial fraud schemed by Sr. Cárdenas to avoid the imminent foreclosure of the Mortgages. It is clear that Sr. Cárdenas organised this fraudulent scheme because:

"- He was the person who controlled the Debtors and the beneficiary of the cancellation of the Mortgages;"

"- The fraud purported to transfer jurisdiction over the Mortgages from the Courts of Mexico DF to the Courts of Jalisco, precisely where Sr. Cárdenas resided and was well-established;"

"- The scheme required the designation of a false address for the service of Lion, and the collaboration of a person at the false address; this role was fulfilled by a lawyer called Lic. José Isaac López Medina, who appeared to be an associate of Sr. Cárdenas;"

"- The fraudulent scheme eventually required the impersonation of a representative of Lion (Sr. José Javier Tovar Arechederra). This was achieved using a copy of Sr. Arechederra's driving licence on the same date that the driving licence was deposited with security at the venue of the meeting organized by Sr. Cárdenas;"

- The Tribunal finally notes that Mexico, while refusing to outright admit that fraud had indeed been perpetrated by the Debtors, argues that the "alleged multi-level fraud" was so complex and sophisticated that its judicial system could not withstand it59.

95.
The objective of the first part of Sr. Cárdenas's fraudulent scheme was to obtain a judgement, register it in the Registros Públicos, and thus legally extinguish the Mortgages, making any foreclosure impossible. The second part of the fraudulent scheme was then to preclude any possibility for Lion to file an amparo procedure, which would have rectified the previous cancellation of the mortgages. The fraudulent scheme required an impressive knowledge of the intricacies of the Mexican procedural system, suggesting that Sr. Cárdenas was assisted by an experienced legal mastermind.

4.1 Judicial enforcement of the (false) Términos

96.
As a first step, the Debtors approached their local Juez de lo Mercantil in Jalisco and requested judicial enforcement of a settlement contract, presented only in the form of a photocopy, titled "Términos para pago de los contratos de crédito" [the "Términos"] and allegedly executed four months before, on November 14, 2011, between Lion and the Debtors60.
97.
The Debtors' prayer for relief in the Cancellation Lawsuit reads as follows:

"PRESTACIONES

A) Por la DECLARACION JUDICIAL que se haga por parte de su Señoría en el sentido de que la demandada "LION MEXICO CONSOLIDATED, L.P." está obligada al CUMPLIMIENTO CABAL de todas las obligaciones que asumió y que dimanan a su cargo del documento base de la acción que las partes denominamos "TERMINOS PARA PAGO DE LOS CONTRATOS DE CREDITO"" [Emphasis added]

98.
The Debtors were thus seeking a judicial order granting specific enforcement of the obligations purportedly assumed by Lion in the Términos: under what seemed to be the terms of this agreement, Lion had accepted the cancellation of all pending debts against the Debtors, the cancellation of the Mortgages securing such debt in the Registro Público, and the return of the Notes to the Debtors, and in exchange the Debtors had undertaken to issue and to deliver to Lion a participation in Sr. Cárdenas's companies61.
99.
The Debtors now alleged that Lion had defaulted on the obligations assumed in the Términos and requested the Juez de lo Mercantil to order specific performance, resulting in the cancellation of the Mortgages in the Registro Público.
100.
The Términos included two further important elements of legal engineering:
101.
First, the Términos purported to contain a clause awarding jurisdiction to the Courts of Jalisco. While all the Promissory Notes attributed jurisdiction to the Courts of Mexico City, far away from Sr. Cárdenas's main place of business, the Términos granted jurisdiction to the Courts of Jalisco62:

"8. Jurisdicción y Competencia Para la interpretación, cumplimiento y ejecución del presente convenio [...] las partes se someten [...] a los Tribunales del Primer Partido Judicial del Estado de Jalisco, renunciando a cualquier otro fuero o jurisdicción que por razón de convenio previo o domicilio actual o futuro pudiese corresponderles".

102.
Second, the Términos included an address for service of process in Jalisco and the name of a process agent. While the Loans provided 3141 Hood Street, Suite 700 Dallas, Texas 7521963 as Lion's address, with a copy to an address in Mexico at Paseo de los Tamarindos 400-B, Piso 8, Bosque de las Lomas, 05120 Mexico, D.F.64, oddly the Términos identified a Jalisco lawyer65 and an address in Jalisco66:

"7. Domicilio para recibir notificaciones y autorizados [Lion] señala como domicilio para recibir cualquier tipo de comunicación relativa a la presente propuesta y notificaciones el de la finca marcada con el número 95 Despacho 7 de la calle Tomás V. Gómez, Colonia Ladrón de Guevara, en el municipio de Guadalajara, Jalisco y como autorizados para recibirlas y acusar recibo de las mismas a los Licenciados Emilio González de Castilla del Valle y Jose Isaac López Medina".

4.2 The Términos document is a forgery

103.
The Tribunal is convinced that the Términos are in fact a forgery [and will refer to the document frequently as the "Forged Settlement Agreement" or "Forged Agreement"]. In reaching this conclusion, the Tribunal finds the following evidence compelling:

"- The Forged Agreement purports to have been signed by Lion's legal representative in Mexico, Mr. James Christian Hendricks67; Mr. Hendricks appeared as a witness in this procedure, and gave sworn evidence that he never signed the document and that the signature appended to the document (shown below) is false68;"

"- Lic. González de Castilla, the other lawyer allegedly designated by Lion as a person authorized to receive notifications in the Términos, and a well-known and highly respected professional, has declared in the presence of a Public Notary that: (i) he was not authorized by Lion or by any other company to receive any notification in Guadalajara; (ii) he did not know the said address nor the other person allegedly authorized; and (iii) he had no professional dealings in Guadalajara69;"

"- Since the very moment that Lion obtained knowledge of the existence of the Forged Agreement in mid-December 201270, it has consistently averred that the document is a forgery; Lion has repeated the averment in this procedure71;"

" - Lion has repeatedly tried to obtain a declaration from the Mexican civil Courts, confirming the forgery of the Términos72; although the Mexican civil Courts have never rendered a judgement confirming the existence of forgery, Claimant says that such refusal is improper and tainted by denial of justice;"

- Upon gaining knowledge of the Términos, Lion initiated criminal actions against Sr. Cárdenas73, some of which were ongoing at the time of the filing of Post-Hearing Briefs74.

"- The Forged Agreement purports to formalize a settlement, in which Lion agrees to cancel the Loans, the Notes and the Mortgages in exchange for a participation in Sr. Cárdenas's companies; there is no contemporary evidence proving that in the negotiations between Lion and Sr. Cárdenas such solution was ever discussed; to the contrary, the evidentiary record shows that Lion's intention during the negotiation was to obtain repayment of the Loans, and if the negotiation failed, to foreclose on the Mortgages75;"

"- It is unlikely that Lion, a well advised Canadian company, which had insisted that in its previous agreements with Sr. Cárdenas and his companies jurisdiction should lie with the Courts of Mexico City, would accept that the Términos, the settlement agreement finalizing the relationship, be subject to the jurisdiction of the Courts of Jalisco; it is even more unlikely that Lion additionally would have consented to designate an obscure lawyer in Jalisco, related to Cárdenas, and with whom Lion had never had relations, as its process agent, authorized to receive all types of notifications;"

- There is a final argument: confronted with Claimant's averment in the present arbitration that the Forged Settlement indeed is a forgery, Mexico has failed to dispute this statement76.

4.3 Emplazamiento and declaration en rebeldía

104.
Two weeks after the filing of the Cancellation Lawsuit, on April 3, 2012 the actuario (a court officer of the Juez de lo Mercantil) attempted a first service of process [the "emplazamiento"] at the address identified in clause 7 of the Forged Settlement Agreement. The service attempt was done on Lic. José Isaac López Medina77, one of the two lawyers identified in the Forged Agreement78, who apparently had his office at that address.
105.
Confronted by the actuario, Lic. López Medina formally declared that no legal representative of Lion was present in his office in order to receive the emplazamiento. Upon receipt of this representation, the actuario withdrew, announcing that he would return the next day.
106.
At the second visit, which occurred next day, the actuario decided to make the emplazamiento against Lion through a notificación por cédula delivered to the person who was at the address, Lic. López Medina79.
107.
Lic. López Medina accepted the emplazamiento and received a copy of the judicial file ("autos").
108.
Being unaware that a Court procedure against it was pending before the Juez de lo Mercantil of Jalisco, Lion inevitably failed to appear within the statutory time-limit.
109.
The consequence of this failure was that six weeks thereafter, on May 22, 2012, Lion was declared en rebeldía by the Juez de lo Mercantil through notification via boletín judicial80 (a judicial bulletin)81.
110.
Two weeks after the declaration en rebeldía, on June 6, 2012 the Debtors submitted their evidence before the Juez de lo Mercantil, including the Mortgage deeds and Minutes of the General Shareholders Meeting of C&C Capital. All the evidence marshalled by the Debtors was admitted six days later, on June 12, 201282.

4.4 The Judgment of the Juez de lo Mercantil

111.
Just two weeks after the submission of evidence, on June 27, 2012 the Juez de lo Mercantil, acting solely on the basis of the evidence marshalled by the Debtors, and without any participation of Lion, declared the Loans settled and ordered Lion to cancel the Mortgages and return the Notes [the "Cancellation Judgment"]83. From the filing of the Cancellation Lawsuit to the rendering of the Cancellation Judgment, only 170 days had lapsed.

The Cancellation Judgement causa estado

112.
A few days thereafter, on August 8, 2012, and at the request of the Debtors, the Juez de lo Mercantil, declared that the Cancellation Judgement "causa estado por ministerio de la ley", i.e. that it has become res iudicata, there being no possibility of submitting a recurso de apelación. The reason given by the Judge for his decision precluding any further appeal was that the amount claimed in the procedure was less than MEX 500,000 (approximately USD 25,000)84.
113.
The decision is difficult to understand, because the principal amount of the Loans settled and Mortgages terminated amounted to tens of millions of dollars. Be that as it may, the decision was highly relevant, because it deprived Lion of any possibility of launching an ordinary appeal against the Cancellation Judgement.

The Cancellation Judgement is enforced

114.
In a subsequent procedural decision, the Juez de lo Mercantil gave Lion a peremptory term of three days to voluntarily comply with the Cancellation Judgement85. Lion, who was still unaware of the Cancellation Proceeding, failed to comply and on August 30, 2012 the Juez de lo Mercantil ordered the Registro Público of Jalisco to cancel the Guadalajara Mortgages86 and that of Nayarit to do the same with the Nayarit Mortgage87.
115.
The Registro Público of Jalisco did so on September 7, 201288. The cancellation of the Nayarit Mortgage was recorded on October 19, 201289. Upon these registrations, all three Mortgages became extinct for all legal purposes.

5. False Amparo Proceedings

116.
The Debtors' scheme did not end here.
117.
Having orchestrated the cancellation of the Mortgages, the Debtors wanted to ensure that Lion, upon being appraised of the Cancellation Judgment, would encounter considerable procedural obstacles in seeking to reverse such decision.
118.
Pro memoria: Lion had already been deprived of any possibility of appeal against the Cancellation Judgement, the Juez de lo Mercantil having decided, upon the request of the Debtors, that the amount in dispute was less than MEX 500,000 and that as a consequence thereof the respondent was not entitled to appeal.
119.
The Debtors, well advised on the intricacies of the Mexican procedural system, were aware that the other viable avenue for reversal of the Cancellation Judgment required Lion to initiate an Amparo procedure. As explained by Claimant's legal expert, a juicio de Amparo is a general challenge procedure governed by the Ley de Amparo, which seeks to revert violations of human rights as afforded to citizens and aliens under Mexico's Constitution90.
120.
The Debtors developed a further fraudulent scheme to disrupt the eventual Amparo to be filed in due course by Lion. The scheme would develop in two stages, which were to occur before Lion became aware of the Cancellation Judgment (and filed a real Amparo):

"- in the first stage, a person falsely alleging to be a legal representative of Lion would present a request for Amparo purporting to act on behalf of Lion; and"

- in the second, that person would abandon the Amparo.

121.
The purpose of this scheme was to prevent Lion, when it eventually obtained knowledge of what had happened, from presenting a proper Amparo: Art. 73 of the Ley de Amparo provides a list of eighteen causes for the finding of inadmissibility of an Amparo, including when an Amparo is based on the same facts as a previously abandoned one91. Under this rule, Lion's proper Amparo would be inadmissible, because a previous Amparo relating to the same facts, had already been submitted and then abandoned. To revert this inadmissibility finding, Lion would have to prove that the person who had submitted and then abandoned the False Amparo, purporting to be a representative of Lion, was in fact not authorized by Lion to act on its behalf - an endeavour fraught with difficulties which in the actual facts proved impossible.
122.
In order to file an Amparo falsely in the name of Lion, the Debtors needed to gain access to a copy of the case file, which in turn could only be obtained by a person holding a power of attorney. Sr. Cárdenas knew from the documents which accompanied one of Lion's requests for payment, that a certain Sr. José Javier Tovar Arechederra was one of Lion's representatives in Mexico. All that was needed was to impersonate Sr. Arechederra.

5.1 The impersonation of Sr. Arechederra

123.
On the same day when the Cancellation Judgment was issued, someone impersonating Mr. Arechederra went to a Notary in Jalisco to obtain a copy of the power of attorney granted to the real Mr. Arechederra92.

[Two years later this Notary Public would be arrested on charges of fraud and forgery of documents, subsequently fined and suspended as a Notary Public and eventually permanently disbarred by the State of Jalisco93]

124.
The plan was not yet fully completed. Sr. Cárdenas still required a document confirming the impostor's identity as Sr. Arechederra. On July 6, 2012, Sr. Cárdenas summoned the real Sr. Arechederra to a meeting in Jalisco (the city where the Juez de lo Mercantil is located)94. Sr. Arechederra left his driver's license at the security control of the building where the meeting took place95.
125.
On the same day, July 6, 2012, an impostor using the same driver's license96 to identify himself as Sr. Arechederra, filed with the Juez de lo Mercantil a request for a certified copy of the entire case file97, on behalf of Lion, exhibiting the power of attorney obtained from the Notary98.
126.
With the copy of the case file, on August 7, 2012 an Amparo against the Cancellation Judgment, purportedly signed by Sr. Arechederra on behalf of Lion, was submitted at the Jalisco Courts [the "False Amparo"]99.

5.2 The False Amparo

127.
The Tribunal is convinced that Sr. Arechederra never actually signed the False Amparo on behalf of Lion. In coming to this conclusion, the Tribunal finds the following evidence compelling:

"- Sr. Arechederra corroborated by his sworn testimony at the Hearing that he never carried out any of the above actions100;"

"- Sr. Arechederra's stamp signature under the False Request for Copies contains a typographical mistake (Arrechedera instead of Arechederra)101 - it is unlikely that the real Sr. Arechederra would be using a stamp signature containing not one but two typos in his name;"

"- Mr. Arechederra has submitted a voucher from the airport102 confirming that it would have been physically impossible for him to file the request for the certified copy, obtain it, sign its receipt, and make it to the airport within an hour103;"

"- The False Amparo designated as domicile for notifications to Lion "los estrados del Juzgado que en turno conozca de la presente demanda104", i.e, the notice board of the competent Court which would judge the False Amparo; and not the address of Lion's lawyers, as was the case in the Loans105 when an address in Mexico was given for Lion;"

- Lastly, Mexico has not denied that the False Amparo was filed by someone else than the real Sr. Arechederra.

128.
The False Amparo was (on purpose) filed with a procedural deficiency: the person submitting the request failed to attach sufficient copies as required under Mexican procedural law106. The Juez in charge of the Amparo notified Lion of this mistake (through the estrados) granting Lion three days to remedy the deficiency107.

[The possibility of amending this procedural deficiency is noteworthy, as it contrasts with the treatment given to the real Lion, when it filed the proper Amparo: it was never granted an opportunity to cure an alleged defect in the power of attorney of the person signing an ampliación de demanda.]

129.
The very purpose of the False Amparo was to be filed and then to be abandoned. Consequently, no copies were ever delivered, and the procedural deficiency was never corrected. Consequently, on August 17, 2012, the Juez dismissed the False Amparo108 and on September 6, 2012 declared this decision to be final and not subject to appeal109.
130.
The effects came to haunt Lion when it eventually filed the proper Amparo.

6. Lion forecloses on the (soon to be cancelled) Nayarit Mortgage

131.
In the meantime, Lion was still unaware that the Debtors had filed the Cancellation Lawsuit in the local Courts of Jalisco, seeking enforcement of a Forged Settlement Agreement, that the emplazamiento had been delivered to an obscure lawyer in Jalisco, that Lion had been declared en rebeldía and that the Cancellation Judgement had been rendered in favour of the Debtors, cancelling the outstanding Loans and Mortgages.
132.
Lion continued its bona fide negotiations with Cárdenas, but in view of the persistence of the default, on April 3, 2012 Lion finally decided to foreclose, but only on one of the three Mortgages: it initiated a juicio especial hipotecario [the "Juicio Hipotecario]110 before the Juez Trigésimo Noveno de lo Civil de México D.F. [the "Juez de lo Civil"]111, against the Debtors, seeking to enforce the Nayarit Mortgage. Lion decided not to foreclose on the Guadalajara Mortgage, trying to minimize costs and with the hope that filing one foreclosure proceeding would incentivize Sr. Cárdenas to pay the outstanding amounts112.

Difficulties in the emplazamiento

133.
The attempts to notify the Juicio Hipotecario to the various Debtors commenced on April 26, 2012, but it would take several years until all the mortgagors could be properly served (emplazados)113 Lion requested the Juez de lo Civil to serve Inmobiliaria Bains 13 times, providing nine different addresses in both Jalisco and Nayarit; the courts of Jalisco and Nayarit - acting at the request of the Juez de lo Civil - were unable to notify the company114 and this situation prevented the Juicio Hipotecario from progressing for more than three years115.

Anotación preventiva

134.
While Lion was trying to notify the Juicio Hipotecario to the Debtors, it requested and obtained an order from the Juez de lo Civil in México D.F., instructing the Registro Público in Bucerías to make a preventive annotation in the books setting forth the existence of a foreclosure procedure [the "Anotación Preventiva"]. The Registrar did so on May 3, 2012 and added that this Anotación Preventiva would guarantee the "inmovilidad registral" of the real estate, preventing any future annotation which could disrupt the proper development of the Juicio Hipotecario116:

"[L]o anterior para efectos de que dicha inscripción sirva como inmovilidad registral con la finalidad de que no se pueda verificarse (sic) en la finca hipotecada ningún embargo, toma de posesión, diligencia precautoria o cualquier otra que entorpezca el curso del juicio".

135.
The Anotación Preventiva was made on May 3, 2012, a month and a half before the Cancellation Judgment (dated June 27, 2012), and in theory prevented any future annotation which could disrupt the Juicio Hipotecario.
136.
Notwithstanding this fact, upon rendering the Cancellation Judgement, the Juez de lo Mercantil of Jalisco sent (through a local Court) an oficio to the Registro Público de Bucerías, requesting cancellation of the Mortgage ("solicito a Usted, cancele la hipoteca")117 The Registrar, disregarding the existence of the previous Anotación Preventiva, registered the cancellation of the Mortgage in the Registro Público on October 16, 2012, the security thus becoming null and void118:

Guadalajara Mortgages

137.
Since Lion had chosen only to enforce the Nayarit Mortgage, but not the Guadalajara Mortgage, no Anotación Preventiva was ever issued in relation to the Guadalajara Mortgages, and the security was cancelled, upon an oficio of the Juez de lo Mercantil of Jalisco of August 30, 2012119.

7. Lion's attempts to remedy the cancellation of the Mortgages

138.
In mid-December 2012 Lion was astonished to learn, through informal sources, of the cancellation of the Mortgages120.
139.
Lion immediately turned to trying to undo the cancellation.
140.
Mexican procedural law allows for the institution of Amparo proceedings to overturn judicial decisions. There are two different types of Amparo procedures: Amparo directo and Amparo indirecto. The Amparo directo is most commonly filed against final judgments, and the Amparo indirecto against certain procedural orders, or against actions taken after the case ends or against persons who did not participate in proceedings121.
141.
The Amparo claim has to be filed by the person affected by the act which is challenged (known as the acto reclamado). Other parties to the Amparo procedure are

- the authorities who dictated, promulgated, published, ordered, executed or tried to execute the acto reclamado (autoridades responsables), and

- the affected party's counterparty in the procedure in which the challenged action was issued or executed (known as the tercero perjudicado)122.

7.1 Lion files an Amparo indirecto

142.
On December 18, 2012 Lion filed an Amparo indirecto lawsuit123 ["Real Amparo", also "Amparo claim" and "Amparo lawsuit" (as opposed to the previous False Amparo)] before the Juez de Distrito en Materia Civil in Jalisco ["Juez de Distrito"].
143.
The claim was brought against the Juez de lo Mercantil, against his Secretary and against the officers responsible for the Registros Públicos of Nayarit and Bucerías124. The Debtors were designated in the Amparo claim as terceros perjudicados (aggrieved third parties)125.
144.
The actos reclamados included, among others, the lack of proper notification of Lion in the Cancellation Lawsuit:

"La falta de emplazamiento al quejoso y todas y cada una de las actuaciones y resoluciones relativas al juicio Ordinario Mercantil radicado ante el Juzgado Mercantil del Primer Partido Judicial del Estado de Jalisco"126.

7.2 Attempts to claim forgery

145.
Initially, Lion started the Amparo indirecto to obtain declaratory relief that it had never been properly served by the Juez de lo Mercantil. It did not include any reference to the Forged Settlement Agreement, because the specific content of the Forged Agreement only became known to Lion when the Juez de lo Mercantil filed an informe as part of the Amparo proceeding127.

The ampliación de demanda

146.
Upon receiving this information, on January 28, 2013 Lion filed an ampliación de la demanda (extension request) of the Amparo lawsuit, explaining that the service made by the Juez de lo Mercantil was based on a forged document and should thus be deemed inexistent128:

"La falta de emplazamiento legal a la hoy quejosa [i.e. Lion] [...] debido a que el supuesto emplazamiento [...] se hizo en un domicilio que no es de la hoy quejosa [...]. Amén de que el supuesto domicilio donde de practicó dicho emplazamiento, fue señalado en un documento que no fue suscrito por mi mandante ni por persona alguna con facultades, ya que la firma que se advierte en el mismo es completamente falsa por no proceder del puño y letra a quien se atribuye." [Emphasis added]

147.
Lion's forgery claim was accompanied by, inter alia129:

- a graphological expert report to prove that the signature in the Forged Agreement did not belong to Mr. Hendricks, and

- emails between a broker retained by Lion and Sr. Cárdenas to demonstrate that, after the Forged Agreement was supposedly signed in November 2011, Lion and Cárdenas were still holding discussions on the terms of the repayment of the Loans.

148.
By proveído (procedural decision) of January 30, 2013 [the "Dismissal Proveído"] the Secretario del Juzgado de Distrito [i.e. the clerk of the Juez de Distrito] in Jalisco dismissed the ampliación of the Amparo submitted by Lion, arguing that130

"dichos actos ya fueron precisados desde el escrito inicial de demanda".

149.
Frustrated by this postponement, Lion brought, on February 6, 2013, an "incidente de falsedad de documento" before the Juez de Distrito, claiming again that the Forged Agreement was the result of fraud131.
150.
On April 10, 2013, the Juez de Distrito stated that he would decide in due course on the admissibility of the proposed graphological expertise on the authenticity of the Forged Settlement Agreement132. And on April 19, 2013, the Juez de Distrito once again decided to postpone his decision on the admissibility of the evidence, because of a queja proceeding which was subsequently initiated and which will be dealt with in the next section133.

7.3 The dismissal of evidence on the forgery

151.
While the decision on the admission of evidence was pending before the Juez de Distrito, one of the Debtors, C&C Ingeniería, filed as a tercero perjudicado two quejas134 before the Segundo Tribunal Colegiado en Materia Civil del Tercer Circuito [the "Tribunal de Queja"] against the Dismissal Proveído issued by the Secretary of the Court135 and the April 10, 2013 decision of the Juez de Distrito136. C&C Ingeniería argued that Lion's ampliación de demanda was inadmissible, because it had not been properly signed on Lion's behalf.
152.
Lion for its part also submitted a queja against the same decision, because it precluded Lion from claiming that the Forged Settlement Agreement was a forgery and the origin of the improper service137.
153.
The Tribunal de Queja dismissed Lion's queja and sided with C&C Ingeniería: the appeal court ruled that the ampliación de la demanda, which Lion had filed, was inadmissible, because it had not been properly signed on behalf of Lion: it should have been signed by Lion's legal representative and not by the attorney empowered by Lion to act on its behalf in the Amparo proceedings138.
154.
Lion was not given an opportunity to cure the alleged procedural defect, although the ampliación de demanda aimed at proving that Lion, an alien company operating in Mexico, had been the victim of an elaborate fraud to avoid its proper emplazamiento.

[This stands in stark contrast with the treatment granted to the complainants when the False Amparo was submitted without the requisite copies. In that instance, the Juez accorded the complainants the chance to cure the formalistic deficiency.]

The decisions of the Juez de Distrito

155.
Once the queja had been resolved, the Juez de Distrito resumed his work, and in accordance with the decision of the Tribunal de Queja resolved that all evidence linked to the forgery claim should be dismissed (both the evidence already admitted and the evidence still pending admission)139.
156.
Thereafter the Juez de Distrito rendered a specific ruling on Lion's separate motion ("incidente de falsedad de documento"). The judge dismissed it on the grounds that the allegedly false document (the Forged Settlement Agreement) was not related to the subject-matter of the Amparo Proceeding140.

Forgery is excluded from the scope of the Amparo

157.
Be that as it may, from that date on, the scope of the Amparo did not include any inquiry into the issue whether the Settlement Agreement had been forged; it was assumed that the Settlement Agreement was valid and binding, having been properly executed by Lion. The scope of the Amparo was reduced to the question whether the emplazamiento had or not been properly executed in accordance with Mexican law. And - congruently with this reduced scope of investigation - all evidence in the file seeking to prove the forgery of the Settlement Agreement was expurgated.

7.4 The Amparo Judgment

158.
On December 4, 2013, the Juez de Distrito delivered his decision denying Lion protection against the Cancellation Judgment [the "Amparo Judgment"]141.

"[...] R E S U E L V E: ÚNICO. LA JUSTICIA DE LA UNIÓN NO AMPARA NI PROTEGE A LION MEXICO CONSOLIDATED, L.P., contra los actos que reclama del JUEZ Y DEL SECRETARIO EJECUTOR, AMBOS ADSCRITOS AL JUZGADO NOVENO DE LO MERCANTIL DEL PRIMER PARTIDO JUDICIAL DEL ESTADO DE JALISCO. [...]" [Capitals in the original]

159.
The Amparo Judgement is a 67-page document, which in its "Resultando" summarizes the procedure, and which then reasons the decision in seven "Considerandos".

Sr. Arechederra's signature had been forged

160.
As a preliminary question, the Juez de Distrito analyzes Lion's allegation that on July 6, 2012 Sr. Arechederra's signature had been forged in the false request for copy before the Juzgado de lo Mercantil - see section 5.1. supra. (The issue was relevant, because if it had been true that on July 6, 2012 Lion had been aware of the Cancellation Judgement, the Amparo would have been inadmissible due to the statute of limitations).
161.
The Amparo Judgement, after weighing the expert evidence marshalled by the parties, concludes that Sr. Arechederra's signature indeed had been forged, that the request for copy had indeed been false, and that consequently Lion's request for Amparo was not time barred142.

Sr. Cárdenas is in prison

162.
The Amparo Judgement also acknowledges that Sr. Arechederra and Lion had filed a criminal action against Sr. Cárdenas, accusing him of having forged his signature on various documents, and that on September 26, 2013 the criminal judge had ordered the imprisonment of Sr. Cárdenas for this crime. However, the Amparo Judge accorded little weight to this piece of evidence143.

No discussion of forgery of the Settlement Agreement

163.
Notwithstanding the finding that at least on one occasion Sr. Arechederra's signature had been forged, and that Sr. Cárdenas was in prison for alleged forgeries of documents, the Amparo judgement does not even discuss Lion's argument that the Settlement Agreement might also have been forged: since the ampliación de demanda had been dismissed (because it had been signed by Lion's attorney, but not by a legal representative), any issue relating to the falsehood of the Settlement Agreement was off limits in the Amparo procedure.
164.
The Amparo Judgement consequently assumes that the Settlement Agreement was validly executed on Lion's behalf. There being a valid Settlement Agreement with a designation of process agent and an address for service of process, the Juez de Distrito dismisses Lion's argument that the emplazamiento should have been made in Dallas, Texas, USA, and in accordance with the applicable international treaties144.
165.
Instead, the Juez de Distrito discusses at length a minor incident in the way the fraudulent emplazamiento had taken place: in accordance with the Settlement Agreement the notification should have been made at Calle Tomás V. Gómez 95, despacho 7. But in reality, the actuario went to the same address, but to a different office: despacho 5.
166.
The Juez de Distrito finds that this "minor defect" does not invalidate the emplazamiento, because the actuario was able to locate Lic. López Medina, who, in accordance with the Settlement Agreement, was the person designated by Lion as process agent145.

7.5 The Recurso de Revisión

167.
Lion was not satisfied with the Amparo Judgement. On December 19, 2013 Lion filed a recurso de revisión [the "Recurso de Revisión""], seeking its revocation, the granting of protection to Lion's constitutional rights and the finding that the Cancellation Lawsuit and related acts were null and void146.
168.
Among other reasons, Lion explicitly challenged the Amparo Judgment, arguing that the Juez de Distrito had disregarded Lion's claim that the Settlement Agreement had been forged, using the argument that the falsehood was unrelated to the dispute and that the defendants in the Amparo had not participated in the alleged forgery. Lion explained that the falsehood of the Settlement Agreement was indeed relevant for the Amparo, because Lion's emplazamiento had been delivered to Lic. López Medina, Lion's purported process agent designated in the Settlement Agreement. If the Settlement Agreement was a forgery, the designation of Lic. López Medina was false, and the emplazamiento had not been properly made147.
169.
At first, the Recurso de Revisión was assigned to the Cuarto Tribunal Colegiado en Materia Civil del Tercer Circuito148. However, it was later decided that the Recurso de Revisión should instead be heard by the same court that had rejected Lion's earlier queja regarding the decisión sobre la ampliación the Segundo Tribunal del Tercer Circuito, referred to in this Award as "Tribunal de Queja")149.

The False Amparo surfaces

170.
Up to this point, Claimant had undertaken at least four formal attempts requesting that it be authorized to allege in the Amparo that the Settlement Agreement was indeed a forgery, and to marshal evidence proving this allegation. Yet the Tribunal de Queja, once again, decided not to investigate the issue of forgery nor to admit any evidence to prove it - but this time for a different reason.
171.
More than 16 months after the initiation of the Recurso de Revisión, on April 17, 2015, the Tribunal de Queja surprisingly decided to remand the case back to the Juez de Distrito for a totally different purpose: to determine whether Lion's Amparo proceeding was inadmissible, a different Amparo relating to the same facts having been filed at an earlier date and thereafter abandoned.
172.
Pro memoria: the False Amparo had been fraudulently filed and then abandoned by someone impersonating Sr. Arechederra, Lion's representative in Mexico - with the purpose of obstructing the real Amparo which Lion was expected to submit in due course.
173.
When the Tribunal de Queja raised the issue of the False Amparo it came as a total surprise:

"- For the last 16 months of Amparo proceeding no party and no prior court had ever referred to this admissibility issue150;"

"- The same Tribunal de Queja had also failed to raise the issue when it first intervened in these proceedings, to adjudicate the appeal against interlocutory decisions of the Juez de Distrito;"

"- The Tribunal de Queja decided sua sponte, and over a year into the recurso de revisión, to raise the existence of the False Amparo; the only reason given by the Tribunal de Queja to justify its decision was that an unidentified administrative official had informed the Court of the existence of the previous Amparo151.

174.
As regards the remand procedure, the Tribunal de Queja ordered that it should be restricted to adjudicating the admissibility issue, explicitly prohibiting the parties to marshal new evidence regarding the falsehood of the Settlement Agreement152 and instructing the Juez de Distrito not to analyze Lion's allegation that such Agreement had been forged153.
175.
After three years of judicial battling, Lion still had no decision confirming the falsehood of the Forged Settlement Agreement and now it was fighting to prove that it should not be deprived of Amparo recourse - the only way to overturn the wrongful cancellation of the Mortgages.

7.6 The remand Amparo

176.
The fact that Lion was being tried by the same judge who had already dismissed evidence on the forgery did not discourage Lion from bringing once more a petition to admit evidence on the fraudulent nature of the Forged Settlement Agreement154. And, since Lion had only acquired knowledge of the False Amparo's existence at this point, it also provided evidence pointing to the inauthenticity of the False Amparo155.
177.
On September 23, 2015 the Juez de Distrito only accepted the graphology expert report and a brief filing on the False Amparo as evidence156. The Juez de Distrito used formalistic reasoning to reject further evidence provided by Lion157.

Lion's withdrawal

178.
At that point Claimant had spent almost three years in lawsuits before Mexican civil courts trying to undo the fraudulent cancellation of the Mortgages. It had achieved very little:

"- Lion had filed an Amparo, but its recurring attempts that the scope of the procedure be extended to cover the forgery of the Settlement Agreement (a fact which Lion only learned after it had filed the Amparo) and that it be authorized to marshal evidence proving the forgery, had been repeatedly dismissed by the first instance Juez de Distrito and in second instance by the Tribunal de Queja, for a purely formalistic reason: the ampliación de la demanda had been signed on behalf of Lion by its attorney and not by its legal representative - a minor procedural defect Lion was never offered the opportunity to remedy;"

"- Unable to submit that the Settlement Agreement had been forged, Lion's Amparo had been dismissed by the first instance Juez de Distrito; in the Amparo Judgement the Juez de Distrito assumed the Settlement Agreement to be valid and binding and concluded that Lion's emplazamiento had been properly served on Lic. López Medina, Lion's process agent as identified in the Forged Settlement Agreement - an obscure attorney, with whom Lion had never had any relationship and who failed to inform Lion;"

"- On appeal against the Amparo Judgement, the second instance Tribunal de Queja, whom Lion had asked to review a further time the prohibition to argue the forgery issue, did not take up this question; instead the Tribunal de Queja, in an unexpected move, made sua sponte the decision to remand the procedure back to the first instance Judge, with a strictly limited remit: to review whether the Amparo had been properly admitted, in light of the existence of a previous Amparo (the False Amparo - a decoy procedure filed fraudulently by the Debtors to derail the admissibility of the real Amparo);"

- Upon the instructions of the Tribunal de Queja, the Juez de Distrito again denied Lion's request to expand the scope of the remand, so that the Amparo could encompass the forgery of the Settlement Agreement.

179.
On December 11, 2015 Lion waived the Amparo lawsuit. Lion says that it took this decision, because it believed it was futile to continue:

"- On the one hand, had Lion pursued the Remand Amparo, Mexico could have argued in this arbitration that Lion's expropriation claim under NAFTA Article 1110 would be inadmissible pursuant to NAFTA Article 1121(2), which sets a three-year time limit to bring claims158;"

"- On the other hand, the circumstances made it clear that further pursuit of Lion's claims, before the same court that had ruled against it before, on the basis on the same evidence admitted previously, and barring admission of other relevant evidence, was futile;"

- Additionally, the graphological evidence that was in fact admitted, with the experts opinions two-to-one in favour of the authenticity of the False Amparo, made it even less likely that the Remand Amparo would make a ruling in favour of Lion159.

8. Criminal proceedings and the fate of the Nayarit property

180.
At the time of the filing of Post-Hearing Briefs, three criminal proceedings concerning the alleged irregularities of which Lion says it has been a victim were pending resolution:

"- A criminal action160 had been brought against Sr. Cárdenas in connection with the Forged Settlement Agreement and the false request for copy; the investigation phase had been completely exhausted; Sr. Cárdenas, in his defense, had initiated Amparos No. 610/2017 and No. 1518/2018; the criminal proceedings were halted until those Amparos were resolved161;"

"- A criminal action162 had been brought against Sr. Cárdenas concerning the False Amparo; at the time of the filing of the Post-Hearing Briefs, this proceeding was at the initial investigation phase, before the Prosecutor's Office in Jalisco; the Prosecutor was in the process of analyzing the matter to bring charges formally (the "imputación")163;"

"- A criminal164 action had been brought against Sr. Cárdenas for the sale of the Nayarit Property; at the time of the final Party submissions, the proceeding was at the initial investigation phase, before the Prosecutor's Office in Jalisco165.

181.
Other criminal proceedings initiated by Lion against Sr. Cárdenas had already been finalized at this point, with the Amparo Judgment stating that Sr. Cárdenas was in jail at the time of the rendering of the decision. Implicitly referring to the stature of Sr. Cárdenas's father-in-law and the apparent leniency of Jalisco courts towards Sr. Cárdenas, Ms. Onay Payne (one of Lion's representatives) stated at the Hearing that they were able to "get him [Sr. Cárdenas] behind bars", but "not for long"166.
182.
On July 27, 2016, Inmobiliaria Bains sold the Nayarit Property to "Hotelera los Tules"167. This sale operation was recorded by the Registro Público of Bucerías on May 16, 2017. In the course of one of the criminal proceedings against Sr. Cárdenas, the judge issued a freeze order, suspending temporarily the development of the property.
183.
Claimant was not aware of further developments168.

V. RELIEF SOUGHT BY THE PARTIES

184.
Lion's requests the following relief in its Post-Hearing Brief169:

"The Claimant respectfully request the Tribunal:

"a. To declare that Mexico has breached its obligations under Articles 1110 and 1105 of NAFTA and international law;"

"b. To order Mexico to pay the Claimant the amount of US$81,992,752 as compensation for the loss caused by the cancellation of the Mortgages with interest at the rate mentioned under (e) below;"

"c. To order Mexico to pay the Claimant the legal fees incurred in the Mexican court proceedings in a minimum amount of US$2,212,004.53 as a result of the cancellation of the Mortgages with interest at the rate mentioned under (e) below;"

"d. To order Mexico to pay the Claimant whatever amount is assessed against LMC by the Mexican courts (currently valued at US$14,853,013.73) as a result of the waiver of the Foreclosure Proceedings as per Article 1121 of NAFTA;"

e. To order Mexico to pay interest on the amounts under (b) to (c) at the Mexican Legal rate provided by Article 362 of the Mexican Commercial Code compounded monthly (i.e., 6%), through the date of full and effective payment of those amounts as from:

"(i) 31 March 2015 for the lost value of the Mortgages;"

"(ii) 31 December 2015 to reimburse LMC for the attorney's fees and costs it incurred in Mexican court proceedings;"

"f. To order Mexico to reimburse Claimants all their reasonable legal costs and fees in connection with this arbitration with interest as of the date of the award at the interest rate mentioned above at (e); and"

g. Any other remedies that the Tribunal consider appropriate in the circumstances given Mexico's breaches"

185.
Mexico's request for relief in its Rejoinder is as follows170:

"For all of the foregoing reasons, the Respondent requests:

"• an Order dismissing the Claimant's Claim in its entirety;"

"• an Order that the Claimant indemnify the Respondent for its costs incurred in this arbitration, including its legal costs and the travel expenses occurred by its legal team, witnesses, and experts; and"

• such other relief as the Respondent may request and this Tribunal may deem appropriate.

635. In the alternative, in the unlikely event that the Tribunal concludes that the Respondent is internationally liable for a breach of its obligations under NAFTA Article 1110 and/or NAFTA Article 1105, the Respondent requests:

"• that the amount of damages be determined on the basis of the CBRE reports and Sanchez Devanny opinion, which put the value of the property, net of foreclosure fees and expenses, at USD $47,060,068.57;"

"• minus the deduction that the Tribunal finds appropriate to avoid double recovery and to account for the Claimant's contributory fault;"

"• plus an award of interest based on a relatively low and risk-free rate applicable to U.S. dollar denominated amounts, such as the U.S. Treasury Bill with annual compounding; and"

• any such other relief as the Respondent may request and this Tribunal may deem appropriate".

186.
In its Post-Hearing Brief Respondent specified that171:

"[...] any damages found must be subject to a deduction for contributory fault of at least 50% and closer to 100% since the Claimant would not have suffered any losses had it not acted negligently and with a lack of due care".

VI. MERITS

187.

Lion has brought this arbitration against Mexico to address Mexico's alleged:

"- judicial and administrative expropriation of Lion's investment under NAFTA Art. 1110172;"

- alternatively, Mexico's denial of justice as a failure to provide fair and equitable treatment under NAFTA Art. 1105, and

- alternatively, the failure to grant Lion's investment full protection and security under NAFTA Art. 1105.

General rule: No judicial expropriation without denial of justice

188.
While expropriation constitutes Claimant's primary claim173, the Tribunal observes that liability for expropriation under Art. 1110 arising from the decisions of domestic courts requires a finding of a denial of justice.
189.
This is agreed upon by both of the Non-Disputing Parties in their submissions:

- The USA states that174:

"Decisions of domestic courts acting in the role of neutral and independent arbiters of the legal rights of litigants do not give rise to a claim for expropriation under Article 1110(1). Moreover, the United States has not recognized the concept of "judicial takings" as a matter of domestic law [...]."

- Canada in turn asserts that175:

"A domestic court's bona fide adjudication as to whether a property right exists under domestic law cannot be recast as an expropriation of that property. A neutral and independent judicial determination that a property right is invalid under domestic law, unless it can be impugned as a denial of justice, does not give rise to separate claim of expropriation under customary international law. International tribunals have followed this approach."

190.

This position is buttressed by the Loewen tribunal, which stated the following about a judicial expropriation claim presented as an alternative to denial of justice176:

"Claimant's reliance on Article 1110 adds nothing to the claim based on Article 1105. In the circumstances of this case, a claim alleging an appropriation in violation of Article 1110 can succeed only if Loewen established a denial of justice under 1105".

191.
A similar view has been expressed by legal scholars, inter alia, by Paparinskis, who in his seminal treatise on the international minimum standard and fair and equitable treatment has opined that

"[w]hile taking of property through the judicial process could be said to constitute expropriation, the rules and criteria to be applied for establishing the breach should come from denial of justice"177.

Exceptions to the rule

192.
There is an exception to the general rule, acknowledged explicitly by both the USA and Canada in their submissions - whenever it can be proved that the courts were not neutral and independent, especially from the other branches of power of the host State.
193.
The USA has opined that178:

"Of course, where a judiciary is not separate from other organs of the State and those organs (executive or legislative) direct or otherwise interfere with a domestic court decision so as to cause an effective expropriation, these executive or legislative acts may form the basis of a separate claim under Article 1110, depending on the circumstances."

194.
The submission by Canada confirms the exception by stating that "[a] neutral and independent judicial determination [...] does not give rise to separate claim of expropriation under customary international law179", thus implying that such a separate claim could be found valid if the judicial determination under question was not neutral or independent.
195.
In the current case, the Tribunal does not find sufficient proof to apply the above exception:

"- No proof has been marshalled as to the interference of the executive or legislative branches of Mexico's government in the course of the local proceedings;"

"- Even though Claimant has presented allegations of bias by Mexico's courts180, these are not substantiated by evidence; and"

- The decisions of the courts failed to benefit the Respondent State.

196.
Thus, the Tribunal finds that it must first adjudicate Lion's claim for denial of justice (VI.1), then it will analyse the requirement of exhaustion of local remedies (VI.2), establish its conclusions (VI.3) and finally devote a short chapter to Claimant's alternative claims (VI.4).

VI.1. DENIAL OF JUSTICE

197.
Claimant avers that it was denied justice by the Mexican judicial system.
198.
The Tribunal will first make an introduction (1.), then it will provide a summary of Claimant's and Respondent's respective positions (2. and 3.) and finally it shall make a decision (4.).

1. Overview

199.
Denial of justice, referred to as denegación de justicia in Spanish, is

"a defect in a country's organization of courts or administration of justice, resulting in the country's violating its international legal duties to protect aliens"181.

200.
The concept reaches back to the Middle Ages182, when private reprisals were allowed against acts of injustice committed by actors of another State183. It later evolved into diplomatic protection assumed by States184. Traditionally, some authors perceived denial of justice as any internationally illegal treatment of aliens185:

"A denial of justice, in a broad sense, occurs whenever a State, through any department or agency, fails to observe, with respect to an alien, any duty imposed by international law or by treaty with his country".

201.
However, currently a narrower view prevails, although there is much debate on what specific State actions constitute denial of justice: points of contention include whether the concept encompasses administrative acts, whether manifestly unjust court decisions on the merits can constitute denial of justice, and whether subjective elements, such as bad faith, should be required186.
202.
In 1935, de Visscher famously described denial of justice as "one of the oldest and one of the worst elucidated [concepts] in international law"187 Despite the passage of nearly a century, de Visscher's statement still stands true.
203.
Paulsson, one of the most prominent contemporary researchers on the subject, has defined denial of justice as follows188:

"[d]enial of justice arises when proceedings are so faulty as to exclude all reasonable expectation of a fair decision [...]".

204.
Paulsson's definition puts the emphasis on the active subject (judicial bodies of the host State) and on the wrongdoing (very grave breaches of due process to the detriment of the alien, which preclude the possibility of an unjust decision on the merits be reviewed).

Applicability under the NAFTA

205.

Nowhere in the NAFTA treaty do the words "denial of justice" appear. The same happens in most investment treaties. There is, however, unanimous agreement among the Parties (including the Non-Disputing Parties) that denial of justice is an international wrong which breaches the fair and equitable treatment ["FET"] standard. Case law and doctrine reach the same conclusion189.

206.
Art. 1105 NAFTA delineates the FET standard:

"Article 1105: Minimum Standard of Treatment

1. Each Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security."

207.
Art. 1131(2) of the NAFTA states that an interpretation by the Free Trade Commission of a NAFTA provision "shall be binding on a Tribunal established under this Section".
208.
One such interpretation was provided on the protections under Art. 1105 of the NAFTA. The Interpretation Note of July 31, 2001 [the "FTC Note"] states as follows:

"[T]he Free Trade Commission hereby adopts the following interpretations of Chapter Eleven in order to clarify and reaffirm the meaning of certain of its provisions: [...]

B. Minimum Standard of Treatment in Accordance with International Law

1. Article 1105(1) prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of another Party.

2. 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 the customary international law minimum standard of treatment of aliens." [Emphasis added]

209.
In light of the Interpretation Note, the protection to be accorded to investors under the FET and full protection and security standards is set at the level of "customary international law minimum standard of treatment of aliens".
210.
Since Claimant has brought a case of denial of justice by the Mexican Courts, the adjudication of this case requires that the Tribunal determine what "customary international law minimum standard of treatment of aliens" is expected from those Courts. Breach of that standard implies denial of justice.

1.1 Procedural and substantive denial of justice

211.
In its Memorial, Claimant argues that the Minimum Standard of Treatment under Article 1105 (1) of the NAFTA incorporates a threefold protection for investors in their dealings with local Courts. Thus, local Courts are prohibited from:

- incurring unreasonable delay in administering justice190,

- refusing the investors access to justice191, and

- rendering manifestly unjust and erroneous decisions that a competent judge would not have taken192.

212.
In Claimant's view, denial of justice can thus be subsumed in two great categories: procedural and substantive denial of justice.
213.
Claimant's Reply provides a more elaborate typology of denial of justice, introducing a two-fold differentiation into "déni de justice" and "défi de justice" proposed by the Institut de Droit International193 and a four-fold one under the Harvard Draft Convention194, which includes substantive denial of justice as one of the categories195:

"A state is responsible if an injury to an alien results from a denial of justice. Denial of justice exists when there is

[i] a denial, unwarranted delay or obstruction of access to courts,

[ii] gross deficiency in the administration of judicial or remedial process,

[iii] failure to provide those guaranties which are generally considered indispensable to the proper administration of justice, or

[iv] a manifestly unjust judgment. An error of a national court which does not produce manifest injustice is not a denial of justice".

214.
In differentiating between substantive and procedural denial of justice, Lion finds support in Oostergetel196.
215.
Respondent in turn argues that denial of justice is always procedural197.
216.
Mexico retorts that the artificial distinction made by the Oostergetel tribunal is misleading and that ultimately it did not lead to the application of any other standard for denial of justice than the traditional, very high one198. Respondent also claims that the Harvard Draft Convention and the Institut de Droite International's Draft Articles are irrelevant, because they lack customary law status199.

The view of the Tribunal

217.
The Tribunal agrees with Respondent, who convincingly argues that there is no "substantive denial of justice". While the dichotomy between substantive and procedural denial of justice has indeed been adopted (to greater or lower endorsement) by some arbitral tribunals200, this differentiation is not useful. To determine whether a judgment was outrageous or egregious on the merits would require a tribunal to delve into the decision-making process under national law - it is trite to repeat that international tribunals cannot be and do not constitute domestic courts of appeal201.
218.
The Tribunal endorses Paulsson's view that:

"in modern international law there is no place for substantive denial of justice [...] If a judgment is grossly unjust, it is because the victim has not been afforded fair treatment [...] Extreme cases should thus be dealt with on the footing that they are so unjustifiable that they could have been only the product of bias or some other violation of the right of due process202"

"[...] denial of justice is always procedural203."

219.
Paulsson adds that manoeuvring the line between what appears to be substantively unjust and what is unjust or erroneous because of gross procedural breaches is "the greatest difficulty of our subject" and explains that204:

""gross or notorious injustice - whatever the words used - is not a denial of justice merely because the conclusion appears to be demonstrably wrong in substance; it must impel the adjudicator to conclude that it could not have been reached by any impartial judicial body worthy of that name".

1.2 Types

220.
A review of case law and scholarly writings reveal that procedural denial of justice can be classified in subtypes: the right to access justice (A.); the right to be heard and to present one's case (B.) ; and the right to obtain a decision without undue delay (C.). These are some of the separate manifestations of denial of justice and, if committed against an alien, constitute international wrongs which can be imputed against the State.

A. Denying an alien access to justice

221.
The first category of procedural denial of justice is uncontroversial. Prof. Paparinskis writes205:

"The easiest case, accepted as uncontroversially wrongful under the Hague Conference, was a discriminatory denial of access to court, described in the Hague Texts as the situation where 'the foreigner has been hindered by the judicial authorities in the exercise of his right to pursue judicial remedies".

222.
He also provides the following examples206:

"[...] a purposeful disruption of the commencement of the proceedings, or even the absence of notification about proceedings that exclude the possibility to challenge them could all result in denial of justice".

223.
Freeman in turn explains due process under international law in the following words207:

""whenever judicial action is taken without giving the alien a hearing or without properly notifying him in order to prepare a defense; whenever misconduct of the judge in withholding, hiding or destroying papers essential to the foreigner's cause is prejudicial in effect; whenever he has not been permitted to produce evidence or to summon valuable witnesses".

224.
Case law supports this view.
225.
The judgment in Ambatielos offers insight into the basic right of foreigners to access local courts in pursuit of justice208:

""Thus, when 'free access to the Courts' is covenanted by a State in favour of the subjects or citizens of another State, the covenant is that the foreigner shall enjoy full freedom to appear before the courts for the protection or defence of his rights, whether as plaintiff or defendant; to bring any action provided or authorized by law [...]" [Emphasis added].

226.
In Idler the US-Venezuela Commission found that the American claimant, Mr. Idler, was denied justice when the Supreme Court in Caracas gave him notice of an impending hearing without sufficient time for him to physically be able to appear in court209.
227.
The Cotesworth & Powell tribunal described the following facts as an "absolute denial of justice"210:"

"Still, a plain violation of the substance of natural justice, as, for example, refusing to hear the party interested, or to allow him opportunity to produce proofs, amounts to the same thing as an absolute denial of justice".

228.
AI-Bahloul explicitly recognized that due process breaches include not notifying the investor of hearings and that deciding in the investor's absence amounts to a gross violation of procedural rules211.
229.
The right to access justice also extends to the right to lodge appeal. This aspect was discussed by the tribunal in Al-Bahloul, where the claimant alleged that his appeals were wrongfully rejected without regard to due process standards212 - the tribunal explicitly acknowledged that the allegations could constitute a denial of due process (but ultimately dismissed the claim because of the limited evidence on the record213).

B. Denying an alien the right of defense or to present evidence

230.
The violation of an alien's right of defense or to present evidence as an international wrong amounting to denial of justice has been universally recognized by academia214.
231.
Case law equally supports this view.
232.
This was done by the aforementioned Cotesworth & Powell tribunal215:"

"Still, a plain violation of the substance of natural justice, as, for example, refusing to hear the party interested, or to allow him [an] opportunity to produce proofs, amounts to the same thing as an absolute denial of justice". [Emphasis added]

233.
In the Ambatielos ruling216:

""the covenant is that the foreigner shall enjoy full freedom to [...] deliver any pleading by way of defence, set off or counterclaim; to engage Counsel; to adduce evidence, whether documentary or oral or of any other kind; to apply for bail; to lodge appeals and, in short, to use the Courts fully and to avail himself of any procedural remedies or guarantees provided by the law of the land in order that justice may be administered on a footing of equality with nationals of the country.".

234.
And the Krederi decision:

"[m]ost frequently a denial of justice may result from a serious defect in the adjudicative process, such as a violation of ... the right to be heard and to present evidence [...]217"

235.
The US-Mexico General Claims Commission in Chattin found that local courts displayed "a most astonishing lack of seriousness" because there was "no trace of an effort to have the two foremost pieces of evidence explained", there was no inquiry made into verifying the statement of a key witness in the domestic prosecution proceedings and there was no effort to examine a witness who could have presented important exculpatory evidence218.
236.
In Ballistini, the claimant was denied a crucial piece of evidence necessary to make his case because the judge he accused of arbitrariness deliberately withheld the documents. The French-Venezuelan Commission found a denial of justice

"because the local authorities deprived Mr. Ballistini of the legal means of instituting before the competent tribunals the actions which the laws would authorize him in case he might improperly have been condemned to a criminal judgment.219"

237.
In Joseph F. Riham220. the Supreme Court of Justice of Mexico reversed the decisions of lower courts in enforcement proceedings because it claimed that critical evidence -that was clearly on the record and discussed by one of the justices - had in fact not been presented before it. The American Mexican Claims Commission found that there was denial of justice as221:

""[I]n the face of the clear and indisputable evidence in the record to the contrary, more particularly in view of the fact that the, attention of the court had been drawn to such evidence by one of its members warrants the conclusion that the said court wilfully disregarded such evidence; that the decision of the court was lacking in good faith and that the same fell so far short of international standards as to amount to a denial of justice" [Emphasis added]

C. Prohibition of undue delay

238.
The final type of procedural denial of justice concerns undue delay in the rendering of a judgement by the local Courts.
239.
There is unanimous agreement by scholars that undue delay in the exercise of justice is a separate type of denial of justice222.
240.
As early as the Fabiani223 case discussed supra, international tribunals have agreed that "justice delayed is justice denied". It is widely recognized that undue delay amounts to a denial of due process224.
241.
It is common ground that there is no abstract manner of determining whether a particular period constitutes reasonable delay but each case should be scrutinized under the specific facts225. For example, in Pey Casado226, a period of seven years without rendering a first instance decision by local courts amounted to a denial of justice. In El Oro Mining and Railway Co.227, the Great Britain and Mexico Claims Commission found that the passage of nine years without a hearing in its case for compensation for having provided materials to the government, constituted a denial of justice. However, in Oostergetel, the length of local proceedings of two years was found not to be in breach of the international minimum standard228.
242.
The tribunal in Chevron devised a widely recognized test for denial of justice for undue delay: it found that "some of the factors that may be considered are the complexity of the case, the behaviour of the litigants involved, the significance of the interests at stake in the case, and the behaviour of the Courts themselves"229.
243.
The Chevron test was followed by the tribunal in Oostergetel230.
244.
Similarly, the more recent Toto Construzioni231 decision, discussed in detail by both Parties in their submissions, has stated that232:

""There is not, under international law, a specific measure by which lapses of time may be condemned as excessive: the lapse is to be considered on a case-by-case basis, taking into account (i) the complexity of the matter; (ii) the need for celerity of decision; and (iii) the diligence of claimant in prosecuting its case."

1.3 Standard

245.
The Tribunal has already noted that denial of justice has been conceived by international customary law and that there is no treaty formula under the NAFTA (and most treaties for that matter) which can offer guidance on which judicial actions attributable to States amount to justitia denegata. Additionally, the Tribunal has decided that denial of justice can only be procedural.
246.
The question remains, however: how to differentiate between procedural decisions properly adopted by local Courts, which are contrary to the alien's interests, and those which amount to an international wrong and engage the responsibility of the State. To clarify this issue the Tribunal shall undertake a brief analysis of some of the major denial of justice cases233 starting with those of the 19th/20th century (A.), then it shall continue with more recent decisions (B.), present the Parties' positions (C.) and reach a conclusion (D.).

A. Late 19th and early 20th century cases

247.
At the turn of the 19th and 20th centuries, there was a proliferation of denial of justice decisions that still today serve as guidance for investment tribunals. On the other hand, certain ideas of the concept of denial of justice developed under these early decisions have been superseded234.
248.
In Cotesworth & Powell, a decision from 1875, the international tribunal found multiple instances of denial of justice. A sentence of classification in bankruptcy proceedings was deemed unjust for illegally excluding claimants as common creditors and failing to notify them of the proceedings235. Additionally, a sentence issued without hearing the claimants in the case as plaintiffs in the suit was also found to constitute denial of justice236. Another denial arose from a one-year delay in notifying an important judicial sentence237. Finally, the tribunal identified a conflict between decisions made by the same courts238.
249.
Idler, a case decided in 1890, concerned the use of an obscure legal remedy from medieval times, which allowed the reversal of any judgments or proceedings detrimental to the government, used by the State to annul previous Court decisions favourable to the alien. The US-Venezuela Commission found that the singular invocation of this ancient remedy by the Supreme Court of Venezuela served to circumvent enforcement of the decisions in favour of the alien and thus constituted a denial of justice239. The Commission also found that the claimant was denied justice because the notice of proceedings he was given made it impossible for him to appear in court240.
250.
In Fabiani, a case from 1896, Venezuela was held responsible for denial of justice, because its courts refused to enforce an arbitral award of a French national against his Venezuelan partners due to strictly procedural arguments, which amounted to a "disguised refusal to rule" ("refus déguisé de statuer"241). The arbitrator also found that the claimant was subjected to undue delay242.
251.
In Ballistini243, a decision of the French-Venezuelan Commission of 1902, a Venezuelan judge wrongfully rendered judgment for calumny and injuries against a foreigner. When Mr. Ballistini sued the judge, who apparently had issued an arbitrary decision to arrest him, the same judge withheld the necessary documentary evidence, making it impossible for Mr. Ballistini to make an effective case before local courts. The Commission found that the claimant had been denied justice:

"[b]ecause the local authorities deprived Ballistini of the legal means of instituting before the competent tribunals the actions which the laws would authorize him in case he might improperly have been condemned to a criminal judgment"244.

252.
In the Chattin case of 1928, the American-Mexican Claims Commission found a denial of justice. Mr. Chattin was arrested illegally and sentenced to two years of jail for embezzlement on the basis of spurious evidence, in a trial in which he was not duly informed regarding the charges brought against him and in which the Court hearings lasted as little as five minutes245. This was a landmark decision regarding basic procedural guarantees to be afforded to foreigners.

The Neer case and the subjective element of denial of justice

253.
One of the traditionally recognized leading cases on denial of justice is the 1926 award of the US-Mexico General Claims Commission in L. F. H. Neer and Pauline Neer. In its decision, the US-Mexico Commission laid out its standard246:

"[T]he treatment of an alien, in order to constitute an international delinquency, should amount to an outrage, to bad faith, to wilful neglect of duty, or to an insufficiency of governmental action so far short of international standards that every reasonable and impartial man would readily recognize its insufficiency".

254.
The imprint made by Neer on the concept of denial of justice has been palpable in investment arbitration awards247; however, it appears that the reliance on the case has rightfully declined in the recent years.
255.
The Mondev tribunal was correct in stating that the facts in Neer were centred on a State's alleged failure to carry out an effective police investigation into a foreigner's murder, and are not apposite when discussing treatment of aliens under the FET standard248. As the Azurix tribunal found249:

"the traditional Neer formula ... reflects the traditional, and not necessarily the contemporary, definition of the customary minimum standard, at least in certain non-investment fields".

256.
Other tribunals have agreed that the Neer standard may have reflected the minimum standard - but only as of 1927 and not in contemporary times250.
257.
Similarly, Paulsson writes that

"there should be no doubt that, to the extent that customary-law minimum standard has any role to play in the interpretation of investment treaties, the Neer formula is of limited import"251.

258.
An additional reason why the Neer standard has become less relevant is that it explicitly requires the finding of bad faith252. This notion has been rejected by NAFTA decisions concerning denial of justice253, and authors alike254.

B. Recent denial of justice decisions

259.
The Parties have not drawn the Tribunal's attention to any NAFTA decision with a positive finding of denial of justice.
260.
The Tribunal will briefly analyse Mondev and Loewen, the two major cases discussed by the Parties. The Tribunal shall also discuss Dan Cake - a very recent award finding for denial of justice in a non-NAFTA case.

The Mondev case

261.
The Mondev case (2002) concerned a failed investment in the USA by a Canadian construction company and involved a claim that the local authorities prevented the claimant from exercising an option to purchase a certain parcel of land. When the claimant filed a case before US courts, the jury found against the local authorities, a decision which was later overturned on appeal. The claimant then failed to obtain a judgment in its favour from the Massachusetts Supreme Court and the US Supreme Court rejected the case by not granting certiorari. According to the claimant, the Massachusetts Supreme Court deviated from its previous rulings to the extent that it had in effect applied "a new rule".
262.
The Mondev tribunal did not find that denial of justice had occurred as, in any common law jurisdiction, one may and should expect "new" judge-made law and the decisions taken by the US courts were not "extreme cases" that would amount to a denial of justice.
263.
The Mondev tribunal found that denial of justice would require255:

"a wilful disregard of due process of law, [...] which shocks, or at least surprises, a sense of judicial propriety".

264.
Its analysis did not end here, however. The tribunal continued to explain that256:

"The Tribunal would stress that the word "surprises" does not occur in isolation. The test is not whether a particular result is surprising, but whether the shock or surprise occasioned to an impartial tribunal leads, on reflection, to justified concerns as to the judicial propriety of the outcome, bearing in mind on the one hand that international tribunals are not courts of appeal, and on the other hand that Chapter 11 of NAFTA (like other treaties for the protection of investments) is intended to provide a real measure of protection. In the end the question is whether, at an international level and having regard to generally accepted standards of the administration of justice, a tribunal can conclude in the light of all the available facts that the impugned decision was clearly improper and discreditable, with the result that the investment has been subjected to unfair and inequitable treatment. This is admittedly a somewhat open-ended standard, but it may be that in practice no more precise formula can be offered to cover the range of possibilities". [Emphasis added].

265.
Mondev also determined that the threshold for establishing treatment in violation of the FET standard had evolved in the past century and that currently it does not require subjective elements on the part of the Host State such as bad faith257:

"To the modern eye, what is unfair or inequitable need not equate with the outrageous or the egregious. In particular, a State may treat a foreign investment unfairly and inequitably without necessarily acting in bad faith [...] the content of the minimum standard today cannot be limited to the content of customary international law as recognised in arbitral decisions in the 1920s".

The Loewen case

266.
In Loewen (2003), the other major case discussed by the Parties, a Canadian funeral home conglomerate challenged a Mississippi State Court jury award of USD 100 M in compensatory damages and USD 400 M in punitive damages on claims that included fraud and violations of Mississippi antitrust law. The claimant argued that, apart from the egregious damages decision by the Mississippi State court, it was also wronged by the application of civil procedure rules requiring it to post USD 625 M to stay execution of the judgment pending appeal.
267.
Interestingly, the investment tribunal appeared to lean towards finding that claimant was indeed denied justice under the facts of the case258:

"After all, we have held that judicial wrongs may in principle be brought home to the State Party under Chapter Eleven, and have criticised the Mississippi proceedings in the strongest terms. There was unfairness here towards the foreign investor".

268.
The Loewen tribunal used the following test, according to which denial of justice amounts to259:

"[m]anifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety"

269.
Loewen also endorsed the Mondev view that under contemporary international customary law, bad faith or malicious intent is not required for a denial of justice260:

"Neither State practice, the decisions of international tribunals nor the opinion of commentators support the view that bad faith or malicious intention is an essential element of unfair and inequitable treatment or denial of justice amounting to a breach of international justice".

270.
However, the Loewen tribunal ultimately found that the claimant had failed to exhaust all available local remedies when it decided to reach a settlement rather than pursue its case before the US Supreme Court261.
271.
Apart from the claimant not having exhausted the available local remedies, Loewen's claims were dismissed for lack of standing, due to claimant's buyout by a company of the Host State (which led to claimant losing its status as a foreign investor under the NAFTA).
272.
The Parties have dedicated a lengthy discussion to the Mondev and Loewen decisions. The Tribunal observes that these cases may offer assistance regarding the applicable standard of denial of justice in the abstract. The underlying facts of those cases, however, substantially differ from the ones in this case.

The Dan Cake case

273.
In a recent non-NAFTA decision of 2015, the Dan Cake tribunal found denial of justice: under Hungarian law the claimant's enterprise, that was in liquidation, was entitled to convene a composition hearing in order to seek an agreement with its creditors. Instead of following the established procedure, the Metropolitan Court of Budapest ordered claimant to submit a number of documents not required by law, and which the claimant was unable to provide. The tribunal considered that such order was unnecessary and that it prejudged and denied the claimant's right to seek an agreement with its creditors262.
274.
Based on these grounds and taking into account that there was no appeal from the Court's order263, the tribunal found that the Court's conduct "[did] shock a sense of judicial propriety264" and that thus claimant had been denied justice.

C. The position of the Parties and the Non-Disputing Parties

275.
The Tribunal shall briefly summarize the positions of Claimant and Respondent on the applicable standard for denial of justice. The Tribunal will also review the Non-Disputing Parties' observations on this matter in their NAFTA Art. 1128 submissions.

Claimant's position

276.
Claimant argues that with respect to procedural denial of justice, the Tribunal should follow the Oostergetel tribunal and apply a standard that the procedural irregularities be "severe" and affect the outcome of the dispute and that any undue delay be "excessive"265.
277.
Lion also claims that it is sufficient for it to prove that Mexico's courts failed to remedy the prior denial of justice, which consisted in the service of process made in a manner inconsistent with the applicable international standards and local law266.
278.
Lion also attacks the Mondev standard proposed by Respondent by stating that the decision was based on an incorrect legal basis: that of arbitrariness rather than denial of justice267.

Mexico's position

279.
Respondent in turn argues that a single very high standard should apply to all types of denial of justice268. This single standard for the finding of denial of justice should be based on the Mondev case269:

"[...] a wilful disregard of due process of law, ... which shocks, or at least surprises, a sense of judicial propriety."

280.

According to Mexico, the Mondev tribunal was not wrong in referring to arbitrariness as part of NAFTA's Art. 1105 minimum standard of treatment. What the tribunal in Mondev did was to hold the criterion of arbitrariness "useful in the context of denial of justice"270, while fully acknowledging the difference between the two.

281.
Mexico emphasizes that the standard for denial of justice is very high, summarizing its scope in the following words271 :

"The threshold to establish denial of justice is very high - e.g. requiring a 'notoriously unjust' or 'egregious' administration of justice 'which offends a sense of judicial propriety'. It does not suffice to establish that domestic adjudicators have erred, or misapplied or misinterpreted domestic law".

The USA's position

282.
In its submission the USA explicitly identifies the denial of justice threshold as high272, due to the principle of judicial independence, the particular nature of judicial action and the unique status of the judiciary in both international and municipal legal systems273. International tribunals should accord deference to domestic courts, whose judgments are presumed to be regular under international law to a higher degree than the actions of a State's legislative or administrative branch274.
283.
The USA provides examples for denial of justice: an "obstruction of access to courts" or a "failure to provide those guarantees which are generally considered indispensable to the proper administration of justice275".
284.
The USA emphasizes the argument that domestic court decisions, or misapplications or misinterpretation of domestic law, do not in themselves constitute a denial of justice under customary international law276.

Canada's position

285.
Like the USA, Canada advocates for a high standard for denial of justice claims and evokes the traditional standard of Court actions or omissions being "extremely gross" or "egregious" or amounting to "an outrage, bad faith, wilful neglect of duty, or insufficiency of action apparent to any unbiased man"277. The high standard is amplified by the need of international tribunals to defer to local Courts278.
286.
Canada lists as examples of denial of justice instances where there has been

"a refusal to entertain a suit or serious failure to adequately administer justice or if there has been a 'clear and malicious misapplication of the law' or if the judgment in question is so patently egregious that 'it is impossible for a third party to recognize how an impartial judge could have reached the result in question".279

D. The Tribunal's view

287.
The very high standard adopted by Mondev has been endorsed by a multitude of tribunals, NAFTA280 and non-NAFTA281 alike. The Tribunal also notes that the test has been proposed by Respondent282 and endorsed by both Non-Disputing Parties283.
288.
The Tribunal accepts the Mondev standard as a guide to adjudicate Lion's denial of justice claim. However, some precisions are required in light of the arguments presented by the Parties.
289.
The starting point for the tribunal in Mondev was the ELSI judgement. In this case the ICJ assessed the concept of "arbitrariness" under the Treaty of Friendship, Commerce and Navigation between the USA and Italy, in the context of a dispute concerning the requisition and forced liquidation of an insolvent Italian company wholly owned by a US corporation. In this setting the ICJ stated that arbitrariness was284:

"a wilful disregard of due process of law, an act which shocks, or at least surprises, a sense of juridical propriety".

290.
The Mondev tribunal replicated the above statement285. Taking this isolated sentence, Mexico has suggested that a finding of denial of justice requires "evidence of intention or malice, collusion, corruption, or flagrant abuse by the Respondent's judicial system"286.
291.
The Tribunal does not agree with Mexico's conclusion, which is only the result of an incomplete reading of the Mondev standard.
292.
The Mondev tribunal acknowledge that the ELSI standard was defined in the context of evaluating arbitrariness, but considered it useful in further defining the test for denial of justice287. The tribunal continued stating that for denial of justice288:

"... the test is not whether a particular result is surprising, but whether the shock or surprise occasioned to an impartial tribunal leads, on reflection, to justified concerns as to the judicial propriety of the outcome..".

293.
The tribunal continued to frame this test within the standard of FET under Article 1105(1) of NAFTA289:

"In the end the question is whether, at an international level and having regard to generally accepted standards of the administration of justice, a tribunal can conclude in the light of all the available facts that the impugned decision was clearly improper and discreditable, with the result that the investment has been subjected to unfair and inequitable treatment".

294.
In defining the test for denial of justice, nowhere does the Mondev tribunal allude to a subjective element. Moreover, in assessing international liability of the Contracting States under Article 1105(1) of NAFTA, the tribunal explicitly rejected this possibility290:

"To the modern eye, what is unfair or inequitable need not equate with the outrageous or the egregious. In particular, a State may treat foreign investment unfairly and inequitably without necessarily acting in bad faith" [Emphasis added].

295.

Other NAFTA tribunals have endorsed this view291. For instance, the Glamis Gold tribunal stated292:

"The Tribunal emphasizes that, although bad faith may often be present in such a determination and its presence certainly will be determinative of a violation, a finding of bad faith is not a requirement for a breach of Article 1105(1).

296.
The Tribunal agrees: a wilful and intentional illicit conduct by local Courts may serve as the grounds for a finding of denial of justice. Wilful intent thus, might be an accessory element in discerning whether denial of justice has occurred, but it is not a necessary requirement.
297.
The Loewen tribunal used a similar test, stressing that denial of justice is procedural293:

"[m]anifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety".

298.

Loewen also endorsed the Mondev view that under contemporary international customary law, bad faith or malicious intent is not required for a denial of justice claim, framed within the Fair and Equitable Treatment of Article 1105(1) NAFTA294:

"Neither State practice, the decisions of international tribunals nor the opinion of commentators support the view that bad faith or malicious intention is an essential element of unfair and inequitable treatment or denial of justice amounting to a breach of international justice".

* * *

299.
In conclusion, the test is an objective one: denial of justice requires a finding of an improper and egregious procedural conduct by the local courts (whether intentional or not), which does not meet the basic internationally accepted standards of administration of justice and due process, and which shocks or surprises the sense of judicial propriety.

2. Claimant's position

300.
Lion says that Mexico breached its duty to treat it in a fair and equitable manner through denying Lion justice in its pursuit of legal remedies against the Debtors: Claimant argues that it was not accorded proper due process rights, since first, it was not granted the opportunity to be heard and then, it was deprived of the legal means to defend its rights (2.1.); Lion also maintains that it suffered undue delay in the local proceedings (2.2.); finally, Lion argues that it complied with the exhaustion of local remedies rule (2.3.).

2.1 Claimant was denied due process

301.
Claimant argues that it was denied justice through the violation of its due process rights by being barred access to justice (A.) and being prevented from presenting its case before local courts and marshalling evidence to support it (B.).

A. Lion was denied access to justice

302.
Claimant was denied the chance to participate before the Juez de lo Mercantil because it was never properly served.
303.
Under Mexican law, proper notification by a Court is subject to making certain ("cerciorarse") that the defendant indeed resides in the place where service is made; the service confirmation should explain the reason that led the Court to be certain ("convencimiento")295. This obligation is enshrined in Arts. 111, 112 and 112 bis, of the Civil Procedure Code of Jalisco ["CPC Jalisco"]296. Additionally, Art. 279 of CPC Jalisco requires the Juez de lo Mercantil to "examine the legality of the service of process" ("examinará la legalidad del emplazamiento") before declaring Lion in default297.
304.
Lion argues that Mexico clearly failed to comply with these provisions.
305.
First, the Court based the citation address solely on the domicile indicated by the plaintiff, designated in the Forged Settlement Agreement - a document which was not an original and bore no original signatures. This notwithstanding, the Court accepted the false information without further research298.
306.
Second the Court's actuario failed to "include particular reasons or objective proof'299, and to indicate the means upon which Lion's domicile was corroborated; apparently, the Court's actuario only relied on the word of the person served, Lic. José Isaac López Medina, although he provided no indication or proof of his position at Lion nor any evidence that he had representation powers300. According to Claimant, the Juez de lo Mercantil acted erroneously and failed to exercise diligence to ensure that Lion was properly served301.
307.
Third, Lion avers that notification by cédula was inappropriate given the circumstances of the case302. According to Lion, notification by judicial bulletins or boards amounts to fictitious service of process, which is clearly inconsistent with the treatment to be given to a foreign company303. Service on Claimant by the Juez de lo Mercantil was inconsistent with two international treaties to which Mexico is party - the Inter-American Convention on Letters Rogatory (with its Additional Protocol) and the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters304 - personal service to Lion should have been made via an international cooperation mechanism305.
308.
Furthermore, Claimant reinforces its argument by stating that a different standard for service was employed by judicial personnel with regard to the Debtors. For example, Claimant observes that while in average, it took a Court in Mexico 42 days to admit and serve a lawsuit306, the Juez de lo Civil failed to serve the Juicio Hipotecario on Inmobiliaria Bains for more than three years, and at the same time required only 22 days to serve the incorrect emplazamiento on Lion307.
309.
Finally, Lion avers that it was limited in its pursuit of justice before local Courts, because it was barred from bringing an ordinary appeal against the Cancellation Judgment, due to an incorrect decision by the Juez de lo Mercantil granting said Judgment res judicata effect in only 42 days, at the request of the Debtors308.

B. Claimant was deprived of its right to exercise means of defense

310.
Claimant says that it was not allowed to properly defend itself. Respondent denied it access to justice through its Courts' continuous failure to scrutinize the authenticity of the forged documents309:
311.
First, the Juez de lo Mercantil should have looked ex officio into the nature of the Forged Settlement Agreement and the documentation indicating that Lion was a foreign company310 before declaring Lion in default311.
312.
Second, Mexico's Courts have denied Lion the opportunity to prove the forgery. Lion submitted the ampliación de demanda as soon as it gained knowledge of the facts underlying the forgery and cannot be blamed for not having raised the issue ab initio312. In Claimant's view, lack of service is a breach of such a magnitude under Mexican law that the Juez de Distrito should have allowed all evidence and arguments that are necessary to prove the circumstances of the allegedly illegal service313, yet the Juez de Distrito dismissed any evidence pointing to the falsehood of the emplazamiento314. And then the Juez de Distrito's decision in the remand Amparo refused to admit Sr. Arechederra's testimony, thereby depriving Lion of the principal evidence that could prove that the person alleged to have signed the False Amparo did not do so315.
313.
Third, none of Mexico's Courts seized of Lion's proceedings ruled on the authenticity of the Forged Settlement Agreement. The Juez de Distrito refused to decide on the issue316; the Tribunal de Queja refused as well317, ruling that the question should be resolved after the False Amparo issue was decided in the Remand Amparo; and finally the Juez de Distrito refused318, understanding that the Tribunal de Queja had excluded from the admissible evidence the evidence concerning the falsehood of the Forged Settlement Agreement319. Ultimately, Lion's Amparo claim was thus frustrated.

2.2 Mexico's unreasonable delay in administering justice

314.
According to Claimant, Mexico's Courts failed to decide Lion's Amparo claim within a reasonable time.
315.
Claimant avers that the time required for the resolution of the Amparo lawsuit was at odds with the usual duration of such proceedings in Mexico. According to the statistics from the Mexican Consejo de la Judicatura Federal, the Amparo lawsuit took almost four times as long as the average for the same year320.
316.
To determine if this delay is unreasonable and amounts to a denial of justice, international tribunals consider three features321:

"- The complexity of the matter: Claimant maintains that the claim submitted to the Juez de Distrito and the Tribunal de Queja was not complex; given that the service was performed at the address and to the person mentioned in the Forged Settlement Agreement, there was only one issue to be decided by the Courts in order to determine whether Lion was properly served - was the Forged Settlement Agreement authentic?322 Claimant states that under normal circumstances, the authenticity of a document is a factual issue that is disposed of preliminarily as a procedural incident323."

"- The procedural diligence of the interested parties: Claimant did not cause any undue delay through its actions during the Real Amparo proceedings324; as soon as it learned of the existence of the Forged Settlement Agreement, it filed a petition to challenge its authenticity325."

- Whether celerity is especially warranted to avoid harm generated in the legal situation of the person involved in the process: Lion submits that celerity was essential because the Amparo claim, as a remedy to ultimately prevent the cancellation of the Mortgages, would become ineffective as time went by326.

317.
On a separate note, Claimant compares the delay in its claims with the unusual speed of the Cancellation Judgment, which deprived it of its investment in Mexico327.

2.3 Claimant complied with the exhaustion of local remedies rule

318.

Claimant begins by stating that under international law, the State arguing that a party has failed to exhaust local remedies has the burden to prove the existence, availability and adequacy of such remedies328, and Mexico has failed to discharge this duty.

319.
According to Lion, it fully complied with the exhaustion requirement as it did pursue all adequate remedies available to it329 (A.)
320.
Notwithstanding, Lion was not required to exhaust all local remedies because:

- The remedies available were inadequate, ineffective and their exhaustion unreasonable330 (B.), and

- A denial of justice for undue delay claim is not subject to the exhaustion requirement331 (C.).

A. Lion's claims did not require further action before Mexico's courts

321.
Lion argues that the exhaustion of local remedies rule applies to those domestic recourses that are likely to be successful. In the case at hand, the remedies to be exhausted would be those which could reinstate the Mortgages to Lion; and Lion did pursue them332. Lion was not required to initiate any proceedings other than the Amparo as it was not feasible for it to launch the juicio de nulidad, which offered inferior protection to the Amparo route. The criminal proceedings did not offer appropriate protection either.
322.
Claimant elaborates on the concept of 'original judicial misconduct'333 and distinguishes between the initial wrong, the denial of justice and the exhaustion of local remedies, which requires the exhaustion of all adequate available remedies334. Following this threefold concept, Claimant avers that in the present case:

"- The initial wrong would be the Debtors' fraudulent actions;"

- The denial of justice would be the breach of Lion's right to be heard by the Juez de lo Mercantil and

- What followed after the Cancellation Proceeding (i.e., the Amparo Proceeding, the Revision Appeal Proceeding and the Remanded Proceeding) is the exhaustion of local remedies, where the "system" failed to correct the initial miscarriage of justice335.

323.
Lion argues that, since all three elements were met, it did in fact exhaust the adequate available local remedies, thus complying with the exhaustion rule under international law336.

B. Lion was exempted from exhausting available local remedies

324.
In any event, Claimant states that, under international law, it was exempted from the exhaustion rule as the local remedies were inadequate, ineffective and their exhaustion unreasonable337.
325.
Lion uses the Loewen standard, stating that only "remedies which are effective and adequate and are reasonably available to the complainant in the circumstances in which it is situated" must be exhausted338.
326.
According to Claimant, the rule provides that only effective remedies, i.e., those providing a reasonable possibility of an effective remedy, must be exhausted and such effectiveness is to be assessed in light of the circumstances in advance of resorting to the remedy (ex ante), rather than in light of the actual outcome of the case and in light of the nature of the violation the remedy is aimed at correcting339.
327.
Secondly, only those remedies which can reasonably be demanded from the investor are to be exhausted. In the present arbitration, the remedies available to Lion were neither effective nor reasonable340:

"- Lion's secured returns on its investments were declining every day and Lion would never be made whole because the Debtors' indebtedness continued to grow and exceeded the value of the collateral;"

- Pursuing the Remand Amparo would have been unreasonably inefficient and would likely have taken more than three additional years.

C. Denial of justice for undue delay does not require exhaustion

328.
Claimant invokes the ILC Draft Articles on Diplomatic Protection to state that under customary international law, local remedies do not need to be exhausted when there is undue delay in obtaining justice and this delay may be attributed to the Host State341.
329.
Lion therefore submits that its denial of justice for undue delay claim is exempted from the exhaustion requirement342.

3. Mexico's position

330.
Mexico avers that Lion was not denied access to justice as it was given proper opportunity to be heard and to exercise its right of defense (2.1.). Additionally, there was no unreasonable delay in the Courts' proceedings (2.2.). Even if the Tribunal finds that Lion was denied justice, its claim should fail as it did not comply with the exhaustion of local remedies requirement (2.3.). Finally, Mexico presents a list of preliminary objections to Lion's claims (2.4.).

3.1 Respondent fully accorded claimant procedural due process

331.
Respondent argues that Lion was neither denied access to justice (A.) nor barred from defending its case and presenting documents to support it (B.).

A. Mexico's judiciary did not deny Claimant the opportunity to be heard

332.
According to Mexico, Claimant's allegations that the Juez de lo Mercantil failed to properly serve it are mistaken343:
333.
First, Mexico is also a victim of the Forged Settlement Agreement344. The actuario had no reason to doubt the authenticity of the Forged Settlement Agreement. Under Mexican law, a Judge has the obligation to verify that the document that serves as the basis for the legal action is compliant, but the Judge lacks power to question its authenticity345. According to Respondent, Claimant has provided no evidence to suggest that the Juez knew or should have known that the contact information was false346. Claimant also ignores the fact that the Juez had no prima facie reason not to rely on the documentation before him347.
334.
Second, the actuario's duty is limited to making sure "that service takes place at the domicile provided by the claimant"348. In this case:

"- The actuario performed service at the address identified by the plaintiff; this service was directed at the legal representative of Lion, as confirmed by the actuario349."

"- On the first attempt of service, dated 3 April, 2012, the actuario left a citation with Lic. López Medina ordering the legal representative to be present at a specified date and time to facilitate service; given the legal representative's absence, the emplazamiento could be effectuated upon any individual present at the time - in this case, it was Lic. López Medina, who was also identified in the Settlement Agreement as authorized to receive notification on behalf of Claimant350.

335.
The emplazamiento was correct: according to the Supreme Court, the emplazamiento has to be performed with the legal representative351 and, if this is not possible, the actuario simply has to ask for the legal representative before performing service upon any other person present at the moment352.

B. Claimant was accorded the right to exercise means of defense

336.
First, if anyone is to be blamed for the Forged Settlement Agreement never being scrutinized by the judicial system in Mexico, it is Lion, whose negligence was the reason why the Courts could not admit the additional evidence353: Claimant should have included references to the alleged fraud in its original Amparo claim, rather than seeking to introduce them through the ampliación de demanda354.
337.
Having failed to include fraud issues, the Juez de Distrito followed the law when it adjudicated a claim for improper notification ("falta de emplazamiento") rather than a claim for forgery355. Therefore, the Juez de Distrito was bound to deliver the judgment that it did and Lion cannot claim a denial of justice due to its own negligence in pursuing its claims.
338.
In its decision to dismiss the ampliación de demanda, the Secretario del Juzgado de Distrito acted in accordance with local law, which did not require him to grant Lion an opportunity to cure its procedural defects356. It was Lion who failed to demonstrate the necessary link between its claim and the Forged Settlement Agreement357.
339.
When Claimant disagreed with the Juez de Distrito's decision, it exercised its right to challenge it through a review proceeding, but lost358 due to one more failure to follow procedural law: the ampliación de demanda must be signed either by the aggrieved party or by its legal representative359. Lion does not appear to contest the fact that it filed its ampliación de demanda improperly360. Therefore, it was not denied the right to present evidence and defend its case.
340.
Second, the Juez de Distrito in the Remand Amparo did not dismiss all of Lion's evidence, but rather explained that some of it was already on the Court's record361; in any event, the Juez de Distrito was not empowered to admit new evidence in respect of the authenticity of the Forged Settlement Agreement in the Remand Amparo and acted in complete accordance with applicable procedural rules362.
341.
In conclusion, Claimant cannot claim that the decisions to dismiss the additional evidence were the result of an idiosyncratic or arbitrary decision363. By failing to follow the applicable procedural rules, Lion and not Mexico is responsible for Lion's inability to present evidence and defend its case before Mexico's Courts.

3.2 Mexico's courts decided Lion's claims within a reasonable time

342.
Respondent claims that the duration of each of the stages of the Amparo Proceeding was reasonable364:

"- First, the Amparo Proceedings took one year to complete, which constitutes an appropriate time given its multiple complexities365;"

"- Second, the proceedings before the Tribunal de Queja took 16 months to complete, which once again was a justifiable time given the extraordinary complexities involved in it366;"

- Third, the Juez de Distrito had only started analysing the Remand Amparo and cannot be blamed for not delivering a decision due to Claimant's premature withdrawal from the proceedings367.

343.
Mexico avers that Claimant still had one or two years of litigation ahead had it chosen to continue, which would not constitute an unusual time given the complexity of the case368. Additionally, Lion is equally responsible for any delay as it waited for four years to initiate the Juicio Hipotecario369.
344.
There is nothing in the duration of the proceedings that amounts to a wilful disregard of due process of law, which shocks, or at least surprises, a sense of judicial propriety. Thus, the duration of the local proceedings does not meet the threshold of a denial of justice through unreasonable delay370.

3.3 Lion failed to exhaust local remedies

345.
Mexico asserts that Lion did not comply with the requirement of the local remedies rule as it did not exhaust all available remedies (A.) and no futility exception is applicable (B.).

A. Claimant did not exhaust all available local remedies

346.
Respondent says that Claimant is improperly using the current arbitration as an appeal of the Amparo judgment in lieu of Mexico's domestic legal system371.
347.
According to Mexico, international law accords the judiciary a greater presumption of regularity and requires a claimant to exhaust local remedies before initiating a denial of justice claim. Otherwise, the host State's judicial system would not have an opportunity to correct itself372.
348.
Respondent avers that Claimant did not exhaust all available local remedies: it could have and should have initiated a nulidad de juicio concluido proceeding and it has also not exhausted the criminal proceedings373.
349.
Additionally, Respondent emphasizes that a denial of justice may only occur with regard to a State's entire judicial system and not separate judicial acts374; a claim of denial of justice can only be based on adjudicative measures that are final. Since Claimant has not exhausted all available options of seeking recourse under Mexican law, it is barred from pursuing a denial of justice claim375.

B. The futility exceptions to the exhaustion rule does not find application in the current case

350.
According to Mexico, the futility standard is high and is not met here376. Instances of ineffectiveness and futility include situations where377:

"- the local Courts have no jurisdiction over the dispute;"

"- the loc