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Avocats, autres représentants, expert(s), secrétaire du tribunal


Table of Selected Abbreviations/Defined Terms

Arbitration Rules or UNCITRAL Rules Arbitration Rules of the United Nations Commission on International Trade Law adopted by the United Nations General Assembly on 15 December 1976
BIT Agreement between the Government of the United Mexican States and the Government of the Republic of Singapore on the Promotion and Reciprocal Protection of Investments, signed on November 12, 2009, which entered into force on April 3, 2011
C-[#] Claimant's Exhibit
CER-001 Expert Report of Kiran Sequeira and Garrett Rush, Versant Partners, LLC dated March 20, 2019
CER-002 Second Expert Report of Kiran Sequeira and Garrett Rush, Versant Partners, LLC dated February 12, 2020
CER-003 Expert Report of Jean Richards, Quantum Shipping Services LTD dated March 20, 2019
CER-004 Supplementary Expert Report of Jean Richards, Quantum Shipping Services LTD dated February 12, 2020
CER-005 Report on Mexican Criminal Law prepared by Diego Ruíz Durán dated March 20, 2019
CER-006 Reply Expert Report on Mexican Criminal Law prepared by Diego Ruíz Durán dated February 12, 2020
CER-007 Report on Mexican Insolvency Law by Luis Manuel C. Méjan Carrer dated March 20, 2019
CER-008 Reply Expert Report on Mexican Insolvency Law by Luis Manuel C. Méjan Carrer dated February 12, 2020
CER-009 Expert Report on Foreign Investment Law by David Enríquez dated March 20, 2019
Cl. Cost Stmt. Claimant's Statement of Costs dated July 23, 2021
Cl. SoC Claimant's Statement of Claim dated March 20, 2019
CL-[#] Claimant(s)'s Legal Authority
Hearing Hearing on Jurisdiction and the Merits held by video conference on May 16-22, 2021
ICSID or the Centre International Centre for Settlement of Investment Disputes
MCA Master Collaboration Agreement, entered into between PACC Offshore Services Holdings Pte. Ltd., Carlos Ramón Espinosa Cerón, Amado Omar Yáñez Osuna, and Martín Díaz Álvarez dated 12 August 2011
MST Minimum standard of treatment
OMS Industry Offshore vessel industry, also known as offshore marine services industry
R-[#] Respondent's Exhibit
Rejoinder Respondent's Rejoinder on Jurisdiction and the Merits dated June 10, 2020
RER-001 Expert Report of José Alberro, Cornerstone Research, dated August 9, 2019
RER-002 Second Expert Report of José Alberro, Cornerstone Research, dated May 11, 2020
RER-003 Expert Report on Industry prepared by Miguel Peleteiro and Arturo del Castillo, Duff & Phelps, dated August 5, 2019
RER-004 Expert Report on Industry prepared by Miguel Peleteiro, Duff & Phelps, dated May 11, 2020
RER-005 Expert Report on Mexican Criminal Law issued by Francisco Javier Paz Rodríguez dated August 5, 2019
RER-006 Second Expert Report on Mexican Criminal Law issued by Francisco Javier Paz Rodríguez dated May 11, 2020
RER-007 Expert's Opinion on Mexican Insolvency Law by Darío Ulises Oscós Coria dated August 5, 2019
RER-008 Second Expert's Opinion on Mexican Insolvency Law by Darío Ulises Oscós Coria dated May 11, 2020
Resp. Cost Stmt. Resp.'s Statement of Costs of July 24, 2021
Resp. SoD Respondent's Statement of Defense dated August 21, 2019
RL-[#] Respondent's Legal Authority
Reply Claimant's Reply dated February 12, 2020
Tr. Day [#] [Speaker(s)] [page:line] Transcript of the Hearing
Tribunal Arbitral tribunal constituted on September 24, 2018 in accordance with the UNCITRAL Arbitration Rules (2010) and Article 13 of the Mexico-Singapore Agreement on the Promotion and Reciprocal Protection of Investments signed on November 12, 2009, and in force as of April 3, 2011. Its members are: Dr. Andrés Rigo Sureda (Spanish), President, appointed by his co-arbitrators; Prof. W. Michael Reisman (U.S.), appointed by the Claimant; and Prof. Philippe Sands (British/French), appointed by the Respondent.
W.S. Witness Statement


The claimant is PACC Offshore Services Holding LTD ("POSH" or the "Claimant"), a company incorporated/organized under the laws of Singapore.

The Claimant brings the claims for itself, and, as provided for under Articles 11(2) and 11(3)(c) of the BIT, on behalf of the following Mexican enterprises: Servicios Marítimos GOSH, S.A.P.I de C.V. ("GOSH"), Servicios Marítimos POSH, S.A.P.I. de C.V. ("SMP"), POSH Honesto, S.A.P.I. de C.V. ("HONESTO"), POSH Hermosa, S.A.P.I. de C.V. ("HERMOSA"), Gosh Caballo Eclipse, S.A.P.I. de C.V. ("ECLIPSE") and POSH Fleet Services Mexico, S.A. de C.V. ("PFSM"), which the Claimant submits are its Mexican Subsidiaries ("POSH's Subsidiaries" or the "Subsidiaries").

The respondent is the United Mexican States ("Mexico" or the "Respondent").
The Claimant and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).
This dispute relates to the bareboat charter services that the Claimant provided to Oceanografía, S.A. de C.V ("OSA"), who in turn sub-chartered them to Petróleos Mexicanos ("PEMEX"), a Mexican state-owned oil and gas company. The dispute concerns a series of acts and omissions by the Mexican authorities (the "Measures") relating to the investment of the Claimant in Mexico (the "Investment") and addressing the Claimant or OSA.



On May 4, 2017, the Claimant delivered a Notice of Intent to Submit a Claim to Arbitration (the "Notice of Intent") to the Respondent pursuant to Article 10 of the BIT,1 On January 19, 2018, Mexico confirmed in writing that it did not believe that the alleged claims had merit, and that if they wished to continue and submit a request for arbitration, Mexico would defend the claim.2


On March 7, 2018, the Claimant provided Consent and Waiver Forms under Articles 11(4) and 11(5) of the BIT.3

On May 8, 2018, the Claimant delivered the Claimant's Notice of Arbitration of the same date, to Mexico, together with factual exhibits C-1 to C-7, and the Claimant's Legal Authority CLA-1 ("Notice of Arbitration"), initiating arbitration proceedings against Mexico. In its Notice of Arbitration, the Claimant appointed Prof. W. Michael Reisman, a national of the United States, as arbitrator.
On June 4, 2018, Mexico submitted its Response to the Notice of Arbitration.
On August 16, 2018, the Claimant submitted to the Secretary-General of ICSID a Request for Appointment of the Presiding Arbitrator and of the Arbitrator not yet appointed, of the same date ("Appointment Request").
On August 20, 2018, Mexico appointed Prof. Philippe Sands, a dual British and French national as arbitrator, of which ICSID took note on August 21, 2018.
By communications of August 22, 2018 and August 29, 2018, the Claimant informed ICSID that it was conferring with the Respondent with respect to the appointment of the Presiding Arbitrator and would revert on September 4, 2018. In the interim, ICSID was to take no action.
On September 6, 2018, the Claimant informed ICSID that the Parties had agreed on a method for the appointment of the President of the Tribunal (i.e., by the co-arbitrators in consultation with the Parties, and absent an agreement, the ICSID Secretary-General would appoint the President of the Tribunal).
On September 21, 2018, the co-arbitrators, Prof. W. Michael Reisman and Prof. Philippe Sands, informed the Parties and ICSID that an agreement had been reached with respect to the appointment of Dr. Andrés Rigo Sureda, a Spanish national, as President of the Tribunal. On September 22, 2018, Dr. Rigo Sureda accepted his appointment, and attached a statement on his independence and availability.

On September 24, 2018, the Tribunal was constituted in accordance with the UNCITRAL Arbitration Rules (2010) and Article 13 of the BIT, and is composed of Dr. Andrés Rigo Sureda, a national of Spain, President, appointed by his co-arbitrators in consultation with the Parties; Prof. W. Michael Reisman, a national of the United States of America, appointed by the Claimant; and Prof. Philippe Sands, a national of Great Britain and France, appointed by the Respondent.

By communications of September 25 and 26, 2018, the Parties requested ICSID to act as Administering Authority for this proceeding, which the Secretary-General of ICSID accepted by letter of September 26, 2018.
On October 7, 2018, in preparation for the First Session, a draft Agenda and draft Procedural Order No. 1 was circulated to the Parties for their comments, which they submitted on November 7, 2018.
On November 21, 2018, the Tribunal held a First Session with the Parties by telephone conference. During the First Session, Ms. Mercedes Cordido-Freytes de Kurowski, Legal Counsel, ICSID, was appointed Secretary of the Tribunal.
On November 28, 2018, the Tribunal issued Procedural Order No. 1 ("PO-1"), reflecting the Parties' agreements, and the Tribunal's decisions on those outstanding issues where the Parties expressed different views.
On December 6, 2018, the Respondent submitted to the Tribunal's consideration a proposal on matters of confidentiality, in accordance with the Tribunal's directions under Section 26.1 of PO-1.
On December 9, 2018, the Tribunal noted to the Parties that "the schedule of document production as it stands would render the production of documents of limited use for the preparation of the Reply. Indeed, in the case of non-objected documents, the deadline is 6 weeks from the due date of the Statement of Defense, and in the case of objected documents ordered to be produced by the Respondent, the deadline is 7 weeks from that date. In these circumstances the Tribunal considers it reasonable to start counting the deadline for filing the Reply as from the end of the production phase. The Tribunal would appreciate the parties' views on this matter by no later than December 14, 2018." Subsequently, the Parties submitted their respective views, as scheduled.
On December 19, 2018, the Tribunal issued Procedural Order No. 2 ("PO-2") regarding the Procedural Calendar together with a revised Procedural Order No. 1, extending the deadlines for submission of the Claimant's Reply and the Respondent's Rejoinder.
On January 8, 2019, the Parties informed the Tribunal that they agreed on the Respondent's proposal on matters of confidentiality set forth in the Respondent's letter of December 6, 2018.
On January 10, 2019, the Tribunal issued Procedural Order No. 3 ("PO-3") concerning the confidentiality of documents.
On March 20, 2019, the Claimant filed its Statement of Claim ("Cl. SoC"), accompanied by: the Witness Statements of Lee Keng Lin, Gerald Kang Hoe Seow, and José Luis Montalvo Sánchez Mejorada; the Expert Reports by Jean Richards (Industry) (with annexes), David Enríquez (Mexican Foreign Investment Law) (with annexes), Diego Ruíz Durán (Mexican Criminal Law) (with annexes), Luis Manuel C. Méjan Carrer (Mexican Insolvency Law) (with annexes), and Kiran Sequeira and Garrett Rush, Versant (Damages) (with annexes); the Claimant's Factual Exhibits C-1 to C-246; and the Claimant's Legal Authorities CL-1 to CL-161.
On May 31, 2019, the Claimant filed for the record new Powers of Attorney granted to Tai-Heng Cheng and Simón Navarro of Sidley Austin LLP by the Claimant and its Mexican subsidiaries on behalf of which the Claimant is acting in this arbitration. The Claimant and its subsidiaries had previously been represented by Tai-Heng Cheng and Duncan Watson of Quinn Emanuel Urquhart & Sullivan LLP.
On June 26, 2019, the Parties informed the Tribunal of their agreement to revise the procedural schedule.
On August 21, 2019, the Respondent filed its Statement of Defense ("Resp. SoD"), accompanied by: the Expert Reports by Miguel Peleteiro and Arturo del Castillo (Industry) (with annexes), Francisco Javier Paz Rodríguez (Mexican Criminal Law) (with annexes), Darío Oscós Coria (Mexican Insolvency Law) (with annexes), and José Alberro, Cornerstone (Damages) (with annexes); the Respondent's Factual Exhibits R-001 to R-092; and the Respondent's Legal Authorities RL-001 to RL-052. Subsequently, the Respondent filed an Errata of the Statement of Defense, dated September 5, 2019.
On October 16, 2019, following exchanges between the Parties, the Parties filed a request for the Tribunal to decide on production of documents.
On November 7, 2019, the Tribunal issued Procedural Order No. 4 ("PO-4") regarding production of documents.
On December 18, 2019, following a request from the Respondent of December 13, 2019, and after considering the Parties' positions on the matter, for the reasons indicated in its letter of December 18, 2019, the Tribunal extended the deadlines for the filing of the Claimant's Reply and the Respondent's Rejoinder. Subsequently, on December 24, 2019, the Tribunal granted a further extension of those deadlines, as agreed by the Parties.
On January 7, 2020, the Respondent updated its distribution list and representation, incorporating Stephen Becker of Pillsbury Winthrop Shaw Pittman LLP to its team of representatives.
On January 27, 2020, the Parties were informed that arbitrator Prof. Philippe Sands would not be available on the hearing dates as scheduled. The Tribunal informed the Parties that it could be available on July 20-24, 2020 for a hearing to be held in Washington, D.C., and invited the Parties to confirm their availability.
On February 12, 2020, the Claimant filed its Reply ("Reply"), accompanied by Second Witness Statement of José Luis Montalvo Sánchez Mejorada; Second Expert Reports by Jean Richards (Industry) (with annexes), Diego Ruíz Durán (Mexican Criminal Law) (with annexes), Luis Manuel C. Méjan Carrer (Mexican Insolvency Law) (with annexes), and Kiran Sequeira and Garrett Rush, Versant (Damages) (with annexes); the Claimant's Factual Exhibits C-247 to C-357; and the Claimant's Legal Authorities CL-0162 to CL-0216. Subsequently, on February 26, 2021, the Claimant submitted a revised Reply correcting minor clerical errors.
Following a consultation process with the Parties regarding the rescheduling of the hearing ("Hearing") in the present case, by letter of March 19, 2020, the Tribunal taking note that both Parties had confirmed their availability for a hearing during the week of May 17-21, 2021, confirmed that the Hearing would be held during that week in Washington, D.C.
On March 30, 2020, the Respondent informed the Tribunal of the Parties' agreement to request an extension of the deadline for the filing of the Respondent's Rejoinder until June 10, 2020. On the same date, the Tribunal confirmed the extension of the deadline, as agreed by the Parties.
On June 10, 2020, the Respondent filed a Rejoinder ("Rejoinder"), accompanied by Second Expert Reports by Miguel Peleteiro (Industry) (with annexes), Francisco Javier Paz Rodríguez (Mexican Criminal Law), Darío Oscós Coria (Mexican Insolvency Law) (with annexes), and José Alberro, Cornerstone (Damages) (with annexes); the Respondent's Factual Exhibits R-093 to R-155; and the Respondent's Legal Authorities RL-053 to RL-127.
On January 15, 2021, the Tribunal wrote to the Parties with reference to the Hearing. Considering the extraordinary circumstances created by the coronavirus pandemic, the health risks, travel uncertainties, and the current and potential quarantine periods following travel, the Tribunal invited the Parties to express their views regarding the modality of this Hearing.
On January 26, 2021, the Tribunal acknowledged the Parties' subsequent communications on the modality of the Hearing (the Claimant's communications of January 19 and 26, 2021 and the Respondent's letter of January 20, 2021), noted that both Parties agreed to holding the Hearing virtually, but disagreed on its length and the starting time. As a result, the Tribunal invited the Parties to discuss the possibility of extending the length of the Hearing by two days, so as to have a 7-day hearing from Sunday, May 16, 2021 to Saturday, May 22, 2021.
On January 28, 2021, both Parties confirmed their availability for a virtual hearing on the proposed dates.
On February 5, 2021, the Tribunal confirmed that the Hearing in the present case would be held virtually from Sunday, May 16, 2021 to Saturday, May 22, 2021, as proposed by the Tribunal and agreed by the Parties.
On February 20, 2021, the Tribunal circulated a Draft Procedural Order No. 5 regarding the organization of the Hearing for the Parties' consideration and comments.
On March 16, 2021, the Parties submitted a joint statement with their comments on the Draft Procedural Order No. 5.
On March 25, 2021, pursuant to Section 22.1 of Procedural Order No. 1, a pre-hearing organizational meeting between the Parties and the President of the Tribunal was held by video conference (the "Pre-Hearing Conference"), to discuss any outstanding procedural, administrative, and logistical matters in preparation for the Hearing.
On March 31, 2021, the Tribunal informed the Parties of the Tribunal's decision regarding the points of disagreement on Draft Procedural Order No. 5 that remained outstanding (the "Outstanding Matters") after the Pre-Hearing Conference, and requested the Parties to provide certain information to enable the Tribunal to finalize Procedural Order No. 5.
On April 21, 2021, the Tribunal issued Procedural Order No. 5 ("PO-5") concerning the organization of the Hearing.
On May 6, 2021, a test was conducted in preparation for the Hearing to ensure connectivity of the Hearing participants.
A hearing was held via zoom from May 16, 2021 to May 22, 2021. The following persons were present at the Hearing:


Andrés Rigo Sureda President
W. Michael Reisman Arbitrator
Philippe Sands Arbitrator
Cina Santos Prof. Reisman's Assistant

ICSID Secretariat:

Mercedes Kurowski Secretary of the Tribunal
Anastasia Tsimberlidis Paralegal
Irina Langenegger Intern

For the Claimant:

Tai-Heng Cheng Legal Representative
Marinn Carlson Legal Representative
Simón Navarro Legal Representative
Jennifer Lim Legal Representative
Manuel Valderrama Legal Representative
Meera Rajah Legal Representative
Eugenia Seoane Legal Representative
Tatiana Velasquez Legal Representative
Daniel Ang Legal Representative
Anthony Peña Legal Representative
James Beall Legal Representative
Whitley Tiller Legal Representative
Lee Keng Lin Party Representative
Andy Soh Party Representative
Corey Whiting Party Representative
Shawn Ang Party Representative
Paul Shen Party Representative
Raymond Ang Party Representative

For the Respondent:

Orlando Pérez Gárate Legal Representative
Cindy Rayo Zapata Legal Representative
Alan Bonfiglio Rios Legal Representative
Rosalinda Toxqui Tlaxcalteca Legal Representative
Ellionehit Sabrina Alvarado Sánchez Legal Representative
Rafael Alejandro Augusto Arteaga Farfán Legal Representative
Karla Shantal Ayala Molina Legal Representative
Miguel Ángel Galindo Vega Legal Representative
Stephan E Becker Legal Representative
David Stute Legal Representative
Jacklyne Vargas Legal Representative
Greg Tereposky Legal Representative
Alejandro Barragan Legal Representative
Ximena Iturriaga Legal Representative

Court Reporter:

Dawn Larson English Court Reporter
Dante Rinaldi Spanish Court Reporter
Elizabeth Cicoria Spanish Court Reporter
Virginia Masce Spanish Court Reporter
Guadalupe García Spanish Court Reporter


Silvia Colla
Charles Roberts
Judith Letendre

During the Hearing, the following persons were examined:

On behalf of the Claimant:

Lee Keng Lin Witness
José Luis Montalvo Sánchez Mejorada Witness
Luis Manuel Camp Méjan Expert
Diego Ruíz Durán Expert
Jean Richards Expert
Kiran Sequeira Expert
Garrett Rush Expert

On behalf of the Respondent:

Darío Ulises Oscós Coria Expert
Francisco Javier Paz Rodríguez Expert
Miguel Peleteiro Expert
Marco Biersinger Expert
Thomas Champy Expert
José Alberro Expert

On July 23, 2021, the Claimant filed a statement of costs, and so did the Respondent on July 24, 2021.


A. Overwiew

In 2011, according to the Claimant, PEMEX – the only oil and gas producer in Mexico and a Mexican state-owned oil and gas company4 – was in need to expedite repair and maintenance works, restore its production levels, and about to engage in an expansion process. PEMEX would therefore require additional and more modern offshore support vessels, floating assets, and foreign capital to implement its expansion plans.5
The Claimant believed that as a world-leading offshore services provider it could meet PEMEX's demand of more modern offshore support vessels by acquiring and bareboat chartering vessels to operators that serviced PEMEX.6 For this purpose, the Claimant would bareboat charter vessels through a Joint Venture to OSA, so that OSA could sub-charter them to PEMEX after bidding in PEMEX' public tenders.7 The Respondent states that the Claimant's intention to invest rested on the expectations OSA generated for the Claimant.8
Offshore vessels are designed to support the offshore oil and gas industry, and are part of what is known as the offshore marine services industry ("OMS Industry").
The Claimant alleges that there were a series of acts and omissions by the Mexican authorities, referred to as the Measures, relating to the Claimant's investment in Mexico and addressing the Claimant or OSA, which gave rise to the present dispute.
The following factual summary provides an overview of the underlying facts in the present dispute. The Tribunal has considered the entirety of the Parties' submissions of fact in their written and oral submissions, whether expressly discussed in this section or not.

B. Claimant's Investment in Mexico

The Claimant asserts that to participate in PEMEX tenders, it needed to partner with a Mexican company, like OSA, that already had an established relationship with PEMEX.9 The Respondent notes that POSH never had a shareholding or invested capital in OSA,10 and that the need for POSH to partner with a Mexican company was due to the 49% limitation prescribed in Mexico's Foreign Investment Law ("FIL" or "LIE") for foreign investment in maritime companies dedicated to the commercial exploitation of vessels for inland navigation and cabotage in Mexico.11
According to the Claimant, its investment in Mexico would depend on three elements: the availability of the vessels, the contracts with OSA, and OSA's ability to contract with PEMEX.12
The Claimant explains that its investment in Mexico took place in three phases: the GOSH phase, the SEMCO phase and the SMP phase.

(1) The GOSH Phase

On August 12, 2011, POSH, Mr. Carlos Espinosa, Mr. Amado Yáñez and Mr. Martín Díaz13 entered into a Master Collaboration Agreement ("MCA"), for the establishment of a joint venture ("JV") company in Mexico between POSH and OSA ("GOSH").14 POSH and Mr. Espinosa would hold 50% of the JV, Mr. Yáñez would hold 25%, and Mr. Díaz the remaining 25%.15
Mr. Espinosa eventually withdrew from the JV. POSH retained 14% of his equity, for a total of 49%, and allocated the remaining 1% to Inversiones Costa Afuera, S.A. de C.V. ("ICA"), a company owned by Mr. José Luis Montalvo, a strategic Mexican partner. POSH lent the capital for ICA to acquire the shares, through a Master Loan Agreement ("MLA")16 and a Supplement to the MLA ("Supplement")17. Mr. Montalvo pledged ICA's shares as collateral for the repayment of the loan.18 This way, POSH would retain full control over ICA's 1% stake19 and over GOSH.20
According to the Claimant, at the time of GOSH's incorporation on August 26, 2011, "POSH owned 49% of the share capital, through its wholly owned subsidiary Mayan Investments Pte. Ltd. ("MAYAN"); [Mr. Montalvo] owned 1%, through ICA; Mr. Yáñez owned 25%, through Arrendadora Caballo de Mar III, S.A. de C.V. ("Arrendadora"); and Mr. Díaz owned the remaining 25%, through GGM Shipping, S.A. de C.V. ("GGM")."21
The Respondent asserts that GOSH's above-indicated ownership interest, was agreed during a shareholders' meeting on May 18, 2012, when the bylaws were modified.22
According to the Respondent, the last ownership structure that GOSH notified to the National Registry of Foreign Investment ("RNIE") was on October 20, 2011, when it was reported that GOSH's shareholding was 51% of Mr. Carlos Ramón Espinosa Cerón, and 49% of POSH.23
Under the JV, POSH would provide the vessels to serve PEMEX's offshore needs, OSA would procure contracts with PEMEX, the vessels would be bareboat chartered to OSA, which would sub-charter them to PEMEX.24
GOSH acquired six vessels (Caballo Argento ("Argento"), Caballo Babieca ("Babieca"), Don Casiano ("Casiano"), Caballo Copenhagen ("Copenhagen"), Caballo Monoceros ("Monoceros"), Caballo Scarto ("Scarto"), and collectively "GOSH's Vessels"25 from the Claimant-related entities for USD 158.91 MM. Of that cost, POSH temporarily loaned USD 142.75 MM to GOSH (the "Bridge Loan")26. To secure the Bridge Loan, GOSH mortgaged the vessels and GOSH's shareholders pledged their shares.27
Four of the GOSH Vessels had to undergo modifications to comply with PEMEX's specifications.28 Such modifications represented additional USD 11,316,203.52, of which POSH paid USD 4,967,549.33, and GOSH paid USD 6,348,654.19.29
The Claimant states that due to problems with the Banco Nacional de México ("Banamex"), the Claimant converted the original Bridge Loan to a final loan to permanently finance GOSH's acquisition (the "Loan")30 which was secured through an irrevocable trust dated August 9, 2013, with POSH as the primary beneficiary to receive all payments owed by PEMEX in connection with the OSA-PEMEX contracts (the "Irrevocable Trust")31, managed by Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero ("Invex").32 The purpose of the Irrevocable Trust was "to shield POSH from potential contingencies and eventualities affecting OSA."33
The Respondent states that the establishment of the Irrevocable Trust was due to a restructuring of OSA's debt.34 OSA failed to pay charters supported by 73 unpaid invoices for a total of USD 49,148,757.16 and failed to make payment for payment notes for USD 224,057.84.35 OSA's debt with PFSM was USD 14,579,677.23 by November 2013.36 Further, OSA accrued various debts with HERMOSA and HONESTO due to chartering debts, repairs of the vessels due to OSA's bad maintenance, and wage payment to the crew.37 OSA also had difficulties in paying SEMCO IV for claims related to the Salvision and Salvirile vessels amounting to US$ 1,917,899.52, reason for which it submitted a notice of arbitration.38 Through the Irrevocable Trust, the risk of nonpayment of OSA should be reduced.39
Further, the Respondent states that there was a second Fund established, the Autofin Fund ("Autofin Fund") for the rights of the Contracts OSA-POSH with relation to Caballo Grano de ORO and Rodrigo.40
By February 16, 2012, GOSH's Vessels were registered in the Mexican Public Maritime Registry and flying the Mexican flag.41 By May 2012, GOSH's Vessels were servicing PEMEX's offshore oil projects through bareboat charters GOSH had entered into with OSA (the "GOSH Charters") as well as through service contracts, with the structure of GOSH chartering the vessels to OSA, which in turn placed them at the service of PEMEX.("GOSH Service Contracts")42

(2) The SEMCO Phase

On December 27, 2011, Semco Salvage (I) Pte. Ltd. ("SEMCO I") and Semco Salvage (IV) Pte. Ltd. ("SEMCO IV"), two wholly-owned Singaporean subsidiaries of the Claimant, entered into contracts with OSA to charter two additional vessels ("the SEMCO Vessels ") to use in OSA's offshore operations in Mexico with no direct contract with PEMEX.43 POSH could use Singaporean-flagged vessels under renewable two-year permits to navigate in Mexico.44 The SEMCO Vessels, "Salvirile" owned by SEMCO I, and "Salvision" owned by SEMCO IV, were in full operation in Mexico by February 2012.45

(3) The SMP Phase

By May 12, 2012, OSA requested two additional vessels from POSH, to be used for a PEMEX tender. These two additional vessels were acquired through Servicios Marítimos POSH, S.A.P.I ("SMP") – previously Sermargosh2, S.A. de C.V. – incorporated on March 22, 2012 as a second JV vehicle, and owned by the Claimant (49%) and ICA (51%), where the Claimant loaned the purchase price of the shares to ICA.46 For this, SMP incorporated two fully-owned subsidiaries, HONESTO and HERMOSA, where HONESTO acquired the vessel Rodrigo DPJ ("Rodrigo") for USD 21 MM, and HERMOSA acquired the vessel Caballo Grano de ORO ("Grano de Oro") for USD 24.5 MM with a loan granted by the Claimant with the collateral of the vessels.47 Both vessels were modified per PEMEX's specifications.48 By April 2013, these were chartered to OSA, which in turn chartered them to PEMEX according to the service contracts PEMEX awarded OSA on June 24, 2013.49
The Respondent notes that, as with GOSH, the Claimant openly acknowledges that POSH maintained control over the corporate and economic rights of SMP shares.50

(4) The Incorporation of Other Supporting Companies

The Claimant further provided supporting services to OSA, such as through its subsidiary PFSM for technical and crew management assistance of GOSH's vessels, and through its subsidiary Operadora de Servicios Costa Afuera, S.A. de C.V. ("OSCA") for administrative personnel related to OSA's operations.51 Further, SMP incorporated ECLIPSE as a holding company to facilitate transactions within the POSH group.52

The Claimant provides the following chart to illustrate its corporate structure:53

(5) Other Activities of the Claimant in Mexico

On October 23, 2013, the Claimant also incorporated POSH GANNET, which acquired the vessel Gannet.54 In a partnership with Huasteca Oil Energy, S.A. de C.V. ("Huasteca") to bid for a contract directly with PEMEX. Huasteca was a minority-owned subsidiary of the Claimant and was awarded the contract. The vessel Gannett was chartered to PACC Offshore México, S.A. de C.V. ("POM").55 PEMEX renewed the contract on several occasions and, according to the Claimant, at the time of writing of the Memorial, it was still fully operational in Mexico, profitably in contract with PEMEX.56

(6) POSH's Operations and Alleged Contributions to Mexico

According to the Claimant, by the end of 2013, POSH had a fully established investment, and solid and stable operations in Mexico.
The Claimant submits that its investments in Mexico "exceeded $190 million and supported the growth of Mexico's oil industry."57 The Claimant's investments included two offices, Mexican and Singaporean companies including: "two holding companies (SMP and ECLIPSE), five vessel-owning companies (GOSH, HONESTO, HERMOSA, SEMCO I and SEMCO II), and two supporting companies (PFSM and OSCA)."58
As to the vessels, POSH's subsidiaries had 10 vessels operating in the Gulf of Mexico, within territorial waters, which the Claimant submits had a combined value of USD 215 MM.59 Eight of them flew under the Mexican flag, they "were bareboat chartered to OSA and then assigned to long-term contracts that OSA had with PEMEX." The other two, flew the Singaporean flag, and "were bareboat chartered to OSA and performing operations in support of PEMEX, but not directly employed by PEMEX".60
The Claimant further asserts that it also provided other services, such as technical support, crew management to the GOSH's vessel, and supported several Mexican companies, contributing to the development of the oil and gas industry in Mexico.61

C. The Sanctions, Criminal Investigation, and Insolvency Proceedings

The Claimant submits that due to its connections with Mexico's prior administrations under a different political party, the Mexican administration led a politically motivated campaign to bring down OSA, its contractors and business partners, including POSH's Subsidiaries. These measures, claims the Claimant, targeted its Subsidiaries, and resulted in the destruction of POSH's investment.62
The Respondent, on the other hand, explains, by way of background, that between 2005 and 2009, the Auditoría Superior de la Federación ("ASF") discovered various irregularities concerning OSA, with the effect of creating a Surveillance Commission in the Chamber of Deputies.63 Further, there were legal proceedings against OSA in Mexico and abroad.64
The Claimant states that on February 10, 2014 (and the Respondent that on February 11, 2014), the Secretaría de la Función Pública ("SFP") issued a resolution accusing OSA of failing to obtain insurance policies covering 10% of the value of nine of its contracts with PEMEX as required by Mexican Law.65 Based on this resolution, the SFP banned OSA from entering into new contracts with any public entity for one year, nine months, and 12 days, and to pay MEX 22 MM (the "Sanction").66 The effects of the sanction were first suspended in July 2014, revoked in November 2014, and the revocation was confirmed in June 2015.67
The disqualification to enter into new contracts with public entities prompted Banamex to launch an internal review of the cash advance facility it had established with OSA and reported to the Mexican authorities that it believed a portion of the account receivables were fraudulent.68
On February 26, 2014, Banamex filed a criminal complaint against OSA before the Procuraduría General de la República ("PGR") claiming that OSA had forged work estimates and approvals from PEMEX to obtain over USD 400 MM. in cash advances from Banamex (the "Banamex Complaint").69
On February 27, 2014, the Financial Intelligence Unit of the Ministry of Treasury ("UIF") filed a separate criminal complaint before the PGR stating that OSA and its shareholders had engaged in money laundering and requesting the seizure of OSA and all its assets (the "UIF Complaint").70 The case was assigned to the Organized Crime Unit ("OCU"), which initiated the criminal investigation "Averiguación Previa UEIORPIFAM/AP/065/2014."71 The Claimant states that the investigation was suspended on October 10, 2018, and referred to a different governmental unit. The Respondent states that it only did the latter.72
One day later, the PGR ordered the temporary seizure of OSA, all its assets, and those of its shareholders (the "Seizure Order"). As a result, on March 1, 2014, the PGR ordered Servicio de Administración y Enajenación de Bienes ("SAE") to take control of OSA.73 SAE blocked all payments owed by OSA to the Subsidiaries and owed by PEMEX to the Claimant via the Irrevocable Trust.74
On March 11, 2014, the Claimant terminated the loan granted to GOSH due to the Subsidiaries' default on the loans.75 On March 13, 2014, the Claimant sent notice to Arrendadora and GGM commencing enforcement of the share pledges and requested approval from Mexican courts to sell the shares, which the courts authorized on July 31 and August 7, 2014.76
On March 19, 2014, PGR seized and detained 10 vessels of the Claimant's Subsidiaries and placed them under SAE's control (the "Detention Order").77 The Claimant states that it learned unofficially about the Detention Order on March 25, 2014.78 On March 28, 2014, the Claimant submitted to the PGR the documentation that the ten vessels belonged to the Claimant and its Subsidiaries and subsequently filed two further briefs requesting the release of the vessels.79
During part of the Detention Order, GOSH's Vessels remained operative servicing PEMEX, with PFSM having to assume the payment obligations OSA failed to meet.80 On May 16, 2014, GOSH withdrew the vessels from the GOSH Charters but did not recover the use of the vessels. The vessels remained inoperative during the rest of the Detention Order.81
The SMP Vessels remained inoperative and OSA failed to pay the crew. SMP covered OSA's costs of maintenance and crew.82 SMP regained possession of the vessels on March 7 and 10, but the vessels remained inoperative during the detention period.83
The SEMCO Vessels also remained inoperative during the detention period.84 While OSA paid the crew, SEMCO could not regain possession nor deploy them elsewhere. According to the Claimant, the vessels depreciated due to OSA's improper maintenance and repair. SEMCO assumed the consequent costs.85
The SEMCO Vessels were released on June 26, 2014. GOSH's Vessels and the SMP Vessels were released on July 16, 2014.86
On May 5, 2014, the PGR launched an investigation against Mr. Yáñez, who was arrested. According to the Claimant, upon challenging the arrest, Mr. Yáñez was released.87 On May 28, 2014, the PMF launched an investigation against Mr. Díaz.88 On October 17, 2017, Mexico launched another investigation against Mr. Yáñez. He was arrested and imprisoned. He challenged his detention and was released.89 The Respondent states that Mr. Yáñez is still subject to a criminal proceeding and was only released on bail.90
On April 9, 2014, the PGR filed for insolvency proceedings against OSA (the "Insolvency Claim") before a Federal Court in Mexico (the "Insolvency Court").91 On April 14, 2014, the Insolvency Court admitted the Insolvency Claim (the "Writ of Admission"), initiated insolvency proceedings against OSA (the "Insolvency Proceeding") and ordered the Federal Institute of Insolvency Specialists ("IFECOM") to appoint SAE as Visitor, who assigned this function to Mr. José Antonio de Anda Turati.92 Further, the Writ of Admission ordered to suspend all execution proceedings against OSA and all payments in favor of OSA's creditors, to make all payments owed to OSA to SAE, and to only make payments that were indispensable to continue operations.93
On May 2, 2014, SAE filed a writ with the Insolvency Court requesting to order PEMEX to make payments to SAE instead of the trusts. On May 6, 2014, the Insolvency Court ordered PEMEX to do so (the "Diversion Order") and, on May 9, 2014, the Insolvency Court further clarified that the Diversion Order also applied to the Irrevocable Trust. The Order was confirmed on May 16, 2014, after the Claimant's and GOSH's challenge.94
On May 6, 2014, SAE answered the Insolvency Claim on behalf of OSA and confirmed OSA's insolvency.95 On May 15, 2014, the Insolvency Court ordered SAE to assess OSA's financial condition. On June 5, 2014, SAE filed a report on the financial condition of OSA, and, on the same date, SAE sought interim relief to suspend the effects of the Sanction and allow OSA to enter into new contracts with PEMEX.96
On July 8, 2014, the Insolvency Court decided that OSA was insolvent and ordered IFECOM to appoint SAE as Conciliator.97 Further, it adopted interim measures requested by SAE, such as the suspension of the effects of the Sanction, the suspension of Contractual Penalties by the State-owned company, and the return of the Contractual Penalties of February 28, 2014.98 The Claimant states that at this point, OSA could no longer qualify for PEMEX's contracts due to its failure to meet the requirements.99
On August 15, 2014, the Insolvency Court decided that PEMEX could not rescind its contracts with OSA, including the GOSH and SMP Service Contracts.100 The Claimant had previously been in contact with PEMEX to assign the GOSH contracts from OSA to GOSH, and SAE had conveyed that it would cancel the contracts in exchange for a haircut to the debt of POSH Group and a higher commission for OSA.101
On October 23, 2014, the Insolvency Court decided the degree of priority and order of payment of OSA's creditors. The Claimant's Subsidiaries were classified as ordinary creditors, which the Subsidiaries appealed unsuccessfully.102
From February 25, 2015, to August 7, 2017, the Subsidiaries sold the GOSH's Vessels and the SMP Vessels. Thus the loans granted by the Claimant to GOSH, HONESTO, and HERMOSA were terminated.103
On August 8, 2016, the Insolvency Court declared OSA's bankruptcy.104 From May 18, 2015 to January 12, 2018, the Insolvency Court approved three restructuring agreements, which were all appealed with the last one pending resolution.105 The Claimant's Subsidiaries withdrew their claims, according to the Claimant due to the missing expectations to recover anything in the Insolvency Proceeding.106
On June 20, 2017, the Insolvency Court issued a decree informing that PGR had lifted OSA's seizure on June 15, 2017.107



The Claimant has requested that the Tribunal:

a) "DECLARE that Mexico has breached the Treaty and international law, and in particular that:

(i) Mexico unlawfully expropriated POSH's and the Subsidiaries' Investment in violation of Article 6 of the Treaty.

(ii) Mexico failed to accord fair and equitable treatment to POSH and the Subsidiaries in violation of Article 4 of the Treaty.

(iii) Mexico failed to provide full protection and security to POSH's and the Subsidiaries' Investment.

(b) In due course and on the basis of the arguments and evidence to be submitted in the valuation phase of this arbitration:

(i) ORDER Mexico to compensate POSH for its losses resulting from Mexico's breaches of the Treaty and international law for an amount of USD$ 159,273,886 as of May 16, 2014 plus interest until payment at a commercially reasonable rate, compounded annually;

(ii) ORDER Mexico to compensate GOSH for its losses resulting from Mexico's breaches of the Treaty and international law for an amount of USD$ 67,852,142 as of May 16, 2014 plus interest until payment at a commercially reasonable rate, compounded annually;

(iii) ORDER Mexico to compensate PFSM for its losses resulting from Mexico's breaches of the Treaty and international law for an amount of USD$ 10,211 as of May 16, 2014 plus interest until payment at a commercially reasonable rate, compounded annually;

(iv) DECLARE that: (a) the award of damages and interest be made net of all Mexican taxes; and (b) Mexico may not deduct taxes in respect of the payment of the award of damages and interest;

(v) AWARD such other relief as the Tribunal considers appropriate; and

(vi) ORDER Mexico to pay all of the costs and expenses of these arbitration proceedings."108

The Respondent has requested that the Tribunal:

(i) "Dismiss entirely Claimant's claims, because the Tribunal does not have jurisdiction to rule POSH's claims or because the Tribunal does not have jurisdiction over one or more claims as they lack merits;

(ii) Order Claimant that pays Respondent for the costs that it has expended in this arbitration, including legal fees, travel fees that the legal team and experts had to make, and the fees paid by Mexico to the Tribunal;

(iii) Any other costs that Respondent may ask for during this arbitration and that the Tribunal considers appropriate."109


A. Summary of the Parties' Arguments

According to the Claimant, Mexico engaged in an arbitrary campaign against OSA which ultimately resulted in the destruction of its investment in Mexico. It is also the Claimant's view that by and large Mexico has not refuted that Mexico: (i) launched and vigorously pursued a multi-front, politically motivated campaign against OSA, (ii) unlawfully destroyed OSA's liquidity and viability ("the Unlawful Sanction"), (iii) launched an unsupported criminal investigation against OSA for alleged money laundering ("the UIF Complaint"), (iv) unlawfully seized all of OSA's assets and took control over OSA ("the Seizure Order'), and (v) unlawfully seized the ten vessels owned by POSH's Subsidiaries ("the Detention Order"). The Claimant further asserts that (vi) the Unlawful Sanction drove OSA into insolvency ("the Insolvency Proceeding"), (vii) the Isolated Decision was an arbitrary ex-post attempt to justify the Diversion Order ("the Isolated Decision"), (viii) that the actions unreasonably and arbitrarily prevented POSH's Subsidiaries from contracting directly with PEMEX, and (ix) SAE created conflicts of interest, appropriated OSA's funds and never accounted for them, acted in a non-transparent manner, and forced OSA to give the government a release from any liability.
In its SoD the Respondent has argued that: "i) the Tribunal lacks jurisdiction ratione personae and ratione materiae because the Claimant has failed to establish a proximate legal causal link between the investor/alleged investments and the alleged measures under the APPRI and the general principles of international law; ii) the Tribunal lacks jurisdiction ratione materiae because there were no investments and, to the extent that there were, the investments were made in contravention of the provisions of Mexican law; and (iii) the Tribunal lacks jurisdiction ratione temporis, as certain alleged measures are time-barred."110
The Respondent explains that the Tribunal has no jurisdiction ratione personae and ratione materiae because the Claimant cannot speak for OSA and the governmental measures were not directed at it. The Claimant was affected only indirectly and incidentally because of its decision to conduct business with OSA. The Claimant was "on [the] distant periphery of OSA's economic activities and, therefore, on the distant periphery of the alleged measures, acts and omissions."111
The Respondent argues that POSH confuses its claims with claims that OSA might make, but "[n]either POSH nor its Subsidiaries can bring a claim based on allegations of how OSA was treated by Pemex or the Mexican government."112 The Respondent argues that this confusion extends to the expropriation claim: "[t]he procurement law sanction, the insolvency proceedings and the criminal investigation were related to OSA, not POSH or its Subsidiaries. OSA is not a POSH investment and, therefore, it cannot have been 'taken' or 'expropriated' from POSH."113
Similarly, the Respondent argues in respect of the claim of unfair and inequitable treatment: "[r]ather than identifying the treatment of its investments (the Subsidiaries) by the Respondent, the Claimant bases its claim of a denial of fair and equitable treatment on actions involving OSA, a Mexican company which is not a POSH investment."114 The argument of lack of a causal link is repeated in the context of the Claimant's allegations of denial of full protection and security to OSA. They all refer to the treatment of OSA not to the Respondent's treatment of the Claimant's investment.
It is the Respondent's contention that the Claimant does not have investments covered by the APPRI because it lacks ownership of the Subsidiaries, and the alleged de facto control violated Mexican law. According to the Respondent, "[b]ecause Claimant has conceded that it intentionally evaded this requirement, the Tribunal lacks jurisdiction ratione materiae; alternatively, the claim should be viewed as inadmissible because of the Claimant's bad faith."115
The Respondent affirms that the Claimant has failed to prove that "the availability of vessels, the contracts with OSA and OSA's ability to contract with PEMEX" are covered investments under the APPRI; it is the Claimant's burden to prove that its alleged investments are covered under the protection of the APPRI.

As regards the objection ratione temporis the Respondent maintains that the three-year limit in Article 11(8) is a jurisdictional matter. The Respondent relies on the two-step test analysis of the Rusoro tribunal: "[f]irst, it assessed whether the claimant (i.e., Rusoro) was aware of the existence of the alleged measures and their consequences for the alleged investments before the 'cut-off date' (3 years prior to Rusoro's Request for Arbitration). Second, it determined the impact of such knowledge for the 'investor-State' claims of the claimant."116

The Respondent applies the Rusoro test to the instant case. It lists first the measures identified by the Claimant that were adopted before the deadline of May 4, 2014 and then affirms that the measures so listed and any others taken before the said deadline are outside the jurisdiction of the Tribunal.

In its Reply, the Claimant questions whether the Respondent has discharged its burden "to prove the factual and legal assertions on which its admissibility and jurisdictional objections are based."117 First, the Claimant asserts that there is no rule that only majority owned assets constitute covered investments. According to the Claimant, it is entitled to submit a claim on its own behalf irrespective of the proportion of ownership in the Subsidiaries. The Claimant also asserts that, under Article 11(2) of the Treaty, it is entitled to file a claim on behalf of local subsidiaries that it directly or indirectly owns or controls. The Claimant re-affirms that, under international law, "the word 'control' includes both legal and de facto control."118

The Claimant refutes that its de facto control over the Subsidiaries violated Mexican law. Based on expert advice, the Claimant argues that "[o]wning vessels and bareboat chartering them in exchange for a rate or providing technical or crew management services do not qualify as 'commercial exploitation of vessels' for the purposes of the FIL".119 The Claimant notes that the Respondent has failed to produce any evidence to rebut the Claimant's expert report.
According to the Claimant, the Respondent has taken out of context its explanation in the SoC that "the investment made by POSH and its Subsidiaries relied on three essential pillars: the availability of vessels, the contracts with OSA and OSA's ability to contract with PEMEX."120 These pillars are not characterized in the SoC as investments but as premises for the investment to succeed. The Claimant affirms that "at a minimum, Claimant's equity and debt investments in the Subsidiaries are covered investments under the Treaty."121

The Claimant argues that the attempts to import a proximate cause requirement for jurisdiction is misplaced and incorrect. According to the Claimant, "the general principle of causation requires a causal link between the State's wrongful act and the damages incurred by the investor. This is a merits issue unrelated to the Treaty jurisdictional boundaries…"122 The Claimant criticizes the Respondent's reliance on NAFTA cases and the requirement of "relating to" in Article 1101(1). The Claimant affirms that "NAFTA decisions have established that the 'relating to' requirement is easily satisfied. The requirement is met where the disputed measure 'affects' the investor or its investments, and it does not mandate a 'legally significant connection' between the disputed measure and the investment."123

In any case, the Claimant states that, even if the jurisdiction of the Tribunal were subject to a proximate cause requirement, such requirement would be satisfied here. The Claimant points out that the measures were not measures of general application, as they were in the case of Methanex, but "specifically targeted OSA and its commercial partners, including POSH and the Subsidiaries, and they directly and irreparably impacted POSH and the Investment."124

As regards the ratione temporis objection based on Article 11(8) of the Treaty, the Claimant asserts that compliance with a statute of limitations is a requirement pertaining to admissibility rather than jurisdiction. Whether it is considered one or the other Article 11(8) is not a barrier to any of the POSH's claims because Mexico's measures constituted a composite act.

The Claimant asserts that the Respondent misrepresented the approach suggested in Rusoro and, "[u]nlike the measures that the Rusoro tribunal assessed separately, all of Mexico's Measures had the same target, namely, OSA's financial viability, management, or assets- or those of its business partners- and all of them aimed in the same direction, against OSA."125

The Respondent in the Rejoinder insists that the "Claimant, in selectively quoting scholarship on jurisdiction and admissibility, conveniently ignores that investment treaty tribunals routinely consider the time bar as a preliminary jurisdictional issue that precedes any decision on the merits."126 Based on Article 11(8) of the Treaty, the Respondent reasserts that "any alleged measures taken before May 4, 2014, must be time barred, and this is a question of jurisdiction, not of arbitrability."127

The Respondent insists in its argument that the Tribunal lacks jurisdiction ratione materiae because the Investment must be compliant with domestic law. The Respondent contends that "the record here provides substantial evidence that the Claimant structured its investment to give the false appearance that the Subsidiaries were in compliance with the 49% foreign ownership cap established by the FIL."128
The Respondent re-asserts the lack of jurisdiction of the Tribunal ratione personae. According to the Respondent, "the Claimant can allege no material actions taken by a governmental authority specifically in relation to GOSH or its Subsidiaries. Rather, the foundation of its claim is to pretend that it can complain about the treatment of OSA – a Mexican company wholly unrelated to the Claimant and that itself does not share the Claimant's view of its treatment."129 The Claimant lacks standing to bring claims for alleged injuries to the purported pillars of the Investment.
The Respondent affirms that "the Claimant had no property interest whatsoever in OSA or OSA's 'ability to contract with Pemex.'" The Tribunal lacks jurisdiction over claims based on the treatment of OSA as well as OSA's contracts with Pemex and OSA's ability to contract with Pemex in the future, as those are not investments of the Claimant for which it could have standing. Further, the Claimant has not shown how "'availability of vessels" or its subsidiaries' services contracts with OSA are covered investments under the APPRI"130.

The Respondent addresses the Claimant's criticism that it has tried to invent a jurisdictional requirement of immediate or proximate causation. The Respondent recalls that investor-state arbitration tribunals are not courts of general jurisdiction and their powers are limited to the consent given by the State. The Respondent finds relevant the reasoning of the Methanex tribunal rejecting the argument that "relating to" meant "affecting" because, "First, like NAFTA Article 1101(1), which the Methanex tribunal acknowledged to be a provision relevant to its jurisdiction, Article 11(1) and (2) of the APPRI prescribe thresholds to arbitration that similarly relate to this Tribunal's jurisdiction. Second, like NAFTA Article 1101(1), the thresholds for arbitration in Article 11(1) and (2) of the APPRI must be interpreted in a manner that confers upon them "significance". Third, the phrase "by reason of, or arising out of" in Article 11(1) and (2) of the APPRI is at least as strict as the term "relating to" in NAFTA Article 1101(1), if not stricter. Thus, as in Methanex, it is not enough to interpret this phrase to mean "affecting", which is exactly what the Claimant in this arbitration is attempting. The term "relating to" has been interpreted to mean "a close and genuine relationship of ends and means" and not something that is merely incidental or inadvertent. At the very least, the phrase "by reason of, or arising out of" imposes a similar threshold. At most, the measures alleged by the Claimant in this arbitration have only an 'incidental' effect on the alleged investments and, therefore, clearly do not meet the threshold."131

B. Assessment by the Tribunal

(1) Preliminary Observations

It bears repeating that OSA is not an investment or investor as defined in the Treaty and the Claimant has no stake of ownership of OSA. The connection with OSA is purely contractual. The task of the Tribunal is to separate those actions of Mexico that are attributable to the Claimant's connection with OSA from acts allegedly taken against the Claimant and the Subsidiaries irrespective of such connection.
It is notable that the Claimant has failed to address the effect that its connection with OSA might have had on its investment. The Claimant has depicted OSA as a victim of state-sponsored political revenge without addressing a number of OSA's business practices which, as described below, brought them into the sphere of investigations for violations of the laws of Mexico.
When SFP sanctioned OSA in February 2013, it prompted Banamex to review in house and with PEMEX the factoring facility granted by Banamex to OSA. The United States SEC order to Cease and Desist summarized the findings of this review as follows:

"Over the period between 2008 and February of 2014, Banamex loaned billions of dollars on the basis of invoices and work estimates – also known as "accounts receivable factoring" in the banking industry – reflecting work performed for Petróleos Mexicanos, S.A. de C.V. ('Pemex') by Oceanografia, S.A. ('OSA'), a Mexican marine services provider for the oil industry in the Gulf of Mexico. However, some of the factored documents received from OSA, amounting to about $400 million, were fraudulent and included forged signatures. Banamex had deficient internal accounting controls over its accounts receivable factoring program used by OSA, including lacking internal accounting controls necessary to test the authenticity of the factored documents prior to advancing funds to OSA and recording them as accounts receivable. Banamex also lacked internal accounting controls sufficient to identify and respond to red flags that arose during the relationship between Banamex and OSA potentially warning Banamex of the ongoing fraud. Instead, it was not until the Government of Mexico itself accused OSA of failing to post a satisfactory insurance bond and decided to temporarily cease doing new business with OSA in February of 2014, at a time when Banamex had approved funding of over $600 million dollars to OSA and was still advancing monies to OSA, that Citigroup discovered many of the work estimates were falsified. Banamex's internal accounting controls surrounding the factoring program were not sufficient to allow the earlier detection of OSA's fraud. As a result, Citigroup recorded nearly $475 million in expenses in its financial statements. In particular, Citigroup adjusted its fourth quarter and full year 2013 financial results downward by the then estimated $360 million loss and recognized an additional loss of $113 million in 2014, when Citigroup had determined the full magnitude of the fraud."132

It is instructive to refer to what a Florida court was told about the same scheme by the same law firm that at the time was also representing the Claimant before the Tribunal133: "[o]n February 20, 2014, Pemex confirmed what Citigroup already knew, that Pemex had not signed many of the Pemex work estimates and work estimate authorizations provided by Oceanografía to Citigroup. On approximately February 22, 2014, the CNBV launched a probe into the fraudulent scheme."134 The plaintiffs in the Florida case blame Citigroup for the fraudulent scheme and affirm that Citigroup admitted criminal behavior and report that the Mexican Banking Regulator and the Mexican Criminal Authority confirmed that Citigroup was responsible for the fraudulent scheme. The lawsuit mentions that Mr. Yáñez had violated criminal law by submitting forged documents to obtain cash advances from Citigroup. On February 28, 2014, a warrant was issued for his arrest for misappropriating Citigroup's cash advances, which he was supposed to use for paying Oceanografia's vendors, creditors and bondholders. A further arrest warrant was issued on October 28, 2014 for his role in fraudulent cash advances.135
It is also relevant that a similar scheme had been run before by OSA and described in the SEC settlement to show Banamex's inadequate response: "[t]he response [of Banamex] to publicly available information regarding OSA and its principals was insufficient. Media reports alleged that OSA had defrauded another Mexican bank of more than $30 million dollars in 2006 under a credit product almost identical to the Program, by submitting fraudulent invoices to obtain financing from that bank, i.e. in the exact manner in which OSA defrauded Banamex. This information was publicized in the media and available to Banamex."136
What appears not to be in issue before this Tribunal is that fraudulent actions occurred, although the question of who may have been responsible for them remains unresolved. The fact that fraudulent behavior occurred is significant, as it makes clear that the Mexican state was entitled – indeed required – to take certain investigatory and other measures to protect the rule of law.

(2) The Respondent's Objections

The Tribunal will consider the following questions raised by the arguments of the Parties on the objections of the Respondent to the Tribunal's jurisdiction: i) was there an investment?; was the investment legal?; were Mexico's Measures related to the investment?; if the measures were related to the investment, are the claims time-barred? and the question raised by the Claimant of whether the time limitation should be considered as part of the jurisdiction or the merits.

It will be convenient to recall here when an investor may, according to the Treaty, submit a claim to arbitration under Article 11. In relevant part this provides:

"1. An investor of a Contracting Party may submit to arbitration a claim that the other Contracting Party has breached an obligation set forth in Chapter II, and that the investor has incurred loss or damage by reason of, or arising out of, that breach.

2. An investor of a Contracting Party, on behalf of an enterprise legally constituted pursuant to the laws of the other Contracting Party that is a legal person such investor owns or controls, directly or indirectly, may submit to arbitration a claim that the other Contracting Party has breached an obligation set forth in Chapter II, and that the enterprise has incurred loss or damage by reason of, or arising out of, that breach."[…]

8. A dispute may be submitted to arbitration provided that the investor has delivered to the disputing Contracting Party its notice of intent referred to in Article 10 no later than three years from the date that either the investor, or the enterprise of the other Contracting Party that is a legal person that the investor owns or controls, directly or indirectly, first acquired or should have first acquired knowledge of the alleged breach and knowledge that the investor or the enterprise has incurred loss or damage."137

Was there an investment?

The Treaty defines an investment as:

"[A]n asset owned or controlled, directly or indirectly by investors of one Contracting Party and established or acquired in accordance with the laws and regulations of the other Contracting Party in whose Area the investment is made, and in particular includes:

(a) an enterprise;

(b) shares, stocks, and other forms of equity participation in an enterprise, or futures, options, and other derivatives;

(c) bonds, debentures, and other debt securities of an enterprise:

(i) where the enterprise is an affiliate of the investor; or

(ii) where the original maturity of the debt security is at least three years, but does not include a debt security, regardless of original maturity, of a Contracting Party or an entity directly owned and controlled by a Contracting Party;

(d) loans to an enterprise:

(i) where the enterprise is an affiliate of the investor; or

(ii) where the original maturity of the loan is at least three years, but does not include a loan, regardless of original maturity, to a Contracting Party or an entity directly owned and controlled by a Contracting Party;

(e) interests arising from the commitment of capital or other resources in the Area of a Contracting Party to economic activity in such Area, such as under:

(i) contracts involving the presence of an investor's property in the Area of the other Contracting Party, including turnkey or construction contracts, or concessions;

(ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise; or

(iii) licenses, authorizations, permits, and similar instruments;

(f) movable or immovable property, and related rights such as leases, mortgages, liens or pledges, acquired in the expectation or used for the purpose of economic benefit or other business purposes;

(g) intellectual property rights; and

(h) claims to money involving the kind of interests set out in sub-paragraphs (a) to (g) above, but not claims to money that arise solely from:

(i) commercial contracts for the sale of goods or services by a national or enterprise in the Area of a Contracting Party to an enterprise in the Area of the other Contracting Party; or

(ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by sub-paragraph (d) above;"138

The description of the investment in the Statement of Claim and substantively reproduced above includes ownership or control, including de facto control, of several enterprises directly or indirectly and loans. The Respondent's arguments assume that, for an enterprise to be a protected investment under the Treaty, an investor needs to own at least 51% of the enterprise: "[t]he Claimant's positions are erroneous in the light of Article 1(2)'s explicit language. Article 1(2) requires the Claimant to have ownership, i.e., more than 51% of shares over the Subsidiaries to claim them as covered investments under the APPRI."139

Article 1(2) of the Treaty does not mandate any particular percentage of ownership of the enterprise for an investment to be protected. In fact, if the understanding of the Respondent would be correct, it would exclude the protection of the minority foreign investors which by law may not own more than 49% of the shares of a company. This takes the Tribunal to the question of whether the investment was made in accordance with the laws and regulations of Mexico.

The Respondent has argued that the investment is illegal because the Claimant evaded the FIL's requirements. The question for the Tribunal is whether the restriction in Article 7 of the FIL applies to POSH's Subsidiaries. The Claimant relies on the expert opinion of David Enríquez: "[t]he restriction included in Article 7 the FIL only applies to Shipping companies that engage in commercial exploitation of vessels. The FIL does not provide a definition of "commercial exploitation" or "commercial exploitation of vessels." Article 2 of the Navigation Law, however, defines "Maritime Commerce" as "...the activities that are carried out through commercial and maritime exploitation of vessels and naval artefacts in order to transport people, goods or things, or to perform an activity of exploration or capture of natural resources, construction or recreation… This means that, the simple activity of making available a vessel to a third party in exchange for a rate, by means of a lease or a bareboat charter, or providing technical or crew management services, although being lucrative activities, do not constitute 'commercial exploitation of a vessel' for the purposes of the FIL."140 Expert Enríquez noted that the Mexican administrative authorities have confirmed this understanding in DAJCNIE.315.14.92 of the Ministry of Economy.141
The Tribunal observes that this confirmation has not been rebutted by an expert opinion of the Respondent and that the Claimant's expert was not called to be cross-examined by the Respondent. The Tribunal concludes on the basis of the evidence before it, including in particular the expert evidence, that the investment of POSH was made in accordance with the FIL.

Therefore, the Tribunal turns to the issue of lack of "proximate causation" raised by the Respondent. The question for the Tribunal is whether Article 11 of the Treaty includes a "proximate causation" requirement and, if so, whether this requirement is satisfied in the present case.

The obvious starting point in determining whether such a requirement exists is the language of the provision, but this does not provide a clear answer. The language of "by reason of, or arising out of [...]" does suggest the need for a link between the alleged breach and the loss, but the nature and extent of this link is unclear.
In light of this, the UNCITRAL Arbitration Rules applicable to this proceeding and existing investment case law may provide some guidance. The UNCITRAL Arbitration Rules state in the opening paragraph that "[w]here parties have agreed that disputes between them in respect of a defined legal relationship, whether contractual or not,142 shall be referred to arbitration under the UNCITRAL Arbitration Rules, then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree." The Tribunal is not aware of any relevant modification to the Rules.
Almost all the cases which address this issue are related to NAFTA disputes, and none have facts similar to the present case. The leading case is Methanex v. U.S.A., where the tribunal found that the language of "relating to" in Art 1101(1) NAFTA imported a requirement that there must be a "legally significant connection between the measure and the investor or the investment"143 This, the tribunal said, was necessary if it was to impose some limit on the claims which could be brought under Art 1101(1), otherwise the infinite chain of consequences which flow from government actions and measures could give rise to an unlimited stream of investment claims. This line of reasoning in Methanex has been followed or cited on a number of occasions since.144

The Claimant has directed the Tribunal to two authorities which it suggests depart from the approach in Methanex. On a close read, however, these cases do not support the Claimant's argument. Firstly, the Claimant relied on the decision in Pope & Talbot v. Canada. However, the tribunal in that case was addressing the issue of whether a measure which related to trade in goods under Chapter 3 of the NAFTA could also relate to investment under Chapter 11, not whether there is a "proximate causation" or "legally significant connection" requirement under Art. 1101(1).145 It therefore has little or no relevance here. Secondly, the Claimant relies on the separate opinion of Dr. Bryan Schwartz in S.D. Myers. However, from a broader reading of this opinion it is clear that Dr. Schwartz's analysis related primarily to regulatory measures which affect investment but principally have another aim, such as protecting the environment, and he did not turn his mind to a situation similar to the one in the present case.146 Dr. Schwartz's approach consequently has little relevance here. In any case, his view appears to have evolved as he did not dissent on this issue in the more recent case of Bilcon v. Canada.147


The Tribunal shares the concern expressed by the tribunal in Methanex. A potentially endless chain of consequences may flow from any government decision or action, and it is necessary and reasonable to find some limit to the claims which can be brought under the Treaty.148 It is unrealistic to suppose that the Treaty parties intended that Article 11 should permit an infinite number of investment claims in relation to any one measure, including in respect of consequences that could not have been foreseen or intended by the decision-maker, or which are so indirect that they were not known (or could not have been known) to the respondent. The Claimant is right to point out that the Tribunal should not impose jurisdictional requirements which do not have a textual basis in the Treaty, but the Tribunal does not run such risk due to the presence of the phrase "by reason of, or arising out of [...]" in Article 11 of the Treaty. Although the Treaty does not use exactly the same formulation of "relating to" as in NAFTA Art. 1101(1), both phrases convey the need for some degree of direct connection between the contested measure and the loss claimed. To hold that this difference is somehow significant risks drawing artificial distinctions between phrases which have the same substantive meaning. Similarly, the Tribunal has a preference for "legally significant connection" used in Methanex instead of "proximate causation" suggested by the Respondent. The Tribunal is concerned that the latter may indicate a need to investigate the merits before a decision on jurisdiction is reached, although it does not believe that there is necessarily any material difference between the two phrases.

The Tribunal addresses next whether the Claimant satisfies the "legally significant connection" test. The Tribunal observes that the relationship between the Claimant and its investment and the other measures are entirely the consequence of the Claimant's contractual relationship with OSA. This is not in dispute. The Claimant is affected by most measures only secondarily and indirectly, through OSA, and not primarily. To put it another way, if the Claimant had not contracted with OSA, it would be unaffected by the measures.
In its Reply and in its oral submissions, the Claimant also relied on the cases of Corn Products International v. Mexico,149 Archer Daniels et al v. Mexico150 and Cargill v. Mexico151 in support of the proposition that an investor which is affected by a measure taken against its contracting party is able to bring a claim. On a close reading, however, these cases are distinguishable. All three disputes concerned a tax imposed on drinks containing High Fructose Corn Syrup ('HFCS'), a product supplied by each claimant (or its subsidiaries) to its contractual counterparties. Although the tax was not directed at HFCS itself, it amounted to a tax on some uses of HFCS. Contracting with a different drinks manufacturer would not have helped the claimant escape its losses. There was consequently a direct relationship between the core business of the investor and the imposition of the tax, which distinguished the claimants in those cases from other entities which contracted with the downstream manufacturers. That is not the case here.
To recall, the Claimant has set forth a string of measures that allegedly are linked and which are said to have ultimately caused the demise of the investment. As summarized by the Claimant in the opening argument at the hearing these measures consist of the Disqualification Order, the attachment of OSA, which in turn caused Banamex to close the factoring facility, the extension of the attachment to GOSH vessels, the Diversion Order in respect of the funds owed PEMEX to OSA to be paid into the Invex Trust and the Blocking Order. Except for the Invex Trust Fund and the Extension and Blocking Orders, the alleged losses are entirely dependent on the fact that the Claimant happened to contract with OSA. There is nothing to distinguish the Claimant from other entities which may have contracted with OSA, and in the view of the Tribunal the Claimant is insufficiently proximate or indirectly affected by the measures objected to amount to a significant legal relationship.152

For these reasons, the Tribunal concludes that only in the case of the Invex Trust, the vessels' detention and the Blocking Order may there be said to be a significant legal relationship and hence its jurisdiction is limited to these measures alone, provided of course that they meet the time bar requirement in Article 11(8) of the Treaty.

The Parties disagree on whether a time bar is a jurisdictional or admissibility matter. In the procedural circumstances of the instant case the question lacks significance: the Tribunal has the benefit of the Parties' written and oral submissions on jurisdiction and the merits. Besides, as the Methanex tribunal noted, "Article 21(1) of the UNCITRAL Arbitration Rules does not accord to the Tribunal any power to rule on objections relating to admissibility."153
The next issue to be addressed by the Tribunal is whether the time bar can be extended to more than three years by reason of the measures being part of a composite act and, therefore, the three-year period may reach to the date of the first of the actions part of the composite act.

The Claimant has submitted that the cut-off date of the three-year period is May 4, 2014. The Respondent has not questioned that date except for its extension on the basis of a composite act. Some of the actions alleged by the Claimant to constitute a composite act in breach of the Treaty are dated before that critical date and would only be within the jurisdiction of the Tribunal by extension of the three-year period on grounds that they are part of a composite act. The Tribunal has already dismissed the Disqualification Order and the Attachment Order on the basis of the lack of their significant legal connection to POSH. The Diversion Order and the Blocking Order are dated after May 4, 2014. This leaves the Detention Order as the only measure legally and significantly connected to POSH and dated before May 4, 2014. In the Tribunal's view the Detention Order may extend the qualifying period to its date of March 19, 2014 since it qualifies as an act having a continuing character, as provided in Article 14(2) of the Articles on State Responsibility: "[t]he breach of an international obligation by an act of a State having a continuing character extends over the entire period during which the act continues and remains not in conformity with the international obligation."154

Thus the Tribunal does not need to consider further the composite act argument since the components of this act dated before May 4, 2014, have been dismissed on grounds of lack of a significant legal relationship to POSH or determined by the Tribunal to have a continuing character. But even if the components predating May 4 -the Disqualification Order and the Attachment Order- had been ruled to have a significant legal relationship to POSH, the Tribunal does not consider that the three- year limit could be extended on the basis of earlier dated measures that resulted from questionable practices of OSA described elsewhere in this Award.
To conclude on the objections of the Respondent to the jurisdiction of the Tribunal, the Tribunal has jurisdiction ratione personae, ratione materiae and ratione temporis in respect of the Detention Order and the acts dated after May 4, 2014.


A. Summary of the Parties' Arguments

(1) Statement of Claim

The Claimant argues that Mexico is responsible for the acts and omissions of its agencies and instrumentalities. The acts and omissions of UIF,PGR, SAE, PEMEX and the Insolvency Court are all attributable to Mexico under international law. According to the Claimant, the acts and omissions of Mexico's agencies and instrumentalities breached the protections of the Investor under Chapter II of the Treaty.
The Claimant asserts that through a series of measures the investment made by it and its Subsidiaries was expropriated. As summarized by the Claimant the following acts and omissions had the effect of depriving POSH and the Subsidiaries from the use, value and benefit of the investment:

"It is public knowledge that the PRI Administration initiated a politically motivated campaign against OSA to sever the ties it had established with PEMEX during the PAN Administrations. Even the Mexican Senate admitted that there was 'a hunt to bring down the company [that had been] spoiled by the Calderon administration', as an act of 'vengeance against the PAN' [Political Party], 'to obtain a... cooperative attitude from that party'...

Mexico unlawfully banned OSA from entering into any public contract, including with PEMEX, harming OSIA's financial situation irreparably, impairing its ability to perform on the contracts with the Subsidiaries and leading to its demise. This measure was declared unlawful and later revoked by Mexican Courts but it was too little too late. OSA was already undergoing insolvency proceedings and did not meet PEMEX's financial requirements for new contracts. This measure destroyed one of the main pillars of the investment––OSA's ability to contract with PEMEX.

Mexico initiated an unsupported criminal investigations [sic] against OSA for alleged money laundering and fraud to obtain over $400 MM. from Banamex. Mexico did not show any sign of illegal activity, since none was present. Mexico never pressed any charges, which clearly illustrates the political nature of the investigation.

Based on the unlawful investigation, Mexico unlawfully seized all OSA's assets and took control of OSA. The PGR ordered the 'temporary seizure' of OSA and placed it under SAE's administration. There were no signs of criminal activity and the Seizure Order had no factual or legal basis. Thereafter, SAE effectively blocked all payments to POSH's subsidiaries (by simply refusing to effect payment) and to POSH (by not processing PEMEX's invoices for work performed). OSA remained seized for over 3 years and the seizure was finally lifted due to the lack of evidence of any crime. As noted above, no charges were ever pressed as a result of the investigation.

Mexico unlawfully seized the ten vessels owned by POSH's Subsidiaries. The Detention Order was fatally flawed, since it stemmed from an unlawful criminal investigation and seizure of OSA. There was no factual or legal basis to detain the vessels owned by POSH's Subsidiaries. For several months, POSH's Subsidiaries were deprived of another pillar of the investment––the availability of vessels.

Mexico drove OSA into insolvency. As a result of the Unlawful Sanction, OSA did not have enough cash flow to operate the vessels and pay its debts. Thereafter, Mexico initiated OSA's Insolvency Proceeding and appointed SAE as OSA's Visitor, Conciliator and Trustee, retaining full control over the company.

Mexico suspended all payments to creditors, including to POSH's Subsidiaries, which had effectively been blocked by SAE upon taking control of OSA. Moreover, Mexico unlawfully diverted the payments owed by PEMEX to POSH via the Irrevocable Trust. This measure was, in fact, a direct expropriation of POSH's lawful rights under the Irrevocable Trust. It further deprived POSH's Subsidiaries from any income, value or use of the contracts with OSA. As noted in the Norwegian Ship owners' Claims case 'whatever the intentions may have been the [State] took, both in fact and in law, the contracts under which the ships in question were being' operated.

Mexico acknowledged that the Unlawful Sanction was the proximate cause of OSA's insolvency. Both SAE and the Insolvency Court acknowledged that this measure had led to OSA's insolvency and, if not immediately suspended, could lead to OSA's bankruptcy.

Finally, Mexico blocked POSH's Subsidiaries from contracting directly with PEMEX. SAE refused to cancel OSA's contracts and the Insolvency Court prohibited PEMEX from rescinding them, fatally condemning the Subsidiaries' operations in Mexico."155

According to the Claimant the expropriation was unlawful because it lacked a public purpose: "[t]he fact [that] there were (unproven) fraud accusations against OSA does not satisfy the public purpose requirement. The PRI's Administration desire to punish OSA and its business partners for OSA's ties with the previous administrations is not a legitimate public purpose either."156
The Claimant points out the lack of substantive and procedural due process: "the measures adopted by Mexico in the administrative proceeding that ended with the Unlawful Sanction, in the unsupported criminal investigation that resulted in no charges, and in the state-driven insolvency proceedings that resulted in OSA's demise, were contrary to Mexican law and violated the Claimant's due process. These measures had a direct impact on, or specifically targeted the Subsidiaries, and resulted in the destruction of the Investment, yet no POSH entity was notified in advance of any of them, nor did they have an opportunity to be heard."157
The Claimant explains that the expropriation was unlawful because Mexico has not paid the compensation required by the Treaty and because the measures specifically targeted to the Claimant and the Subsidiaries are by definition discriminatory.

The Claimant argues that the Respondent breached Article 4(1) of the Treaty by failing to accord the investors and the investment treatment in accordance with customary international law, including fair and equitable treatment. Based on a review of recent cases the Claimant concludes that "the minimum standard of treatment under customary international law has evolved and, in the context of foreign investment, has converged in substance with the standard of fair and equitable treatment"158, and that "it now is axiomatic that a host State has legal obligations under the minimum standard of treatment -and thus under Article 4(1) of the Treaty- to act in good faith, to refrain from exercising its powers arbitrarily, to provide a stable and secure legal and business environment, and to honor legitimate expectations that arose from conditions that it offered to induce the investor's investment."159


The Claimant bases its argument that the Respondent breached Article 4(1) on the following acts of the Respondent: (i) the politically motivated campaign against OSA to sever the ties it had established with PEMEX during the previous administrations, (ii) the unlawful ban of OSA to enter into any public contract, (iii) the unsupported criminal investigations against OSA; (iv) the seizure of all of OSA's assets and control of OSA, blocking all payments to POSH's Subsidiaries, and the failure of the public authorities' duty to explain its resolutions; (v) the unlawful seizure of the ten vessels owned by POSH's Subsidiaries; (vi) the Unlawful Sanction was the proximate cause of OSA's insolvency and the Diversion Order diverted the payments owed by PEMEX to POSH via the Irrevocable Trust; (vii) the blocking of POSH's Subsidiaries from directly contracting with PEMEX; (viii) lack of transparency and due process, all measures within the criminal investigation were adopted in secrecy, without notice to the Subsidiaries or an opportunity to be heard; and (ix) Mexico abused its power and violated due process by adopting all possible roles in OSA's insolvency proceeding incurring in conflict of interest.

The Claimant also argues that the Respondent breached the Treaty by failing to provide full protection and security. According to the Claimant, the Respondent's obligation extends beyond the physical security of the investments to their legal protection and security. Specifically, the Claimant asserts that the Respondent failed to honor the rule of law in the administrative proceeding resulting in the Unlawful Sanction , in the criminal investigations against OSA, in the seizure of OSA's assets and the taking of control of OSA, and in the seizure of the vessels owned by the Subsidiaries. In respect to the seizure of the vessels, the Claimant asserts that "Mexico did not employ the legal diligence required by international law to protect the investment nor did it allow the investor reasonable procedural recourse to contest it. It was undisputed that the vessels did not belong to OSA, nor were they associated with any of the alleged crimes. POSH's representative filed three briefs with the PGR showing this and requesting the release of the vessels. All three briefs went unanswered. A testament to the lack of evidence of any crime is the fact that the vessels were released several months later without any further explanation."160
The Claimant additionally argues that the Respondent failed to provide an objective, impartial and independent supervision of the insolvency proceeding, and "coerced POSH and its Subsidiaries to accept a 'hair cut to the debt' and a 'higher commission' in exchange for the cancellation of OSA's contracts, which was the sound and reasonable commercial decision."161
The Claimant concludes: "[i]n sum, the State's actions, including through its administrative, criminal and judicial bodies, withdrew and withheld legal protections from the investment made by POSH and its Subsidiaries in violation of its obligation to provide full protection and security under the Treaty. These wrongful failures of protection have cumulatively caused the complete deprivation of the use, value, and enjoyment of the investment. Mexico breached its 'obligation of vigilance' and failed 'to take all measures necessary to ensure the full enjoyment of protection and security of [the] investment ...'"162

(2) Statement of Defense

The Respondent denies that it breached any obligation under the Treaty and makes several observations before addressing the Claimant's claims. The Respondent notes that "In presenting its arguments, the Claimant fails to distinguish how the obligations it invokes apply differently to these entities, which comprise the executive, administrative and judicial branches of the Mexican government. Further, it simply repeats the same allegations in support of each of its claims of expropriation, denial of fair and equitable treatment, and denial of full protection and security, as though the content of each obligation were identical."163
The Respondent clarifies that, when the Court of Appeals invalidated the Disqualification of OSA, it made no separate conclusions with respect to whether OSA had negligently breached its obligation to submit bonds with respect to the nine OSA-PEP Contracts.
The Respondent explains that the UIF Complaint was based on the analysis of transactions with irregular characteristics that exceeded risk models.
The Respondent further explains that (i) Investigation 115/2014 investigates whether Mr. Yáñez used Oceanografía's resources for different purposes than for which they were obtained; (ii) Investigation 239/2014 investigates the possible crime of providing false information to credit institutions, and (iii) these inquiries are in the stage of criminal proceedings and have not yet concluded.
The Respondent recalls that Mexican law permits a "legal moratorium" for a company submitted to insolvency and thus to suspend payments to creditors while the bankruptcy proceedings are resolved.
The Respondent concludes its observations by stating that the Claimant has not established nor can it establish that the claimed measures were issued outside the normal course of action of the Mexican authorities
The Respondent disputes that there is such a thing as "judicial expropriation", "[w]hen a tribunal acts as a neutral arbiter of disputes between private parties, its decision against the interests of one party that happens to be a foreign investor will not lead to expropriation. If that were so, every decision by a domestic court against a foreign investor involving property rights could be viewed as an expropriation and there would be a very large body of jurisprudence on the subject in investment treaty law… [E]ven if the concept of judicial expropriation were accepted, it would be necessary to comply with the rule of firmness or finality. In the case at hand, the Precautionary Measure (erroneously called the Deviation Order) derived from a decision issued by a trial court: the Insolvency Court."164
The Respondent notes that "the Subsidiaries and Invex challenged the Precautionary Measure, and other decisions of the Insolvency Judge through appeals and amparos. This means that the Mexican judicial system was put to the test by the Claimant."165 The Respondent adds, "[i]n fact, the Petition for Review 96/2015 filed by Invex resulted in an interpretation precedent issued by the Third Collegiate Court that concluded, among other things, that: the trust and the transfer of rights were concluded during a dubious period (i.e., the Retroactive Period); the Precautionary Measure was not illegal or unconstitutional, and the Precautionary Measure was intended to protect the assets of OSA ('bankruptcy estate'), allowed the commercial operations of Oceanografía, protected thousands of employees and maintained equal treatment for hundreds of suppliers (creditors)."166 The Respondent affirms that the Claimant has tried to argue a claim of denial of justice "disguised"167 as judicial expropriation.
The Respondent asserts that nothing was taken from the Claimant, that the POSH's vessels were not expropriated. In this respect, the Respondent provides a calendar of events reproduced below:

• On March 7, 2014, Oceanografía returned the Rodrigo DPJ vessel to POSH Honesto. Prior to that, the vessel was taken out of service due to lack of payment to the crew.

• On March 10, 2014, Oceanografía returned the Caballo Grano de Oro vessel to POSH Hermosa. However, since December 26, 2013, the vessel had been out of service due to technical problems

• On March 19, 2014, the SAE requested the provisional attachment of some vessels in possession of Oceanografía, including Caballo Argento, Caballo Babieca, Caballo Copenhagen, Don Casiano, Caballo Grano de Oro, Caballo Monoceros, Rodrigo DPJ and Caballo Scarto.

• On March 28, 2014, the PGR notified the Subsidiaries that their vessels were part of the Provisional Attachment. On the same date, GOSH and POSH Hermosa filed communications with the PGR to demonstrate that the Subsidiaries were the owners of the vessels and thus not covered by the attachment .

• Further documentation was submitted on April 29 and May 7, 2014.

• On May 19, 2014, the SAE, at the request of the PGR, delivered Salvirile and Salvision to SEMCO IV pending resolution of their legal status.

• On June 26, 2014, the PGR lifted the provisional attachment Salvision, Salvirile, POSH Honesto, POSH Hermosa, Caballo Argento, Caballo Babieca, Caballo Don Casiano, Caballo Copenhagen, Caballo Scarto, and Caballo Monoceros.

Therefore, the Respondent concludes that the Subsidiaries only had to prove that they were the owners of the vessels so that their provisional attachment would be lifted.
According to the Respondent, the supply contracts of the Subsidiaries with OSA are not an "investment" within the meaning of the Treaty and, therefore, cannot be expropriated. Furthermore, GOSH itself withdrew its vessels from operation under its contracts with OSA: "since December 26, 2013, Caballo Grano de Oro was out of service due to technical problems. Caballo Argento was retired by GOSH as of May 11, 2014. Rodrigo DPJ was taken out of service due to lack of payment to crew personnel since February 28, 2014. Caballo Babieca was withdrawn from operation on May 11, 2014 by GOSH. Don Casiano was retired on May 10, 2014. Caballo Copenhagen suffered an impact on the breakwaters due to a crash at the Dos Bocas Maritime Terminal on April 15, 2014 and was subsequently withdrawn. Caballo Scarto was removed due to administrative problems with Oceanografía on May 11, 2014. Caballo Monoceros was removed due to administrative problems on May 12, 2014."168
According to the Respondent, the Claimant decided to withdraw all the vessels which caused the OSA-PEP Contracts related to the Subsidiaries' vessels to be rescinded.
The Respondent recalls that on August 15, 2014, the Insolvency Judge granted a precautionary measure at the request of Oceanografía to extend the validity of only 9 OSA-PEP Contracts (out of a total of 25) since they were the only ones financially and operationally viable. The Respondent notes that the Subsidiaries could have challenged this precautionary measure and they did not.
The Respondent denies that the ability of OSA to contract with PEMEX was an investment and, in any case, it was not expropriated. The disqualification was in force for only 5 months and was not applicable to existing contracts.
The Respondent disputes that the series of acts or omissions had the aggregate effect of destroying the value of the Claimant's investment. The Respondent also denies that the alleged acts and omissions constituted a "creeping expropriation". According to the Respondent, the measures identified by the Claimant are too remote from each other and too remote from POSH and the Subsidiaries; they had no expropriation effect either individually or jointly.
The Respondent insists on the vagueness of the alleged breach of the fair and equitable treatment obligation, "[t]he most important and fundamental thing is that the Claimant actually complains about the application of Mexican insolvency and/or bankruptcy laws and its system for criminal investigation and prosecution, but without presenting any evidence of customary international law standards relevant to bankruptcy and criminal systems. This alone is reason to dismiss the claim of a denial of fair and equitable treatment."169
According to the Respondent, the standard for finding a violation of the minimum treatment standard is high and, after reviewing the caselaw, concludes that "the minimum standard of customary international law prohibits an action that is 'arbitrary, grossly unfair, unjust or idiosyncratic, is discriminatory and exposes the claimant to sectional or racial prejudice, or involves a lack of due process leading to an outcome which offends judicial propriety.' Allegations of violation of national law, general complaints of injustice, and self-defined 'expectations' are not sufficient to argue a violation of the standard on fair and equitable treatment."170
The Respondent dismisses the Claimant's argument as inappropriate because i) all the measures under discussion were taken in the normal course of proceedings and were reasonable, and ii) the Claimant had no "legitimate expectations." In respect of the latter, the Respondent argues that POSH did not make its investment with adequate knowledge of the risk involved. According to the Respondent, there were many red flags that showed that OSA was not a reliable partner. The Respondent lists the following:

• "In 2011, the Claimant already knew that Oceanografía and Mr. Yáñez were almost bankrupt;

OSA had violated the terms of the bareboat charter since 2012 and, nevertheless, the Claimant decided to continue its commercial relationship;

In 2007, a Surveillance Commission was created in the Chamber of Deputies to review the contractual irregularities of Oceanografía;

Oceanografía and its directors (Mr. Yáñez and Mr. Díaz) had dubious backgrounds;

Oceanografía's 2013 Financial Statements revealed that the company faced investigation requests by the SAT, 29 commercial lawsuits, 7 civil lawsuits, 19 procedures related to the imposition of penalties by PEP, 7 lawsuits with PEP, and 7 nullity cases."171

The Respondent adds that POSH could not have had "legitimate expectations" that contracts with OSA would be renewed or renewed on the same terms. The Respondent recalls that the contracts awarded by Pemex have to go through a public procurement procedure. Furthermore, the need for offshore services and the rates of such services depend on industry factors and especially the price of oil. It could not be guaranteed that Mexican and global oil markets would not change.
The Respondent notes that "in February 2014 (that is, before the Disqualification, criminal investigations and insolvency proceedings), POSH "look[ed] into requesting for the assignment of the 6 GOSH contracts and the 2 [SMP] contracts to the POSH group." "Also, in early February 2014, POSH claimed the restitution of some of the vessels and even began a commercial arbitration against Oceanografía."172 The Respondent concludes that the argument of the Claimant that the Respondent breached the legitimate expectations of the Claimant is without foundation.
As to the breach of the full protection and security obligation, the Respondent affirms that, under customary international law, this obligation is limited to the investor's physical security. The Respondent notes that the Claimant simply repeated under the full protection and security the same accusations than it did for denial of fair and equitable treatment and concludes that "[t]he Tribunal should reject the Claimant's attempt to extend the full protection and security obligation of Article 4.1 of the APPRI."173

(3) Reply

As regards the claim of expropriation the Claimant concludes that "the question of whether a measure constitutes an expropriation depends upon the actual effect of the measures on the investor's property. A series of measures that deprive an investor of the use or enjoyment of its investment, including the deprivation of all or a significant part of the economic benefit of its property, amounts to expropriation. If the Measures at stake have these effects (as they did), there is no need to inquire into the motives, intentions or form of the measures in order to conclude that an expropriation has occurred. This is what happened in the case at hand."174
The Claimant insists that the Diversion Order and the Isolated Decision directly expropriated the receivables owed to POSH pursuant to the Irrevocable Trust by diverting those funds to SAE's bank account. As explained by Mr. Méjan, "the assignment of collection rights to a trust entails a transfer of ownership of these rights. The assignor (in this case OSA) loses the ownership of the rights to the assignee (the Trust), which becomes the new owner of these rights. The assignee replaces the assignor as the creditor."175 In this case, OSA had assigned the rights arising from the OSA-PEMEX Contracts to the Irrevocable Trust, of which POSH was the primary beneficiary. By diverting those payments to the government's bank account, Mexico directly took POSH's beneficial ownership rights, as primary beneficiary of the Trust, over the collection rights arising from the contracts between OSA and Pemex. Mexico directly expropriated POSH's rights that had been lawfully acquired through valid, binding and enforceable contracts.176
Based on the Claimant's review of caselaw, the Claimant argues that "tribunals are clear that the determinative factor in assessing whether measures constituted an indirect expropriation is not the duration of the measures or the claimants' retention of legal ownership of assets. Rather, as in this case, an indirect expropriation may result from nominally temporary measures that have the effect of permanently destroying the viability of the enterprises constituting the claimant's investment."177
The Claimant argues that the relationship between the politically motivated measures and their expropriatory nature vis-à-vis POSH's Investment is clear: "[a]ll of the measures were intended to strain OSA's finances, take control of OSA, or divert OSA's resources to the government, without regard to the rights of international investors that were OSA's business partners, like Claimant. All of the Measures either directly impacted or specifically targeted POSH's Subsidiaries and deprived them of the value, use, and benefit of the Investment: the vessels were detained for several months; POSH's Subsidiaries did not receive any payments from the contracts with OSA (from OSA or PEMEX through the Irrevocable Trust) while still incurring in costs to preserve the vessels and pay the crews; and the Subsidiaries could not contract directly with PEMEX for the services they were previously rendering through OSA. There was no cash flow, no activity and, even no vessels (for a time). Under these conditions, a few months were sufficient to see the Investment completely destroyed."178
According to the Claimant, by "February 2015, one year after Mexico initiated its political crusade against OSA, the Subsidiaries had no vessels, no contracts with OSA, and no possibility to contract with PEMEX. The value of their Investment was zero."179
The Claimant insists that "the Measures substantially interfered with and frustrated entirely POSH's distinct, reasonable, investment-backed expectations, including the most basic expectation that the host country will follow the law."180
The Claimant points out that "Mexico does not question the unlawfulness of the expropriation, but rests instead on its contention that there was no "taking" in the first place, as the Measures were adopted in 'the normal course of action of the Mexican authorities.'"181
The Claimant points out that Mexico has no answer to the fact that the expropriation, lacked compensation, due process and public purpose, and was discriminatory.
The Claimant argues that the "FET standard protects the investor's legitimate expectations that the State will conduct itself in a consistent, transparent, even-handed and non-discriminatory manner, will not act beyond its authority, and will not contradict its own laws and regulations… Mexico violated POSH's and the Subsidiaries' due process rights, by depriving them of their standing to challenge the Diversion Order. After the Amparo Decision had confirmed the unlawfulness of the Diversion Order, Mexico successfully challenged the Amparo Decision. In the Revision Decision, Mexican courts revoked the Amparo Decision on grounds that POSH did not have standing to challenge the Diversion Order. The Revision Decision did not reach the merits to assess whether the Diversion Order was contrary to Mexican Law and the Mexican Constitution, as confirmed by the Amparo Decision. The Revision Decision thus deprived POSH and the Subsidiaries of any means to challenge the Diversion Order in Mexican courts, despite that Order's clearly harmful, destructive impact on their rights to receive payments from PEMEX under the Irrevocable Trust. That loss of access to justice is a further, serious deprivation of due process."182
The Claimant argues that the Isolated Decision held, inter alia, that the Irrevocable Trust and assignment of rights became automatically ineffective upon the declaration of insolvency. However, "[t]he Insolvency Court never issued a declaration of ineffectiveness, but rather indirectly deprived them of effect by unlawfully extending the effects of a precautionary measure to the Irrevocable Trust and Assignments of Rights, without hearing any of the interested parties thereunder."183
The Claimant insists that Mexico arbitrarily prevented PEMEX from rescinding the contracts with OSA and replacing them with new contracts with the Subsidiaries. The Claimant also insists that the conduct of Mexico in respect of the Investment or the Investor considered together as a composite act breached the FET. The conduct also constituted "an abject disregard of POSH's legal, contractual, and other acquired rights and as such constituted a failure to provide full protection and security to POSH's investments. Individual components of that course of conduct can also make out FPS violations on their own account."184

(4) Rejoinder

Respondent draws the Tribunal's attention to the New York case of OSA and Mr. Yáñez against Citibank in which OSA and Mr. Yáñez claim that Citibank was responsible for orchestrating a fraud that led to OSA's bankruptcy and caused Mr. Yáñez to face criminal proceedings. For the Respondent, this case demonstrates that OSA itself : "i) holds Citibank exclusively responsible for the loss of its business, and ii) OSA did not consider that the temporary suspension to contract with Pemex had affected its business."185 The Respondent adds that the Claimant has failed to point out that OSA and Mr. Yáñez subsequently filed a commercial claim against Banamex before the courts of Mexico City,186 which "shows that OSA, to this day, continues to blame private entities (e.g., Banamex) for its legal and financial problems, and not Pemex or the Respondent. Furthermore, it is shown that Pemex fulfilled its payment obligations under the OSA-PEP Contracts."187 In the Respondent's view, the New York lawsuit shows that OSA blames Citibank, and not the Mexican government, for its problems. The New York lawsuit says nothing about a conspiracy between the government and Citibank, or that OSA was the target of a "politically motivated hunt" as the Claimant seeks to lead the Arbitration Tribunal to believe in this arbitration. OSA states in the New York lawsuit that it did not commit fraud; it argues that Citigroup was the one who committed the fraud. Whatever the outcome of this litigation, the reality is that the claim in the New York Case constitutes complete evidence that the Claimant does not and cannot speak for OSA. The Claimant decided to systematically and without reason dismiss any argument or evidence presented by the Respondent, clearly because it contradicted its alleged theory of the political plot against OSA.188
The Respondent recalls that former counsel to the Claimant filed the Florida Case complaint shortly before the Statement of Defense: "[t]his judicial procedure was initiated by a large group of service providers, bondholders and OSA creditors against Citigroup. The plaintiffs in that lawsuit are represented by the law firm Quinn Emmanuel, the same firm that initially represented the Plaintiff in this arbitration. In the Respondent's view, the Florida Case lawsuit contradicts the facts argued by the Claimant in this arbitration."189
The Respondent clarifies that both cases were dismissed without prejudice on the basis of forum non conveniens. The Respondent explains that the Florida Case lawsuit was presented as evidence in this arbitration to demonstrate that a substantial group of OSA creditors also blame Citigroup for the problems faced by OSA, and do not blame the Mexican government. According to the Respondent, the two cases before US Courts "demonstrate that the Claimant cannot speak on behalf of or represent OSA in this arbitration. Furthermore, these cases take away any credibility from their theories about the supposed political campaign against OSA" by the Mexican government.190
The Respondent asserts that the Claimant's purported reliance on Pemex's due diligence is misplaced and had "POSH conducted legal due diligence with respect to OSA, that due diligence would have surely revealed significant 'red flags', including numerous investigation requests by SAT; civil lawsuits; procedures related to the imposition of penalties by PEP; lawsuits with PEP; and nullity cases. These 'red flags' would have indicated with certainty that OSA was not a reliable customer or partner. As such, the Claimant must assume its responsibility for the risk of not having done so."191
The Respondent notes that the Claimant is the only creditor to OSA that claims that the valuations prepared by Citigroup, Advent and Blackstone were correct. The Respondent adds that "[i]n fact, the evidence shows that the Claimant had information indicating that it was risky to do business with Oceanography. In June 2011, after a first meeting with Mr. Martín Díaz, POSH learned that OSA was facing at least USD $ 1.1 billion in debt and financial commitments, and that it could not be clearly determined the reasons why OSA was valued at USD $ 400 million."192
The Respondent further observes that the Claimant also ignored the risk of the OSA administration. The Respondent recalls that, in the document production phase, "the Claimant produced an internal report on July 18, 2011, in which it analyzed the operation and management of the OSA vessels. According to the report itself, the structure of the Oceanografía organization was disorganized, despite the fact that at the time attempts were being made to restructure it. In fact, OSA administrators themselves were unable to clearly identify the responsibilities of each area and the process manager. Despite this, POSH decided to ignore its own observations and chose to bet on a business relationship with OSA despite any risk."193
The Respondent insists on the illegality of the investment and maintains that, "[a]s long as the company establishes the possibility of cabotage (even if it does not do so), the restriction on the percentage of foreign participation must be met."194
The Respondent clarifies that "OSA was in charge of obtaining Pemex contracts for the provision of services and not charter contracts. This is an important difference and based on it, it cannot be affirmed that Pemex made any promise that it would 'charter' the POSH vessels."195 The Respondent further clarifies that "POSH's alleged expectations based on the age of the Vessels are unfounded. The Vessels were a work tool subcontracted by OSA to be able to provide the services that Pemex required. The contractual relationship between Pemex and OSA was not binding on POSH. In other words, under the OSA-PEP Contracts, OSA had the discretion to decide which vessel it would use to fulfill its contractual obligations to Pemex."196
On the issue of the Blocking Order, the Respondent explains that, "[l]egally, the same boat could not—and cannot—provide services under two contracts at the same time. Claimant also minimizes the competition that exists among other suppliers, more economic offers and changes in the offshore market, such as the fact that Pemex no longer required that the vessels have the Mexican flag."197
On the termination of the OSA-PEP Contracts, the Respondent clarifies that "[i]n principle, the OSA-PEP Contracts did not have to be terminated since Pemex required these services. Ultimately, controversial issues arose within the bankruptcy proceedings regarding conventional penalties for breaches made by OSA under the OSA-PEP Contracts, which delayed the formalization of the contractual settlements… It is important to remember that the Subsidiaries withdrew the Vessels, which largely caused the OSA-PEP Contracts to be terminated and conventional penalties were generated against OSA."198
The Respondent details OSA's breaches of the contracts: On February 1, 2013, all GOSH Vessel charters increased charter rates, from USD 9,700 per month to USD 14,500 per day, approximately. On April 25, 2013, GOSH required OSA to pay overdue charters since September 2012 (Notice of Default).
The Respondent recalls that, on July 1, 2013, three agreements were executed: i) a credit agreement between POSH and GOSH; ii) the management contract between PFSM and OSA, and iii) an agreement between POSH, GOSH, Mayan, ICA, GGM and Arrendadora Caballo de Mar (2013 Agreement). According to the Respondent, these agreements, "show that POSH sought to ensure the payment of its debts, have greater control over the vessels and ensure that OSA would not [keep] the payments made by PEP."199
The Respondent disputes the Claimant's assertion that, as a result of the 2013 Agreement, OSA paid its debts in mid-2013. According to the Respondent, this document does not show that OSA had settled its debts but notes that in June 2013 OSA made only a few payments and defaults continued.
Based on March-May 2013 communications between OSA and POSH, the Respondent affirms that "it is evident that POSH was looking for ways to dispense with the commercial alliance with OSA. In addition, at that time, POSH knew that OSA simply did not make the payments under the Charters, despite having the money."200
On February 10, 2014, POSH Honesto and POSH Hermosa demanded that Oceanografía return the ships.
On May 8, 2014, GOSH sent a new notification of non-compliance for non-payment since September 2012.
According to the Respondent, "POSH sought to give the impression that it had granted the loan to GOSH for the acquisition of the Vessels since 2011."201 The Respondent disputes that the only reason to establish the Invex Trust was to guarantee POSH's loan to GOSH, "the facts and evidence demonstrate the following: i) that POSH had to finance the vessels because it saw no other viable option due to the limited options from national banks; ii) GOSH's debts to POSH were increasing with the non-payment from OSA, iii) POSH and GOSH looked for ways to corroborate if OSA actually received the payments from Pemex, iv) OSA reluctantly acknowledged that it did receive payments from Pemex, but OSA continued to default on its payment obligations to GOSH—and in turn GOSH with POSH, and v) the instrument to prevent OSA from continuing to default on payments and stop disposing of resources was through the Invex Trust."202
The Respondent also disputes that "GOSH, POSH Honesto and POSH Hermosa were 'stripped' from obtaining profits from their investment, since they had to sell the boats to pay the loans."203 The Respondent recalls that POSH-related companies (Adara Limited or Maritime Charlie) acquired the GOSH, POSH Honesto and POSH Hermosa Vessels. The same companies that sold the eight ships to the Subsidiaries. The Respondent further recalls that "[p]rior to Adara and Maritime Charlie 'repurchasing' the Vessels, POSH canceled the mortgages on the Vessels that secured the loans in favor of the Subsidiaries. This does not result in a minor event. The Claimant not only maintained control of the eight vessels, but the loans and guarantees were made in favor of practically the same companies dependent on POSH, which initially sold the vessels to the Subsidiaries."204
The Respondent points out that Mr. José Luis Montalvo acknowledges that Caballo Copenhagen and POSH Honesto are the subject of charter contracts, POM has such vessels, and they are operating in Mexico. In sum, the Respondent concludes: "[t]he above coupled with the fact that the shares of GGM and Arrendadora Caballo de Mar in GOSH were acquired by GOSH Caballo Eclipse S.A.P.I. de C.V., another company related to POSH, reveal that POSH had no damages on the 'capital and debt' in GOSH."205
The Respondent rectifies certain facts narrated in the Reply. First, the Disqualification did not cause the insolvency of OSA because i) the OSA-PEP Contracts were still in force, that is, OSA's source of income did not cease, ii) the Disqualification had a maximum duration of five months, as the Insolvency Judge suspended its effects through a precautionary measure, and iii) OSA began to display financial problems, at least, since 2013. Second, Citibank suspended OSA factoring, not the Respondent. Third, the Claimant did not mention the settlement of the SEC which reached conclusions similar to those of the CNBV. Fourth, the Respondent questions the reliability of the testimony of Mr. [REDACTED] Fifth, the Respondent or the Subsidiaries did not object to Mr. Maza as administrator of OSA. Sixth, the Banamex complaint was conclusive for the PGR to investigate the ORPI crime. Seventh, OSA's assignment of rights established as an exception the insolvency proceedings. Eighth, the object of the Invex Trust was to pay POSH and GOSH but the income depended on future commitments, i.e. the compliance with OSA-PEP Contracts. Ninth, POSH, GOSH and Invex did not exercise the ordinary remedies provided in the Insolvency Law ("IL"). POSH and GOSH lacked legal standing to resort to an amparo trial as an extraordinary means of defense. Invex, who had legal standing to initiate an amparo, exercised those rights. The Respondent asserts that "[i]n no moment POSH and the Subsidiaries were restricted in their access to justice since Invex was in charge to defend its interests as trustee."206
The Respondent refers to expert Oscós's explanation that "the judgment of the Review Appeal 96/2015 is the expression of the access to justice and the answer to the amparo trial promoted by Invex … The isolated precedent issued by the Third Collegiate Court has not been superseded by a later criterion, much less by the isolated precedent of the Review Appeal 70/2018, which is irrelevant and inapplicable to OSA's case since it is an insolvency case different from OSA's, and it arose under different circumstances than those that led Invex to promote the Amparo 844/2014 and resulted in the judgment of the Review Appeal 96/2015."207
The Respondent expresses concern for the lack of acknowledgment by Mr. Yáñez that, on July 1, 2013, he agreed to restructure OSA's debt to POSH and GOSH. The Respondent recalls that Mr. Yáñez participated as president of the Board of Directors of OSA and GOSH, a situation that had the effect of triggering one of the requirements to consider an event as fraudulent indicated in the IL called "related person".208
The Respondent clarifies that the bank statements that the Respondent produced in the document production phase correspond to the bank accounts described in the Insolvency Proceedings: "[t]he amount of USD $24.8 million (calculated based on the seven bank accounts that encompass the period of May 2014 to December 2017) do not correspond to OSA's debt to POSH, that it had to pay to the Invex Trust. The GOSH Vessels stopped their services since May 2014, consequently it was impossible that they generated any income in favor of OSA until 2017."209

B. Assessment by the Tribunal

(1) The Claim of Expropriation


Article 6 of the Treay on "Expropriation and Compensation" sets forth the conditions to be met for an expropriation to be in compliance with the requirements of the Treaty:

"1. Neither Contracting Party may expropriate or nationalize an investment either directly or indirectly through measures tantamount to expropriation or nationalization (hereinafter referred to as "expropriation"), except:

(a) for a public purpose;

(b) on a non-discriminatory basis;

(c) in accordance with due process of law; and

(d) on payment of compensation in accordance with paragraph 2 below."


Article 17.1 of the Treaty on Applicable Law is also relevant. It reads:

A tribunal established under this Section [Section One under Chapter III on Dispute Settlement] shall decide the issues in dispute in accordance with this Agreement and the applicable rules and principles of international law.

The Tribunal notes that this article is applicable to any issues in dispute and needs to decide them in accordance the rules and principles of international law.

The Parties dispute whether there is such a matter as judicial expropriation. The Claimant has argued that conduct of the judiciary of the Respondent is not beyond the reach of the Treaty's obligations of the Respondent. On the other hand, the Respondent contends that there is no possibility of judicial expropriation under the Treaty.
The Tribunal observes that Article 6 does not on its face exclude any measures taken by any organ of a Contracting Party. The defining feature of the measures is their effect, not the identity of the organ of the Contracting Party which takes them. It could be an organ related to the executive, legislative or judicial branch of a Contracting Party.
For purposes of attribution to a State, Article 4 of the International Law Commission's Articles on Responsibility of States for Intentionally Wrongful Acts ("ILC Articles") include organs that exercise judicial functions. It reads as follows:

"The conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a territorial unit of the State."210


The Commentary to Article 4 of the ILC Articles explains:

"[T]he reference to a State organ in Article 4 is intended in the most general sense. It is not limited to the organs of the central government, to officials at a high level or to persons with responsibility for the external relations of the State. It extends to organs of government of whatever kind of classification, exercising whatever functions, and at whatever level in the hierarchy, including those at provincial or even local level. No distinction is made for this purpose between legislative, executive or judicial 211 organs."

Therefore, acts of the judiciary are not per se to be excluded from being treated as expropriatory in character. The issue is what should be the standard to be applied in order to differentiate the role of an international arbitral tribunal in an investment arbitration from an appellate court of domestic courts' decisions. The Parties have raised and addressed this question.
The Claimant refers in particular to the Eli Lilly tribunal's dictum that "it will accordingly only be in very exceptional circumstances in which there is clear evidence of egregious and shocking conduct, that it will be appropriate for a NAFTA tribunal … to assess such conduct."212 As already noted, the Respondent has questioned whether judicial expropriation is possible, but in any case, the Respondent asserts that the customary international law standard applies: "a 'notoriously unjust' or 'egregious' administration of justice 'which offends a sense of judicial propriety.'"213 The Respondent adds that, "unlike actions of the executive or the legislature, judicial acts can violate customary international law obligations in only the most extreme and unusual of circumstances."214

The standard described by the Claimant and Mexico in their references to the dictum of the Eli Lilly tribunal and to customary international law, respectively, converges around the necessity for the presence of unusual circumstances, situations of "clear evidence of egregious and shocking conduct" by the courts. The Tribunal agrees with this standard, not as an added condition to expropriation under Article 6 but by placing this article in the context of the Treaty and in particular Article 17.1 of the Treaty.

Before applying this standard the Tribunal observes that the Claimant has not been consistent in framing the claim as a direct or indirect expropriation, or both. In the SoC the Claimant argued that the expropriation of the investment was "creeping and indirect" and the measures taken by Mexico constituted measures having an effect equivalent to expropriation.215 In the Reply, the Claimant alleged the direct expropriation of payments owed by OSA to POSH via the Invex Trust and the indirect expropriation of "the rest of the investment." The Tribunal will address first the claim of direct expropriation and later the Detention Order and the Blocking Order as measures allegedly having an effect equivalent to expropriation.

a. Direct Expropriation of Trust Assets

The claim of direct expropriation of Trust assets is based on the Diversion Order, the Revision Order and the Isolated Decision preventing POSH from receiving payment through the Trust thereby depriving POSH of its rights and diverting the funds for the benefit of Mexico. The question for the Tribunal is whether egregious and shocking conduct of the Mexican courts has been shown taking into account the circumstances described below related to [the terms of the Assignment Agreements], the purpose of the Trust, the timing of the Trust, and the financial situation of OSA when the Trust was established. The Tribunal will also address the question of access to the Mexican courts.

(i) The Purpose of the Trust

(ii)The Financial Situation of OSA when the Trust was established

In sum, the evidence before the Tribunal makes it clear that when the Trust was established the financial situation of OSA was already precarious, and the infusion of funds by the Claimant was intended to finance the debt of OSA to the Claimant.

(iii) Access to the Mexican Courts

OSA was in substantial arrears in paying the bills owed to the Claimant. The Claimant also needed to refinance the debt owed by OSA to the Claimant. This is the moment in April 2013 chosen to establish the Trust after having considered setting it up for several years. The timing is suspect. The Claimant was aware that the trust arrangement may be disputed and so informed potential investors in the prospectus of April 2014: "[...] there can be no assurance that there will be no attempts by the creditors of OSA and the Mexican government to dispute the trust arrangement and claim against charter hires paid or payable to the trust."228 It is not surprising that the Third Collegiate Court concluded that the Trust and the assignment of rights were done during a dubious period.

b. The Detention Order

The issue for the Tribunal is whether from an expropriation point of view a temporary (or temporally limited) attachment can amount to an expropriation. The jurisprudence on whether temporary deprivations can amount to an expropriation is mixed. Early tribunals used the language of "permanent deprivations", suggesting that deprivations which are229 temporary will not be enough to give rise to an expropriation claims. The weight of case law, however, favors being open to the possibility under certain conditions of an expropriation in a case involving something other than a permanent deprivation, but only in very limited circumstances. Tribunals have considered a number of factors, including the temporal duration of the deprivation,230 and whether the deprivation was always intended to be temporary.
Tribunals have been reluctant to find that a measure is expropriatory in circumstances where the deprivation has not had long-term effect on the value of the investment. As the tribunal in LG&E v Argentina expressed it, "[g]enerally, the expropriation must be permanent, that is to say, it cannot have a temporary nature, unless the investment's successful development depends on the realization of certain activities at specific 231 moments that may not endure variations".
The Claimant was deprived of some of the vessels for a short period of 4-5 months, and there is no evidence that the deprivation was ever intended to be permanent. Further, the Claimant recovered the vessels. In these circumstances the Tribunal dismisses the claim of expropriation grounded on the Detention Order and will re-visit the claim from the point of view of fair and equal treatment.

c. The Blocking Order

Under the claim of indirect expropriation the Claimant includes the Blocking Order: "Mexico blocked POSH's Subsidiaries from contracting directly with PEMEX as an alternative [rather than through OSA]. SAE refused to cancel OSA's contracts and the Insolvency Court prohibited PEMEX from rescinding them, fatally condemning the Subsidiaries' operations in Mexico."232
This order was issued at the request of SAE. It prohibited PEMEX from contracting with GOSH's ships previously chartered to OSA. The Claimant affirms that PEMEX wanted to cancel the OSA contracts and award them directly to POSH's Subsidiaries in order to avoid interruption of service. The Claimant further affirms that the Subsidiaries' vessels had a clear competitive advantage against other vessels, because they had already incurred mobilization and modification costs and would therefore be able to offer the most competitive bid for a new contract. However, "SAE refused to cancel OSA's contracts and the Insolvency Court prohibited PEMEX from rescinding them, fatally condemning POSH's Subsidiaries' operations in Mexico",233 and preventing GOSH from mitigating its loss through direct charters with PEMEX.
The Respondent points out that Oceanografía defended its rights and interests during the Insolvency Proceeding by requesting precautionary measures including the suspension of the administrative procedures of termination of the OSA-PEP Contracts and the extension of the Contracts' validity.234 This notwithstanding, the Claimant blames SAE and PEMEX for not taking action to make fast-track administrative termination procedures for the OSA-PEP Contracts, so that such contracts would be assigned to POSH. According to the Respondent, "[t]his theory does not stand up."235 The evidence provided by the Claimant demonstrates that "POSH wanted to end its business relationship with OSA as soon as possible."236
The key issue for the Tribunal is whether the Claimant or the Subsidiaries were given promises to be able to enter into new and future contracts with PEMEX once the OSA contracts with PEP were terminated. If they were not, whether the intention of the Claimant was to terminate the relationship with OSA or to mitigate damages becomes irrelevant. There is no written evidence of the Claimant or the Subsidiaries having made any such promise. New contracts would have had to be subjected to public bidding with the consequent uncertainty whether a bid for them would be successful. The Claimant believed that its vessels had a competitive advantage, but this by itself is no more than its appreciation of possible future business. On the basis of the evidence before the Tribunal, the Claimant has not shown that it had a right to new contracts, or that the benefit of such promise may be said to have been expropriated. Accordingly, the expropriation claim must fail.

(2) Breach of Fair and Equitable Treatment


Article 4 of the Treaty on the minimum standard of treatment ("MST") provides:

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

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

3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article."

Footnote 1 to the expression "the customary international law minimum standard of treatment of aliens" in Article 4.2 explains that "[w]ith regards to this article, the customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the economic rights and interests of aliens."

The text of Article 4 shows the intention to ensure that fair and equitable treatment and full protection and security are applicable as part of the MST and that are also applicable "all customary international law principles that protect the economic rights and interests of aliens." At the same time, "for greater certainty", it is affirmed that the concepts of fair and equitable treatment and full protection and security do not require treatment additional to that required by the MST.


There is an ambivalence in the text of Article 4 between the recognition of what is included in the references to the MST and, at the same time, a concern for limiting in paragraph 2 the consequence of such recognition. This ambivalence leads the parties to the Treaty to explain that such concepts "do not require treatment in addition to or beyond that which is required by that standard and do not create additional substantive rights." Article 4.3 extends this limitation to ensure that breaches of other provisions of the Treaty or of other international agreements do not establish a breach of Article 4.

In sum, the Treaty parties affirm their obligation to accord investments of investors fair and equitable treatment but without extending the treatment beyond the MST. This conclusion begs the question of what does it mean fair and equitable treatment when the Treaty links it to the minimum standard of treatment. After a review of case law, the Waste Management tribunal provides an answer on which both Parties rely in their pleadings:

"Taken together, the S.D. Myers, Mondev, ADF and Loewen cases suggest that the minimum standard of treatment of fair and equitable treatment is infringed by conduct attributable to the State and harmful to the claimant if the conduct is arbitrary, grossly unfair, unjust or idiosyncratic, is discriminatory and exposes the claimant to sectional or racial prejudice, or involves a lack of due process leading to an outcome which offends judicial propriety –as might be the case with a manifest failure of natural justice in judicial proceedings or a complete lack of transparency and candour in an administrative process."237

In the case of the Detention Order, the actual reason for the attachment was not uncertainty as to title to the vessels, but to ensure service of OSA to PEMEX. Mexico has not denied that the reason for sequestering the vessels was to ensure that OSA continued to provide services to PEMEX. The Detention Order, quoted by Mexico's expert, Javier Paz, in the second report, states that the vessels were seized [REDACTED] The Order also states that [REDACTED]238 Thus it was known that OSA did not own the vessels but it had only their use.
The Respondent argues that, while it sequestered the vessels for the purpose of servicing PEMEX, all POSH had to do to get them back was to prove "ownership". If Mexico sequestered the vessels until it verified that the insolvent party wasn't the owner and who the owner was would be a reasonable course of action in an insolvency, but it doesn't explain why it took Mexico several months to verify the ownership of ships registered under its flag. Indeed, Mexico already had, or should have had, information regarding the ownership of eight out of the attached ten vessels, which were Mexican-flagged, even before the Detention Order was issued. The ownership information for those vessels was instantly available by checking the Mexican National Registry, the very purpose of which is to gather and make available information about the ownership of Mexican-flagged vessels. Instead, Mexico detained the vessels and required the Subsidiaries to file three different pleadings to establish their ownership with the PGR before they finally obtained the release of their vessels from the Detention Order.239
As the Detention Order itself states, the vessels were sequestered to ensure they continued to service PEMEX. If this was the objective, why was proof of ownership necessary or sufficient to release them?
To conclude, the Subsidiaries retained ownership of the vessels but not their use or benefit. It is not disputed that the effect of the measure was to deprive the owners of the income generated by the vessels during the detention periods. The owners were never compensated by the Respondent and the actual reason for the attachment was not uncertainty as to title to the vessels, but to ensure service to PEMEX as stated in the Detention Order. The Tribunal finds that the Detention Order was arbitrary, grossly unfair and unjust, and for this reason breached the applicable standard requiring the Respondent to grant the Claimant fair and equitable treatment.

(3) Full Protection and Security


A. Summary of the Parties' Arguments

This summary is limited to arguments related to losses for which the Tribunal has determined the Respondent is responsible, namely: (i) lost charter hire for the period vessels were detained by the Mexican authorities, and (ii) demobilization fees and repair costs of the vessels.
In the SoC these two items are included in the chapter of historical losses, which the Claimant defines as losses pre-dating the Valuation Date of May 16, 2014. The Claimant explains that during this period and since March 19, 2014, POSH and the Subsidiaries did not receive any payment from OSA, and they were not able to re-charter their ten vessels elsewhere. After deducting the operating costs incurred by GOSH, HONESTO and HERMOSA, the Claimant estimates losses due to lost charter hire in the amount of USD 11,289,516.241
As regards demobilization fees and repair costs, the Claimant affirms that: (i) SEMCO was not paid a demobilization fee of USD 1,800,000 for the SEMCO vessels242 as required by clause 16 of the SEMCO Charters, and (ii) due to poor maintenance, HONESTO, HERMOSA and SEMCO paid for repairs in the amount of USD 1,355,806.243
In the SoD, the Respondent argues that because the bareboat charters of Caballo Grano de Oro and Rodrigo DPJ expired in January 2014 and Salvirile and Salvision expired in February 2014 there was no basis to assume that these vessels would have been chartered by PEMEX but-for the impugned measures and should not be included in the damages' calculation.244
The Respondent also observes that (i) the Claimant has not deducted the operating costs of the estimated lost charter hire, and (ii) there is double counting because the amount of PSFM's invoices was included in another head of damages. After taking into account these criticisms, the Respondent estimates the lost charter hire at USD 5,268,756.245
The Respondent argues that there was no evidence that PEMEX was obligated to pay demobilization fees to OSA or pay for damage allegedly caused to POSH's vessels. For these reasons the Respondent disputes the inclusion of this head of damages.246
In the Reply, the Claimant accepts in part the Respondent objection related to PFSM's invoices, but argues that the Respondent's objections to damages arising from the detention of the SMP and SEMCO vessels is baseless. The Claimant explains, "[t]he SMP and SEMCO vessels were under contract with OSA, but were not assigned to a specific contract with PEMEX (as opposed to GOSH's Charters which were assigned to a specific contract with PEMEX). In addition, the Claimant has established that, even though the SMP and SEMCO charters with OSA had expired, Mexico deprived the Claimant of its ability to re-charter those vessels and re-deploy them elsewhere."247 The Claimant adds that it would be "illogical that the vessels could be detained with no economic consequence for both the period of detainment and uncertainty surrounding the release date."248 Based on Versant's Second Expert Report, the Claimant argues that the most appropriate benchmark is the charter rate applicable to the most recent contracts.
As regards PSFM's invoices, the Claimant agrees to deduct the amount of these invoices already included in its calculation of damages for work performed and invoiced payable through the Irrevocable Trust, but the Claimant disagrees with the estimated operating costs per day per vessel. Accordingly, Versant deducts from their estimated operating costs per day for the GOSH's vessels (but not the SMP or SEMCO vessels since PFSM's invoices did not include the costs for these vessels during the detention period) and reduces the calculation of "lost charter hire from US$ 11.29 million to US$ 9.48 million (reduction of US$ 1.81 million)."249
In the Rejoinder, the Respondent states that, "[i]f this Tribunal determines that the temporary detention of those vessels constitutes a breach of the APPRI, the Respondent acknowledges that it would be responsible for any damages flowing from that detention –i.e., there is no causation issue regarding these damages."250 But the Respondent insists that the Claimant makes unreasonable assumptions to assess those damages. As contended in the SoD, the Respondent claims that there is no factual basis to assume automatic renewal of service contracts and to equate "the damages to the full value of the lost profits under a hypothetical renewal, rather than assessing them as the loss of an opportunity that could potentially have value."251 The Respondent argues that, "[s]ome allowance has to be made to account for the needed to obtain a new contract, as well as the possibility of not obtaining it."252 For this reason, the Respondent assumes that the four vessels with expired contacts would be under a new contract for 80% of the detention period. The Respondent further objects to the Claimant's estimate of damages because it does not deduct the operating costs from lost income for certain vessels. Based on these adjustments, the Respondent estimates that losses for the detention period amount to $6.7 million.
On the matter of demobilization fees and repair costs, the Respondent notes that the Claimant's experts did not produce invoices to PEMEX for payments made on account of demobilization fees or repair costs. Based on expert Richards' report253 and the Barecon 2001 Standard Bareboat Charter Agreement254, the Respondent submits that the Claimant would be responsible for paying for these fees and costs.

B. Assessment by the Tribunal

The Tribunal has determined that the liability of the Respondent is limited to certain damages resulting from the Detention Order. There is no dispute on the causality of these damages, either on factual or legal aspects. Rather, the disagreement between the Parties is limited to the fact that some contracts for the vessels had expired and the Claimant assumed in calculating damages that they would have earned income during the entire period of detention, and certain operating and repair costs that had not been deducted in the Claimant's counter-factual scenario.
Since there was no automatic renewal of contracts, the possibility of their renewal should be assessed as "the loss of an opportunity that could potentially have value."255 The Second Report of the Respondent's expert Alberro has assumed that "the four vessels with expired contracts would be under a new contract for 80% of the detention period, which is in line with market information for the first quarter of 2014."256 The Tribunal finds this assumption reasonable in the circumstances.
The second objection of the Respondent to Versant's calculation of damages is related to the failure of Versant to include demobilization fees and repair costs. The Respondent affirms that there is no evidence that Pemex was contractually obligated to pay such fees and costs.257
The question is not whether OSA or POSH were responsible for those fees and costs, but whether Pemex or PEP were responsible. No evidence has been produced to show that they were contractually responsible. The evidence referred to above258 rather confirms the opposite. For these reasons, adopting the approach and reasoning proposed by the Respondent (see para. [269] above, the Tribunal determines that the damage for the vessels' detention amounts to USD 6,712,226.



According to Article 6.2(c) of the Treaty on compensation, interest is to be paid "at a commercially reasonable rate for that currency, from the date of expropriation until the date of actual payment." The Tribunal has not found that the Claimant was expropriated but unfairly treated. Article 6 refers to compensation for expropriation, as it is customary in this type of treaty. Arbitral tribunals have nonetheless granted compensation on the basis of provisions equivalent to Article 6 for breaches of other obligations under the applicable investment treaty. The Parties in their arguments have not raised this as an issue and have argued for and against an award of damages assuming that compensation under Article 6 would apply to a breach of Article 4. The Tribunal will proceed accordingly.

The Parties don't differ on the Claimant's request that pre- and post-award interest is applicable to the amount awarded by the Tribunal. It is also not in dispute that interest be compounded. The Parties differ on the applicable interest rate. The Claimant has requested 12% or LIBOR plus 4 points.259 Mexico argues that LIBOR without added percentage points would be a commercially reasonable rate as required by the Treaty.260
The Tribunal finds that the Claimant has not justified the reasonableness of 12% or LIBOR plus 4 percentage points and it is persuaded by Mexico's argument that LIBOR is a commercial rate, fixed by a third party which has excluded extreme values in its calculation.261
For these reasons, the Tribunal determines that interest shall be at an annual compounded LIBOR without any additional percentage point. Interest shall accrue from May 16, 2014 to the date of payment.


The costs of the arbitration, including the fees and expenses of the Tribunal, ICSID's administrative fees and direct expenses, amount to (in USD):

Arbitrators' fees and expenses
Andrés Rigo Sureda USD 184,125.00
W. Michael Reisman USD 150,375.00
Philippe Sands USD 75,000.00
ICSID's administrative fees USD 148,000.00
Direct expenses (estimated) USD 126,789.19
Total USD 684,289.19

Each Party has pleaded that the Tribunal order the other to pay all the costs of this arbitration including its costs of legal representation and assistance. Under Article 42 of the UNCITRAL Rules, the costs of arbitration shall in principle be borne by the unsuccessful party, but "the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case."
In the circumstances of this proceeding in which the Claimant is only being awarded a minimal part of its claim, the Tribunal considers that it is reasonable that each party bears its own costs and 50% of the costs of the Tribunal and the ICSID Secretariat.
The Tribunal notes that the Parties have equally contributed to the costs of the Tribunal and the ICSID Secretariat and, therefore, there is no need for the Tribunal to order the payment on that account of any sum by one party to the other.


For the above reasons, the Tribunal decides by majority262:

1) That the Tribunal has jurisdiction ratione personae, ratione materiae and ratione temporis in respect of the Detention Order and the acts dated after May 4, 2014.

2) That the Respondent breached its obligation to grant the Claimant fair and equitable treatment in breach of Article 4 of the Treaty on account of the detention of the Claimant's vessels.

3) To award the Claimant USD 6,712,226, such amount to be free of taxes, carry interest at LIBOR without any additional percentage points, compounded annually and accruing since May 16, 2014 until payment.

4) Each party shall bear its own costs and 50% of the costs of the Tribunal and the ICSID Secretariat.

5) All other claims and requests are dismissed.

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