[00:00:00] Speaker 00:
case number 24 dash 71 85 eda united mexican states versus lyon mexico consolidated lp hecker cardenas offense mr becker court valent united mexican states mr burrata court valent hecker cardenas mr common for the emily bye mr becker good morning may it please the court i am steven becker from pillsbury winthrop shop pitman representing petitioner the united mexican states

[00:00:30] Speaker 06:
We believe there's two key issues raised here.

[00:00:33] Speaker 06:
First, when the relevant language of an arbitration agreement is clear and unambiguous, can arbitrators disregard that language by purporting to do an interpretation?

[00:00:43] Speaker 06:
And second, does a reviewing court have the discretion to repair a defective award by recharacterizing its language and setting out new reasoning on behalf of the arbitrators?

[00:00:57] Speaker 06:
Obviously, we think the answer to those questions is no.

[00:01:00] Speaker 06:
With regard to the first point, we think allowing arbitrators to avoid clear language would be inconsistent with the Supreme Court's statement in MISCO that the arbitrator may not ignore the plain language of a contract.

[00:01:13] Speaker 06:
Other courts have agreed that if the language is clear, arbitrators cannot make interpretations.

[00:01:19] Speaker 06:
For example, in XL, the A circuit stated, when the language of the contract is clear and unambiguous, the arbitrator may not rely on parole evidence.

[00:01:29] Speaker 06:
The Eighth Circuit also stated in Missouri River that an arbitrator cannot rewrite the contract and add new terms, which is what happened here in this case.

[00:01:40] Speaker 06:
The Seventh Circuit has similarly ruled in U.S.

[00:01:42] Speaker 06:
Soccer Federation and Anheuser-Busch that an arbitrator cannot declare an ambiguity when none exists.

[00:01:50] Speaker 06:
Article 11501 is clear and unambiguous, and the tribunal itself acknowledged its literal reading.

[00:01:59] Speaker 06:
The obligation in 11.05.1 refers to treatment of investors, I'm sorry, refers to treatment of investments.

[00:02:06] Speaker 06:
Other obligations in the same chapter, indeed in the same section, refer separately to treatment of investors and investments.

[00:02:16] Speaker 06:
But the tribunals, go ahead.

[00:02:18] Speaker 05:
Can you think of an example of an instance where a country violates 11.05.1 and

[00:02:28] Speaker 05:
That violation is.

[00:02:33] Speaker 05:
Challenged in arbitration.

[00:02:36] Speaker 06:
Sure, there have been dozens of cases that have challenged violations of article 11 and appropriately challenged the violation.

[00:02:42] Speaker 05:
Yeah, so I've been.

[00:02:43] Speaker 05:
What's an example of 1.

[00:02:45] Speaker 06:
Um, the, uh, uh, Lowen versus United States case, the, uh, arguing that the U S courts denied justice to the subsidiary, your subsidiary of a Canadian company.

[00:02:59] Speaker 06:
There's an example who brought that arbitration.

[00:03:01] Speaker 06:
Arbitrations have to be initiated by the investor and they could bring claims either under Article 1116 on behalf of themselves and or under Article 1117 on behalf of an enterprise that they own or control in the other country.

[00:03:18] Speaker 05:
So that's what I would have guessed is that an investor brought that arbitration in order to vindicate the protection of investments in 11051.

[00:03:30] Speaker 06:
Exactly.

[00:03:31] Speaker 06:
To vindicate the investment, its investment being a U.S.

[00:03:36] Speaker 06:
company.

[00:03:37] Speaker 05:
Yeah.

[00:03:37] Speaker 05:
So I thought that's what the other side saying is allowed and happened here.

[00:03:43] Speaker 05:
And I thought your argument was that an investor cannot vindicate 11.05.1 because 11.05.1 protects investments, not investors.

[00:03:56] Speaker 06:
The issue we went to the district court conflated the issue of how to initiate an arbitration, the rules for that, and the legal standard that applies.

[00:04:07] Speaker 06:
The issue with Lion was that it was arguing about the treatment of itself as an investor in the Mexican courts, not the treatment of an investment.

[00:04:18] Speaker 06:
And the NAFTA parties have been very clear

[00:04:21] Speaker 06:
That 11051 only applies to the treatment of investors.

[00:04:23] Speaker 05:
All the arbitrators and the district court found that it was actually the treatment of the investments that was being reviewed.

[00:04:33] Speaker 06:
No, Your Honor, all the arguments in the arbitration award related to the treatment of Lion Mexico in the U.S.

[00:04:39] Speaker 06:
courts.

[00:04:40] Speaker 05:
I'm sorry, in the Mexican courts.

[00:04:41] Speaker 05:
But it was the treatment of their investments in... No, it was the treatment of them.

[00:04:46] Speaker 06:
They complained that the Mexican courts didn't treat them appropriately by not giving them opportunity, sufficient opportunities or ruling in their favor on various issues.

[00:04:55] Speaker 05:
Maybe the opposing counsel can address this, but my understanding is they were complaining that we were mistreated as investors, but in light of mistreated in our protection of the investments.

[00:05:11] Speaker 06:
But your honor, that's not what the arbitration agreement provides for.

[00:05:15] Speaker 06:
There are other provisions in Chapter 11 that expressly state that the obligations are owed to investors.

[00:05:23] Speaker 06:
So, for example, in article 11.052.

[00:05:25] Speaker 05:
I read it and the district court was all over this in the decision and her decision, but also in the argument, the oral argument, the hearing.

[00:05:41] Speaker 05:
It seems like you're backing away from, or maybe you never made the argument, that 11.051 must be read so literally that only an investment can initiate arbitration to protect it.

[00:05:56] Speaker 05:
No, you're saying, of course, an investor can initiate the arbitration to protect an investment.

[00:06:01] Speaker 05:
And so then

[00:06:03] Speaker 05:
really just the arbitration panel is really just trying to figure out, OK, was this Mexican court's mistreatment of an investment or mistreatment of an investor?

[00:06:13] Speaker 05:
And that just seems like heartland decision for an arbitration panel to decide, not for a court to come in and say, oh, no, you weren't even interpreting the arbitration agreement.

[00:06:25] Speaker 06:
Your honor, the problem is that, in effect, the arbitrators added new words to Article 11.051.

[00:06:33] Speaker 06:
They added add investors, or they modified the express definition of investments to include investors.

[00:06:40] Speaker 06:
And there are specific definitions of invested investors, which you have disregarded.

[00:06:44] Speaker 04:
It's very strong evidence that the tribunal did consider investments insofar as it dismissed Lyon's

[00:06:53] Speaker 04:
claims relating to promissory notes on the ground that the promissory notes are not investments under NAFTA.

[00:07:01] Speaker 04:
Why isn't that very strong evidence that the tribunal properly focused on the nature of the investments and not only on the owner?

[00:07:11] Speaker 06:
The issue in the preliminary phase on jurisdiction related to, excuse me, I have to say, I'm trying to reserve one minute for rebuttal and I see I'm out of time.

[00:07:23] Speaker 06:
I hope I can continue.

[00:07:26] Speaker 04:
You may.

[00:07:27] Speaker 06:
OK, thank you.

[00:07:30] Speaker 06:
The issue in the preliminary jurisdictional phase was whether Lion Mexico had an investment within the meeting of the NAFTA to begin with.

[00:07:40] Speaker 06:
And so Mexico argued that the mortgages and the notes were intertwined.

[00:07:46] Speaker 06:
The notes were for a term of less than three years, which under the definition of investment doesn't qualify as a covered investment.

[00:07:56] Speaker 06:
The tribunal decided to separate the mortgages from the notes.

[00:08:02] Speaker 06:
And they said, OK, the notes aren't an investment, but we'll hold that the mortgages qualify on the basis that they are intangible real estate.

[00:08:11] Speaker 04:
Well, so they're looking at the nature of the investment, right?

[00:08:16] Speaker 04:
Applying Article 11051 to protect the investments.

[00:08:21] Speaker 06:
No, excuse me, Your Honor.

[00:08:22] Speaker 06:
Line Mexico brought multiple claims.

[00:08:26] Speaker 06:
It argued that there had been an expropriation.

[00:08:29] Speaker 06:
It argued other issues.

[00:08:31] Speaker 06:
So 11051 was one of several alternative claims.

[00:08:36] Speaker 06:
If we were talking about, if the tribunal had made a ruling on expropriation, this issue about the difference between investments and investors would be irrelevant.

[00:08:44] Speaker 04:
Right.

[00:08:44] Speaker 06:
Right.

[00:08:45] Speaker 06:
But the tribunal decided not to address that claim.

[00:08:49] Speaker 04:
I'm not sure how that supports your argument though.

[00:08:52] Speaker 06:
I'm saying the people are suggesting, the lower court was suggesting, I have to fix 11.05.1 to give these people an opportunity to bring a claim.

[00:09:03] Speaker 06:
The response is there are several alternative bases upon which people can bring claims, including denial of national treatment, expropriation, et cetera.

[00:09:14] Speaker 06:
right?

[00:09:15] Speaker 06:
So the rule about what's an investment applies in all of those contexts that gets to whether you have standing to bring a claim any claim to begin with.

[00:09:24] Speaker 06:
It's not inextricably tied just to the issue of 11 0 5 1.

[00:09:28] Speaker 03:
Judge Childs, do you have any questions?

[00:09:30] Speaker 03:
Well, just that when he's pushing us to a literal reading and suggesting that somehow the arbitrator goes beyond their power, but what about how much deference you give to the arbitrators' interpretation generally?

[00:09:47] Speaker 06:
Your Honor, there's a distinction in the cases between situations in which language is ambiguous

[00:09:53] Speaker 06:
And then there's great deference to the arbitrators in interpreting ambiguous language and other cases in which the language is clear and unambiguous, which is our position here.

[00:10:06] Speaker 06:
There was no reasonable manner in which the 11.05.1 can be read to discuss treatment of investors.

[00:10:16] Speaker 06:
is simply precluded by the definitions, by the clear language, even the Federal Trade Commission interpretive statement that was cited specifically says 11051 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments.

[00:10:39] Speaker 04:
But I don't take lying to be arguing that we should read it to apply to investors.

[00:10:46] Speaker 04:
I think they're saying that the tribunal appropriately treated it as applying to investments.

[00:10:53] Speaker 04:
And so what in the tribunal's decision most clearly shows support to your position that they actually lost sight of

[00:11:04] Speaker 04:
The focus on investing investments and obviously to protect an investment, you help the owner of that mess and that's just avoidable.

[00:11:14] Speaker 06:
Yes, but the.

[00:11:17] Speaker 06:
The point after Chapter 11, it has very narrowly prescribed circumstances in which a claim for damages can be brought.

[00:11:25] Speaker 06:
And that's what we're talking about here.

[00:11:27] Speaker 06:
There's no general right to sue foreign governments for money under international law.

[00:11:34] Speaker 06:
The terms are prescribed here, just as they might be in the Federal Tort Claims Act.

[00:11:38] Speaker 06:
right?

[00:11:39] Speaker 06:
You can't just be every, not everything, not all government misconduct is entitled to financial compensation.

[00:11:46] Speaker 06:
The key point in response to your question, however, is the tribunal expressly said the tribunal finds that NAFTA Article 1105 doesn't grant protection to Lyon as an investor.

[00:11:59] Speaker 06:
That's on page JA 110.

[00:12:03] Speaker 06:
They were very clear.

[00:12:06] Speaker 06:
I think people now, sorry, excuse me.

[00:12:08] Speaker 03:
No, I was just going to say, you seem to believe that the interpretation is wrong, but not that the arbitrator did not interpret the treaty.

[00:12:18] Speaker 06:
I think the arbitrator, we think the arbitrators made a fake interpretation.

[00:12:22] Speaker 06:
I think the expression is noises of contract interpretation because they cited items like the Free Trade Commission interpretation that don't support their conclusion.

[00:12:32] Speaker 06:
But our main point,

[00:12:34] Speaker 06:
is that when the language is clear, is not reasonably capable of being read in another manner, the arbitrator should not have engaged in an interpretation.

[00:12:43] Speaker 04:
Okay.

[00:12:45] Speaker 04:
Any other questions?

[00:12:47] Speaker 04:
All right.

[00:12:48] Speaker 04:
We'll hear now from Mr. Farah.

[00:13:06] Speaker 02:
Good morning, Your Honors.

[00:13:07] Speaker 02:
May it please the court, my name is Luis Parada, for moving appellant, Hector Cardenas.

[00:13:12] Speaker 02:
Mr. Cardenas is an integral part of this dispute, so much that because of what the arbitral award said about him, if Mexico is forced to pay the $77 million, Mr. Cardenas himself is going to have to reimburse that money to Mexico.

[00:13:29] Speaker 02:
This is why he moved to intervene under Article 24 of the Federal Rules of Civil Procedure to support Mexico's petition to vacate the award with two additional arguments.

[00:13:46] Speaker 02:
One of these arguments deals about jurisdiction, and the other one about due process to him.

[00:13:51] Speaker 02:
This court denied Mr. Cardenas' motion to intervene.

[00:13:59] Speaker 02:
on three different grounds.

[00:14:00] Speaker 02:
I'm gonna address only one, futility, because of the impact that has been on this case.

[00:14:06] Speaker 02:
This equal rule ruled that even if Mr. Cotten has complied with all the requirements and their Proof 24, he will not be allowed to intervene because intervention would be futile because the courts of the U.S.

[00:14:20] Speaker 02:
cannot review issues of jurisdiction.

[00:14:26] Speaker 02:
Well, it is true that most, if not any, all arbitration rules reserve or indicate that the arbitrators have the power to decide on jurisdiction.

[00:14:39] Speaker 02:
That does not mean that arbitrators have the sole power, that they have the last word on jurisdiction.

[00:14:45] Speaker 02:
Because as a general matter, an arbitral award is subject to further review.

[00:14:52] Speaker 02:
In arbitrations under the exit convention, like this court has seen many,

[00:14:55] Speaker 02:
The exit convention itself has its own mechanism to review awards by tribunals, including decisions on jurisdiction, and to annul those awards when they, for example, exceed their powers.

[00:15:10] Speaker 03:
But Mexico actually defended against the arbitration award.

[00:15:15] Speaker 03:
And so I understand you to mean that your argument is that your interest is distinct based on this jurisdictional claim.

[00:15:22] Speaker 03:
But that sounds like maybe that's more of a litigation strategy?

[00:15:27] Speaker 02:
No, Your Honor.

[00:15:28] Speaker 02:
Mexico could not have possibly made this argument on vacator because they failed to make it during the arbitration.

[00:15:42] Speaker 03:
Would you be seeking vacator of the entire award or a partial modification?

[00:15:48] Speaker 02:
Vacator of the entire award.

[00:15:50] Speaker 03:
And you're not prejudice everybody already in this litigation for what a decade?

[00:15:58] Speaker 02:
Could you please repeat that?

[00:15:59] Speaker 03:
How does that not prejudice everybody who's already been in this litigation?

[00:16:03] Speaker 02:
Well, the one that the one that is really prejudiced here is Mr. Cardenas, because he's the one who's going to have to end up paying the 77 million award if it is enforced, and he was not even allowed to be.

[00:16:14] Speaker 02:
The Federal Tribunal made very serious findings against him, blaming him basically for committing fraud and orchestrating a fraudulent scheme, forging documents without him being present.

[00:16:28] Speaker 02:
And he, because of that, for example, the state of Nayarit, where one of the properties that was in the joint, supposedly joint investment is located, has already started expropriation proceedings against this property.

[00:16:40] Speaker 02:
which is valued at more than $800 million.

[00:16:43] Speaker 02:
So the prejudice is to Mr. Cardenas.

[00:16:45] Speaker 02:
Mr. Cardenas is only asking for due process.

[00:16:47] Speaker 04:
But Mr. Cardenas was aware of the arbitration and the district court held that he didn't seek timely to participate there.

[00:16:56] Speaker 04:
You fault Mexico as a representative of the same interests by saying they failed to raise any objection, the jurisdictional objection in the arbitration.

[00:17:06] Speaker 04:
Well, so did Mr. Cardenas fail

[00:17:08] Speaker 04:
to raise any jurisdictional objection or any objection whatsoever in the arbitration.

[00:17:15] Speaker 04:
That was a decision that he made thinking, oh, I can rely on the existing parties.

[00:17:20] Speaker 04:
But that's a choice that he made that he has to live with.

[00:17:24] Speaker 02:
Respectfully, that is not correct.

[00:17:26] Speaker 02:
Your Honor, in international arbitration, it's not like here that people can be hearing us live and can read the transcript and be hearing a recording.

[00:17:36] Speaker 02:
They can be present here in the courtroom.

[00:17:37] Speaker 02:
This arbitration was under closed doors.

[00:17:39] Speaker 02:
It was not public.

[00:17:40] Speaker 04:
All the more reason that Mr. Cardenas might have thought, I need to be there because I cannot otherwise monitor.

[00:17:46] Speaker 02:
There's no right.

[00:17:47] Speaker 04:
There's no right, but you know that you can petition to address a tribunal.

[00:17:53] Speaker 02:
He had his lawyer, Mr. Ivan Mercado, petitioned five times.

[00:17:57] Speaker 02:
Not for himself.

[00:17:59] Speaker 02:
for his companies, because Mr. Mercado is a lawyer and Mr. Cardenas is not.

[00:18:05] Speaker 02:
So the one that would have to be before the tribunal would be Mr. Mercado for raising the issue of jurisdiction which related to his cases that he had.

[00:18:14] Speaker 04:
But he petitioned for a different party, not for Mr. Cardenas.

[00:18:18] Speaker 02:
For Mr. Cardenas' companies.

[00:18:20] Speaker 02:
I mean, the thing is,

[00:18:23] Speaker 02:
The problem here is not that he was not present.

[00:18:27] Speaker 02:
The problem is that he was not present and the tribunal made very serious findings against him in his absence and that is violation of the process.

[00:18:38] Speaker 04:
But his lawyer knows that arbitration and the business community has fought for and prevailed in this, that there needs to be

[00:18:45] Speaker 04:
finality.

[00:18:46] Speaker 04:
So there's very, very limited review as we face today here.

[00:18:51] Speaker 04:
If they arguably interpreted the contract, then that's enough.

[00:18:54] Speaker 04:
And so anyone who has interest that may be seriously implicated in an arbitration would do well at least to preserve.

[00:19:03] Speaker 04:
the effort to intervene in the arbitration no to petition to be there because as you say once it's done it's the reasoning is not subject to much review at all it is man the process pardon the the ruling is is subject to review under section 10 of the federal arbitration it's a very limited review as we all know access of powers it's very limited yeah in

[00:19:32] Speaker 02:
In exit arbitrations, this award, this arbitration, if it were held now, it would be under the exit convention because now Mexico is party to the exit convention.

[00:19:42] Speaker 02:
This decision, this award would be reviewable by an anomaly committee, by an ad hoc committee, for excess of powers.

[00:19:50] Speaker 02:
And they would decide if the tribunal exceeded its powers and they could annul this.

[00:19:55] Speaker 02:
The same is true for an arbitration.

[00:19:58] Speaker 02:
Under the additional facility rules, especially because the courts of the federal courts of Washington D.C.

[00:20:06] Speaker 02:
are the courts of the seat of the arbitration.

[00:20:09] Speaker 02:
Only the district court invocates an award, and this is what we have.

[00:20:13] Speaker 05:
Did Mr. Becker say anything today that you disagree with?

[00:20:18] Speaker 05:
No, he did not.

[00:20:19] Speaker 05:
Is there anything in his brief that you disagree with?

[00:20:23] Speaker 02:
Uh, no, no, I think, I think Mexico's argument is correct.

[00:20:27] Speaker 05:
It sounds like your interests were pretty well represented.

[00:20:29] Speaker 02:
No, it was not because we have.

[00:20:33] Speaker 02:
The additional two issues, due process and jurisdiction are personal to Mr. Cardenas and they are arguments that Mexico cannot make.

[00:20:46] Speaker 02:
Because actually Mexico was participant in the violation of due process against Mr. Cardenas by not calling him as a witness, not even wanting to meet with him.

[00:20:56] Speaker 02:
And actually, I'm sure you have read the briefs,

[00:20:59] Speaker 02:
Mexico threw Mr. Cardenas under the bus.

[00:21:03] Speaker 02:
And that's why Mr. Cardenas has to now, before the court that is deciding petition to vacate the award, under Senate Objection Act, Section 10, Mr. Cardenas appeared to you to finally get the opportunity to have a due process.

[00:21:20] Speaker 02:
Otherwise, the governor of Nayarit is already there for a year and a half with an expropriation

[00:21:27] Speaker 02:
uh process to to whisper paid an 800 million dollar property.

[00:21:34] Speaker 02:
Supposedly because of what Mr Cardenas did was a legendary award.

[00:21:39] Speaker 02:
Mexico has not moved a finger to stop the ornament of majority.

[00:21:44] Speaker 02:
Mr Mr Cardenas is fighting for his own right to do process, which is not being deprived of

[00:21:52] Speaker 02:
life, liberty, or property without due process of law.

[00:21:55] Speaker 02:
And this is what he has been suffering.

[00:21:57] Speaker 02:
He just wants to have his day in court.

[00:21:58] Speaker 02:
He hasn't had it yet.

[00:21:59] Speaker 02:
And not because of his fault.

[00:22:01] Speaker 02:
Again, the problem is not that he was not present.

[00:22:04] Speaker 02:
The problem was not being present.

[00:22:07] Speaker 02:
The tribunal made very definite, endambling findings of fact against him that are being used against him to deprive him of substantial property.

[00:22:20] Speaker ?:
Thank you.

[00:22:21] Speaker 04:
All right.

[00:22:22] Speaker 04:
Thank you.

[00:22:27] Speaker 04:
And we next hear from Mr. Conlon.

[00:22:32] Speaker 01:
May I please look forward?

[00:22:33] Speaker 01:
I think I'd first like to address one of the arguments that Mr. Becker made about investment of investor and whether what the tribunal did here was consistent with Article 11051.

[00:22:49] Speaker 01:
So the proceedings that were commenced here was because Lion Mexico's mortgages were canceled.

[00:22:58] Speaker 01:
And Lion Mexico was unable, was not given the opportunity to challenge the cancellation of those mortgages.

[00:23:03] Speaker 01:
So this started with an investment.

[00:23:07] Speaker 01:
Before the tribunal, Mexico argued that an investor of a party may not bring a claim on behalf of an investment unless the investment is an enterprise of another party that is a juridical person that the investor owns or controls directly or indirectly.

[00:23:25] Speaker 01:
Now, investment is defined in Article 11 under 1139.

[00:23:29] Speaker 01:
There is eight different categories of investments.

[00:23:33] Speaker 01:
The investment at issue here is a mortgage, and that was the tribunal held that it was an intangible interest in real property.

[00:23:43] Speaker 01:
Pursuant to Mexico's argument, seven of the eight categories of investments cannot be protected by an investor.

[00:23:52] Speaker 01:
under 11051 in a NAFTA proceeding.

[00:23:57] Speaker 01:
So that was the question presented to the tribunal.

[00:24:01] Speaker 01:
How does the tribunal give effect to the purpose of 11051, which is to protect investments if seven of the eight listed investments are not subject to protection, as Mexico argues?

[00:24:18] Speaker 01:
As the court noted, judicial review of international arbitration awards is extremely limited.

[00:24:24] Speaker 01:
Courts don't sit to hear claims of factual or legal error by an arbitrator as they would in reviewing decisions of lower courts.

[00:24:32] Speaker 01:
Even if the tribunal was incorrect in its analysis, that is not sufficient.

[00:24:37] Speaker 01:
If the tribunal even arguably interprets the contract, or in this case a treaty, it must be confirmed.

[00:24:45] Speaker 01:
The tribunal found that the conduct of Mexican courts in cancelling Lion Mexico's mortgages without notice and refusing to grant Lion Mexico an opportunity to present evidence to demonstrate that the mortgages were canceled as a result of fraud violated both Mexican procedural rules and elemental principles of due process under international law.

[00:25:04] Speaker 04:
Let me ask you, Mr. Conlon, in the arbitration proceeding, and I know there's not transcript of that, but

[00:25:12] Speaker 04:
Did Lyon ever advance the argument that Article 11051 protects it as a foreign investor from unfair treatment, even when that unfair treatment is not tied in any way to a particular investment?

[00:25:29] Speaker 01:
Lion Mexico argued that under the circumstances of this case, in order for its investment to be protected, Lion Mexico needed to act on behalf of that investment.

[00:25:40] Speaker 01:
It was not a juridical entity.

[00:25:41] Speaker 01:
It could not do anything on its own to protect its rights in the Mexican legal system.

[00:25:52] Speaker 04:
So it addressed this juridical entity argument, but it was making assertions there to protect the mortgage investment.

[00:26:01] Speaker 04:
Correct.

[00:26:02] Speaker 01:
Correct.

[00:26:03] Speaker 01:
Because there's only one, under the definition of investment, which is an enterprise, that's the only type of investment that is a juridical entity.

[00:26:13] Speaker 01:
The others include equity securities, debt securities alone.

[00:26:16] Speaker 01:
None of those other defined investments are juridical entities able to act on their own behalf.

[00:26:27] Speaker 01:
There's no dispute here about the factual findings of the tribunal.

[00:26:30] Speaker 01:
There's no dispute that the mortgages at issue here are protected investments under NAPTA 11051.

[00:26:35] Speaker 04:
What about the timeliness?

[00:26:37] Speaker 04:
Why isn't the timeliness taken care of by

[00:26:41] Speaker 04:
Because Cárdenas is not really asserting a separate cause of action.

[00:26:46] Speaker 04:
It wants to participate because it sees Mexico not advancing some of the arguments it would want to make.

[00:26:51] Speaker 04:
And Mexico has timely raised the substantive claim.

[00:26:55] Speaker 04:
So why is there a timeliness problem?

[00:26:57] Speaker 01:
with respect to intervention?

[00:26:59] Speaker 01:
Well, for several reasons.

[00:27:01] Speaker 01:
One, the Federal Arbitration Act gives a hard three-month deadline.

[00:27:06] Speaker 01:
He missed that by eight months.

[00:27:08] Speaker 01:
Secondly, he's looking to interject entirely new issues that were considered and rejected by Mexico in terms of raising them before the tribunal.

[00:27:17] Speaker 01:
Well, the jurisdictional argument was raised before the tribunal by Mr. Mercado

[00:27:21] Speaker 01:
Neither the tribunal nor Mexico wished to pursue that.

[00:27:24] Speaker 01:
Mr. Mercado was not allowed to proceed because he did not provide necessary detailed information about his personal background and his standing to participate as a non-participating party.

[00:27:36] Speaker 04:
But in terms of the timeliness, if the jurisdictional issue was raised, there's not any kind of sandbagging or belatedness.

[00:27:44] Speaker 04:
If Mexico's in, the issue's been put on the table in a timely manner, then why doesn't

[00:27:53] Speaker 04:
kind of date back and say, as you said, they're kind of leaving the jurisdictional issue aside they didn't want to pursue, but he does.

[00:28:04] Speaker 04:
So just in terms of timeliness of intervention, everyone knew what they were up against.

[00:28:10] Speaker 01:
Right, but it would have the perverse consequence of issues being considered by a state party here in Mexico, them choosing not to raise that issue.

[00:28:20] Speaker 01:
Yet some intervener could raise an issue that's only for Mexico to raise and justify bringing that up for the first time in a review in court, such as the district court, when it shows as a tactical matter not to raise it before the tribune.

[00:28:36] Speaker 01:
Likewise, due process concern.

[00:28:38] Speaker 01:
There's no due process here.

[00:28:40] Speaker 04:
Doesn't that go, when you say it's only for the state to recognize, doesn't that go to the merits of his claim that, you know, he's not bound by this arbitration judgment and... Cardenas?

[00:28:50] Speaker 01:
Yeah.

[00:28:51] Speaker 01:
Yeah, he's not bound by this arbitration judgment.

[00:28:53] Speaker 01:
There's been no submission.

[00:28:54] Speaker 01:
There's a statement that he's required to indemnify Mexico for this judgment.

[00:28:59] Speaker 01:
There's nothing in the record to that effect.

[00:29:01] Speaker 04:
Right.

[00:29:01] Speaker 04:
And in terms of due process, which he raises, he can't be bound by a

[00:29:07] Speaker 04:
process that he wasn't a participant in.

[00:29:10] Speaker 01:
Correct.

[00:29:11] Speaker 01:
And he makes no argument that there's any res judicata effect, there's any collateral estoppel effect from this judgment.

[00:29:18] Speaker 01:
This award may well have been cited in different proceedings in Mexico, but that does not give him the right to now upend the appeal.

[00:29:27] Speaker 01:
In his motion to intervene,

[00:29:28] Speaker 01:
he says that he's not looking to challenge the factual record that was asserted by the court.

[00:29:34] Speaker 01:
So what rights are being validated in the proposed motion where he's denied due process if he's not challenging the factual record?

[00:29:43] Speaker 05:
And because this is similar to what Judge Pillard was saying, what you were saying, because he was not party to the arbitration,

[00:29:51] Speaker 05:
he has at least left open the possibility that when Mexico or someone comes after him for money and attempts to use the arbitration decision against him, he's left open the possibility that it shouldn't apply against him because he wants to party to it.

[00:30:09] Speaker 05:
So his decision to not join the arbitration may have been a very self-serving strategic decision.

[00:30:19] Speaker 01:
Right, a tactical decision to try and get two bites of the apple.

[00:30:22] Speaker 04:
Right.

[00:30:23] Speaker 04:
Or to be able to denounce, plausibly deny.

[00:30:26] Speaker 04:
So he says, what do you mean I don't have a legally protected interest that's threatened?

[00:30:32] Speaker 04:
Here, I have to pay $77 million.

[00:30:36] Speaker 04:
In your response to that, nothing in the record on it.

[00:30:39] Speaker 01:
There's nothing that indicates he has to pay $77 million.

[00:30:42] Speaker 01:
If the tribunal's award bound him to pay $77 million to reimburse Mexico, that would be a different issue.

[00:30:49] Speaker 01:
But that's not the factual situation that we're presented with here.

[00:30:53] Speaker 01:
There's no case that Mr. Cardenas has cited or that we've seen in which someone in the position of Mr. Cardenas has the ability to intervene.

[00:31:02] Speaker 01:
He does not have the legal interest, the cases that are cited.

[00:31:06] Speaker 01:
involved non-parties who are bound by the award.

[00:31:09] Speaker 01:
In one case, a non-party had to pay a million dollars pursuant to the award.

[00:31:15] Speaker 01:
There was a case involving a union where the international portion of the union was bound by a decision involving one of its local unions, local chapters.

[00:31:28] Speaker 01:
That is not at all the circumstances that are presented here.

[00:31:33] Speaker 04:
Anything more, Judge Childs?

[00:31:35] Speaker 04:
No.

[00:31:37] Speaker 04:
Thank you.

[00:31:39] Speaker 04:
Thank you.

[00:31:43] Speaker 04:
And did anybody reserve any time?

[00:31:45] Speaker 04:
Each.

[00:31:47] Speaker 04:
Okay.

[00:31:48] Speaker 04:
Mr. Becker.

[00:31:51] Speaker 06:
Yes, Your Honor.

[00:31:53] Speaker 06:
This issue that Council for Lyon raised about seven or eight categories aren't protected or what have you.

[00:31:59] Speaker 06:
First of all, again, the scope of what parties can seek under Chapter 11, what are in a claim, is very well and narrowly defined.

[00:32:09] Speaker 06:
Parties had their intention and it's clear.

[00:32:12] Speaker 06:
Second of all, that's not an issue that was discussed in the award.

[00:32:15] Speaker 06:
And people, similar to the district court, they're trying to add a gloss

[00:32:21] Speaker 06:
to the award itself to say well this is what the arbitrators must have been thinking or here's another justification for their ruling and we would submit to you that's not proper that the award has to stand on its own four corners

[00:32:37] Speaker 06:
And if the arbitrators can't supplement the arbitrators reasoning by saying, well, we wish the NAFTA was broader or we want to second guess what the US and Mexico and Canada negotiated.

[00:32:52] Speaker 06:
That was the only point we wanted to make.

[00:32:54] Speaker 04:
All right.

[00:32:54] Speaker 04:
Thank you.

[00:32:55] Speaker 04:
And a minute by Mr. Parada.

[00:33:07] Speaker 02:
Ernest, I would bring your attention to tab 19 of the Joint Appendix.

[00:33:12] Speaker 02:
And there you will see that the expropriation decree that specifically targets Mr. Cardenas and his properties because of the responsibility assigned to him in the award as the perpetrator of fraud.

[00:33:28] Speaker 02:
But let me tell you something else.

[00:33:30] Speaker 02:
This case for Mr. Cardenas is not only about the money.

[00:33:34] Speaker 02:
That is half of the problem.

[00:33:36] Speaker 02:
The problem is the lack of due process given to him has ruined his reputation.

[00:33:42] Speaker 02:
He's already been in jail three times.

[00:33:45] Speaker 02:
because of the allegations that the lion made in criminal proceedings against them using the same measures in the award.

[00:33:56] Speaker 04:
So for him- That can't be right that it's just the arbitration award.

[00:33:59] Speaker 04:
I've never heard of a criminal prosecutor relying

[00:34:03] Speaker 04:
on a private arbitration and its factual finding establishing criminal activity.

[00:34:10] Speaker 04:
And I assume that Mr. Cardenas had due process in any criminal proceeding for which he was saying.

[00:34:15] Speaker 02:
Your Honor, I may have misspoken.

[00:34:17] Speaker 02:
It was not the criminal proceedings were not predicated on the award.

[00:34:22] Speaker 02:
But I'm obviously talking about his rep, that was for the money part.

[00:34:25] Speaker 02:
But that has also, the award has damaged his reputation.

[00:34:28] Speaker 02:
Aside from that, Mr. Cardenas, because of criminal accusations by Lyon, has been imprisoned in jail three times.

[00:34:37] Speaker 02:
It was even before the award.

[00:34:41] Speaker 02:
And he presumably, I mean, he's been exonerated in all the Mexican court proceedings where Mr. Cardenas has been present.

[00:34:49] Speaker 02:
He has been found not guilty, exonerated completely, but it and the award have caused a lot of damage to his reputation in addition to what you will see in tab 19.

[00:35:03] Speaker 05:
All right.

[00:35:03] Speaker 02:
Thank you.

[00:35:04] Speaker 02:
Thank you.

[00:35:05] Speaker 05:
Thank you.