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Tecnicas Medioambientales Tecmed S.A. V United Mexican States

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Tecnicas Medioambientales Tecmed S.A. V United Mexican States International Centre for Settlement of Investment Disputes TECNICAS MEDIOAMBIENTALES TECMED S.A. v. THE UNITED MEXICAN STATES CASE No. ARB (AF)/00/2 AWARD President: Dr. Horacio A. GRIGERA NAON Co-arbitrators: Prof. José Carlos FERNANDEZ ROZAS Mr. Carlos BERNAL VEREA Secretary to the Tribunal: Ms. Gabriela ALVAREZ AVILA Date of dispatch to the parties: May 29, 2003 1 TABLE OF CONTENTS Para. A. Introduction……………………………………………………………..… 1-3 B. Procedural History……………………………………………………….. 4-34 C. Summary of Facts and Allegations…...………………………..………… 35-51 D. Preliminary Matters………………………………………………………. 52-92 I. Jurisdiction of the Arbitral Tribunal……………………………………. 53-71 II. Timely submission by Claimant of its claims against Respondent……………………………………………… 72-74 III. Scope of the Purchase Transaction……………………………………… 75-92 E. The Merits of the Dispute…………………………………………………. 93-201 I. Expropriation…………………………………………………………… 95-151 II. Fair and Equitable Treatment…………………………………………… 152-174 III. Full Protection and Security and other Guarantees under the Agreement………………………………………………………………. 175-181 F. Compensation. Restitution in Kind……………………………………….. 182-200 G. Decision……………………………………………………………………… 201 2 THE TRIBUNAL Constituted as indicated above, Having conducted its deliberations, Issues the following award: A. Introduction 1. The Claimant, Técnicas Medioambientales, TECMED S.A., is a commercial company organized under Spanish law, domiciled in Madrid, Spain. It is represented in this arbitration proceeding by: Mr. Juan Carlos Calvo Corbella Técnicas Medioambientales TECMED S.A. Albasanz 16 – 1a planta 28037 Madrid, Spain Ms. Mercedes Fernández Mr. Juan Ignacio Tena García Jones, Day, Reavis & Pogue abogados Velázquez 51 – 4a planta 28001 Madrid, Spain 2. The Respondent is the Government of the United Mexican States, represented in this arbitration proceeding by: Mr. Hugo Perezcano Díaz Consultor Jurídico Dirección General de Consultoría Jurídica de Negociaciones Comerciales Subsecretaría de Negociaciones Comerciales Internacionales Secretaría de Economía Alfonso Reyes No. 30, piso 17 Colonia Condesa Mexico, D.F., C.P. 06179, Mexico 3. This Award decides on the merits of the dispute between the parties in accordance with Article 53 of the Arbitration Additional Facility Rules (Arbitration Rules) of the International Centre for Settlement of Investment Disputes. 3 B. Procedural History 4. On July 28, 2000, the Claimant filed with the Secretariat of the International Centre for Settlement of Investment Disputes (“ICSID”) an application for approval of access to the Additional Facility and a request for arbitration against the Respondent in accordance with the Additional Facility Rules for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes (hereinafter referred to as the “Rules”) and under the provisions of the Agreement on the Reciprocal Promotion and Protection of Investments signed by the Kingdom of Spain and the United Mexican States (hereinafter referred to as the “Agreement”). The Agreement entered into force for both countries on December 18, 1996. The Claimant is the parent company in Spain of TECMED, TECNICAS MEDIOAMBIENTALES DE MEXICO, S.A. de C:V. (“Tecmed”), a company incorporated under Mexican law, and holds over 99% of the shares of such company. Additionally, Tecmed holds over 99% of the shares of CYTRAR, S.A. DE C.V. (“Cytrar”), a company incorporated under Mexican law through which the investment giving rise to the disputes leading to these arbitration proceedings was made. 5. On August 28, 2000, the Acting Secretary-General of ICSID, pursuant to Article 4 of the Rules, notified the Claimant that access to the Additional Facility Rules had been approved with respect to this case and that the notice of institution of arbitration proceedings had been registered; he then sent the certificate of registration to the parties and forwarded copies of the notice of institution of arbitration proceedings to the Respondent. 6. On October 2, 2000, the Claimant notified the Centre of the appointment of Professor José Carlos Fernández Rosas as arbitrator and of its consent for the Parties to appoint as arbitrator a person of the same nationality of the Party making the proposal. 7. On November 7, 2000, the Respondent notified the Centre of the appointment of Mr. Guillermo Aguilar Alvarez as arbitrator and nominated Mr. Albert Jan van den Berg as President of the Arbitral Tribunal. 8. On November 29, 2000, the Claimant objected to the nomination of Mr. van den Berg and proposed instead that the Parties request their designated arbitrators to appoint the President of the Arbitral Tribunal, which was accepted by the Respondent. 9. On January 30, 2001, the ICSID Secretariat informed that Mr. Fernández Rosas and Mr. Aguilar Alvarez had appointed Dr. Horacio A. Grigera Naón as President of the Arbitral Tribunal. On February 2, 2001, the Claimant confirmed its agreement to this appointment and, in its communication dated February 22, 2001, the Respondent notified the Centre of its agreement to the President’s appointment. 10. On March 13, 2001, the Centre’s Acting Secretary-General informed the parties that, as from that date, the Arbitral Tribunal was deemed to have been constituted and the proceedings to have begun. 11. The first session of the Arbitral Tribunal with the parties was held in Paris, France on May 7, 2001. During the course of the session, procedural rules applicable to these 4 proceedings were established and the schedule for the submission of memorials by the Parties was fixed, among other things. 12. On September 4, 2001, the Claimant filed its memorial. 13. On November 16, 2001, the Respondent made certain observations regarding opinions alleged to have been given by Mr. Aguilar Alvarez in another arbitration proceeding which, in the Respondent’s view, also involved legal matters to be debated in this arbitration proceeding. 14. On November 16, 2001, Lic. Aguilar Alvarez submitted his resignation as arbitrator in these proceedings, upon which, in a letter of the same date, the ICSID Secretariat served notice of the suspension of the proceedings until the vacancy created by Mr. Aguilar Alvarez’s resignation was filled. 15. On November 20, 2001, the Arbitral Tribunal accepted the resignation of Mr. Aguilar Alvarez. 16. On December 14, 2001, the Respondent served notice of the appointment of Mr. Carlos Bernal Verea in replacement of Mr. Guillermo Aguilar Alvarez. 17. On December 17, 2001, the ICSID Secretariat informed that Mr. Carlos Bernal Verea had accepted his appointment by the Respondent to serve as arbitrator in these proceedings and as from such date deemed the Arbitral Tribunal to have been reconstituted and the arbitration proceedings to have resumed. 18. On January 22, 2002, the Arbitral Tribunal issued a procedural order deciding certain procedural matters raised by the Parties and extended the deadline for the submission of the Respondent’s counter-memorial until February 4, 2002. 19. Following a new request by the Respondent in its written communication of January 31, 2002, on February 1, 2002, the Arbitral Tribunal extended the deadline for the submission of the Respondent’s counter-memorial until February 11, 2002. 20. The Respondent’s counter-memorial was received on February 11, 2002. On February 19, 2002, the Respondent enclosed a list of the facts alleged in the memorial that were recognized by the Respondent in its counter-memorial and those that were not. 21. On March 7, 2002, the Arbitral Tribunal issued Procedural Order No. 1, fixing the week of May 20, 2002 for the Evidentiary Hearing to be held in Washington, D.C., USA, dispensing with the submission of a reply and rejoinder by the Parties, establishing guidelines for holding the hearing and setting June 28, 2002 as the deadline for the Parties to submit their closing statements after the hearing. 22. Following new requests and exchanges between the Parties in the notes of the Respondent and Claimant dated March 13 and 21, 2002, respectively, the Arbitral Tribunal issued its Procedural Order No. 2, which —in addition to specifying certain additional 5 matters in relation to the hearing scheduled for the week of May 20 – provided that, at the end of the hearing on May 24, 2003, the Parties could address the Arbitral Tribunal orally, and extended the deadline for the submission of closing statements until July 15, 2002. 23. On April 29, 2002, the Secretariat of ICSID notified the Parties of the agenda issued by the Arbitral Tribunal for the conduct of the hearing. 24. The hearing was held in Washington, D.C., at the seat of ICSID. It began in the morning of May 20, 2002, and ended on May 24, 2002, after the Parties addressed the Arbitral Tribunal orally. 25. A stenographic transcript of the hearing was made, which lists the following persons as having been present at the hearing: Members of the Arbitral Tribunal 1. Dr. Horacio A. Grigera Naón, President 2. Prof. José Carlos Fernández Rozas 3. Mr. Carlos Bernal Verea Secretary of the Arbitral Tribunal 4. Ms. Gabriela Alvarez Avila Técnicas Medioambientales TECMED S.A. 5. Mr. Juan Carlos Calvo Corbella 6. Ms. Mercedes Fernández 7. Mr. José Daniel Fernández The United Mexican States 8. Mr. Hugo Perezcano Díaz 9. Mr. Luis Alberto González García 10. Ms. Alejandra Treviño Solís 11. Mr. Sergio Ampudia 12. Mr. Carlos García 13. Mr. Rolando García 6 14. Cameron Mowatt, Esq. 15. Stephen Becker, Esq. 16. Sanjay Mullick, Esq. 17. Ms. Jacqueline Paniagua 18. Lars Christianson, Engineer 19 Ms. Ruth Benkley 20. Francisco Maytorena Fontes, Engineer 21. Christopher Thomas, Esq. 26. The hearing was held in accordance with the agenda fixed by the Arbitral Tribunal and within the time limit set for the Parties in Procedural Order No. 2 for the examination of witnesses and experts. 27. The following witnesses and experts were heard at the hearing after the opening statements made by the Claimant and the Respondent, respectively. Offered by the Claimant José Luis Calderón Bartheneuf Javier Polanco Gómez Lavin Enrique Diez Canedo Ruiz José María Zapatero Vaquero Jesús M.
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