October Hearing Transcript Day 2

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[Page 375]

BEFORE THE INTERNATIONAL CENTRE FOR SETTLEMENT OF
INVESTMENT DISPUTES

ICSID Case No. ARB/19/6

- - - - - - - - - - - - - - - - - - - -x
In the Matter of Arbitration Between: :
:
ANGEL SAMUEL SEDA AND OTHERS, :
:
Claimants, :
:
and :
:
REPUBLIC OF COLOMBIA, :
:
Respondent. :
- - - - - - - - - - - - - - - - - - - -x Volume 2

HEARING ON NEW EVIDENCE AND ORAL CLOSING SUBMISSIONS

Tuesday, October 4, 2022

Hotel Le Royal Monceau
Hearing Room: Louis Duhayon,
Andre Junot & Pierre Bermond
37 Avenue Hoche
Paris, France

The Hearing in the above-entitled matter

came on at 9:30 a.m. before:

PROF. DR. KLAUS SACHS
President of the Tribunal

PROF. HUGO PEREZCANO DÍAZ
Co-Arbitrator

DR. CHARLES PONCET
Co-Arbitrator

[Page 376]

ALSO PRESENT:

MS. SARA MARZAL YETANO
Secretary to the Tribunal

Realtime Stenographers:

MR. DAVID A. KASDAN
Registered Merit Reporter (RMR)
Certified Realtime Reporter (CRR)
B&B Reporting/Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of America

MR. LEANDRO IEZZI
MR. DIONISIO RINALDI
D.R. Esteno
Colombres 566
Buenos Aires 1218ABE
Argentina

Interpreters:

MS. ANNA SOPHIA CHAPMAN
MS. AMALIA THALER - de KLEMM
MS. ROXANA DAZIN

[Page 377]

APPEARANCES:

On behalf of the Claimants:

MR. RAHIM MOLOO
MS. ANNE CHAMPION
MS. MARRYUM KAHLOON
MR. BEN HARRIS
MS. NIKA MADYOON
Gibson, Dunn & Crutcher, LLP
200 Park Avenue
New York, New York 10166-0193
United States of America

MR. PEDRO G. SOTO
MS. ANKITA RITWIK
Gibson, Dunn & Crutcher, LLP
1050 Connecticut Ave N.W.
Washington, D.C. 20036
United States of America

MR. ALEJANDRO MEJÍA
MR. JUAN PABLO PANTOJA RUIZ
Cáez Muñoz Mejía Abogados
Cra. 17 ##89-31
Bogotá, Colombia

Party Representatives:

MR. ANGEL SEDA
MR. JUSTIN ENBODY
MR. STEPHEN BOBECK
MR. JUSTIN CARUSO
MR. MONTE ADCOCK
MR. PIERRE AMARIGLIO

[Page 378]

APPEARANCES: (Continued)

On behalf of Respondent:

MS. MARTHA LUCÍA ZAMORA
MS. ANA MARÍA ORDÓÑEZ PUENTES
MR. GIOVANNY VEGA-BARBOSA
MS. ELIZABETH PRADO LÓPEZ
MS. YADIRA CASTILLO MENESES
MR. ANDRES FELIPE REINA ARANGO
MS. MARCELA MARÍA SILVA ZAMBRANO
Agencia Nacional de Defensa
Jurídica del Estado
Carrera 7 No. 75-66 - 2do y 3er piso
Bogotá
Colombia

MR. CARLOS SABOYÁ
Director de Asuntos Jurídicos, Fiscalía
General de la Nación

MS. SANDRA MARTÍNEZ
Asesora de la Dirección de Asuntos
Jurídicos, Fiscalía General de la Nación

MS. SANDRA MONTEZUMA
Asesora en el Despacho del Vicefiscal,
Fiscalía General de la Nación

MR. ALBERTO ACEVEDO QUINTERO
Director del Cuerpo Técnico de
Investigaciones de la Fiscalía General de
la Nación

MS. TATIANA GARCÍA
Directora de Asuntos Internacionales,
Fiscalía General de la Nación

MR. ANDRES FELIPE TINOCO
Asesor en el Despacho del Vicefiscal,
Fiscalía General de la Nación

[Page 379]

APPEARANCES: (Continued)

DR. YAS BANIFATEMI
MS. YAEL RIBCO BORMAN
MS. PILAR ALVAREZ
MS. CAROLINA BARROS
MR. YOUSSEF DAOUD
Gaillard Banifatemi Shelbaya Disputes
22 rue de Londres, 75009 Paris
France

MS. XIMENA HERRERA BERNAL
Gaillard Banifatemi Shelbaya Disputes
165 Fleet Street
London EC4A 2AE
United Kingdom

[Page 380]

APPEARANCES: (Continued)

On behalf of the United States of America:

MS. LISA J. GROSH
Assistant Legal Adviser
MR. ALVARO PERALTA
MR. JOHN DALEY
MS. NICOLE C. THORNTON
MS. JULIA BROWER
MR. MATTHEW HACKELL
MS. MICHELLE KER
Office of the Legal Adviser
United States Department of State
Washington, D.C. 20520
United States of America

MS. CATHERINE (KATE) GIBSON
Office of the U.S. Trade Representative
600 17th Street, N.W.
Washington, D.C. 20006
United States of America

MR. EMMETT WEISS
U.S. Department of Treasury
Washington, D.C.
United States of America

[Page 381]

C O N T E N T S

PAGE

PRELIMINARY MATTERS..................................382

REBUTTAL ARGUMENTS

ON BEHALF OF THE CLAIMANTS:

By Mr. Moloo.......................................382

ON BEHALF OF THE RESPONDENT:

By Ms. Banifatemi..................................464

By Ms. Herrera.....................................523

By Ms. Banifatemi..................................538

PROCEDURAL DISCUSSION................................543

[Page 382]

P R O C E E D I N G S

PRESIDENT SACHS: Good morning, ladies and
gentlemen. Are we ready to proceed, and are there any
housekeeping matters?

I ask you, Mr. Moloo, first.

MR. MOLOO: None. From us. Thank you.

PRESIDENT SACHS: Okay.

MS. BANIFATEMI: Nothing from else,
Mr. President. Thank you.

PRESIDENT SACHS: We will hear Claimants'
rebuttal, 30 minutes.

MR. MOLOO: If I could ask for a moment.

(Pause.)

REBUTTAL ARGUMENT BY COUNSEL FOR CLAIMANTS

MR. MOLOO: Thank you, Mr. President.

It is always most important to make sure
that David is ready in the first instance.

Members of the Tribunal, thank you very much
for your time over the course of the last several
years that we've been before you. I suspect that
today will be the last time I address you in person,
so I wanted to start with that. Thanks.

[Page 383]

And we appreciate the attention you've given
us over the last several years because, as you know,
we think this is a very important case. We do agree
with Respondent on that premise. It's an important
case for many reasons. And it is kind of like what
Ms. Banifatemi said yesterday: It has been two
completely different narratives, two ships passing
through some body of water without seeing each other
in the middle of the night.

And here is the narrative that Colombia has
given to us over the last few weeks and months. If we
look at the first slide. We heard yesterday in the
Closing, in the particular region where the Claimants
have invested that most of the land in Antioquia,
where Medellín is largely in the hands of narcos, and
their blessing, to put it that way, too, if there's
entry into the market--that's another barrier to
entry--you need the blessings of the narcos to do
business in Medellín.

We also heard the only legitimate
expectation, obviously Mr. Seda and his acolytes
should have been that by allegedly investing in

[Page 384]

Colombia, they are investing in one of the worst
regions and the most dangerous regions. That's the
narrative we have from that side. You come into
Medellín, you come into Colombia and it's not just a
sign on the Meritage Lot that says "Do not buy here."
It's a sign at the airport when you get off the plane.

One of the worst regions. You need the
blessings of the narcos to do business here. Do not
buy here. Do not do business here. That's their
narrative. You should know better. And if you do
diligence on the title and you didn't find anything,
too bad so sad because someone at some point in time
you are in Medellín. You should know better. Narcos
are involved everywhere. It's a barrier to entry to
do business here. You've got to get the blessings of
the narcos. That's their narrative.

No amount of diligence is ever enough
because someone at some point in time [Redacted]
[Redacted] and figure out that back in the 1990s
a narco was involved and behind the front buyer and
you didn't figure that out. Sorry. You should have
Google-searched we heard yesterday. You should have

[Page 385]

gone around and asked folks. I don't know what the
standard is. I don't know what the standard is,
according to Colombia.

And what we've told you is a different
narrative. We've told you there is a standard. It's
clear. It's not Google-searching, go to the ends of
the Earth and you can't do business here. It's
actually not that at all, and that's why Colombia
entered into this Treaty.

And if you go to the next slide, you can see
on the Preamble: The Parties expressly said that at
the beginning of the treaty, the first page. The goal
was to attract investment, to move on, to offer
alternatives to the drug-crop production. How do you
do that if you have a big sign on the door that says
"Do not come in," do not do--"do not invest here."

What we heard yesterday, I find it honestly
shocking that the representatives of the Government of
Colombia are telling an international tribunal, that
they are investing in the one of the worst
regions--that's a quote--the most dangerous regions.
That's the legitimate expectation you should have.

[Page 386]

No, that's not. The purpose of this Treaty.

Everybody knew. We don't deny that there is a history
of drug-trafficking in Colombia. What we're saying is
the way forward is to attract investment, to allow
folks to come in and give them some legal security
when they come in so that they can invest and make
some money, yes. It's not a bad thing to make some
money. It's not a casino. You come in, you invest,
you take risk, you make money, and in the process you
develop that economy. That is what the purpose of
these treaties are. Those are the two ships passing
through the night.

And if I were to pick a narrative--you know
which one I'd pick. It's not the one that says "Do
not do business here." It's the one that says "We
have had a troubled past, but we want to invite
investment so we can transition to a better future."
That's the ship that I want to be on, and I hope the
Tribunal is with me.

It's also the ship that the Constitutional
Court of Colombia appears to want to be on because, in
August 2020, the Constitutional Court--it's the

[Page 387]

highest court in the country that resolves
constitutional matters--said this: Before them was
the question of what does it mean to do to be a
good-faith buyer? And they said: "In a scenario such
as this, people in legal commerce would be
obliged"--because this is what was being
proposed--"they'd be obliged not only to study the
titles to the assets, not only the titles to the
assets but also to perform meticulous investigations
into the legal past of the sellers, into the legal
disputes that may have been involved in different
jurisdictions, and into investigations and inquiries
carried out by Prosecutors' office in which they could
be involved and even into opinions about the sellers
in their communicates and on social media." That's
the Google standard. They're saying that's what's
being proposed here. But that doesn't work. That's
what the Court said. They said: "The State has not
determined one aggravating factor of all of this is
that normally the transfer of assets from lawful
sources to third parties in lawful destinations and
are acquired in good faith by persons who have

[Page 388]

profited from illegal activities occurs when the State
has not determined the existence of illegal activities
or the participation of such individuals in these
activities itself."

And if you were to adopt this approach, they
say it makes legal trade difficult or impossible and
also imposes unreasonable and unsustainable burden on
individuals which go far beyond the duties of the
legislator can constitutionally impose on them. As a
matter of Colombian Constitutional Law, they said, we
can't impose this high burden. That would make
commerce impossible. So that's the boat that the
Constitutional Court appears to be on, too.

I see that the signal is lost.

(Pause.)

MR. MOLOO: Gentlemen, you have it in front
of you so I can continue, okay.

And so in response to all of this, what is
the primary defense that we see now over the last few
months from Colombia.

(Comment off microphone.)

MR. MOLOO: It's fine. It's fine. It's

[Page 389]

fine. Thank you.

What we see from Colombia is this Essential
Security Defense, and basically what they're saying [Redacted]
[Redacted]
[Redacted] That's what
they've tried to manufacture. And you hear all of
these very grandiose and if--we heard about theatrics
yesterday, and apparently we're the ones putting on
theatrics but this is what you hear from Colombia.

Oficina de Envigado, it's not any
organization, it's a major armed international
criminal organization historically involved with the
Medellín Cartagena, engaged in bloody armed conflicts
in drug-trafficking and money-laundering. That may be
true, and nobody is denying the past of Colombia.

[Redacted]
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[Page 390]

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[Redacted] But
yes, I don't know.

ARBITRATOR PONCET: You don't think it does,
okay.

MR. MOLOO: But a hundred percent--to answer
your question specifically, we have no idea. I mean
that's what's being alleged. There's no testimony or

[Page 393]

anything like that.

ARBITRATOR PONCET: We can check [Redacted]
[Redacted]
[Redacted]
[Redacted] Am I
right on this?

MR. MOLOO: I would need to go back and look
at the specific reference, but my point more
generally--

ARBITRATOR PONCET: I'm not saying--

MR. MOLOO: Yeah.

ARBITRATOR PONCET: Let me make this very
clear.

MR. MOLOO: Yes.

ARBITRATOR PONCET: [Redacted]
[Redacted]
[Redacted]
[Redacted]

MR. MOLOO: Yes.

ARBITRATOR PONCET: I just want to clarify
what the factual position is.

[Redacted]

[Page 394]

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PRESIDENT SACHS: Okay. Please, proceed.

MR. MOLOO: But, of course, we didn't have

[Page 399]

the opportunity to do this earlier, because these
arguments are all coming up post-Hearing; right? So,
it is what it is, but if the Tribunal is interested,
we are more than happy to put in that evidence that
supports what I just told you, Mr. President.

[Redacted]
[Redacted] And then,
we have the Essential Security Provision that they're
relying upon: "Nothing in this Agreement shall be
construed to preclude a party from applying measures
that it considers necessary for protection of its own
Essential Security interests."

And then they say, but you have to look at
the footnote. And the footnote says the Tribunal or
panel hearing the matter shall find the exception
applies, if it's invoked. But there's two questions
here. The first is: Does the Essential Security
Exception apply? And they're saying that's a
self-judging question. I actually don't care as much
about that question.

The second question is--but I'm going to
come to it. I will come on to it. For present

[Page 400]

purposes, the second question is: If it applies, what
does that mean? What does that mean if it applies?

And the footnote doesn't tell you what
it--what happens if it applies, but what it does not
say--it does not say if the exception applies, a
tribunal shall not have jurisdiction or you don't get
access to dispute resolution. It doesn't say that at
all. All--it actually says it confirms the opposite.
The Tribunal shall find that the exception applies.

But the question you have to ask yourself is
if it applies, then what? And that's the question
that the Eco Oro Tribunal answered.

But before I get to that, I do want to point
to this next slide. They say there's a subsequent
agreement, but--and they say it's non-justiciable.

What is non-justiciable? What is non-justiciable,
because they put the red--we added the blue box, by
the way. The red box is what they've added. They're
saying that Colombia and the United States agree that
this question is non-justiciable. But if you look at
what is non--what comes just before that, Colombia
says the present dispute is non-justiciable. That's

[Page 401]

not what the United States says. They say the
indication is non-justiciable. That's the first
question. Colombia is focused on the second question.
So, they do not agree about what is non-justiciable.

Colombia would--wants to you adopt the
position that this dispute is non-justiciable. You
don't have the right to decide this matter. You have
no jurisdiction, we're out if we invoke this. The
United States is saying the invocation of this
exception is non-justiciable. Those are different
things. And if you look at--on the next slide, they
referred to the U.S. delegation round, look at what
the U.S. says. There is a general concern that the
general exception should not be abused. They should
not be abused. This is a strong exception in cases of
matters that have to be dealt with national security.

The invocation of that exception is not subject to
court review.

But the question is: Once you invoke it,
then what? And that's where Eco Oro said, well, the
"then what" is you get to adopt your measures, but it
does not mean you're exempt from the compensation

[Page 402]

obligation. So, they say, but Eco Oro was not
self-judging, but that doesn't matter because we're in
the second question now; right? And the Tribunal at
Eco Oro was saying, okay, let's say it applies. Let's
say this exception applies, but then what? If it
applies, then what? And what they're saying in that
case, very similar type of language for an exception
provision, and it doesn't really matter what the
exception is, whether it's Essential Security or
environment, but what happens then? They're saying it
does not escape the--it just means that you can keep
your measure whether it's to protect the environment
or the Essential Security or the health of your
population. Whatever it is, you can keep that Measure
in place. But if you've breached the Treaty, you
still have to compensate. So, you don't get
restitution, you don't get your property back, but you
still have to compensate.

ARBITRATOR PONCET: So, to compensate--the
duty to compensate, in that reading of 22.2, would not
come from the Measure itself but from the fact that
hypothetically it would have been applied in a

[Page 403]

discriminatory manner, it would not be consistent with
fair and equitable treatment; is that what you're
saying?

MR. MOLOO: That's correct.

ARBITRATOR PONCET: How about indirect
expropriation?

MR. MOLOO: Yeah, likewise.

ARBITRATOR PONCET: So, if the Measure is
not subject to review, but it can constitute indirect
expropriation, doesn't that make the Measure
effectively subject to review?

MR. MOLOO: Because an indirect
expropriation is only unlawful if it doesn't meet the
four criteria, one of them being a compensation
requirement.

For unlawful expropriation, where there is
no compensation paid; right? The remedy under
customary international law, under Chorzów Factory, is
restitution. You get your property back. If there's
an unlawful expropriation that I was not compensated
for, what happens under customary international law?
The default is I get my property back. If I got paid

[Page 404]

compensation, it's not unlawful. If I got paid
fair-market-value compensation, I have no claim before
you gentlemen.

ARBITRATOR PONCET: But if the invocation of
the exception, which is not subject to judicial review
even by itself, if that invocation results in the
Measure being excluded, carved out of the remedies of
the Treaty, normally afforded by the Treaty, how is it
that the Treaty sort of comes back by the back door
through--

MR. MOLOO: Yeah, let me clarify. It's a
good question.

ARBITRATOR PONCET: Please do, because--

MR. MOLOO: Yeah, it's not all of the
remedies. It's one very specific remedy. If we go to
Article 22.2, which is on Slide 11, it specifically
says this--nothing in this Agreement shall be
construed to preclude a party from applying the
Measures. That's it, so it doesn't exclude the
compensation remedy. It just says you can apply the
Measure, and so what Eco Oro said was--they said, what
does that mean? So. Let's look at the Eco Oro

[Page 405]

Decision.

ARBITRATOR PONCET: So, the Measure, you can
apply them anyway, then if you apply them even without
22.2, the point is if you apply measures that are
inconsistent with the Treaty, you end up being
sanctioned under the Treaty, and you have to pay
compensation.

MR. MOLOO: You have to pay compensation but
you don't have to withdraw the Measure.

So, what's important--

ARBITRATOR PONCET: But you don't anyway, do
you? I mean, if a State expropriates unlawfully, it
doesn't have to give the property back. It should,
but if it doesn't, it's going to pay up.

MR. MOLOO: Well, as a matter of
customary--under the Articles of State Responsibility,
generally, there are some exceptions for restitution;
right? One of them being if it's impossible to give
the property back. But the primary remedy is
restitution.

But I think it's important to remember that
this Article 22 does not only apply to investment; it

[Page 406]

applies to trade; right?

ARBITRATOR PONCET: Right.

MR. MOLOO: Which--and the remedy in trade
context as well is withdrawal of the Measure; right?
If I have an embargo on certain--the importation of
products; right? The remedy in the trade context is I
have to lift my embargo. What this is saying is, no,
you don't have to lift the embargo. There may be
other remedies involved--available, but the remedy of
withdrawal of the Measure, whether it's under the
investment-treaty context or under the trade context,
is not available, and that's exactly what the Eco Oro
Tribunal said.

They said Colombia also provided no
justification as to why it is necessary for the
protection of the environment--that's the measure--the
purpose there--not to offer compensation to an
investor for any loss suffered as a result of the
Measures taken by Colombia to protect the environment,
nor explained how such a construction would support
the protection of investment in addition to the
protection of the environment.

[Page 407]

So, they were looking at, okay, how do
we--you allow, in that case, the State to protect the
environment, here it's Essential Security Interest,
but also achieve the objective of protecting
investments? And they're saying you allow for the
compensation obligation.

And they specifically said in that case,
accordingly, the Tribunal does not find that, in that
case, Article 2201(3), it's a similar FTA situation
there--

ARBITRATOR PONCET: At the risk of being
hand drawn and quartered by environmentalists, do you,
and do we have to draw a difference between protecting
the environment and Essential Security Interest, or is
it the same thing? Does it boil down to the same
thing?

MR. MOLOO: In the context of the way these
treaties are structured, it's essentially the same
thing because what States basically did was they
carved out--they said there are certain things that
are really important to us, and if they put
environment--they have, you can see, it says for the

[Page 408]

protection of human, animal, and plant health, parties
understand to include environmental measures necessary
to protect human, animal, or plant life and health, to
ensure compliance with their laws. These were
all--there was a list of things, for the conservation
of living or non-living inexhaustible natural
resources. They can put whatever they want in the
exceptions.

And in the trade context, you know, in GATT,
Article 20, it's similar; right? They've got a list
of exceptions.

So, this is a thing that one finds,
Exception Clauses in treaties.

PRESIDENT SACHS: May I ask, when you
compare the Canada-Colombia FTA, in the introductory
sentence, there's a "subject to" half sentence, which
is not in Article 22 of our Treaty. They may be
subject to the requirement that such measures are not
applied in a manner that constitute arbitrary or
unjustified discrimination between investments or
between investors.

So, what does it mean for the interpretation

[Page 409]

of Article 22 that there is not such a "subject to"
language?

MR. MOLOO: That, in my reading of the Eco
Oro Decision, does not factor into the Tribunal's
Decision because they're--they--what the first part of
that sentence says is, "are not applied in a manner
that is constituted arbitrary or unjustified
discrimination"; right? So, it's just talking about
those two things.

But in the Eco Oro Decision, they're
not--they don't just say, okay, we're just going to
assess whether or not your conduct was arbitrary or
unjustifiable discrimination. They talk about
breaches of FET, they talk about breaches of the other
provisions of the Treaty. So, they're not just saying
you're limited now to the question of arbitrary or
unjustified discrimination, that's not what they did.
So, if that had a bearing on their analysis, then
presumably they would have said, okay, you're then
limited to whatever this Clause says, but they said,
no, no. What this is saying is, you can adopt your
measure, but it doesn't exempt you for the

[Page 410]

compensation obligation with respect to breaches of
the Treaty.

PRESIDENT SACHS: Okay.

(Pause.)

ARBITRATOR PEREZCANO: If I may?

PRESIDENT SACHS: Please.

ARBITRATOR PEREZCANO: Now, Article 22
is--sorry. I had it here, and I just--so,
Article--actually, the whole of Chapter 22 are
exceptions, and you're saying that what the exceptions
mean is that if they applied, then the country, the
State, gets to keep the Measures no more. So, what
are the "exceptions to," then? Why are they
exceptions? Exceptions to what?

I mean, I understand, sort of, your
argument--and this is my understanding; you may
correct me if I'm wrong--when you look at the
expropriation provision, the fact that an
expropriation is done, as it must be, for a public
purpose, and it can be, you know, the greatest
purpose. The Santa Elena Case comes to mind, was to
protect, if I recall correctly, turtles. So,

[Page 411]

that's--you know, it's a perfectly valid public
purpose, and it's good for the environment, and it's
good for the turtle, and the turtle is in
conservation.

So, the fact that that is the object of the
Measure doesn't exclude compensation if it's an
expropriation, even if it is to protect the turtles,
then that requires compensation.

So, I understand, you know, sort of, in that
context that expropriation would be required, but if
it is an exception to the Treaty, you're saying that
in the trade context, the--it's just--you know, the
remedy is you get to keep the Measure. I would
disagree with that characterization. If it falls
under the exception, then there is no wrongfulness in
terms of the ILC Articles. If there is no--if the
exception applies, although there might be a prima
facie violation, it is covered by the exception, so
there is no international unlawfulness. And if there
is no international unlawfulness, why--what would be
compensated? That's what I don't understand.

Now, just to take it back to the trade

[Page 412]

context, what happens in the trade context ultimately,
because there is no international police, a country
always gets to keep the Measure if it wants to--not
without consequences, but if it wants to.

MR. MOLOO: Counter-measures. Right.

ARBITRATOR PEREZCANO: And there are several
countries that have gone down that road, and then the
remedy is counter-measures.

MR. MOLOO: Correct.

ARBITRATOR PEREZCANO: Whether regulated
counter-measures has, you know, suspension of
concessions or other obligations or counter-measures
under the ILC Articles. That's a remedy. If it falls
under the exception, it's not that the State gets to
keep the Measures. There is no basis for
counter-measures, for the other remedy in case the
State, a sovereign, decides I'm going to keep the
Measures in any event.

So, again, if it falls under the
exception--if it doesn't exclude compensation, then
what's the purpose of the exception to begin with?

MR. MOLOO: So, I understand your question,

[Page 413]

and I think it's really important to look at the
treaty language because the treaty language does not
preclude a wrongful action. It does not say that if
this exception applies, there is no breach of the
Treaty.

There are treaties that exclude the
Tribunal's ability to decide a matter generally, like
there are other treaties that have language that
reflect more along the lines of what you're
suggesting, Mr. Perezcano, but this Treaty does not do
that. All this Treaty says is that if the exception
applies, it means that it doesn't preclude the Party
from adopting the Measure. So, I would say in the
trade context--

ARBITRATOR PEREZCANO: But, again, what's it
an exception to?

MR. MOLOO: To--so, let me use your example
of the trade context. My suggestion--my
interpretation would be that the State does--I accept
that sometimes States don't withdraw their measure,
but that is the primary remedy. This is just--this is
saying you don't have to. You don't have to withdraw

[Page 414]

your measure. It's not--when the WTO--when a tribunal
says, a trade Tribunal says you must withdraw your
measure, that is what they're being ordered to do.
Here, that cannot be the remedy that a tribunal
orders.

ARBITRATOR PEREZCANO: The remedy to one--if
the exception applies, there's no remedy--

MR. MOLOO: The exception does not apply to
the breach. It applies to the remedy of applying the
Measure.

ARBITRATOR PEREZCANO: Can you--

MR. MOLOO: It doesn't say "breach." It
says to preclude a party from applying the Measure.

So, this is precisely the language--

ARBITRATOR PEREZCANO: Well, I don't
think--I mean, I haven't looked recently at the whole
of Chapter 22, but I don't think that any of those
Articles say "in case of breach, then the exception
applies." That would be an odd formulation for
exceptions. I don't think we'll find--I haven't seen
any treaty where that language would come up. I think
exceptions are drafted generally as they are here in

[Page 415]

Chapter 22.

ARBITRATOR PONCET: That's not what it says.

MR. MOLOO: I think--they're--I mean, you're right that exceptions often appear this way, and in--so in the trade context, for example, I don't think it would be right to say that a State--so, if a State adopts a measure to protect in Santa Elena--it was leatherback--versus Costa Rica, it was leatherback turtles, I think it was a property development on the beach--and if they're going to protect leatherback turtles on the beach or in the trade context, if they, you know, prevent the--you know, they say, we're not going to import--we're going to apply tariffs--right?--to a particular product. They're allowed to do that if an exception applies. But does that mean that the foreign State has no remedy, that they--that their goods are now subject to a tariff, but they have to let in the other country's products tariff-free? Is that what it means? That to me would be undermining the purpose of the trade agreement; right?

So, I think it would--in the trade context,

[Page 416]

what I would say what the answer would be is, okay, you can keep your tariff because the remedy cannot be that you have to withdraw your tariff but that doesn't mean I don't get to put in a counter-measure. I get to put up a tariff, too.

So, what Eco Oro is saying is you have to look at the purpose from the perspective of what is the exception trying to do? It is trying to protect--it is allowing the State to apply its exception, whether it's to protect leatherback turtles or an Essential Security Interests, or the public health--right?--but you also have to protect investors' investments. That's another goal of the Treaty.

And as the United States said, it was--they wanted to make sure that this exception didn't undermine the--you know, basically a gaping loophole for the investor protections. That every time a case comes up they just say, oh, we put our hands up, we say this exception applies. We're out, basically, "get out of jail free" card; right? To avoid that, tribunals like Eco Oro have said, well fine, you can

[Page 417]

adopt your measure, you can--in the trade context--you can put up your tariffs, but that doesn't mean that the other side doesn't have a remedy. That remedy just can't be--the remedy ordered just can't be "withdraw your measure."

So, that's one of our four submissions on Essential Security and I do encourage the Tribunal to read the Eco Oro Decision, because it was under the Canada-Colombia FTA, so also involving Colombia, which has--it was an Article 22--there was an exceptions provision like this. There's a debate about whether this one was self-judging and that one is not, but I don't think that affects this analysis that we're undertaking right now, which is what is the consequence of it applying, whether self-judging or not. And the Tribunal went through, you know, and considered Canada's Non-Disputing Party submissions. Canada came in and they said, this is what it means, and much like the U.S. has done here, and the Eco Oro Tribunal went through that in some detail, and I think it's a helpful analysis. So, I do encourage the Tribunal to read the Eco Oro Decision. I have no

[Page 418]

doubt they will.

But I think another important point here, with respect to the Essential Security Provision, is the timing of when it is that the Essential Security Interest must come up. Because from the language of the provision itself, it is clear that the Essential Security Interest to be protected must be known at the time that the Measure is adopted. You can't say, I'm adopting this Measure. I am going to take your property from the beach--as in Santa Elena and Costa Rica--I'm not going to let you develop your tourist development in the beach. When there are no--there's no concern about leatherback turtles on the beach. And then, 10 years later, say, oh, now there are leatherback turtles, so what I did 10 years ago, I'm going to rely on something that happens 10 years later to justify an action I took 10 years ago. You can't do that. The Essential Security Interest must be known and must be the reason why you adopted the Measure in the first place.

ARBITRATOR PONCET: If I adopt as a State, I adopt an Asset Forfeiture Law that aims at assisting

[Page 419]

me in the fight against organized crime, and particularly a type of organized crime that puts into a question the very existence of my State, isn't that--isn't any measure adopted in the context of this asset forfeiture, by definition, something that relates to an Essential Security Interest, and do I really have to invoke it before I take the Measure or even afterwards, actually?

MR. MOLOO: That's not Colombia's case. Colombia's case is, they did not have--they didn't know about their Essential Security purpose until the Rejoinder, and that's why they brought it up late.

If you look at our Opening slides--I don't know if you--

ARBITRATOR PONCET: Yeah, I've got them.

MR. MOLOO: --have them, but this might be of assistance.

ARBITRATOR PONCET: Which one?

MR. MOLOO: It's the--

PRESIDENT SACHS: I think we are aware of the document.

MR. MOLOO: Yeah, it's the--yes, we can get

[Page 420]

it for you, the specific reference, but basically they've said that they didn't have this Essential Security purpose and they didn't know about it up until the--before the Rejoinder. So, it is not--their case is not that any application of the Asset Forfeiture Law is--you know, would implicate the Essential Security Provision.

ARBITRATOR PONCET: I'm aware of that, but isn't that a possible line of approach to the problem?

MR. MOLOO: If it was legitimate--I mean, we'll get on to the good-faith application, but I don't think they can just wave their hand and say this is for Essential Security, and so, Tribunal, you have no more job here; right? Because it would just not be a good-faith application of the provision, and I'll come on to that too, but I don't think they can just wave their hand up in the air and say, we show up to this Tribunal, we're invoking this exception, you're out.

Because then, what's the point of the Treaty? We might as well rip up the Treaty, because every time they get sued, they'll show up and say I'm

[Page 421]

out, Essential Security. That's what will happen.

And if you look at the Nicaragua versus U.S. Case, that case involved a treaty that had a non-precluded measures clause, and we can see it--oh--you can see--here's the Slide 234 of the Opening in Colombia's Post-Hearing Brief. It has evoked the Essential Security Exception in good faith and that it was not in a position to invoke it prior to the Rejoinder. The Respondent did not and could not raise the exception at the inception of the proceedings. [Redacted]

[Redacted]

They're not basing it on anything that we do under the Asset Forfeiture Law is--implicates the Essential Security Provision. That's not their case.

ARBITRATOR PONCET: Okay.

MR. MOLOO: But I think even then they can't just say, oh, because this is done under the Essential Security, the Asset Forfeiture Law, you know, we're home free; right? So, I think that is--is a critical point. If you look at the Nicaragua v. U.S. Case, they specifically dealt with this question of timing,

[Page 422]

at what point in time do I need to invoke the Essential Security? Do I need to know my Essential Security concern? And there they specifically said, it must have been at the time the Measure is taken.

That's what the ICJ says in the Nicaragua v. U.S. case, which makes sense.

If you're going to apply an Essential Security exception, if you're going to take a measure to protect your Essential Security, if I'm going to take a measure to protect my society, I have to know that I'm taking that measure for that purpose. I can't take a measure and then 10 years later try and post hoc justify it. That's not what the Essential Security Provision is there for.

And it does relate to the good-faith invocation of this provision. And if you go to the next slide, there was a question that was put to counsel for Respondent: What is their position? Can you just invoke it? I think Dr. Pérez--Dr. Poncet, you asked counsel for Colombia yesterday that question. Can I just invoke it at any point in time?

And I wasn't quite sure what the answer was yesterday,

[Page 423]

but I will tell you what the answer was in Colombia's Rejoinder, and it's up here--sorry, we can go back to our Slide 15. It is the Respondent's submission that the Tribunal's scope for review of Colombia's invocation of the exception is strictly circumscribed to an examination of whether the exception of Essential Security has been invoked in good faith.

So, they accepted in their Rejoinder that this Tribunal has the authority, the jurisdiction, to assess whether or not it was invoked in good faith. That is accepted in their Rejoinder.

And both Parties cite to the Russia Measures concerning traffic and transit case with respect to what this standard is, and there's two aspects to that standard. The first is the definition of the Essential Security Interest in and of itself. And I would say if they could not define the Essential Security Interest at the time that they invoked the Measure, that is not a good faith indication or defining of the Essential Security Interest.

But the second is the Measure at issue must meet a minimum requirement of plausibility in relation

[Page 424]

to the preferred Essential Security Interest. And so it must be connected, there must be a connection between the Essential Security Interest that's being invoked and the Measure that's being adopted. And what we would submit is if you're going after good-faith third parties, which the Asset Forfeiture Law itself protects, then by taking a property from a good-faith third party that is not a good-faith invocation of an Essential Security Provision.

So, it's twofold. There's the question of timing. At the time that I took the Measure, did I know, was I doing it for that reason? And they themselves have said no, we didn't know at that time. We didn't know until the Rejoinder.

And the second is: Are the two connected? Was this Essential Security Interest met by invoking the Measure? And we would submit if you are taking a property or an asset or an investment of a third-party good-faith purchaser, which the law that you're invoking itself protects, then that is not a good-faith indication of the Essential Security protection, and that is something that Colombia and us

[Page 425]

accept you are able to look at.

You know, I did say at the beginning of yesterday I wasn't sure what we were going to hear yesterday afternoon, whether we might hear a new objection and sure enough, we did. We heard an illegality objection for the first time yesterday. Closing Submissions, here's the slide, the first slide, ICSID Article Rule 41(2). That should set off alarm bells. Because when was the last time we saw that? The last time we saw that was when we saw their late admission of the Essential Security defense. And it says the Tribunal may on its own initiative consider, at any stage. Apparently after the Merits Hearing, at the Closing Submissions you can now consider this brand new defense of what? Of illegality, that the investment has been made illegally. They were telling you throughout the submissions that there's been no wrongdoing by the Claimants. That's a direct quote from them. You saw that yesterday. We put up that quote. They said Claimants have done nothing wrong here. It's not the Claimants' wrongdoing; we're going after the asset.

[Page 426]

But now they're saying that the Investment was made illegally.

Well, I don't think I need to say much more than to say that is clearly out of time, and if the Tribunal is going to consider it, we would reserve our rights. But, you know, if you open one door, and if you let them go through that door, the Respondent is going to look for another door. And we're going to be walking through doors forever. We're never going to finish this proceeding because every time we show up before you gentlemen or have another pleading, there's a new argument, a new defense.

Now, Members of the Tribunal, I know there's been a lot of questions, I want to be helpful to you, but I also am cognizant of time. So, now is an appropriate--I don't think we need to take a break right now, but I just want to make sure from a time perspective how you want us to proceed.

SECRETARY MARZAL: Well, you have five minutes-and-a-half remaining, and the Tribunal has spent 25 minutes in questions.

MR. MOLOO: I know we have separate time

[Page 427]

reserved this afternoon for questions, but I'm in your hands, Ms. Banifatemi. I want to be helpful to the Tribunal. If they're going to continue to interject with questions I'm happy to continuing answering questions, and likewise with you this afternoon.

PRESIDENT SACHS: Why don't you go through the remaining part of your rebuttal, and we will then have the break.

MR. MOLOO: Okay.

MS. BANIFATEMI: That's perfect, Mr. President, and I note that the Tribunal had reserved one-and-a-half hours, so whether or not the Tribunal asks these questions now or later, that doesn't make much of a difference. So, we're completely in your hands.

MR. MOLOO: Thank you. And obviously we will proceed in the same way with you. Thank you, Ms. Banifatemi.

If there are no more questions on Essential Security for the moment, and I'm happy to take any, I will move to discrimination.

Now, we've talked obviously a lot about

[Page 428]

discrimination in this case; and, in my mind, I have not seen a clearer case--you know, one of the key questions in discrimination cases oftentimes are there like circumstances, are there similar cases. It is almost impossible in my mind to view a case where that is--cannot be in question because you literally have a Sister Property with the same alleged deficiencies in the history of title, and the two are treated differently. And one of the questions that was asked by President Sachs yesterday was--and I think this is an important point, so I wanted to clarify it--is--let me take a step back. We talked about these two studies that they had, that Ms. Ardila Polo had when she was making her assessment. And we said when she made her assessment she had one on the Sister Property and one on the Meritage, and she took action against the Meritage and not the Sister Property.

And one of the questions, Mr. President, you asked, which was a good question, did Ms. Ardila already have in hand the legal opinions to the title search at the time. And then the question was, at the time of the Precautionary Measures. And President

[Page 429]

Sachs you said yes. And Ms. Herrera said no, she did not have them at that time.

But on cross-examination she answered this very question, but she answered it differently.

Ms. Champion said, you had these two title studies, including the title studies performed by the two law firms, Otero & Palacio, that's the Meritage one, and Gúzman Monroy. Sorry, Ms. Ardila said that she had those two. She says I have the Otero & Palacio and the Gúzman Monroy. And Ms. Champion asked to clarify, at what point in time did you have these studies? So you had the Otero & Palacio title study before you imposed Precautionary Measures? And she said: "That's right."

So, she was talking about these two title studies, having them before she imposed Precautionary Measures.

So, the answer to your question, according to Ms. Ardila Polo, did she have these two title studies before she imposed Precautionary Measures? The answer is yes, she did.

PRESIDENT SACHS: That could also be an

[Page 430]

element of relevance in regard of Article 118 concerning the initial phase where it says in Number 5 that the authority must search for elements of good faith. So, if they had in hand this opinion that would show that the Investor made inquiries as to the titles?

MR. MOLOO: She was not--she didn't do this because she asked for them.

PRESIDENT SACHS: Well, she had this in hand. This was the point.

MR. MOLOO: We can give you the reference, but it was handed to her in the file, so she had a file that was--that had certain information. But there is no evidence in the record at all that she actually assessed good-faith status at all. She had them at the time, but there is no evidence in the record that she actually made--did anything with them, assessed whether or not there was good-faith status of anybody.

But what she did do, is having these two in hand, she treated one property differently than the other is the point that I'm making. But I think it is

[Page 431]

important to note that just because she was handed something--her obligation is not just to have it in her hand; it's to do something with it. And all the evidence in the record suggests that she did not make an assessment of good faith.

Because, by the way, if she had made an assessment of good faith, then she made a different determination with respect to the Sister Lot, and a different determination with respect to the Meritage. That is the definition of discrimination.

So, if she did do an assessment, the question, that one, that begs is, why did she come to a different conclusion then, with respect to the Sister Property and the Meritage? So, either she didn't do the assessment or she did the assessment, and both of them said clean title, and she gave one the benefit of that clean title and the other one not. So, whether she did it or not, I think there is a breach of the Treaty.

ARBITRATOR PONCET: And your explanation for that differential treatment is corruption?

MR. MOLOO: Well, discriminatory intent is

[Page 432]

not necessary to determine. This Tribunal need not speculate as to why. You don't need to find that there was corruption in order to find that there was discrimination.

ARBITRATOR PONCET: That's a very serious allegation; of course?

MR. MOLOO: And we take it very seriously when we make the allegation, absolutely, but for purposes of this Tribunal making a determination, to find that there was discrimination, one need not find that there was corruption. You just need to find that there was differential treatment of similar cases. And there was no rational justification for that.

If you're looking for an explanation, which would be an independent breach of the FET standard, we've given you what we think that explanation is, but one need not make a determination with respect to corruption to find that there was discriminatory treatment.

ARBITRATOR PONCET: But you are saying that the--I will reserve that question for later. I don't want to keep interrupting.

[Page 433]

MR. MOLOO: I mean, we are saying that the only rational explanation for it is that there was a mal intent, yes. That is what the evidence points to, based on the timeline, but it is not necessary to look into the intention; why did they treat them differently? It doesn't matter. The fact that you treat similar cases differently and there is no justified reasonable explanation as to why is the test, and the Parties agree on that test.

And what is their explanation for why there might have been this differential treatment? [Redacted]

[Redacted]

[Page 434]

[Redacted]

[Redacted] So, there is no rational explanation for why you treat these differently.

And then we say well, why do you treat all the other Iván López properties differently? And they say, well, because you have to look after 1994 because he probably started drug-dealing around 1994, and

[Page 435]

that's the date that we look at. So, how-and so they look at--they give a couple of examples, but how does that explain that, in 2007--2007--look at this Transaction. Report of the Judicial Police from May 2016. Look who owns this property. Iván López Vanegas is on the title. By the way, remember, on the Meritage Property, Iván López's name was never on the title of that property. It was owned through a front-buyer, an alleged front-buyer, a company called "Sierralta." This is directly owned by Iván López.

And in 2007, while he is in jail in the United States, if you would have done a Google search, that's what you would have found. The property gets transferred to a fiduciary that's owned by the State in 2007, and that property was transferred to a fiduciary, because now you know the structure, this is the way it's done in Colombia, because it was going to be developed for condominiums. That's on the next slide. You can see it was for the purposes of the establishment of condominiums, it was a development.

ARBITRATOR PONCET: And that's not in the framework of any Asset Forfeitures; right? Is it?

[Page 436]

MR. MOLOO: There's no evidence in the record at all--

ARBITRATOR PONCET: You could see it's done in other countries, Italy is the first example that comes to mind, of course, where assets are forfeited in the context of drug-trafficking, and I will then turn over to fiduciary company's management. This is not what we're talking about here, huh?

MR. MOLOO: No, absolutely. It's for the purposes of establishing condominiums, as you can see on the next slide. So, it is not done in the context of an Asset Forfeiture, correct.

And if you look on the next slide, you can see a number of other transactions. These were the 47 that were sent to--on the list, the 47 that were sent to Ardila Polo that had she looked at them--she was looking at 1994 is the date. [Redacted]

[Redacted]

[Page 437]

[Redacted]

[Redacted] She went after the Meritage where Iván López was not directly on title, and it was an acquisition in 1994.

Why did she not go after any of these other properties? The 1994 cut-off date, which is completely arbitrary, by the way, there is no rational explanation for that 1994 date except the fact that that's when the Meritage Property was acquired by Sierralta. Why didn't she go after any of these other ones? There is no rational explanation.

So, vis-à-vis all of these comparator groups, there is rampant discrimination, [Redacted]

[Redacted]

But another thing that this tells you is something very important: If fiduciaries and banks are not catching Iván López, then clearly diligent

[Page 438]

folks in similarly--in fact, who have more onerous requirements are not finding anything, when they're searching for Iván López directly.

And you've seen the Experts have talked about this "common error" doctrine. That is the definition of a common error. If everybody is making the same mistakes, fiduciaries, banks, everybody, nobody's finding anything when they're doing whatever you have to do, Google search or whatever it is that you have to do.

PRESIDENT SACHS: I'm sorry, Mr. Moloo, we have to stick to our timetable in some way. Strictly speaking, your time is over, considering even the questions of the Tribunal, so make a short note to go through the rest.

MR. MOLOO: I will go through them relatively quickly, Mr. President. Thank you.

Let me turn to FET, the fair-and-equitable-treatment standard. What we have for you here is, in this section, every provision that we could find in the Asset Forfeiture Law that refers to good-faith status, so for your reference it's

[Page 439]

there.

The first provision deals--and they're not in order, but they're all there--deals with Affected Persons. These are the folks who have a vested interest. They are the ones whose good faith status matters. That's Article 30.

We asked the question: What is the relevant date at which good faith must be assessed. And Dr. Medellín and Dr. Martínez have both answered that question as saying October 2013.

And why do they say October 2013? I think that's an important question. It's because October 17th is when this pre-sales Trust Agreement was signed. And on Slide 27, you can see that Agreement, and that Agreement makes it clear, sorry, it's the Administration and Payment Trust. Both of these agreements were signed on that date. And the Administration and Payment Trust makes it clear that, as of that date, the Contract is irrevocable, and the Trustor may only modify it or change the use of the assets in Trust with prior written approval of the purchasing beneficiaries. The purchasing

[Page 440]

beneficiaries are the Unit Buyers.

So that matters; right? Because as of that date, you're now selling units to Unit Buyers, so as of that date it's irrevocable. You can't, it's the point of no return, so that makes sense. Your good faith should be assessed as of that date because as of that point, you can't give it back. You're now selling to Unit Buyers. So, if you discover something at some later point in time, you're stuck, you're stuck. You now have obligations.

So, that's why Dr. Medellín and Dr. Martínez say that's the date because that's the point at which you have vested acquired rights, and it's the point of no return. It's an irrevocable obligations at that point.

Article 3, which is at the very beginning of the Asset Forfeiture Law, makes it crystal-clear, Asset Forfeiture shall have as its limit--its limit--the right to ownership legally obtained in good faith without fault. So, they say, you know, it doesn't go after people. It goes after the asset. We agree. It goes after the asset. But there is a limit

[Page 441]

to going after that asset. You can only go after the asset insofar as it does not affect the rights of good-faith third parties. So, it is an act, if you're going after the asset, yes. But you can't go after the asset when it affects the right of an affected party who is a good-faith third party.

There is a presumption of good faith, that's Article 7.

Whose burden of proof is it? It's the Attorney General's burden of proof to assess good faith. And they say, oh, but this is their burden of proof in court. But it's like any Prosecutor's burden of proof; right? You don't bring the action to court unless you feel like you can meet the burden of proof that's on you--right?--the standard of proof. And so, the burden of proof is on the Attorney General. That's not in dispute.

At what point in time in this proceeding do they have to assess good faith? This is Article 118(5) that, President Sachs, you were asking about. They must search for and collect--they must search for and collect the proof. They didn't search for and

[Page 442]

collect the proof. They had these title studies and treated two differently, but they didn't go and search for any--they had nothing else, that we know of. They didn't ask certainly Newport about any of the steps that they had taken during the initial stage, and what is that initial stage? It's the point up to the Provisional Determination. That's the Determination of Claim, which happened January 25th. That's usually the initial stage.

But there is an exception, and that is when Precautionary Measures are taken. Precautionary Measures may be taken urgently during the initial stage, but even then Article 87 makes case, makes clear that when you're taking early Precautionary Measures, you must still do so. In any case, the rights of third parties acting in good faith without fault must be safeguarded.

And Dr. Medellín explains this. He says the imposition of Precautionary Measures requires the greatest care, given that their duration, depending upon the duration of the Asset Forfeiture Proceeding might extend over time generating possible harm to

[Page 443]

persons who are able to demonstrate their status as good-faith third parties without fault. If we end up getting stuck in an Asset Forfeiture Proceeding that's six years long, that's what he's talking about. You have to assess their good faith and protect their interests because otherwise you get stuck in this proceeding, and that's it. You're stuck.

ARBITRATOR PONCET: Sorry to interrupt again, but it's not fully clear to me what happened in this case at the expiration of the six-month period which is now--which is quoted on your--of your Article 89, which is quoted in your Slide No. 32.

MR. MOLOO: They issued--

ARBITRATOR PONCET: Go ahead.

MR. MOLOO: They issued a Determination of Claim saying that Asset Forfeiture should take place. That's what the Attorney General's Office decided.

ARBITRATOR PONCET: And then?

MR. MOLOO: And then it went into a court process where it is currently stuck.

ARBITRATOR PONCET: So other than the judicial determination that the Measure was, in

[Page 444]

principle, justified, there is nothing, is what you're saying?

MR. MOLOO: It was a prosecutorial decision.

ARBITRATOR PONCET: Okay.

MR. MOLOO: That Determination of Claim is made by the Attorney General's Office. The Determination of Claim was filed by Ardila Polo. It was an administrative act. And then the next step is the Requerimiento, which was--Ardila Polo was unceremoniously fired or moved or whatever, between the Determination of Claim and the Requerimiento.

They were documents that were issued about one month apart. Dr. Caro was asked about this on cross-examination, he basically copy-pasted the Determination of Claim and adopted it as the Requerimiento. He said, out of 120 cases--you may remember this from the cross-examination.

ARBITRATOR PONCET: Yeah, yeah.

MR. MOLOO: And as soon as he got hired, he basically said, oh, I just ignored my 120 cases and for one month straight I did nothing but do this Requerimiento. That's what he said in

[Page 445]

cross-examination.

ARBITRATOR PONCET: So, after the six-month period, and to this very day, we have an Asset Forfeiture Procedure that is in limbo.

MR. MOLOO: Correct.

And just in 2022, the affected-party status of Newport has now been recognized, and what have we been told? We have been told well, now we'll wait and see how long it takes, but now they may be recognized at some point. And their good-faith status may be--the Courts because the prosecutors didn't do it, now the courts might do it, and what happens then? They get the property back? But that's still a breach of international law because it's too little too late.

It's not--this claim is not premature because that investment is dead. It is gone. All of the other projects are done. And that's why Dr. Medellín says what he says. You have to take the greatest care before you do this. You have to assess good-faith party at the early stage because of this. Because it can get stuck because of their duration in these Asset Forfeiture Proceedings for years.

[Page 446]

And I asked Mr. Caro before he did the Requerimiento, did he assess good faith. So I asked him, did you do this during the initial stage; right? Because this is what he's required to do. Did you assess Newport's good faith? And in cross-examination he said, he assessed Corficolombiana's good faith but not Newport's, is what he basically said.

What is the good-faith standard? What must you do? We've talked to you about the Constitutional Court Decision. I won't go into that in any more detail, but it's not the Google-search standard that you heard on the other side.

And you have the slide from yesterday saying, well, if they would have searched for Iván López, even though he wasn't on title, to be clear, what was Iván López? He was a legal representative at one point in time. This is important to know, of Sierralta. At the time they did the search, he was not the legal representative of Sierralta. The legal representative--that's why he didn't turn up. That's why he wasn't on the list. The legal representative at the time they wrote to the Attorney General's

[Page 447]

Office and said, please search all of these people, was Sebastian López, his son, and they did search Sebastian López. But Iván López was a legal representative at an earlier point in time. So, apparently, you're supposed to search all the owners, all the current legal representatives, and all of the prior legal representatives is what you're supposed to do. You're supposed to Google-search all of them.

Mr. President, do you have a question?

PRESIDENT SACHS: No, no.

MR. MOLOO: And the Google-search standard I don't think I need to deal with in any further detail, but obviously there would be a whole bunch of mischief that would happen, commerce would come to a halt. If this Tribunal finds that the standard is anything other than what the Constitutional Court decided, then it would be havoc, I will say, in Colombia because business will come to a halt. No one will buy and sell property if this Tribunal finds that that's the standard.

You see that Dr. Martínez and if you look at Medellín's Second Report at Paragraph 70 also

[Page 448]

confirmed that the standard is what this Constitutional Court Decision says it is. And instead on Slide 40, you can see--sorry, 39, you see what standard they would like to rely upon on Colombia, and they rely on a case from the Court of Antioquia district but I think it's important to recognize that this is not an Asset Forfeiture Proceeding case. This is a case under the Victims Land Restitution Law.

So, to be clear, this case that they rely on on that slide is not an Asset Forfeiture Law case. It is a Victims Land Restitution law case and therefore does not apply.

You're well-aware of the--and by the way, it's also not the Constitutional Court, which is the highest Constitutional Court of the country. It's a lower court.

You're well-aware of the diligence that was done, but there is only one point that I wanted to emphasize. They say, oh, the Orteo Palacio, they only did a civil title study. They also did a corporate study, and Ms. Champion took you through that yesterday, on their counter-party, on La Palma. So,

[Page 449]

it's not just a title study that they did; they did a corporate study, and Ms. Champion gave you that citation yesterday.

Dr. Medellín and Dr. Martínez both looked at this case, and they said, as the father of the Asset Forfeiture Law and the one who drafted this law, they looked at it and they said, would these--would this--would Newport have qualified as a good-faith purchaser? And the answer for both of them independently was yes, based on what I have seen was done in this case, I think that sufficient steps were taken to make them good-faith third-party purchasers.

At any point in time, the Attorney General's Office has the right to withdraw an action against a good-faith party without fault. That's 124, Paragraph 4. But they haven't done that in this case.

And I think this last section that I wanted to take you to is important, which is Article 16. Forfeiture shall be declared under the following circumstances. 10 is particularly interesting here. Yes, forfeiture goes against assets, but even assets of legal origin can be taken when--assets of legal

[Page 450]

origin whose value is equivalent to any assets described in the preceding numbers, can be subject of Asset Forfeiture when? Whenever the action is inadmissible due to the recognition of the rights of a third party against acting in good faith without fault. What does that mean? It means that if I were to act against an asset that would affect the rights of a third party--good-faith third party without fault, I can't act against that property. Instead, I go against the property of the wrongdoer's licit property, their lawful property. I can go against that property because what I can't do under any circumstances is affect the rights of a good-faith third party.

And that's what Article 16(10) allows them to do. It allows them to go against lawfully obtained property of a wrongdoer if going against the illicit property would affect adversely the rights of good-faith third-party purchasers. And that's exactly what Dr. Martínez and Dr. Medellín talk about in their Report. That's what should have been done in this case. If they identify a good-faith third party

[Page 451]

that's being affected here in Newport--and by the way, the Unit Buyers--but if there is a third party whose rights are being affected, if I go after this particular asset, what I do instead is [Redacted] or Iván López's other assets, that's what you're supposed to do. So you don't under any circumstances affect a good-faith third-party purchaser.

Sorry, did you have a question, Dr. Poncet?

ARBITRATOR PONCET: I was mumbling to myself that this is very similar to the Italian provision.

MR. MOLOO: And many jurisdictions have something similar. Even though it's against the asset, you can't go after the asset if it affects the rights of good-faith third parties, you can then go after other assets.

What I want to end on if--in just a couple of minutes because I don't think there was any real rebuttal to our damages case in this case, quite frankly, is a few of the points that were made at the end of yesterday. The first thing I wanted to address is that--this causation question. There is more than

[Page 452]

enough documentary evidence I think that this has affected Luxé and other properties. They say very carefully in their Closing Presentation: There is no documentary evidence that Colpatria pulled their funds from Luxé. But Mr. López Montoya and Mr. Seda confirmed this in their testimony, and Mr. Seda was not questioned about it, and Mr. López Montoya, who is the VP of Construction, and obviously very well-positioned to be able to answer this question, testified to this. There is no--nothing in the record that questions that evidence.

They talk about, oh, well, Paladin was still interested, and they refer to a couple of emails, and you can see they refer to C-379. They said Paladin was still interested. But let's look at that email. It's right there.

Paladin writes to Mr. Seda on August 8th, 2007--2016, 5 days after the Asset Forfeiture of the seizure, I should say, of the Meritage, and he said: Understood, we would have to wait until the Meritage issue is resolved to move forward--that's with respect to the Luxé, he's talking about his investment in the

[Page 453]

Luxé--but I do not see a problem with continuing the relationship and learning more about Luxé in the meanwhile. But he's making clear, yes, he's still saying okay, we'll still talk, let's see what happens, but we're going to have to wait to see that this Meritage issue is resolved.

So, it is misleading, quite frankly, when they say the Claimants tried to obtain alternative financing or tried to sell the Project. And emails from Paladin if you look at them, you'll see that, in fact, there were third parties that were still interested. Well, no, they're saying, okay, let's carry on the conversation but we have to wait for this Meritage issue to be resolved before we invest in Luxé. That's what that email actually says.

DCF is appropriate here, and even if you applied the Rusoro test that they put up. All of these, I explained to you yesterday, are satisfied. You have to look at this enterprise as a business, not just the Meritage Projects in isolation. This is the Royal Realty Property Group. Had dozens of employees that worked on all of these projects. They were

[Page 454]

working on Luxé, on The Charlee Hotel, Mr. López Montoya, Mr. Seda, it was the same people that were working on this--it was a business. It was not just one--you can't look at it as just one project that was affected here. It was an entire business that was adversely affected. And that enterprise had a history of financial performance because of The Charlee. This is unlike other--there is a track record here. Are there reliable projections through Business Plans? Yes, BRG relies on those Business Plans.

If you go through each and every one of these, we have satisfied all of them, and Rusoro says you don't even need to satisfy all of them, but I think we satisfy each and every one of them.

And like I said, this is unlike--real estate property development cases are unlike mining and other cases where there's all of this--all of this uncertainty. Real estate has inherent value. Once you have the Contract locked in, once you have financing in place, this project is a go. You pre-sell the Units. You pre-sell them.

The last point I wish to make is just to

[Page 455]

deal with these concerns that they have that we're pursuing actions in domestic courts. Well, there are--we can assure you just like they have in other cases, that we can provide whatever undertaking this Tribunal requires that we will not double-recover. As a matter of international law, there are certain rights that obviously our clients have, and those are the ones that are being pursued before this Tribunal, and that's perfectly acceptable and other tribunals have dealt with similar situations.

And this whole idea that money, if you Award the clients--the Claimants money that it's going to flow to criminal organizations? That's not going to happen. This structure is no longer. This project is not being built. [Redacted]

This is damages, what's being claimed here is damages to the Claimants. This money is going to go to the Claimants--and there is obviously a third-party funder who also gets some money--but no money is going to any criminal organization in Colombia. And if the Tribunal would need an undertaking, I doubt they would, but obviously a similar undertaking could be

[Page 456]

provided.

Members of the Tribunal, I appreciate your indulgence this morning. Those are my submissions, subject to any other questions.

PRESIDENT SACHS: Thank you very much, Mr. Moloo.

Now, in terms of time budget, Sara.

SECRETARY MARZAL: Would you like me to tell the additional minutes that they spent?

PRESIDENT SACHS: Yes.

SECRETARY MARZAL: 19 minutes.

PRESIDENT SACHS: So 49. Instead of 30, 49?

SECRETARY MARZAL: Um-hmm.

PRESIDENT SACHS: So, the same budget is, of course, available to the Respondent.

MS. BANIFATEMI: Thank you, Mr. President.

And before we depart for the break, my partner has a question for Mr. Moloo.

MS. HERRERA: Thank you.

Mr. Moloo, you made a reference when you were showing us the titles that you stated that--you say that Ms. Ardila Polo had received, and you say we

[Page 457]

can give you the reference, I would be grateful if you can give me the reference.

MR. MOLOO: Understood.

MS. HERRERA: Thank you.

MS. CHAMPION: I'll send you the page number of the cross. I think she said she--

MS. HERRERA: I didn't mean of the cross, because that's in--clearly you put it in the bundle. But Mr. Moloo said--

MR. MOLOO: It's in the cross, where she answered the question. We will give it to you.

MS. HERRERA: No, no, not the question. You say we can show you the reference to the--where you take the basis that she got it, and when she got it.

MS. CHAMPION: She said in her testimony that she received it from the Organized Crime Prosecutor.

(Comment off microphone.)

MR. MOLOO: We can give you the reference.

MS. HERRERA: Thank you.

MS. CHAMPION: But if you look at that page of testimony, it's clear. I think she got it from -

[Page 458]

what's her name?– María Isabel Correa Torres, I believe.

MS. HERRERA: If you send it, that's great. Thank you. Thank you, again.

PRESIDENT SACHS: Now it's five past 11:00. Can we resume--we said that we would give you some more time, so a longer tea break, let's say 11:45? Would that be all right?

MS. BANIFATEMI: It's 11:09 by my watch.

PRESIDENT SACHS: Yes.

MS. BANIFATEMI: I had noted, Mr. President, you would give us 45 minutes. So, if the Tribunal agrees, we're now at 11:10, 5 to 12:00.

PRESIDENT SACHS: 5 to 12:00, yes.

MS. BANIFATEMI: 5 to 12:00. Thank you.

(Recess.)

PRESIDENT SACHS: Okay.

MR. MOLOO: Mr. President, there were two questions that I wanted to come back on, one from Dr. Poncet and one from Professor Perezcano, if I may.

I see there are technical difficulties. I will give them a moment.

[Page 459]

(Pause.)

MR. MOLOO: Shall I proceed, or shall we wait?

(Pause.)

PRESIDENT SACHS: Please proceed now.

MR. MOLOO: Thank you.

[Redacted]

But what he did mention is that the only requests that were ever made to La Palma around the same time as this, after the asset seizure were pursuant to promise of purchase agreement, specifically Clause 3, which says it "agrees to transfer title to the Real Property covered by this Contract free of mortgages, civil claims, seizures,

[Page 460]

conditions subsequent, pending lawsuits, ground rent, any encumbrance or limitation of ownership, and it shall defend title in those cases where it is required under the law."

There are two letters in the record at C-419, and I have copies, if the Tribunal would find it helpful, and C-418.

C-418 is November 23rd, 2016, and C-419 is March 6, 2017. And that second letter actually quotes the provision I just read, where Mr. Seda is writing to Fanny Giraldo at La Palma, asking them to cover the fees to defend the title in actions, and I can provide these, if they're--if the Tribunal would want copies of each.

PRESIDENT SACHS: If they're on the record, that's fine.

MR. MOLOO: They're on the record, yes, C-418 and C-419.

So, to the extent there are any requests being made to defend title, you can see the formal letters where--from Mr. Seda to Fanny Giraldo at La Palma. But obviously for the avoidance of any doubt,

[Page 461]

[Redacted]

The second point was Professor Perezcano, in response to your question about the scope of the Essential Security Exception and whether it covers breaches or just precludes this Tribunal from saying the Measure cannot be withdrawn. We do address this is some detail in our submissions, but there is one specific Treaty that I wanted to bring to your attention, which is at CL-210, and it's the India-Singapore Investment Treaty, and that provision is different from ours in an important way. It's basically phrased like a denial-of-benefits clause.

It says: "Nothing in this chapter shall be construed to require a party to accord the benefits of this chapter to an investor that is an enterprise of the other party where a party adopts or maintains measures in any legislation or regulations which it considers necessary for the protection of its Essential Security Interests with respect to a non-party..."

[Page 462]

But that one clearly says that "nothing in this chapter should be construed to require a party to accord the benefits of this chapter" in that circumstance, and this Tribunal will be well familiar with denial-of-benefits clauses where that's where they're saying you don't get the protection of the Treaty. You don't get access to arbitration. You don't get protection of the treaty. What I think is important is our Treaty, the one that's at issue here, also has denial-of-benefits provisions. It has denial-of-benefits provisions at 10.12, and it specifically says: "A party may deny the benefits of this chapter to an investor of another party that is an enterprise of such other party where they don't maintain diplomatic relations or adopts or maintains measures with respect to the non-party or a person of that non-party that prohibits transactions with the enterprise that would be violated or circumvented if the benefits of the chapter were accorded to the enterprise or to its investments." So, for example, maybe if one was on an OFAC List or something like that, then there is a denial of benefits.

[Page 463]

So, they did deny benefits of the protections of the Treaty in certain limited circumstances but not in the circumstances at issue in this case.

Those were two points I wanted to address.

PRESIDENT SACHS: We will now give the floor to the Respondent.

REBUTTAL ARGUMENT BY COUNSEL FOR RESPONDENT

MS. BANIFATEMI: Thank you very much, Mr. President.

One housekeeping matter is that we are going to distribute some slides.

Is it coming or...it was sent by email apparently, okay. So you have received them by email and one of my colleagues will bring paper copies just in a few minutes for your convenience.

Another housekeeping matter is that simply a number of comments by my colleague and friend on the other side related to the Treaty in response to the Tribunal, so I will try to fit everything in the time that I have, but I don't rule out that I may need a bit more time because these are Tribunal questions, if

[Page 464]

you allow me, so if the Tribunal has just a bit of indulgence on the 49 minutes because we do have a lot to say.

PRESIDENT SACHS: Yes, we'll have some indulgence, but please do not go much longer.

MS. BANIFATEMI: I do not intend to abuse the Tribunal's indulgence, absolutely.

CLOSING ARGUMENT BY COUNSEL FOR RESPONDENT

MS. BANIFATEMI: Thank you. So, without further ado, I will start--and I will go through Mr. Moloo's presentation point by point. So, since being a rebuttal, I will follow the same sequence. And for some of my comments, I will refer back to what my partner Ms. Herrera had said because sometimes these concern asset forfeiture proceedings and she will address those more in-depth.

In fact, the slides would have been helpful now because--yes, you can see them on screen, so that's perfect.

So the first point made by Mr. Moloo was that the narrative by Colombia is that we are essentially saying "do not invest in Medellín because

[Page 465]

it's a very dangerous region." That's not the point, with respect. The point is that when you do attempt to invest in a region which is plagued by violence and by organized crime, the least you should do is that you should engage in due diligence and to know where you're going essentially. So it doesn't mean that you cannot but you know where you're going and you know where you're putting your steps.

On the exact due diligence--and my colleague is now distributing the paper copies--on the due diligence itself, Ms. Herrera will go through that, but I wanted to just give you a sense of what we're talking about here. If you go to Slide 3 of our presentation, you'll see that many Asset Forfeiture Proceedings were initiated against lots in Antioquia, which is also in the same region, and you have here an excerpt from our Rejoinder where you see that, for example, [Redacted]

[Redacted]

So, what we're saying is that it's not only

[Page 466]

the Meritage. It's also other places and lots and regions.

Next slide on Slide 4, you see that--and this is all in on the record, we actually discussed them at the May Hearing--[Redacted]

[Redacted]

So, all of this shows one thing which is that this is indeed a very dangerous, violent region. So, if you pretend to go there and invest, the least

[Page 467]

when--you're an indeed good-faith buyer or a good-faith investor, what the least you should do is do a due diligence properly, and Ms. Herrera will come back to the due diligence that actually was done by Mr. Seda.

But what you see here--and that's the last--Slide 6 is an excerpt of my cross-examination of Mr. Seda, and you see what he said. He said that, you know, when I asked him about this and I asked him about the danger in the region, he said "it's a strategy. Does it always have to be danger? It could be other variables, et cetera.

There are some unattractive. You see promise. You see that there's something that can be made out of it. You're a first arrival. You come in and you create attractive development and usually other people follow. It was our strategy." If it's a strategy he has to live by the strategy and by what he did.

So the next slides are the actual due diligence, which I will not go through right now. Ms. Herrera will actually develop this further, so I

[Page 468]

want to just stop here on the point which is a narrative. A narrative is if you go to a very dangerous region plagued by organized crime and the Cartel of Medellín, you know what you're doing. It's your duty to engage on that.

[Redacted]

On the point--I think there was a point made by--again the dangerous region. So this has been accepted by Mr. Seda. The additional point I wanted to make is about the Preamble. There was a point made about the Preamble. It cannot be said in this Tribunal. I would be very surprised if this Tribunal says, given the Preamble that we have, that it says

[Page 469]

that one of the purposes of the Treaty is to allow narco trafficking and corruption. It says the exact contrary. It says "prevent and combat corruption," So, that is the Preamble and that is the intention of the parties by entering into this Treaty. It's not the contrary.

And when I discussed casino, I discussed it in the sense that Mr. Seda allegedly invests less than 2 million with a number of other people, but he expects 255 million from this Tribunal and only--and then he expects everything else in Colombia as well because he has the other remedies. Now they say, Oh, we can take an undertaking. But that undertaking will not resolve the problem of the multiple bites at the apple and certainly not the problem of Colombia currently being the subject of a number of actions by the Unit buyers against it, so that cannot be resolved.

There was a point made by Mr. Moloo about the Colombian courts and a decision on Slide 6. This relates actually--and the only point I will make now is that when you read Slide 6 of Mr. Moloo, it says:

[Page 470]

In a scenario such as this.

Of course, as usual, that's a misrepresentation and they don't tell you everything that follows is related to "in a scenario such as this" which is Asset Forfeiture proceedings, and Ms. Herrera will explain to you why. This is completely wrong and how you should indeed understand this excerpt.

Now, this was the first chunk of discussions by Mr. Moloo. Now going to Essential Security, and there is a first point on Essential Security [Redacted]

[Redacted]

[Page 471]

[Redacted]

So, you have to go back, as usual, given the

[Page 472]

misrepresentations to the actual record and what was discussed at the time a statement was made. And, of course, this has nothing to do with the point that I will now make.

[Redacted]

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[Redacted]

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[Redacted]

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[Redacted]

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[Redacted]

This is an interview by, I understand, a famous radio journalist on W Radio 5 August, and you see that he says in the passage in yellow, "they are certain that people were the owners of those like the ones--he's talking about the Meritage here because the article discusses Mr. Vanegas, López Vanegas, coming and asking Mr. Seda for the land because he says "it's mine." So, the journalist asked "they are certain that some people were the owners of those, like the ones I'm going to mention: The López brothers, they belong--this land would have been taken over by people who were linked to the Oficina de Envigado, such as Rogelio and Daniel." Rogelio is the big boss of the cartel--okay?--none less than that. "Then it passed in the hands of Perra Loca; then to Mr. Juan Guillermo Arango, known as Gurú; and then to Javier García, known as Maracuyá."

He's--the journalist asks him, and we really

[Page 477]

don't have an answer to that. And then, I encourage you to read the full Exhibits R-30. There may be--we will double-check that because the--when I looked at earlier today, I looked at Page 2, it says, "journalist" and answer, it says, "journalist." So, we will need to--we will come back to the Tribunal if the Transcript is not accurate, but you see that, here, there is no real answer. And then, you see the answer, "yes, sir, in relation to our knowledge on this subject?" "Yes, we did have knowledge on this subject." Actually, you need to read the entirety of the passage in R-30. He says--the journalist says, well, I imagine you didn't know about all this, and Mr. Seda says in--that's where he says what he says here "in relation to our knowledge on the subject, yes, we did have knowledge on the subject." He says, "we did have knowledge on the subject", which presented to us the--remember, that was a foreign company.

And then, he goes on about the due diligence that he engaged in, and he says that the only thing we can do are the studies required by law that the

[Page 478]

studies--it's not in your slide. I'm just reading from Exhibit R-30.

(Comment off microphone.)

MS. BANIFATEMI: If you--I don't know if we can flag R-30 or not, but I'm reading from Page 2 of R-30 in the English version.

So, then I just continue reading for purpose of time. He refers to title studies, and as you know, by the way, that the title studies only look at the nominees--now you know that--so, it's not enough. And he says, well--he says--he brags about having hired the regarded firm called "Otero & Palacio," and we now know that Otero & Palacio did only a 10-year study when we know that Asset Forfeiture Proceedings do not have a statute of limitation.

And then he says, I quote: "They do a study that uses not only the lists, like the Clinton lists, and ask people recognize but they also use tools, like Google," so he admits that Google can be a basis to do search, and hooks for any links not only to people on the property list, but also to relatives, siblings, known husbands and wives. So, any links that these

[Page 479]

people have are shown on any news. One thing you're commenting on is that these properties were passed from hand to hand with certain people. We did a thorough investigation; it doesn't show any of these things.

And so, what this shows is that he accepts that you have to do a thorough investigation, so he says he didn't know at the time, but even assuming, even assuming in 2014 he didn't know about all of these people, which Ms. Herrera will show, he knew or should have known before that.

Let's assume in 2014 he hears from the journalist, well, [Redacted]

[Redacted] The least he should have done then would have been to say, okay, maybe my investigation was not thorough. Maybe, I want to go back and do a double-check, which he didn't do.

[Redacted]

[Page 480]

[Redacted]

And Slide 35, you see that--and actually, that's the right order chronologically. So, on 2 June, Mr. Seda volunteers to facilitate and pressure for a transaction between Iván López and the previous owners. You see that from a chain and that you may remember this was also discussed in the May Hearing, Exhibit 162 between Mr. Victor Mosquera, the lawyer, and Mr. Seda. And Mr. Seda says, this is something

[Page 481]

that has to be solved by the previous owners, whoever they may be, who sold the Lot, but what we can do this, negotiate and facilitate a transaction and pressure from our end for the hassles they can cause.

So, essentially, López Vanegas comes and says, the land is mine, and then, Mr. Seda says, well,

[Redacted]

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[Redacted]

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[Redacted]

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[Redacted]

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[Redacted]

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[Page 492]

This is what we're talking about here, and this is not even denied.

Now, one last point that I will make before I pass on to my colleague, Ms. Herrera, is really on the Essential Security Interest and the Treaty. This is important, and part of this will also address the questions from the Tribunal earlier today.

What I will say, and there was a lot of comments about what the exception means, what we say it means, and so on.

My first point is simply read, read the actual text. I mean, it's not that difficult. Read the text. Nothing in this Agreement shall be construed, so nothing in this Agreement is a catch-all that says that nothing in this Agreement, including investor-State arbitration, including standards of protection, including compensation, nothing in this Agreement shall be construed to preclude the Party from applying; okay?

So, this is also what the U.S. says. I have to go back because Mr. Moloo does not respond to it. He doesn't have any response to it. I have to back to

[Page 493]

the U.S.' oral submission of 3 May, Page 390, where they said, the Claimant yesterday said that this allows a State to apply or continue to apply measures it considers necessary for the protection of its own Essential Security Interest but that Article 22.2(b) does not address the question on liability or compensation. The United States disagrees. This is their own State. The United States disagrees once the Essential Security Interest Exception is invoked, the Tribunal may not therefore find the relevant measures in breach of the Chapter 10 obligation and may not consequently order the payment of any compensation in connection with that Measure.

So, this means what it means, nothing in this Agreement--preclude--shall be construed to preclude a party from applying. This means that the Party can apply. It can apply measures without any consequence, and there is no violation. By definition, there is no violation because this is an exception, an exclusion, the Treaty doesn't apply, period. So, you essentially are not even under the realm of the protection of the--the substantive

[Page 494]

protection or ISDS or compensation. Simply, the States can apply measures that they consider and so on, so this is applied. So, you have to interpret each word for what it is.

So, you can--so, when Mr. Moloo says that it's an invocation of the exception but--which is fine, but it's not the dispute. I was not quite clear about what he says. I don't want to mischaracterize what he said, but what we say is very clear. Once this exception is raised, this Tribunal or any tribunal does not have the power to make any determination of the exception; and, by definition, of the dispute because the exception is raised in relation to a dispute.

So, this is--and he says, well, forget about self-judging. No, you cannot forget about self-judging. There's a footnote that is there. The footnote says, for greater certainty, once it's raised, the exception applies. The exception applies, and the Treaty itself says, "the Party from applying measure," so the exception means that the Party can apply measures.

[Page 495]

Now, the self-judging is important because it says, "it considers." He doesn't address "it considers" at all. That's important, it's in your Treaty. You have to give some meaning to it. It considers; right? Necessary for the protection of its own Essential Security Interests. So, now they referred to Eco Oro--

ARBITRATOR PONCET: Sorry to interrupt.

Just a second, but you're not saying, are you, that this means that as soon as the Essential Security Exception is raised, there is no arbitral review possible of anything? Is that what you're saying?

MS. BANIFATEMI: The exception--

ARBITRATOR PONCET: Including whether or not the exception is raised in good faith by hypothesis?

MS. BANIFATEMI: Well, again--and this was a mischaracterization by Mr. Moloo who says, we accept that you can determine good faith. We do not. We have three layered scenarios. Our primary position is that this is not justiciable. Not justiciable is that you do not have the power to make a determination once the exception is invoked. This is what the U.S. says;

[Page 496]

this is what Colombia says. You do not have power to make any assessment, including whether this is in good faith or not. I'll come back to this because other Treaties are worded differently. It's very important.

So, this Treaty is worded in that sense. It says, "it considers," and then it says in the footnote "for avoidance of doubt," for greater certainty, "once the Panel shall find that the exception applies"; okay? So, the exception applies. "The exception applies" means that the Party can apply measures--right?--so you cannot go beyond that, you cannot make any determination. That's the meaning of "self-judging."

If you're not with us on not justiciable, which is a power to adjudicate the matter, then it's you do not have jurisdiction because, again, of the self-judging wording it considers necessary. You have to take for granted that when the State says these measures are necessary, they are necessary, and you cannot determine whether the exception is invoked in good faith or not, and you cannot determine the validity under the Treaty of the actions. This is our

[Page 497]

second position.

Our third position is, in the event you do not find that it's not self-judging, no power, no jurisdiction, in that event, third scenario, in the alternative, if you were to determine whether Colombia has raised it in good faith, then you should find comfort--this is everything I argued yesterday--you'd find comfort that Colombia has raised it in good faith, timely, the Essential Security Interests are fully at place, as you can see from evidence on record and the facts or circumstances that we're discussing, and therefore, you should give effect to this invocation of the exception, which is that no determination can be made of the validity of the Measures, which is the Measures that are in front of you under the dispute, which is that the Meritage was expropriated or Mr. Seda was treated unfairly and so on. You cannot determine that because the provision says nothing in this Treaty--in this Agreement precludes a State from taking or applying measures.

ARBITRATOR PONCET: So, the provision means that the State is not only not precluded from applying

[Page 498]

the Measures, but will escape any liability or responsibility under the Treaty for the consequences of these Measures, even if they are applied in the discriminatory matter, violate FET, you name it? That's your point; right?

MS. BANIFATEMI: My point, to be very precise, it's--this is an exception to the applicability of the Treaty, so the Treaty does not apply, period. So, since it doesn't apply, period, you do not even have to determine validity under international law and compliance with any obligations of the Treaty because the Treaty doesn't apply. It's over.

ARBITRATOR PONCET: What would be a circumstance in which the exception would be raised, assuming we go to your second option. What would be a set of facts under which a tribunal like this one should find that the exception was not raised in good faith?

MS. BANIFATEMI: Well, that is if you do not find that it excludes your power to adjudicate--

ARBITRATOR PONCET: Yeah, assume that.

[Page 499]

MS. BANIFATEMI: --a primary point, and your jurisdiction. So, if you decide that you have jurisdiction to make an assessment as to the validity of the exception, then you determine whether the exception was raised in good faith.

ARBITRATOR PONCET: Give me an example of an exception not being raised in good faith in that context? What would that imply? What would that entail?

MS. BANIFATEMI: Well, I can't answer right now--I mean, it's factual. It's a factual circumstance.

ARBITRATOR PONCET: Yeah, but, I mean, wouldn't that be, for instance, a situation in which the admittedly essential interest of the State to fight organized crime, et cetera, would be invoked just as a way to escape liability for the consequences of what would otherwise be a violation of fair and equitable treatment. Is that a situation in which one could reasonably, again by hypothesis, find that the exception was not raised in good faith? In other words, if you raise it, but your real intent to

[Page 500]

protect against something else, are you in good faith?

MS. BANIFATEMI: The point is really that you do not have the power or the jurisdiction to make that determination.

ARBITRATOR PONCET: You're going in circles.

MS. BANIFATEMI: No, I'm not going in circles. You do not have simply. If you're in the circumstance where you want to determine whether the implication is in good faith, you have to look at the facts. And the facts here are very clear. The facts are:

[Redacted]

[Page 501]

[Redacted]

ARBITRATOR PONCET: Let me just finish the second question so you can answer both. What do you make of that, and what do you make of the fact that after the six-month period of the attachment, so to speak, or the--the English word escapes me, (in French), after that six-month period, apparently we have an Asset Forfeiture Proceeding that seems to be in limbo. What do you make of that? I mean--

MS. BANIFATEMI: So--

ARBITRATOR PONCET: Doesn't the--and again, it's a hypothesis. I'm not saying that this is the way it is and I'm not saying that we are going one way or the other. Assuming we find that there is--this investigation should not have remained in limbo, as it apparently has, are we still in a situation where the invocation of the Measure, the invocation of the exception could be construed as being a good-faith one that really stops the power of this Tribunal to

[Page 502]

investigate anything and to adjudicate anything?

MS. BANIFATEMI: But if you may, Dr. Poncet, this is taking the Order in reverse order.

ARBITRATOR PONCET: Yes.

MS. BANIFATEMI: Because you're looking at the validity under the Treaty of an action, whether or not six months was enough or not enough, and Ms. Herrera will actually discuss the timing of the Asset Forfeiture Proceedings. So, whether or not the Asset Forfeiture Proceeding and the way it unfolded was in compliance with the Treaty is a matter which is different from Essential Security--invocation in good faith of the Essential Security. The invocation in good faith of the Essential Security is [Redacted]

[Redacted]

which excludes the application of the Treaty.

So, if you find, as you should, if you're in the third alternative, that this was invoked in good faith. You should not look at the substance of the

[Page 503]

case and whether or not asset forfeiture unfolded in this way or that way, because that's the actual merits.

ARBITRATOR PONCET: Yes, but in order to find that it is invoked in good faith, don't we also have to find that the underlying Asset Forfeiture Procedure has been conducted with sufficient due diligence? I confess to being somewhat perplexed--

MS. BANIFATEMI: No, sir.

ARBITRATOR PONCET: --by the fact that, you know, six years after this initial Forfeiture, no charges have been brought, no Decisions have been issued--

MS. BANIFATEMI: No, sir.

ARBITRATOR PONCET: --nobody knows what's going to happen to that land.

MS. BANIFATEMI: No, sir. These circumstances go to the application of the Treaty to a set of facts on the merits of the dispute, whether or not Mr. Seda and his acolytes were treated fairly. This is the substance of the dispute, the merits of the dispute, and you should not get there, ever, we

[Page 504]

say. Even under our third alternative, which is that you determine that you have to assess and determine the good-faith application and invocation of the Essential Security because, if you do go there, which I hope I won't because you do not have jurisdiction--power and jurisdiction to do that, if you go there, you will have ample evidence in front of you to show that this is Essential Security. Colombia is doing this to protect its Essential Security, to protect, including the safeguarding of the other countries than Colombia, because we're talking about the influence of the cartel even beyond Colombia.

This is--if the fight against narco-trafficking, killings, armed--dangerous armed organizations, criminal organizations, and you see the U.S.'s reaction. The U.S. is talking about the UN Convention about fight against drug trafficking. This cooperation, judicial cooperation and police cooperation between the two Countries. How serious should we get for you to find that this is a serious Essential Security Interest?

So, what we're saying is that once you find

[Page 505]

that--

(Overlapping speakers.)

ARBITRATOR PONCET: Hang on a second.

MS. BANIFATEMI: --that's the end of the matter.

ARBITRATOR PONCET: Hang on a second.

Nobody is denying that it is an extremely important interest of the State. And I had sufficient experience with Italy to, you know, be plausible when I say that I have no doubt, okay? Because I know quite a few of the top Italian Magistrates who risked their lives every month fighting the mafia, et cetera. So, nobody is denying that.

The question is: If we apply your scheme--your scheme. If we apply your solution, there is really no room left for the hypothesis that Mr. Seda is a man in good faith who acted in good faith. His only recourse is the local courts, which seem to be not particularly swift, put it this way.

MS. BANIFATEMI: That is not correct. I will start with the last part. That is not correct because the Asset Forfeiture Proceeding has, and

[Page 506]

Ms. Herrera will address that with the timeline, there is an actual timeline that you need to see because you understand how it works. Mr. Seda himself, and she mentioned that yesterday, Mr. Seda himself has recognized that it does take time. Why? Because it's an investigation. Because this is a rule of law, this is a country that's governed by rule of law. They're not doing this just out of their pocket. They'll actually go investigate, investigation takes time. So, they want to make sure that if the result is going to be a good-faith third-party buyer, so that takes time.

So--and she will address the actual timing, so that's completely different, and he does have the remedy. He had the remedy of the courts, first of all, he has the remedy of acting against the State, Article 90 of the Constitution, so there is no denial of justice anywhere. [Redacted]

[Redacted]

[Page 507]

[Redacted]

So, this is the last part.

Now going to your previous question. You are bound by a treaty, you are duty-bound to give meaning and effect to this Treaty. I didn't write this Treaty. The U.S. and Colombia did. And they knew what they wrote. And I went through this yesterday, both in terms of the travaux préparatoires and what they said at that time, about what they said this time. And so, it says "nothing in this Agreement shall be construed to preclude the Party from applying measures." What does that mean? It means that the Party can apply measures without any assessment because it says nothing in this Agreement. Otherwise you have had--

And let me come back to other treaties

[Page 508]

because other treaties don't say that. It doesn't say nothing in this Treaty except the ISDS provision, except the compensation provision. It doesn't say that, it says "nothing in this Treaty." And it's not enough for Mr. Moloo to say, oh, I will take another example, which is a denial of benefits. Denial of benefits is a completely different animal. What you have in front of you is this, is Essential Security, and you have to look at what it says. And what it says is nothing in this Agreement in itself--it considers-- And I will come back to this if you allow me, because that has to be given meaning--what Colombia considers to be its Essential Security.

That's why we say you do not have the power or the jurisdiction to judge because the Treaty has not given you the power or the jurisdiction to judge. This is what--you have--you're arbitrators, and this is the integrity of the system we're talking about.

Ms. Ordóñez explained to you, Colombia entered into these treaties with the understanding that arbitrators would uphold their intention and the consent that they have given and the limitations to that consent. And

[Page 509]

this is the limitation. This is the Clause that says the Treaty does not apply period when there is an Essential Security which Colombia or the U.S. considered to be essential.

Now, if you allow me, I do want--and this is exactly in answer to your question, if you allow me to go through some of my other points because they will again, go to the language.

ARBITRATOR PONCET: Sorry.

MS. BANIFATEMI: Not at all. It's important, and I'm very happy for the questions, in fact.

So, let's take them, the Eco Oro.

Mr. Moloo really likes Eco Oro, and I also encourage the Tribunal to read Eco Oro, please look at Slide 13 of their rebuttal this morning.

In fact, Mr. President, you mentioned to Mr. Moloo a difference, but there's not only one difference. There's a number of differences.

So, "for the purpose of Chapter 8 - Investment", first difference. It's not "nothing in this Agreement", which is nothing in this Agreement.

[Page 510]

It cannot be clearer than that. It says "for the purpose of Chapter 8 - Investment."

Then it says: "Subject to the requirement that such measures are not applied in a manner that constitutes arbitral or unjustifiable discrimination."

That means precisely what you're saying, Dr. Poncet. This provision allows a tribunal to make a determination as to whether the Measures constitute arbitral unjustifiable discrimination. So, this does give power to a tribunal to do just that and to make that determination. And if you continue, it says "nothing in this Agreement shall be construed to prevent a party from adopting or enforcing measures necessary". It doesn't say "it considers." You do not have that very important language. So, you have two limitations, three limitations here: It's only in relation to the "Investment" chapter; it's subject to a determination by the Tribunal about arbitrariness and unjustifiable discrimination. It doesn't have the "it considers," so it's not self-judging.

And the final point is that measures are necessary, two, three limited grounds, including

[Page 511]

environment and animal and human life and so on. So, it's not the broad exclusion that you have in 22.2(b) of the TPA that you have in front of you.

So, again, these are oranges and apples. It may be an Essential Security Provision but you have to interpret the language and you have to apply the language. Ordinary meaning of the words. This is where you start.

Now, they also refer to Nicaragua. I don't have it in my slides, but if you allow me, I will refer you back to Exhibit RL-152, which is the Decision by the International Court of Justice.

PRESIDENT SACHS: Slide 14?

MS. BANIFATEMI: Slide 14. Yes, but they don't have the provision that you want to say, which is Paragraph 222.

In that case, the Measures were about essentially the U.S. saying Nicaragua is a risk to my security, and the Measures were armed attacks, mining of ports and so on. We're talking about the U.S. essentially doing all these things. So, the Court says that the Court has jurisdiction to determine

[Page 512]

whether measures taken by one of the Parties fall within such an exception is also clear from the fact that the text of Article XXI of the Treaty does not employ the wording which was already to be found in Article XXI of the GATT. This provision of GATT contemplating the exceptions to the normal implementation of general agreement stipulates that the Agreement is not to be construed to prevent any Contracting Party from taking any action which it considers necessary for the protection of its Essential Security Interests. In such fields as nuclear fission, arms, et cetera, the 1956 Treaty on the contrary speaks simply of necessary measures, not of those considered by a party to be as such. So, the ICJ makes a very clear distinction in an interpretation exercise between when you have necessary, which is what you have in Eco Oro, and when you have measures that the State considers necessary.

This is very different.

And this, I think I also have somewhere, if I have not lost, I think it's also--I don't have it with me, but it's also the fact in the Russia case,

[Page 513]

and I have discussed that in May, in fact. I don't have it with me. But it's the same logic that you have in the Russia GATT determination. RL-192 for the Russia Decision.

Now, I'm just looking at my notes to make sure that I address everything. And also the time limit--there is, as you will see, Article 22.2 does not have any time limit. So, it's important that when you're seized at the time at which you're seized of the Essential Security invocation, you recognize that that has been invoked. And as we have said earlier, the moment when Colombia raised and invoked the Essential Security is the moment when, based on, [Redacted]

[Redacted]

[Page 514]

[Redacted]

[Page 515]

[Redacted]

Now, one final point, I want to make sure that I have addressed everything, your question, and that is in answer to your question, Dr. Poncet, on the Treaties. So, if you--I will refer you back to our Rejoinder of 16 February 2022. These are Paragraphs 233 to--and onwards, at the very least, 235.

And you see in Footnotes there is a reference to a number of treaties entered into by Colombia. And you will remember that this was--your question came up after I addressed yesterday the effet utile interpretation of treaties, and I said that you have to give--it has to be a purposeful interpretation , the meaning that you give this provision. And I referred--I think I may have misspoken, I said 17. In our count, I think at this time I'm right. It is 15. Generally, it's 13 different treaties and the GATT and

[Page 516]

the Canada-Colombia FTA. These are treaties to which we refer, and you will see in Paragraphs 33 and 4, we explain that this provision that you have in front of you is exceptional, it's quite unique. And that's why you have to give it the meaning that the Parties said it should have, and that's why we said the authentic interpretation given by the U.S. and Colombia is so important to you.

ARBITRATOR PONCET: So, it's not found in the others; right? It's similar.

MS. BANIFATEMI: The others are different. They all are Essential Security but the difference--

ARBITRATOR PONCET: This is a unique provision.

MS. BANIFATEMI: Yes. And we explain--

ARBITRATOR PONCET: Why does the U.S. refer to the fact in one of the documents we saw--why does the U.S. refer to the alleged existence of same provisions in treaties signed by the United States?

So, you're saying it's unique to Colombia or are you saying it's unique, period?

MS. BANIFATEMI: It's unique to the treaties

[Page 517]

entered into by Colombia. I have not done the entire universe of Essential Security, and I do not want to speak for the U.S., of course, and since they listen maybe they want to intervene on this, but we explain that these treaties mostly referred to measures necessary for the protection of the State's national security. Just as in Eco Oro, they do not have the self-judging language of "it considers," which as you've seen in the Nicaragua Case and the ICJ said you have to make a distinction because one is not the other it considers. We couldn't determine this one, the 1956 Treaty between Nicaragua and the U.S. does not have that, therefore we can make a determination. That's what the ICJ says.

I want to finish perhaps--I really hope that I have said everything I wanted to say.

[Redacted]

[Page 518]

[Redacted]

I do want to take--before I pass it on to Ms. Herrera, I do want to take issue with no wrongdoing, and maybe answer to one of your questions, Dr. Poncet.

When we said there was no wrongdoing, this is in relation to the beginning of the Asset Forfeiture Proceedings. Why? Because it looks at the asset. It doesn't look at Mr. Seda. So, you cannot say that Mr. Seda was discriminated against because the Asset Forfeiture Proceeding looks at the assets and just follows the trace of the asset. So, Mr. Seda, of course, he was not looked at for wrongdoing. [Redacted]

[Redacted]

[Page 519]

[Redacted]

So, I will stop here, because again, for lack of time, and Ms. Herrera will continue with the Asset Forfeiture and the discrimination and the merits.

[Page 520]

Thank you.

PRESIDENT SACHS: In the interest of time, please concentrate on what is really new because we went through all this yesterday already.

MS. HERRERA: Yes, Mr. President. Just one thing, may I know how much time we have left?

ARBITRATOR PONCET: Five minutes.

MS. HERRERA: Seriously? I take your word.

SECRETARY MARZAL: 49 minutes that you had, you only have one minute left, but--

MS. BANIFATEMI: There was some--and I was.

SECRETARY MARZAL: Yes, and I was counting it. I counted 16 minutes of questions and answers. At some point--

(Comments off microphone.)

PRESIDENT SACHS: Can we say 10 minutes? Is that all right? Try your best, please.

MS. BANIFATEMI: We have at least 16.

PRESIDENT SACHS: No, no, no, the 16 minutes were deducted.

MS. HERRERA: Okay. I will go to the point.

MS. BANIFATEMI: This is actually important

[Page 521]

so.

MS. HERRERA: You have here the due diligence. I won't repeat about why the type of studies are not sufficient but I want to bring your attention to several points.

If you see in Point 10.

PRESIDENT SACHS: Which slide?

[Redacted]

have the request made by Mr. Sintura, again to the Fiscalía, asking, look at the list. We have discussed that Mr. Iván López could have been found and was there, and all that, but I want to call your attention to the language that Mr. Sintura employs here. And he says, Corficolombiana wants to verify blah blah blah,

[Page 522]

criminal measure against any the following individuals that hold positions of Managers, Assistant Managers, legal representatives, members of the Board of Directors, shareholders of the legal entities mentioned, blah, blah.

And we're told, and that's something that Mr. Moloo said in May, it says, well, you know, it was only here, you don't have Mr. Iván López because this only looks as to the date of this petition who were the legal representatives, and I will say this is very peculiar.

PRESIDENT SACHS: You said this yesterday already.

MS. HERRERA: Yes, but I'm saying this is peculiar. And I will submit, I will say you will have a much clearer picture of why is Mr. Sintura doing this, and we haven't been presented that was excluded.

MS. BANIFATEMI: May I?

MS. HERRERA: Yes.

MS. BANIFATEMI: As Ms. Herrera is looking for it, I would like to draw the Tribunal's attention to Slide 20 which is a good summary of every point in

[Page 523]

time at which Mr. Seda at the very least should have sought for further due diligence and he didn't, so you will have that to review in your time.

MS. HERRERA: Thanks, Ms. Banifatemi.

As Ms. Banifatemi was saying, you have the points, and perhaps one point that I want to make here is as Ms. Banifatemi has shown since [Redacted]

[Redacted]

So, moving very quickly, now I'm going to move, sorry, back to, it's quite a lot, sorry.

PRESIDENT SACHS: We didn't want to put you

[Page 524]

under pressure. I mean, you made your points, but stick to the 10 minutes.

MS. BANIFATEMI: Just as Ms. Herrera is doing that, I do want to make the point that we tried, given the Tribunal's questions yesterday, we wanted to give a timeline, and this also goes to Dr. Poncet's question of the Asset Forfeiture Proceeding because it clarifies a lot of the questions that you had.

MS. HERRERA: So, if I can refer you to Page 60, and that has to do with the Asset Forfeiture Proceeding, and you heard again, that the view that they weren't complied with, but you have the timeline of how it worked, and again, I will limit my comments to specific points.

You can see on 63 exactly the evidence that Prosecutor Ardila had at any given time. I wanted to make a point about, the point that my colleagues made this morning, about Ms. Ardila having the information regarding the two title studies regarding the two, what they call, the Sister Property, by the time she imposed the Precautionary Measures. And whilst it's true that Ms. Ardila said that, and I understand in

[Page 525]

the middle of cross-examination, she might have said that. If you look, and this is C-024bis, that's--excuse me, I think I have it there. Don't I have it there in the slide?

PRESIDENT SACHS: So, you say C--

MS. HERRERA: Sorry, if you look at the page in the Requerimiento, which is later on, as Mr. Caro said, but you will see he's listing the sequence of information and when it was acquired, you have Page 77.

ARBITRATOR PONCET: Which slide are you on?

MS. HERRERA: Sorry, page 77.

ARBITRATOR PONCET: Okay.

MS. HERRERA: You will have seen, it says Point 60, when Ms. Ardila actually received the information from the criminal court in, excuse me, the Attorney General's Office in Medellín [Redacted]

[Redacted]

Sorry, the information she received, this information of the title, she received in March 27, 2017. So, it was not her memory may have failed her. It was not before the Precautionary Measures. And that goes to

[Page 526]

the whole argument of discrimination, which I will quickly--

PRESIDENT SACHS: I'm sorry, I didn't quite follow. I mean, did you refer to the allegation or what we discussed this morning, that she had at her disposal the two legal opinions before she issued the determination?

MS. HERRERA: The--

PRESIDENT SACHS: The Requerimiento.

MS. HERRERA: No, the Measures.

PRESIDENT SACHS: The Measures, okay.

So, are you saying that this is not correct?

MS. HERRERA: That's not correct. That was my response, it wasn't correct. And when you look back at the--

PRESIDENT SACHS: At what?

MS. HERRERA: At the document of the Requerimiento, which lists the order in which the Prosecutors received all the information, you will see when it was received in the record, so there was--

PRESIDENT SACHS: Could you point us to the document?

[Page 527]

MS. HERRERA: Yes. That's C-024bis, that's part of the record--or part of the file of the Asset Forfeiture Proceeding.

PRESIDENT SACHS: Um-hmm.

MS. HERRERA: And if you look now at the slide on--

ARBITRATOR PONCET: C-24?

MS. HERRERA: That's correct, bis. And that's Page SP-0118, and the specific paragraph is 60 in that document.

So, again, you have all the explanations and we will go back as to the valuation of good faith, et cetera. You have it there.

One point--

ARBITRATOR PONCET: C-24bis, on which page?

MS. HERRERA: SP-0118.

ARBITRATOR PONCET: We're talking about C-024bis; right?

MS. HERRERA: Correct.

ARBITRATOR PONCET: And what page are you?

MS. HERRERA: You mean on the presentation?

ARBITRATOR PONCET: On the document?

[Page 528]

C-024bis.

MS. HERRERA: At Page SP-0118.

ARBITRATOR PONCET: SP-0?

MS. HERRERA: 118.

ARBITRATOR PONCET: Okay, that would have been simpler.

MS. HERRERA: Sorry.

PRESIDENT SACHS: Can we perhaps put it on the screen?

MS. HERRERA: Can you project it?

ARBITRATOR PONCET: I hate to say this, but this was not in the Hearing Bundle; right? Because there it starts at 0151. I'm looking at C-024bis, and it stops at 0151, SP-0151.

(Comment off microphone.)

MS. BANIFATEMI: Yes, 0118.

MR. MOLOO: C-124bis, 124bis; right?

MS. BANIFATEMI: C-024bis, Page SP-0118.

ARBITRATOR PONCET: Okay, now we've got it.

MS. RIBCO: It's Page 118 of the PDF. It's on the screen now.

ARBITRATOR PONCET: Where do we find these

[Page 529]

studies now?

MS. HERRERA: 60, Paragraph 60 on the top, and they say dated at the top it received this.

PRESIDENT SACHS: It does not indicate the date at which the study was received by the author of this document?

MS. HERRERA: It says we have the Report, and this Report contains the expansion of the complaint of Mr. Iván López Vanegas on February and the study of the transfers of the--Guzman & Monroy because Guzman & Monroy is the one relating to the--what they call the Sister Property.

PRESIDENT SACHS: Yes, but there is no date indicated at which they received this.

Your point was that, she received the documents only later and not as she said earlier, but I don't see a date here that would confirm this.

MS. HERRERA: The way I read it is in March 27, 2017, she receives further information which includes this study.

PRESIDENT SACHS: Okay, we have the text here and--

[Page 530]

MR. MOLOO: Just to confirm, this document is not authored by Ms. Ardila Polo. This is authored by Dr. Caro. She authored the Determination of Claim, not the Requerimiento. By this point it's Caro.

MS. HERRERA: It says the document received in the file of the Asset Forfeiture.

PRESIDENT SACHS: Okay. So I think we covered that.

Please, go ahead.

MS. HERRERA: On this, again, the Asset Forfeiture and all the sequences, you have there one point that I wanted to address, and again, that's on the duration. I wanted to remind you of the--how extensive this investigation is. I already referred to that.

Before, one point, and this is not--will come not as a surprise to the other Party, is that we have been informed that, in fact, Newport has, as for the nullity--annulment of all the process on the basis that they were not included as an affected party, which they were in the initial phase, that has been--there has been--this is something that if you're

[Page 531]

looking for it there, I don't have it. This happened--

PRESIDENT SACHS: I'm sorry, we're not following. Could you repeat what you just said? I'm sorry.

ARBITRATOR PONCET: We're still on your Slide 77 or are you talking about something completely different?

MS. HERRERA: Don't look at the slide.

ARBITRATOR PONCET: So start again, please.

MS. HERRERA: Okay. I'm going to refer to the duration of the procedure. So, under duration of procedure, I wanted to remind you why it has taken so long. I already addressed that later. But I wanted also to update you on some developments that are known to our friends on the other side, which is the fact that Newport, after the Decision of the court, the Superior Court--

PRESIDENT SACHS: The 22 April 2022 Decision?

MS. HERRERA: Was rendered, and they were recognized as afectados. In the trial phase, Newport

[Page 532]

asked for the annulment of all the process, saying that they have not been able to present evidence in the initial phase because they weren't considered afectados.

But this annulment--this annulment has been resolved, there has been a nullity and appeal, so I'm just saying that because of the duration that it may take--

ARBITRATOR PONCET: We have that request on the record? I don't remember it.

MS. HERRERA: No, we don't.

PRESIDENT SACHS: And the Decision?

MS. HERRERA: And the Decision not. They know it, the other Party--

(Comments off microphones.)

ARBITRATOR PONCET: With respect, you're testifying to something that's not in the record; right?

MS. HERRERA: I'm updating.

I'm going to move, given the time, basically to the arguments quickly on discrimination. And the

[Page 533]

submission of Colombia is that, the Claimants had not discharged their burden of proof. The basis on which the Asset Forfeiture of Meritage Lot were started are several, and they're just focusing saying Iván López appeared, the transformation of the process, the physical and the legal transformation, [Redacted]

[Redacted] and if you look at the grounds, there are several grounds. They have not shown that any of the properties they are referring to are in similar circumstances.

And again, they're also not showing why there is no justification to treat any of those properties differently, if there was. So, that goes to like circumstances. I don't have the time to be more specific. That goes also to the Sister Property. There were many other--apart from the 25 percent not coming from illicit funds, and there were several other transfers, transformations that occurred in the Meritage Lot that did not occur with the Sister Property.

Now, as regards the standard of due diligence, I explained at length, and it cannot be

[Page 534]

denied, that the Court was not referring--and that's very clear in the decision of the Constitutional Court, to the scenario we are referring, which is illicit--forfeiting assets of illicit origin.

Now, the Claimants say now, well, but, you know, you have these two Articles that allow you to go after some licit--excuse me--

PRESIDENT SACHS: You mean the Paragraphs 10 and 11?

MS. HERRERA: Correct. 16(10) and 16(11) to go after licit property, that's what they should have done. You may recall that Dr. Reyes makes very clear this, and that's in the--at Page 1219 of hi s presentation, of his cross-examination, when he responds to counsel for the Claimants' question about this article, and said for that to apply, for that situation to apply so that you can actually have to go--so that the Prosecutor has to go to a licit asset because the property that should be first affected is in the hands of third parties, bona fide third parties. It has to be a determination by the Courts that that property is in the hands of bona fide third

[Page 535]

1 parties. This has not happened here. I refer you to

2 Transcript Day 4.

3 And given the time, I don't think that I can

4 make the other points. I don't know if Ms.--

6 MS. BANIFATEMI: No. Are you done? So, I

7 would also encourage here the Tribunal to look at

8 Slide 85, which is the final timeline, and the

9 previous slides as well, of course, which explains the

10 Asset Forfeiture timeline and timing because there was

11 some questions yesterday from the Tribunal, we wanted

12 to make sure that you had clarity about how the

13 process goes on and what happened in this case and

14 what were the bases on which the Prosecutors made the

15 determinations that they made.

16 Due to lack of time, we will skip the

17 damages slides, which you will have at the end, and on

18 your own time you can have a look. We did respond to

19 some of the points made by our colleagues on the other

20 side.

21 And one last point, if I may, is I want to

22 clarify something that I said in response to your

[Page 536]

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[Page 538]

1 Whether or not the time was taken in the

2 Asset Forfeiture Proceedings and the point I think

3 that you made also in the May Hearing, which is that

4 this has taken a long time, that is the process of the

5 Asset Forfeiture Proceeding. The Asset Forfeiture

6 Proceeding was suspended for a number of years because

7 of Mr. Seda's appeal about the afectado situation.

8 So, to the extent that they're using their

9 rights to appeal the remedies that are allowed them

10 under the Asset Forfeiture Proceeding, and that

11 creates delays, that's not Colombia's doing. Colombia

12 has again, the rule of law. They seized the

13 opportunity to make appeals. If that appeal suspends

14 or makes the process longer, that's their choice. But

15 Colombia cannot be faulted for that.

16 PRESIDENT SACHS: I'm sorry to interrupt

17 you, but the appeal was made in order to give him the

18 chance to go to trial, because he needed to be

19 recognized as an affected party, and so this took so

20 long.

21 MS. BANIFATEMI: And they have been

22 recognized now.

[Page 539]

1 PRESIDENT SACHS: Yes. This was

2 Mr. Poncet's point, six years after the start of it.

3 MS. BANIFATEMI: Yes, and that goes to the

4 merits of the dispute, which we say again, you don't

5 get to, because of the Essential Security, which is a

6 different matter. But on this, it will be for you to

7 decide, even if you were on this, you have to decide

8 as to the whole and the timeline is important, the

9 entirety of the Asset Forfeiture Proceedings and the

10 way that the investigations are going on those

11 matters.

12 PRESIDENT SACHS: Okay. Thank you very

13 much.

14 I think we should give you the floor as to

15 the point of the proceedings against Mr. Seda. I

16 think this was the moment where you expressed the

17 desire to say something, so be short.

18 MR. MOLOO: Okay, Mr. President, can I seek

19 five minutes of indulgence?

20 PRESIDENT SACHS: Yes.

21 MR. MOLOO: There are three points that I

22 want to address, one of them being the one that you've

[Page 540]

1 just identified. But I don't want to go on forever.

2 But I think there's three clarifications.

3 PRESIDENT SACHS: I was clear: On that

4 point, please.

5 MR. MOLOO: Okay. On that specific point,

6 the point that I wanted to make is that the record

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20 PRESIDENT SACHS: Yes, yes, okay. Period.

21 I think we should have a break now also for

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[Page 542]

1 lunch break because we need some time to discuss how

2 we see the further proceedings and whether we still

3 have questions. I mean, we put quite a few questions

4 already, but we have to discuss whether we have

5 further questions. So, I would propose that we meet

6 again at a quarter to 2:00, giving us a little bit

7 more than an hour--or quarter to 3:00, sorry.

8 And perhaps in the meantime, if you could

9 discuss among yourselves the further proceedings,

10 meaning whether you still want to have some time to

11 submit your cost submissions, whether you want to--the

12 right to reply to the cost submissions, and yes, these

13 are the main issues left to be discussed, I think.

14 (Pause.)

15 PRESIDENT SACHS: If you go out, let's say

16 we resume at 3:00.

17 SECRETARY MARZAL: And then we can confirm

18 with Court Interpreters--Court Reporters and

19 Interpreters.

20 (Pause.)

21 (Whereupon, at 1:39 p.m., the Hearing was

22 adjourned until 3:00 p.m., the same day.)

[Page 543]

1 AFTERNOON SESSION

2 PROCEDURAL DISCUSSION

3 PRESIDENT SACHS: So, can we resume after

4 the break?

5 We wanted to discuss a few things with you,

6 after having heard you in rebuttal.

7 The Tribunal has decided to reconsider the

8 decision that was communicated to the Parties in its

9 email of the 22nd of September as regards the

10 documents R-305, -306, and -308. We will allow them

11 into the record, and we will allow the Parties to make

12 further submissions, obviously, limited to these new

13 documents, in written submissions. We have to define

14 the date, but obviously no new evidence and only

15 dealing with these documents or materials.

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20 Second, we would invite the Non-Disputing

21 Party, the U.S., hoping that they are connected, but

22 otherwise they will read it in the Transcript, to

[Page 544]

1 submit similarly worded Essential Security Interests

2 exceptions in U.S. treaties. I here refer to Page 11

3 of the Respondent's Closing in which a quote from the

4 U.S. oral intervention was shown to us, which reads

5 that "Article 22.2(b) is self-judging, of course with

6 the long-standing U.S. position that similarly worded

7 Essential Security Interests exceptions in U.S.

8 agreements or treaties are to be read as self-judging.

9 "

10 We would invite the U.S. to provide the

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12 deadline of 10 days, and we would allow the Parties in

13 their submissions dealing with [Redacted]

14 to comment on these treaties and the wording

15 concerning the Essential Security Interests exception

16 in such treaties in their final submissions with a

17 page limit of 20 pages on that subject.

18 This being said, we would now like to

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20 [Redacted] A proposal was made.

21 Ideally, we would invite the Parties to try to find a

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[Page 545]

1 certain deadline, and if this is not possible, if you

2 fail to reach an agreement, the Tribunal would be

3 there to assist and to give instructions, if

4 necessary.

5 So, let's go back point by point. As far as

6 this protocol is concerned, can we have, first, your

7 view, please.

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21 MS. BANIFATEMI: Mr. President, if I may

22 have five minutes of recess to consult with my

[Page 549]

1 clients, that would help us.

2 PRESIDENT SACHS: Sure.

3 And maybe you also want to discuss this.

4 Let's have a 10-minute break and see you

5 again.

6 MS. BANIFATEMI: Thank you.

7 (Recess.)

8 PRESIDENT SACHS: Respondent, I think the

9 floor is now yours.

10 MS. BANIFATEMI: Thank you, Mr. President.

11 Sorry for the time. It's a very complex

12 matter, so I wanted to first take the time to get it

13 right.

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13 MS. BANIFATEMI: Which letter are you

14 referring to, Mr. Moloo?

15 MR. MOLOO: Page 10 of the September 7th,

16 2022 letter.

17 MS. BANIFATEMI: I was not looking at the

18 right one.

19 (Pause.)

20 MR. MOLOO: Can I shortcut this,

21 Mr. President?

22 PRESIDENT SACHS: If it's a shortcut, yes.

[Page 560]

1 MR. MOLOO: Given the circumstances, we can

2 just accept the proposal they have in their letter.

3 PRESIDENT SACHS: The proposal in the

4 letter?

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18 ARBITRATOR PONCET: You guys are just

19 agreeing; right?

20 MR. MOLOO: I don't know why there is such

21 an objection to agreeing to the proposal.

22 MS. BANIFATEMI: I want to understand what

[Page 561]

1 is being accepted because as part of what we proposed

2 there was also on authenticity a number of proposals,

3 so I want to be very clear on what's accepted.

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17 MS. CHAMPION: I do have a trial right after

18 this.

19 MR. MOLOO: Perhaps we can take that

20 off-line with counsel.

21 MS. BANIFATEMI: I would prefer to do that

22 because I also am moving from one hearing to another,

[Page 565]

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5 MR. MOLOO: I think we'll just have to take

6 it up on a case-by-case basis. For example, it may

7 not--it may be that--this is very hard for me to come

8 up with an example at the moment, but it may be that

9 someone who is not specifically a speaker but may be

10 able to give some context, I think we will just have

11 to apply to the Tribunal in a particular situation.

12 The Tribunal will be able to make a decision.

13 PRESIDENT SACHS: Well, we may provide this,

14 but it will be exceptional. I mean, there must be

15 good reasons--

16 MR. MOLOO: Understood.

17 PRESIDENT SACHS: --to request this.

18 MS. BANIFATEMI: And in which case we

19 reserve our right to also provide whoever would put

20 context, because we don't know who could put context

21 on the other side, and we need to also be able to do

22 that.

[Page 568]

1 MR. MOLOO: My only point is I don't know

2 what I don't know. We just have no idea at the

3 moment.

4 (Pause.)

5 PRESIDENT SACHS: Okay, so we would ask you

6 to, you know, to agree on a protocol with those key

7 elements and to inform the Tribunal accordingly.

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17 MS. BANIFATEMI: A submission will take

18 time, so we will need to consult internally. Again,

19 there is--we have hearings and filings upcoming, so I

20 would prefer to revert to the Tribunal if I may after

21 we have consulted on the protocol and everything.

22 MR. MOLOO: I think that's fine.

[Page 569]

1 The one thing I would just ask,

2 Mr. President, is I am really hesitant to have a

3 200-page brief on, you know--so page limits might be

4 appropriate.

5 PRESIDENT SACHS: Yes, we already mentioned

6 a page limit for the U.S. treaty practice, and we

7 would also foresee a page limit for [Redacted]

8 [Redacted] of, let's say, 30 pages, so altogether

9 50 pages.

10 And the Tribunal reserves the right to call

11 for another hearing, virtual hearing, in case that we

12 wish to hear you on the further submissions.

13 MR. MOLOO: Understood.

14 MS. BANIFATEMI: Mr. President, it must be

15 me. I'm not clear on the page limit. You said 30

16 pages, so altogether 50 pages, so it's 30 pages per

17 Party for [Redacted].

18 PRESIDENT SACHS: Um-hmm.

19 MS. BANIFATEMI: Okay. Thank you.

20 MR. MOLOO: And I assume this would be

21 Respondent puts in whatever submission they want to

22 make [Redacted] because we don't know what

[Page 570]

1 submission they want to make, and then we will have an

2 opportunity to respond.

3 PRESIDENT SACHS: We said simultaneous.

4 MR. MOLOO: For [Redacted]?

5 PRESIDENT SACHS: Yeah.

6 MR. MOLOO: Okay.

7 [Redacted]

8 [Redacted]

9 [Redacted]

10 And you already had made certain points

11 which are not yet in the record. Any further

12 observation, questions, comments?

13 MR. MOLOO: On this particular issue, or

14 generally?

15 PRESIDENT SACHS: On this particular issue.

16 MR. MOLOO: No, Mr. President.

17 PRESIDENT SACHS: Generally.

18 [Redacted]

19 [Redacted]

20 [Redacted]

21 [Redacted]

22 [Redacted]

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[Page 572]

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3 Okay.

4 MR. MOLOO: That was my only point.

5 MS. BANIFATEMI: Nothing on our side but to

6 thank the Tribunal for its patience over these two

7 days which were long and complex X thank you to ICSID

8 and for your support and Court Reporter and

9 Interpreters.

10 PRESIDENT SACHS: It's our turn to thank

11 counsel for your very efficient and professional

12 conduct, and of course, we thank Sara from ICSID and

13 also, of course, David and Leandro for their

14 extraordinary work. It was not easy. So have a nice

15 afternoon, evening. And the Interpreter, yes. I'm

16 sorry, I forgot the Interpreters who also did a

17 terrific job, so thank you very much, and we will hear

18 from you.

19 MR. MOLOO: Thank you.

20 (Whereupon, at 4:21 p.m., the Hearing was

21 concluded.)

[Page 573]

CERTIFICATE OF REPORTER

I, David A. Kasdan, RDR-CRR, Court

Reporter, do hereby certify that the

foregoing proceedings were stenographically

recorded by me and thereafter reduced to

typewritten form by computer-assisted

transcription under my direction and

supervision; and that the foregoing

transcript is a true and accurate record of

the proceedings.

I further certify that I am neither counsel

for, related to, nor employed by any of the

parties to this action in this proceeding,

nor financially or otherwise interested in

the outcome of this litigation.

Signature

DAVID A. KASDAN