INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
ESPÍRITU SANTO HOLDINGS, LP and L1BRE HOLDING, LLC
Claimants
v.
UNITED MEXICAN STATES
Respondent
(ICSID Case No. ARB/20/13)
Members of the Tribunal
Mr. Eduardo Zuleta Jaramillo, President of the Tribunal
Mr. Charles Poncet, Arbitrator
Prof. Raúl Emilio Vinuesa, Arbitrator
Secretary of the Tribunal
Ms. Elisa Méndez Bräutigam
March 27, 2024
1. Pursuant to Section 19 of Procedural Order No. 1 (“PO1”), a Pre-Hearing Organizational Meeting for the organization of the Hearing on Jurisdiction and Merits (the “Hearing”) was held by videoconference between the President of the Tribunal and the parties on September 5, 2023, at 11:00 am, Washington, D.C. time. The audio recording of the meeting was circulated to the Tribunal and the parties.
2. Participating in the conference were:
President of the Tribunal
Mr. Eduardo Zuleta JaramilloICSID Secretariat
Ms. Elisa Méndez BräutigamParticipating on behalf of the Claimants
Mr. Richard C. Lorenzo
Ms. Juliana de Valdenebro
Mr. Nigel Blackaby KC
Mr. Lee RovinescuParticipating on behalf of the Respondent
Mr. Alan Bonfiglio Ríos, Secretaría de Economía
Ms. Rosilinda Toxqui Tlaxcalteca, Secretaría de Economía
Mr. Geovanni Hernández Salvador, Secretaría de Economía
Ms. Pamela Hernández Mendoza, Secretaría de Economía
Ms. Ellionehit Sabrina Alvarado Sánchez, Secretaría de Economía
Mr. Jorge Escalona Gálvez, Secretaría de Economía
Mr. Aldo González Aranda, Secretaría de Economía
Mr. Stephan J. Becker, Pillsbury Winthrop Shaw Pittman LLP
Mr. Cary Shaw, Pillsbury Winthrop Shaw Pittman LLP
Mr. Alejandro Barragán, Tereposky & DeRose
Ms. Ximena Iturriaga, Tereposky & DeRose
3. During the meeting, the President of the Tribunal and the parties discussed the draft procedural order circulated to them on August 10, 2023, including in particular the parties’ comments of August 30, 2023, advising the Tribunal of the agreements reached and their respective positions where no agreement was reached on the organization of the Hearing.
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4. By means of Procedural Order No. 12 dated September 13, 2023, the Tribunal decided to postpone the Hearing scheduled for October 16-20, 2023, and indicated that the Tribunal would set new Hearing dates in a separate decision, after consultation with the parties.
5. On October 17, 2023, after consulting the parties, the Tribunal informed them that “the hearing will take place the week of April 8, 2024.” Given that the Respondent informed the Tribunal that its damages expert was unavailable that week, the Tribunal “invite[d] the Respondent to liaise with its damages experts to explore whether they could become available the week of April 8, 2024, and to inform the Tribunal accordingly.”
6. On November 1, 2023, the parties informed the Tribunal that the Respondent’s damages expert “is now available to testify on Friday, April 12, 2024” and that “[the] Parties confirm that all witnesses and experts’ testimony will be heard during the week of April 8th.”
7. On February 25, 2024, the parties transmitted their comments on the draft Procedural Order No. 14. The Tribunal ruled on the parties’ main disagreements by letter of February 28, 2024. In its letter, the Tribunal further invited the parties to confer on a hearing agenda by March 11, 2024.
8. On March 11, 2024, the parties submitted their respective proposals for a hearing agenda. In its letter of March 13, 2024, the Tribunal instructed the parties to confer again on a hearing agenda and submit a joint proposal by March 25, 2024. The parties submitted their jointly agreed hearing agenda on March 25, 2024.
9. The Tribunal has considered the parties’ positions during the Pre-Hearing Organizational Meeting of September 5, 2023 and the correspondence and submissions following the said Pre-Hearing Organizational Meeting and, in the present Order, sets out the procedural rules upon which the parties have agreed and/or the Tribunal has determined will govern the conduct of the Hearing.
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10. The Hearing will take place from Monday, April 8 to Friday, April 12, 2024, with Saturday, April 13, 2024, in reserve. The Hearing will be held in-person at ICSID’s facilities located at World Bank C Building, 1225 Connecticut Ave. N.W., Washington, D.C.
11. The Hearing will start each day at 9:00 am (Washington, D.C. time) and end each day at 5:30 pm (Washington, D.C. time). The Tribunal may sit longer on a specific hearing day when circumstances so justify.
12. There will be two 15-minute breaks during each day, one in the morning and one in the afternoon, as well as a 1-hour lunch break.
13. At least 10 minutes during each Hearing day will be reserved for housekeeping matters.
14. At least 30 minutes during each Hearing day will be reserved for Tribunal time.
15. The order of proceedings and structure of the Hearing will be as indicated in the agenda incorporated as Annex A.
16. This schedule is subject to any changes that the Tribunal may deem necessary or appropriate during the Hearing.
17. In accordance with Section 20.5 of PO1, the total Hearing time will be split evenly between the parties. Each party shall be permitted to use the time allocated to it as it sees fit.
18. Time allotted to the parties does not include breaks, time used for housekeeping matters, nor Tribunal time. Accordingly, each party shall have a total of 15 hours and 50 minutes available to it during the entire Hearing. The Tribunal may adjust the time allocation when appropriate in the circumstances.
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19. The parties may provide opening statements during the first Hearing day. The parties have agreed to allocate 2 hours and 15 minutes to their opening presentations, with a rebuttal of up to 15 minutes.
20. Time used by the parties in oral argument or in examination of witnesses and experts shall be attributable to the party making such argument or conducting such examination.
21. Time spent responding to Tribunal questions, other than minor questions such as requests to specify the document to which reference is made, shall not be counted towards either party’s time allocation unless the Tribunal decides otherwise.
22. In accordance with Section 20.5 of PO1, the Secretary of the Tribunal shall keep a chess clock account of time and advise the parties of the total daily time used at the end of each Hearing day.
23. The parties are expected to use the Hearing day efficiently and avoid unnecessary slippage (e.g., delays in returning from breaks). In the event of excess slippage, the Tribunal may revisit the length of the sitting day or, in unusual circumstances, the time allocated to the parties, bearing in mind principles of predictability, equal treatment and a fair opportunity for the parties to be heard.
24. As provided for in paragraph 13.4 of PO1, by March 22, 2024 the parties shall courier to the ICSID Secretariat and to Mr. Poncet and Prof. Vinuesa¹ a USB drive containing an electronic copy of the entire case file (including pleadings, witness statements, expert reports, exhibits, legal authorities and Tribunal decisions and orders to date) with a consolidated hyperlinked index of all documents.
¹ The President does not require a USB drive with the electronic copy of the case file.
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25. This case file shall be used as the single Electronic Hearing Bundle. The USB shall be PC and Mac compatible, and shall not contain any document not previously filed. It shall be organized as follows:
Electronic Hearing Bundle:
01. Pleadings
A. Claimants
B. Respondent
02. Witness Statements
A. Claimants
B. Respondent
03. Expert Reports
A. Claimants
B. Respondent
04. Exhibits
A. Claimants
B. Respondent
05. Legal Authorities
A. Claimants
B. Respondent
06. NDP Submission + Parties’ Comments
07. Tribunal’s Rulings
26. The Electronic Hearing Bundle shall be uploaded by the parties to a designated sub-folder in the BOX filesharing platform by March 22, 2024. To ensure operation of the hyperlinked index, the entire Electronic Hearing Bundle shall be housed within one folder and then uploaded to BOX as a single zip file. Should the size of the zip file make the upload to BOX impossible, the parties shall upload the organized Electronic Hearing Bundle to a designated sub-folder on to the BOX filesharing platform, using the structure indicated at paragraph 18 supra, including a consolidated (non-hyperlinked) index. To the extent possible, all materials in the Electronic Hearing Bundle shall be text searchable (i.e., OCR PDF or Word), and should include a table of contents where applicable.
27. Prior to the Hearing, the Members of the Tribunal, the Secretary of the Tribunal and the parties shall download the Electronic Hearing Bundle from the BOX Case Folder into their own devices to have access to it offline during the Hearing. The court reporter and the
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interpreters will also be provided a copy of the Electronic Hearing Bundle via the ICSID Secretariat.
28. Documents that are not part of the record may not be exhibited at the Hearing. This provision is without prejudice to an application a party may make under Section 16.3 of PO1.
29. During cross-examinations, the parties will refer to documents that already form part of the record of the case using the Electronic Hearing Bundle.
30. The witnesses and experts are entitled to ask to be shown a full copy of any exhibit or authority on which they will be questioned (i.e., they are not to be restricted to reviewing excerpts of documents shown on a screen).
31. At the beginning of each witness or expert direct examination, the party who is putting forward the witness or expert will provide the witness or expert with unmarked hard copies of his or her signed statements or reports. Annexes to the statements and reports may be printed at a party’s discretion.
32. The party examining a witness shall upload an electronic copy of the cross-examination bundle to a designated folder in the BOX filesharing platform and send an email to the entire case email distribution including the other party, the Secretary of the Tribunal, the Members of the Tribunal, the court reporters and the interpreters as necessary with the link to the designated BOX folder, no later than 15 minutes in advance of each testimony; but no witness or expert shall review such bundle before testifying. Documents will be shown electronically by each party and displayed in screens in the hearing room.
33. The parties may, at their discretion, provide a hard copy of the cross-examination bundle to the witness, the expert, the Tribunal, opposing counsel, the court reporters and the interpreters.
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34. A party is not limited to the use of the cross-examination bundle and may refer the witness or expert to any document in the Electronic Hearing Bundle during cross-examination.
35. The parties may use PowerPoint or other slide presentations during the Hearing, subject to the below rule on demonstrative exhibits.
36. Demonstrative exhibits shall be used in accordance with Section 16.8 of PO1, bearing in mind that a PowerPoint presentation constitutes a demonstrative exhibit only to the extent that it contains charts, tabulations or other representations of data that compile information already present in the record albeit in a new form. Demonstrative exhibits must reflect and reference (with exhibit numbers) evidence on the record and may not introduce new evidence, directly or indirectly.
37. Demonstrative exhibits and PowerPoint presentations shall be electronically provided to the Tribunal, the Tribunal Secretary and the other party by email and uploaded to BOX 1 hour before their use.
38. The parties may, at their discretion, provide a hard copy of the demonstrative exhibits and PowerPoint presentations to the Tribunal, opposing counsel, the court reporters and the interpreters.
39. Each party will ensure that electronic copies of PowerPoint presentations and demonstrative exhibits are uploaded to BOX by the end of each Hearing day, designating each with the corresponding CD-__ or RD-__ number.
40. The parties should, insofar as possible, circulate any speaking notes to the court reporter prior to the start of each intervention. These notes should be emailed directly to the court reporter and shall be treated as confidential information. Notes will be destroyed immediately after use.
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41. The rules set out in Section 18 of PO1 for the examination of witnesses and experts are confirmed.
42. Before giving evidence, witnesses shall make the declaration in ICSID Arbitration Rule 35(2), and experts shall make the declaration in ICSID Arbitration Rule 35(3).
43. In accordance with Section 18.3 of PO1, witness statements and expert reports shall constitute the direct testimony of each factual or expert witness, respectively.
44. Expert witnesses shall be permitted to make a presentation on the contents of their respective expert report(s) of no more than 45 minutes prior to any cross-examination.
45. If an expert intends to use any demonstrative exhibit or PowerPoint presentation for the purpose of presenting his or her case or the contents of their respective expert report(s), this demonstrative exhibit or PowerPoint presentation shall be electronically provided to the Tribunal, the Tribunal Secretary and the other party by email and uploaded to BOX no later than 1 hour before their use. Demonstrative exhibits and PowerPoint presentations shall be used in accordance with Section 16.8 of PO1. The parties may, at their discretion, provide a hard copy of the Demonstrative Exhibits and PowerPoint presentations to the Tribunal, opposing counsel, the court reporters and the interpreters.
46. When an expert report is signed by more than one expert, the party that submitted the report must designate one expert who shall lead the testimony. The lead expert shall, without conferring, designate the expert who is to answer each question. In any circumstance, only one expert shall provide an answer to each specific question.
47. The procedure for the examination of witnesses provided for in Section 18.4 of PO1 applies. The direct examination of witnesses shall not exceed 15 minutes.
48. The above provision will apply, mutatis mutandis, to the examination of experts, subject to the clarification that experts may make a presentation in lieu of direct examination for up to 45 minutes, as noted at paragraph 37, above.
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49. During the course of an examination, counsel for the party presenting the witness or expert subject to examination may object to questions posed to the witness or expert by the examining counsel provided that the objection is not argumentative or suggestive. Objections will be resolved by the Tribunal.
50. Experts (but not witnesses) shall be allowed in the hearing room before giving their testimony and shall be permitted to read the transcript of the hearing before testifying. Witnesses who are also representatives of a party shall be allowed in the hearing room for the opening presentations and shall be examined in the first instance prior to any other witnesses, one after the other. (For the avoidance of doubt, if there is more than one party-representative for one party, the second party-representative to be examined would be excluded from the hearing room only for the period of examination of the first party-representative witness). Once a witness has completed his or her examination, that witness may remain in the hearing room thereafter. This includes party-representative witnesses.
51. The party whose witness or expert has been called for cross-examination must make the witness or expert available for the Hearing. In accordance with Section 18.2 of PO1, if a witness or expert has been called to testify by the adverse party but the witness or expert does not appear at the Hearing, that witness’s or expert’s testimony shall be stricken from the record unless the Tribunal finds that there have been extraordinary circumstances that prevent him or her from testifying.
52. Witnesses and experts shall not have access to or review any notes that they may have prepared prior to their testimony, except for experts who shall have access to their speaking notes during their direct presentations and their demonstrative exhibits referenced in paragraph 38 above.
53. It shall not be permitted for anyone to communicate with the witnesses or experts during their examination by any means other than communication on the record.
54. In order to prevent any down time during the Hearing, each witness and expert shall be available for examination half a day before and after their scheduled examination time.
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55. The parties shall make their best efforts to start and finish the examination of a witness or expert on the same day. If the examination is interrupted and must continue in the following session, the witness or expert shall remain sequestered, with appropriate instructions from the Tribunal not to communicate with any party overnight, until the examination is completed.
56. Examination by video-conference may be permitted for justified reasons at the discretion of the Tribunal. If a party proposes to have one of its witnesses examined by video-conference, it shall seek leave to do so by March 15, 2024. The Tribunal may provide further directions for examinations by video-conference.
57. On March 15, 2024, the Respondent informed the Tribunal that two of its witnesses, Messrs. Arturo Martínez Salas and Emiliano Zepeda Strozzi, have not yet obtained U.S. visas to attend the Hearing in person, that they would need to testify remotely in the event they did not receive their visas on time, and that the Respondent would be able to provide further information on the status of their visa applications by the end of March 2024. On March 18, 2024, the Tribunal took note of the Respondent’s communication and asked the Respondent to keep it updated on this matter. Further, on March 22, 2024, the Claimants noted that their witness, Mr. Eduardo Zayas, is expected to testify virtually absent any new developments with respect to his travel restrictions. The Tribunal will rule on any matters concerning remote witness participation separately.
58. The parties have called for examination the following witnesses and experts:
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² The Claimants initially called Dr. Angélica Armenta Pichardo for cross-examination. The Respondent opposed. On February 28, 2024, the Tribunal took note of the parties’ respective positions, noted that Dr. Armenta is not available to attend the Hearing, and concluded that Mr. Bartolo alone will testify on the Armenta-Bartolo Report.
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59. Each party shall decide the order in which it will present its own witnesses, as per the order provided in Annex A.
60. In the event that a video-conference examination takes place, each witness and expert witness should be warned regarding the presentation of evidence remotely and asked to display his or her surroundings by means of his or her camera. They should also make the following statements at the beginning of their examination:
61. During a video-conference examination, witnesses or experts shall not use a “virtual background” and shall not impede or limit in any way the recording of the remote location from which he or she is testifying, including the use of filters that blur or distort the room environment. In addition, the witness or expert shall indicate the location from which he or she is testifying, shall be alone in the room, and shall indicate whether there are persons in adjoining or nearby rooms who are involved in the arbitration.
62. The Tribunal shall have the authority to request the witness or expert to reorient his or her camera at any time during the examination to provide a better angle, lighting, or to check the surroundings or any material available to the witness or expert.
63. In accordance with Section 21.1 of PO1, the Secretariat shall record the Hearing, and the audio recording will be shared with the parties and the Tribunal at the conclusion of the Hearing.
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64. Except for the court reporter(s) that will make their own audio recording of the Hearing, attendees will not otherwise make any audio, video or screenshot record of the Hearing or any part of it.
65. The provisions of Section 21.2 and 21.3 of PO1 concerning transcription apply.
66. Transcription services will be provided by B&B Reporters and D-R Esteno (the “court reporters”). The court reporters will attend in person. The court reporters may seek to clarify the record from time to time during the course of the Hearing. The cost of court reporting services shall be borne equally by both parties, out of the advance on costs paid by the parties, subject to the Tribunal’s award of costs.
67. ICSID has made arrangements to have English and Spanish verbatim transcripts available in real-time using Live Note or a similar software during the Hearing.
68. Should court reporters be participating remotely, the real-time court reporting shall be made available to the Participants via an online link connection to be provided by the court reporters. The connectivity details (links and instructions) to connect to the streamed real-time transcripts in both procedural languages will be shared by ICSID prior to the start of the Hearing.
69. Electronic versions of the transcripts will be provided to the parties and the Tribunal on a same-day basis.
70. In accordance with Section 21.3 of PO1, the deadline for the corrections to the transcript shall be 45 days following the later of the dates of the receipt of the sound recordings and transcripts. The agreed corrections may be entered by the court reporter in the transcripts (“Revised Transcripts”). The Tribunal shall decide upon any disagreement between the parties and any correction adopted by the Tribunal shall be entered by the parties in the Revised Transcripts.
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71. In accordance with Section 11.7 of PO1, the Hearing will be conducted in Spanish and English with simultaneous interpretation from and into each procedural language. The cost of interpretation services shall be borne equally by both parties, out of the advance on costs paid by the parties, subject to the Tribunal’s award of costs.
72. It is planned that the interpreters will attend the Hearing in person.
73. The parties confirm that all witnesses and experts require interpretation (English to Spanish or Spanish to English) when testifying:
Fact witnesses:
i. Claimants
Mr. Santiago León Aveleyra, testifies in English.
M. Eduardo Herrera de Juana, testifies in Spanish.
Mr. Agustín Muñana Zúñiga, testifies in Spanish.
Mr. Eduardo Zayas Dueñas, testifies in Spanish.
ii. Respondent
Mr. Andrés Lajous Loaeza
Mr. Carlos Alberto Serdán Rosales
Mr. Eduardo Clark García Dobarganes
Mr. Rufino H. León Tovar
Arturo Martinez Salas
Emiliano Zepeda Strozzi
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Mr. Alejandro Corral Serrano, testifies in Spanish.
Mr. Joshua M. Mitchell, expert witness, testifies in English.
Mr. Marco Antonio de la Peña Sánchez, testifies in Spanish.
Mr. Howard Rosen, testifies in English.
Mr. Timothy Hart
Ms. Rebecca Vélez
Mr. Max Alberto Diener Sala
Mr. Jorge González Gallástegui
Mr. Francisco Elías Bartolo Sánchez
74. The Hearing shall be closed to the public. However, in accordance with Sections 20.6 and 25 of PO1 provisions shall be made for representatives of the Non-Disputing NAFTA Parties to attend the Hearing upon request.
75. On February 12, 2024, the ICSID Secretariat asked the Non-Disputing NAFTA Parties to confirm to the Tribunal and the parties by March 4, 2024, whether they were planning to attend the Hearing and, if so, to provide their lists of participants. The Non-Disputing NAFTA Parties confirmed that their representatives would attend the Hearing remotely and provided their respective lists of participants on February 19 and February 22, 2024. On February 29, 2024, the representatives of the Non-Disputing NAFTA Parties further confirmed that they do not intend to make oral submission at the Hearing.
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76. All participants shall (i) keep confidential all documents and information coming to their knowledge as a result of their participation in the hearing; (ii) not use, or authorize any other person to use, such documents and information other than for the purpose of performing their work at the hearing; and (iii) dispose of all documents if printed, as confidential material, and delete all electronic copies that might be stored on personal devices when their hearing-related work has been completed.
77. In accordance with Section 22 of PO1, the matter of post-hearing submissions and the deadline for the filing of costs submissions will be discussed at the end of the last Hearing day. No new evidence may be submitted with the post-hearing submissions and the statements of costs. This provision is without prejudice to an application a party may make under Section 16.3 of PO1.
78. Each party shall provide its respective List of Participants by March 22, 2024, using the format provided in Annex B.
79. The Hearing will be simultaneously streamed via Zoom in accordance with how ICSID usually arranges it. For any Remote Participant the Secretary of the Tribunal will provide a connection via Zoom (“Hearing Platform”). The details to join the Hearing Platform will be shared by the Secretary of the Tribunal in advance of the Hearing and the Hearing Platform will be available via the same link throughout the entire Hearing.³
80. Remote Participants are subject to the same obligations of confidentiality as all other attendees.
³ Other logistical details (e.g., testing, connectivity, equipment and set up, etc.) will be handled through correspondence directly by the Secretary of the Tribunal.
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81. The logistical details (e.g., confirmation of room number assignments, List of Participants, set-up details, details on court reporting and technical support services, internet access, audio-visual equipment and catering orders) will be handled through correspondence directly with the ICSID Secretariat.
82. In accordance with Section 20.7 of PO1, the parties will submit by March 22, 2024 (i) a chronology of relevant facts in tabular form; (ii) a list and brief description of the individuals and entities who/which are part of the relevant factual background (dramatis personae); and (iii) a list of the substantive issues required to be determined by the Tribunal.
83. The Tribunal, in consultation with the parties and the ICSID Secretariat, may issue a protocol on COVID-related measures if the circumstances so justify.
For and on behalf of the Tribunal,
Signature
Mr. Eduardo Zuleta Jaramillo
President of the Tribunal
Date: March 27, 2024
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[attached separately]
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