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PCA CASE No. 2019-46

IN THE MATTER OF AN ARBITRATION
BEFORE A TRIBUNAL CONSTITUTED IN ACCORDANCE WITH THE
TRADE PROMOTION AGREEMENT BETWEEN THE REPUBLIC OF PERÚ AND
THE UNITED STATES OF AMERICA
- and -
THE UNCITRAL ARBITRATION RULES 2013

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[Page 138]

PCA CASE No. 2019-47

IN THE MATTER OF AN ARBITRATION
BEFORE A TRIBUNAL CONSTITUTED IN ACCORDANCE WITH THE
CONTRACT OF STOCK TRANSFER BETWEEN EMPRESA MINERA DEL
CENTRO DEL PERU S.A. AND DOE RUN PERU S.R. LTDA, DOE RUN
RESOURCES, AND RENCO, DATED 23 OCTOBER 1997, AND THE
GUARANTY AGREEMENT BETWEEN PERU AND DOE RUN PERU S.R. LTDA,
DATED 21 NOVEMBER 1997
- and –
THE UNCITRAL ARBITRATION RULES 2013

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- - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

VIDEOCONFERENCE HEARING ON ARTICLE 10.20.5 OBJECTIONS AND
BIFURCATION, Volume 2
Saturday, June 13, 2020

The hearing in the above-entitled matters convened

at 9:00 UTC-4 (Washington, D.C.) before:

JUDGE BRUNO SIMMA, President of the Tribunal

DR. HORACIO GRIGERA NAÓN, Co-Arbitrator

MR. J. CHRISTOPHER THOMAS QC, Co-Arbitrator

[Page 139]

ALSO PRESENT:

Registry, Permanent Court of Arbitration:

MR. MARTIN DOE RODRIGUEZ, Senior Legal Counsel
Secretary of the Tribunal

MS. ISABELLA URÍA, Assistant Legal Counsel

Assistant to the Tribunal:

DR. HEINER KAHLERT

Court Reporters:

MR. DAVID A. KASDAN
Registered Diplomate Reporter (RDR)
Certified Realtime Reporter (CRR)
Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of America
(202) 544-1903
[email protected]

SR. VIRGILIO DANTE RINALDI, S.H.
MR. LEANDRO IEZZI
MS. LUCIANA SOSA
D.R. Esteno
Colombres 566
Buenos Aires 1218ABE
Argentina
(5411) 4957-0083
[email protected]

Interpreters:

MR. DANIEL GIGLIO

MS. SILVIA COLLA

Law In Order:

MR. JASON AOUN

MS. AMBER JADE

[Page 140]

APPEARANCES:

On behalf of the Claimants:

MR. EDWARD G. KEHOE
MR. CEDRIC SOULE
MS. ISABEL FERNÁNDEZ de la CUESTA
MR. ALOYSIUS "Louie" LLAMZON
MS. HELEINA FORMOSO
MS. LUISA GUTIERREZ QUINTERO
King & Spalding, LLP
1185 Avenue of the Americas
New York, New York 10036-4003
United States of America

MR. DAVID WEISS
King & Spalding, LLP
110 Louisiana Street, Suite 3900
Houston, Texas 77002
United States of America

Claimants' Representatives:

MR. JOSHUA WEISS
The Renco Group

MR. MATTHEW WOHL
The Doe Run Company

[Page 141]

APPEARANCES: (Continued)

On behalf of the Respondent:

MR. RICARDO AMPUERO
MR. SHANE MARTÍNEZ del AGUILA
Republic of Perú

MR. JONATHAN C. HAMILTON
MR. FRANCISCO X. JIJÓN
MR. JONATHAN ULRICH
MS. ESTEFANÍA SAN JUAN
MR. ANTONIO NITTOLI
MS. CAROLYN SMITH
White & Case LLP
701 Thirteenth Street, N.W.
Washington, D.C. 20005-3807
United States of America

MS. ANDREA MENAKER
White & Case, LLP
5 Old Broad St, Cornhill
London EC2N 1DW
United Kingdom

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C O N T E N T S

PAGE

PRELIMINARY MATTERS.........................................144

REBUTTAL ARGUMENTS (Treaty Arbitration)

ON BEHALF OF THE RESPONDENTS:

By Mr. Hamilton..........................................145

By Ms. Menaker...........................................157

ON BEHALF OF THE CLAIMANTS:

By Mr. Kehoe.............................................172

By Mr. Llamzon...........................................184

By Mr. Soule.............................................188

OPENING STATEMENTS (Contract Arbitration)

ON BEHALF OF THE RESPONDENTS:

By Mr. Hamilton..........................................192

By Ms. Menaker...........................................199

ON BEHALF OF THE CLAIMANTS:

By Mr. Kehoe.............................................207

By Ms. Fernández de la Cuesta............................216

QUESTION FROM THE TRIBUNAL...................................226

[Page 143]

REBUTTAL ARGUMENTS (Contract Arbitration)

ON BEHALF OF THE RESPONDENTS:

By Mr. Hamilton..........................................228

By Ms. Menaker...........................................229

By Mr. Hamilton..........................................232

By Mr. Jijón.............................................235

By Mr. Hamilton..........................................236

ON BEHALF OF THE CLAIMANTS:

By Mr. Kehoe.............................................240

By Ms. Fernández de la Cuesta............................241

PROCEDURAL DISCUSSION........................................247

[Page 144]

P R O C E E D I N G S

PRESIDENT SIMMA: Thank you very much. Let me
open the second day of the Hearing in our cases, and we
start with rebuttal presentations.

And if you don't have any organizational thing
to raise right now, which looking at Mr. Hamilton, it
doesn't seem to be the case, Mr. Kehoe, any organizational
item?

MR. KEHOE: No, sir.

PRESIDENT SIMMA: Okay. Then I give the floor
to Respondent for the rebuttal in the Treaty arbitration.

MR. HAMILTON: Mr. President, if I might, we do
have one organizational matter--

PRESIDENT SIMMA: All right.

MR. HAMILTON: --which is the President
mentioned the calculation of the use of a three-hour
period of time, and we wanted to ask if the Secretary
could advise the status of the clock.

PRESIDENT SIMMA: Martin?

SECRETARY DOE: Sure. I can do that quickly.
The Claimants have used an hour and 40 minutes
thus far, and the Respondent has used an hour and 38
minutes until now.

PRESIDENT SIMMA: Very well. Okay.

MR. HAMILTON: Shall I proceed, Mr. President?

[Page 145]

PRESIDENT SIMMA: Please do.

MR. HAMILTON: Thank you very much.

REBUTTAL ARGUMENT ON TREATY ARBITRATION BY COUNSEL FOR
RESPONDENT

MR. HAMILTON: Good morning to the President and
the Members of the Tribunal, the PCA staff and also our
counterparts. Good morning to you all. Buenos días.

Next slide, please.

Members of the Tribunal, what are we talking
about when we're talking about The Renco Group and its
management of the La Oroya Complex in the Central Andes of
Peru? You don't need my words. You can read what has
been pending in a case in court in Missouri dating back
prior to the entry into force of the Treaty to 2007. And
I'll just refer you to Exhibit R-17, a pleading in that
case brought against Renco and various Renco entities and
executives, and it states: "Sulphur dioxide, emitted an
excessive level from the La Oroya Complex damages the
circulatory and respiratory systems, increases mortality
and is linked to lung cancer, especially when present
along with elevated levels of particulate matter. During
the course of their ownership, operation, use, management,
supervision, storage, maintenance, and/or control of
operations of their metallurgical complex, the defendants
negligently, carelessly and/or recklessly made decisions

[Page 146]

while located in the states of Missouri and/or New York.
Defendants' actions and omissions caused the release of
these toxic substances and resulted in plaintiffs'
exposure to these toxins and harmful substances." And
defendants did so, big surprise, for their own financial
benefit.

That issue related to Renco's violations of the
air quality in La Oroya are at the heart of everything in
front of you, Members of the Tribunal. You heard
information yesterday that was grossly out-of-context from
my counterparts, and information dating back two decades
or more, but this is the reality of the dispute that has
been pending since well before the Treaty came into force,
and this is the responsibility that Renco has spent years
and years trying to evade by shifting responsibility for
its wrongdoing onto the backs of Peru and the Peruvian
people.

Before you at this time, Members of the
Tribunal, is a very concrete set of issues related to the
Treaty. And let's be clear: It is Renco that disregards
the Treaty.

We're going to first look at the treaty
requirements and Renco's disregard of those requirements.

It was telling that, yesterday, Renco
included--can we please go to the slide that says: "Renco

[Page 147]

disregards the Treaty"--sorry, there's a slight
technological lag, Members of the Tribunal--"Renco
disregards the Treaty."

Yesterday, Renco cited excerpts from the
Preamble to the United States-Peru Treaty. It was curious
that it did so because it did the exact same thing five
years ago in a hearing about its treaty violations in the
Renco I case; and, in the Renco I case, as here yesterday,
Peru reminded the Tribunal that the Treaty includes a
range of objectives that must be considered in balance.
Indeed, you can read the Transcript from that first
hearing and see where we made the exact same comments.
There is a lot of déjà vu to what is going down in this
Hearing.

Peru is the Party of the rule of law in this
proceeding. Renco is the Party that seeks to evade the
plain language obligations that any Investor when pursuing
rights under the Treaty.

Indeed, at this time when the mere concept of
globalization and the approach of resolving disputes to a
Rules-based system established by treaties are under
assault. This is not the time for tribunals to rewrite
treaties, bend the rules to an investor that already was
found to have violated the Treaty, and to do so based on
the whims and desires of a polluting corporation.

[Page 148]

This issue before you, Members of the Tribunal,
is not that complicated. The Treaty states, the Treaty
mandates, the Treaty instructs temporal requirements and
limits the consent of the State to arbitrate based on
those requirements, and the Parties to the Treaty
underscore that those requirements must be followed. And
there are only two Parties to this Treaty--the United
States of America and the Republic of Peru--and Renco has
no comfort from the submission of the United States
Government as the Non-Disputing Party.

In the face of these clear Treaty requirements,
Renco brings the smog that it put into the air of La Oroya
into this sacred Treaty proceeding, and it is asking you,
Members of the Tribunal, to do nothing less than to
rewrite the Treaty. That's the way Renco operates. They
want to rewrite laws. They want to rewrite periods of
time to comply with environmental regulations. They want
to rewrite treaties. They want to do nothing less than
take plain and clear Treaty language--the United States of
America calls it clear and rigid--and they want to pull
out their track changes and add comma, "unless," "unless"
the polluting corporation wants to change the
requirements, "unless" the corporation lost the previous
case and wants to now suffer no consequences for it. That
is not what the Treaty says, and that is not what the

[Page 149]

Tribunal is authorized to do. Renco does this by bringing
a fog of international law, trying to confuse, trying to
rewrite the Treaty. They did the exact same thing in
Renco I.

Meanwhile, outside this space of the Treaty
proceeding where the rule of law must prevail, there's
still a tawdry world of constant lobbying with cozy
corporate insiders affiliated with Renco trying to shape
the outcome of this dispute.

And, finally, in this context, the fog of false
allegations, false allegations against Peru and false
allegations against its counsel. Totally inappropriate.
Peru objects in the strongest manner possible to the
allegations and dubious terminology that we heard
yesterday. And it can all be boiled down to a phrase that
we heard thrown around by Renco yesterday. "So what?",
Renco said, "So what that Peru was collegially engaged in
consultations?" And they're asking this Tribunal to say:
"the Treaty requires X, so what?" It summarizes their
entire case in two words: "So what?"

And let's look at these false factual
allegations, because they are revealing as to what Renco
is really up to here, and what really is not that
complicated a set of issues.

Regarding the issue of waiver, Renco disregards

[Page 150]

the procedural history. Renco emphasized time and
again--and it had a slide where it cited to a stray phrase
in Renco I alleging that Peru never raised its waiver
objection until September of 2014-2015. That is false.
It's absolutely false. If there's any thought to the
contrary, it's not based on facts. Renco says it was
completely unaware of Peru's objections. That is
inaccurate. Peru raised the waiver issue promptly.

Now, let me be clear.

The waiver obligation, just like the temporal
restrictions, is absolute, clear and rigid. States have
no obligation to raise in the first week or month or year
their jurisdictional objections in a proceeding. It would
be, as "ismundo arebes" (phonetic) if States were under a
specific obligation like that that is not stated anywhere
in the Treaty.

But, in any event, Peru raised the waiver issue
promptly. As a matter of fact, Peru referred specifically
to the compulsory waiver and the scope of the mandatory
waiver and the scope of the consent to arbitrate, although
it had no obligation to do so, in 2011.

Next slide.

So, Renco is simply disregarding the early
procedural history of the case. In fact, Renco filed an
Amended Statement of Claim in August of 2011. It withdrew

[Page 151]

through the Claimant, withdrew a waiver, but intentionally
maintained a non-compliant waiver, and during that same
month, August 2011 through September of 2011, Peru twice,
in correspondence, referred to the waiver issue.

Now, after that, the Tribunal was subsequently
stated in April of 2013. During the meantime, there was
no Tolling Agreement, there was no agreement of any type.
And once the Tribunal was constituted, there was a First
Session. The Parties engaged in vigorous debate and
discussion about the Schedule for the case and established
a procedural schedule.

Next slide.

Renco also disregards Peru's compliance with the
procedural schedule. Under the Procedural Agreement and
what Renco repeatedly requested is that Respondent raised
its--any jurisdictional objections in its
Counter-Memorial. That's what Renco was after. Peru did
not waive for its Counter-Memorial. The very first filing
that Peru made in Renco I after the Procedural Order, it
filed on time, and it complied, and it stated the waiver.
And it stated--and I'm citing to our correspondence of
March 2014: "Renco has presented an invalid waiver in
this proceeding because it does not conform with the
language required by the Treaty."

So, Renco continues to perpetuate the falsehood

[Page 152]

in front of this Tribunal that somehow a State that
diligently raised an objection clearly provided for by the
Treaty, clearly supported by the interpretation of the
United States of America, and they're trying to put it
onto your backs, Members of the Tribunal, to disregard
temporal requirements under the Treaty by somehow blaming
Peru for diligently raising a waiver requirement years
ago. It's completely out of line with what the Treaty
contemplates.

As a matter of fact, even after that first
filing, again and again and again Peru requested to be
heard, and I refer your attention to Slide 7, a whole
series of requests. The waiver turns on a narrow set of
facts involving a single paragraph, flaws which have not
been cured, references to ongoing violations of the waiver
requirement. If Peru's waiver objection is not heard and
decided now, it will result in an extraordinary waste of
resources. That is what Peru said.

What did Renco do? Renco repeatedly tried to
stop Peru from being heard. It insisted that this issue
be punted until later in the proceedings during the merits
phase, that Respondent will have every opportunity to
raise its other objections in the Counter-Memorial.

So, think about this, Members of the Tribunal.
Renco invented a false story, completely false, that

[Page 153]

somehow Peru secretly hid a waiver objection. Peru
satisfied every obligation under the Treaty. It satisfied
every obligation under the Procedural Order. It
repeatedly, repeatedly, repeatedly requested to be heard,
and Renco repeated tried to obey, and we all know why.
Because the later it's delayed, the more they say, oh, how
unfair it to us it would be, so they're doing nothing more
now than trying to cast aspersions on the State for
diligently raising an objection which prevailed.

Now, let's be clear. Renco I decided for Peru.
Absolutely and clearly. Renco violated the Treaty. And
as I explained yesterday, there was no indication
according to the Tribunal that Renco did do so
inadvertently. The Renco I Tribunal did not find any
abuse, and they did not find or rewrite the Treaty to
allow Renco to cure. So, what is Renco doing? Having
failed in Renco I with its last-minute abuse and cure
arguments, Renco is coming to you and they're saying,
Members of the Tribunal, we want you, who weren't part of
the previous case, to disregard the Treaty's objections
before you, and we want you to go back and decide that
there was abuse, when it was already decided by a prior
Tribunal there was not abuse. And they want you, Members
of the Tribunal, to allow Renco to cure its intentional
misuse of a waiver. They want you to give you them the

[Page 154]

cure. They want to you add extra language to the Tribunal
to which the United States of America and the Republic of
Peru do not agree.

So, this entire approach of Renco is to escape
clear prescription requirements in the Treaty by creating
an inaccurate story and trying to put onto Peru's back
Renco's prior treaty violation. It cannot be the right
thing to do.

And these inaccurate procedural history parts of
Renco's case play out as well with Peru's timely raising
of temporal objections before this Tribunal. As we
pointed out, Peru raised temporal objections long ago in
the first Renco Case. There's no surprise that there are
such concerns.

Now, what does the Treaty say? The Treaty says,
if a Respondent requests. Renco says--according to Renco
the Treaty says to make and brief its objections. That is
not what the Treaty says. And the United States
submission gives no support to Renco and does not buy into
Renco's effort to misuse the Feldman Case.

Renco also miscites precedents. It misuses RDC
v. Guatemala. We saw a glitch yesterday including RDC v.
Guatemala. Look, everybody always does it the same way.
No. There is not a mould, and the reason there is not a
mould is because there is no itemized requirement.

[Page 155]

Whereas, for instance, if you file Notice of Arbitration
under the UNCITRAL Rules, it indicates various core
elements that you should include.

You know, take note, Members of the Tribunal,
Renco chose to call its Notice of Arbitration in this case
a "Statement of Claim." Then it came later and said,
"Well, that wasn't really our Statement of Claim. We're
going on to give more information, more experts, more
witnesses." And, in fact, in this phase of the case they
did so. They added additional factual allegations to try
to escape their prescription problems. Yet they turn
around and want to rewrite the Treaty requirement to stop
Peru from being heard.

Now, think about it. They want to stop Peru
from being heard on this issue. We will be heard on this
issue. It's simply a question of when, just as with the
waiver issue.

And let's also be clear that Peru triggered the
Treaty's expedited mechanism. A little bit of context is
useful here. The Framework Agreement that the Parties
negotiated, not a mere tolling agreement, said various
things including that if the Parties were unable to reach
a final solution, they would consider a sole arbitral
proceeding. There were discussions between the Parties
about how to manage these parallel claims. As a matter of

[Page 156]

fact, in Peru's Preliminary Response of January 2019, Peru
said Renco cannot apply the Treaty retroactively. Renco's
claims are time-barred.

There also was procedural coordination. We
specifically put into the joint letter of October 17,
2019, language that said the Parties will coordinate with
the Tribunal as to the date of constitution. That was
specifically designed, as we discussed with this Tribunal
last January, to allow the Parties to explore how to
manage these parallel proceedings in a reasonable way that
respects due process, and that's why Peru repeatedly
sought conference calls and repeatedly tried to consult on
these issues.

And, in fact, the day before we filed our
request, we were in discussions, and we thought that there
was going to be an agreement on the date of constitution
so that the Parties could agree more broadly on how to
manage these two cases effectively. Instead, of course,
we went ahead and filed our request, which was ready and
waiting, and here we are.

So, what we really see is Renco déjà vu. They
want to disregard the Treaty and prevent Peru from being
heard. They did it in Renco I. They tried to prevent
Peru from being heard about Renco's treaty violations.
They failed. They failed.

[Page 157]

Now, what are they doing here?

(Overlapping interpretation with speaker.)

MR. HAMILTON: What we have before you, Members
of the Tribunal, is a lot of factual allegations that
plainly pre-date the Treaty. We have a much smaller
category of allegations that are prior to the Prescription
Date. And, finally, we have the nub of the nub of the
nubs, which is an appeal of an appeal of an appeal, and
they're left with this one, 2015 Supreme Court rule. It
cannot be the case, Members of the Tribunal that you have
the authority to rewrite the prescription language of the
Treaty and in any way let Renco get away with this
approach to its claims.

Ms. Menaker is going to address a few points on
non-retroactivity, on prescription and denial of justice.

Thank you.

PRESIDENT SIMMA: Thank you, Mr. Hamilton.
Ms. Menaker, the floor is yours.

MS. MENAKER: Thank you, Mr. President, good
afternoon, Members of the Tribunal, good morning.

So, I will begin very briefly addressing the
non-retroactivity points. Yesterday, you heard Renco
state that Peru has invented a false legal standard based
on Berkowitz versus Costa Rica; but Peru, the United
States, and even Renco previously all agreed that the

[Page 158]

legal standards set forth in the Berkowitz Case is the
correct one, and namely that is that the post-entry into
force alleged acts or facts that are deeply rooted in and
that are not independently actionable from the earlier
acts or facts cannot sustain a claim.

And that's what we have here with respect to
Renco's fair and equitable treatment and expropriation
claims because both of those claims are deeply rooted in
and not independently actionable from the MEM's granting
of its last PAMA extension which occurred before the
Treaty's entry into force.

And again, I remind the Tribunal--or I reference
again the Tribunal to the Berkowitz Case where the
Tribunal stated that the Tribunal itself needs to look at
the essence of the Claimants' claim. It can't just accept
how the Claimant has formulated its claim.

And if you could go back one slide, please.

If you look at Renco I. In Renco I, Renco
stated the essence of its fair-and-equitable-treatment
claim was that in May 2006, Renco sought an extension for
its comma deadline. It sought a five-year extension but
it was only granted an extension of two-and-a-half years
which Renco characterized as being draconian and imposing
numerous conditions that were onerous conditions which
significantly expanded the costs and the complexity of the

[Page 159]

PAMA obligations. That was the four essences of the
fair-and-equitable-treatment claim. Now, in Renco II, it
seeks to reformulate that claim by saying that the breach
which actually began in March 2009 when Peru refused to
recognize Renco's right under the FTA to complete its PAMA
obligations, in other words, refused to recognize its
rights to get another alleged extension of these PAMA
deadlines.

Similarly, for its expropriation claim, in
Renco I, Renco stated that Peru's failure to grant Doe Run
Peru an effective extension resulted in the expropriation
of Renco's investments. They are again referencing the
May 2006 extension in saying that was not an effective
extension. They needed twice as long.

And now what do they say? They say that the
PAMA deadline expired in October 2009, Peru's refusal to
grant the PAMA extension caused DRP to fall into
bankruptcy. Both claims are deeply rooted in and are not
independently actionable from the May 2006 alleged refusal
or the refusal of the MEM to grant an extension that was
in Renco's mind sufficient when, in May 2006, the MEM
stated no, you're only going to get a two-year, ten-month
extension. It never again changed that extension. That
was the cause, that was the crux of the
fair-and-equitable-treatment claim of the expropriation

[Page 160]

claim.

And now just as in the Corona Materials Case,
what has happened since that time has not changed the
essence of the Claim. Just as in Corona Materials where
Respondents' failure to reconsider a refusal to grant a
license was nothing other than an implicit confirmation of
its previous decision, here, it's the same thing. The
MEM's refusal to grant a further extension is no different
than what happened before and cannot revise a claim that
that existed prior to the entry into force of the
Tribunal. And notably, Renco simply ignored
the Corona Materials Case in its opening.

Now I'll turn to prescription; and, to begin to
answer the Tribunal's question of yesterday, there is no
doubt that the prescription period is jurisdictional. It
is not a question of admissibility. It is a question of
jurisdiction. This is clear from the Treaty's language
itself, particularly the title.

First, if you look at Article 1017, which is
entitled, "consent of each Party to arbitration," it
states that: "A Party's consent to the submission of a
claim in accordance with this Agreement, which means in
accordance with the requirements in the Agreement." Then
you have 10.18, which is titled, "the conditions and
limitations on consent of each Party." Again, it says:

[Page 161]

"No claim may be submitted to arbitration if more than
three years have elapsed." That's in Paragraph 1.
Paragraph 2 is the waiver requirement. Both of those are
conditions and limitations on consent to arbitrate which
are inherently jurisdictional.

And, indeed, tribunals uniformly have recognized
that the prescription period is a jurisdictional
requirement.

So, if you look at the Renco I Tribunal, for
example, there, the Tribunal began by, again, looking at
the title of 10.18 which I just read and saying that the
title itself makes clear because the title is "conditions
and limitations on consent of each Party," and it makes
clear that the requirements, both prescription
requirements in 10.18(1) and the waiver requirement in
10.18(2) go to the Tribunal's jurisdiction.

Similarly, in the Corona Materials Case that I
just discussed, that dealt with the prescription period,
that Tribunal also quoting the United State's submission
favorably, said that the Claim was time-barred and,
therefore, the Tribunal lacked jurisdiction over the
Claim.

In Glamis Gold, it's a NAFTA Case, that NAFTA
also contains a three-year prescription provision just
like this Treaty, and there that Tribunal held that the

[Page 162]

limitations period in objection about the limitations
period is a plea as to the jurisdiction of the Tribunal.

Now, before going into its arguments concerning
the suspension of the prescription period or abuse with
respect to the prescription period, Renco argued yesterday
that its claim was not time-barred because it had
submitted its claim in Renco I, and the statute of
limitations or the prescription period would run from that
date.

And it argued here that our argument, that
Peru's argument that it could not do so because it never
actually submitted a claim to arbitration in Renco I
because that claim, that Notice of Arbitration, was
accompanied by a defective waiver, they said that that
merges and cobbles together Article 10.16 which relates to
the submission of a claim to arbitration and Article 10.18
which deals with consent, the prescription period and the
waiver.

And Renco argued that these are two completely
different issues that Peru hasn't cited any of the
authority for this novel proposition under international
law. The allegedly novel proposition is that the Claim
that is submitted with the defective waiver has not been
submitted to arbitration and, therefore, the prescription
period cannot begin to run from the Date of Submission of

[Page 163]

that Notice of Arbitration. But to the contrary, there is
ample authority that says just that.

So, I would draw the Tribunal's attention to,
again, the Corona Materials Case. There, the Tribunal
held, and I quote: "A notice of arbitration that is
unaccompanied by a valid waiver does not constitute a
claim--does not constitute a claim--the claim will be
considered to have been submitted on the date of the valid
waiver."

Similarly, the Waste Management I Tribunal,
another tribunal operating under the NAFTA, that contains
the same waiver provisions and time-bar prescription
period, held that, in that case, the Claimants' claim was
dismissed for lack of jurisdiction because it had
submitted an improper defective waiver, and that owing to
the breach by the Claimant of one of the prerequisites to
submission of a claim that is deemed essential in order to
proceed with the submission of a claim to arbitration. In
other words, that the Claim was not submitted to
arbitration because it was accompanied by a defective
waiver.

And the Renco I Tribunal recognized just as much
when it said that the submission of a defective waiver
will lead to a clear timing issue because if no compliant
waiver is served with a Notice of Arbitration, the

[Page 164]

Tribunal has no authority because no claim has been
submitted to arbitration.

Yesterday, Renco also argued that this
notwithstanding, one ought to override the express
language of the Treaty by looking to its purported object
and purpose, which it contended was in Renco's favor.
And, as I stated yesterday during my Opening, one cannot
overwrite the express language of a Treaty by reference to
the purported object and purpose. Instead one must
interpret the language in light of the object and purpose.
You don't overwrite the express language with reference to
a perceived object and purpose.

But, nevertheless, Renco's theory would actually
subvert the object and purpose of the Treaty, and in
particular, the objective of both the waiver and the
time-bar provisions, and you can come up with any number
of examples, but as just one. If you can imagine a
claimant that submits a claim--submits a Notice of
Arbitration with a defective waiver, one, that perhaps on
its face comports with the language of the Treaty, but
that they don't discontinue parallel claims in local
court, and then the prescription period runs. Their claim
is dismissed for lack of jurisdiction or a non-compliant
waiver. They then lose in court. They refile a claim in
arbitration with a Notice of Arbitration with a compliant

[Page 165]

waiver and then argue well, they're not time-barred
because they filed their Notice of Arbitration years back,
and the prescription period should run from that time.

You see, that's subverts the object and purpose
of having the time period and of requiring the submission
of a valid waiver at the time that one submits a claim to
arbitration.

Now, moving to Renco's theory of suspension,
Renco argues that Peru's statement as well as the United
States's shared agreement which also has been endorsed by
multiple tribunals including but not limited to the
Feldman Tribunal, the Corona Materials Tribunal, that the
limitations period is a clear and rigid requirement that
is not subject to any suspension, prolongation or other
qualification; that that is somehow inconsistent with the
Party's Framework Agreement.

Now, in the Party's Framework Agreement, as
Mr. Hamilton has described, that was a period of time
after Renco filed its Notice of Intent for this
arbitration before it filed its Notice of Arbitration when
the Parties were inferring and negotiating over a
multitude of issues, including how to coordinate the two
claims, and Peru agreed there not to raise a defense of
statute of limitations for that period of time during the
negotiations. Peru has upheld that Agreement. There is

[Page 166]

no allegation whatsoever from Renco that it hasn't. And,
indeed, there are no measures that occurred during that
period of time that formed the basis for Renco's claim.

But Peru says, nevertheless, look, Peru, in that
documents, so-called suspended the limitations period or
agreed to waive its right to put forward a suspension
defense, and isn't that inconsistent with the notion that
the time the prescription period cannot be suspended? But
there is no inconsistency whatsoever. Because saying that
the limitations provision is a jurisdictional requirement,
that it is a clear and rigid jurisdictional requirement
that is not subject to suspension, simply means that the
Respondent--doesn't mean that the Respondent cannot waive
its right to make an objection. It's the same thing for a
waiver requirement under 10.18(2). That's also
jurisdictional.

In both cases, the Tribunal cannot remedy the
issue. The Tribunal cannot remedy a defective waiver.
The Respondent, on the other hand, can choose to allow the
Claimant to submit a different waiver and agree that it
will not raise an objection on that basis. It could
choose to do that, just like a respondent could choose not
to raise a limitations objection, but that doesn't mean
that the Tribunal can remedy a defective waiver, and on
the Respondents' behalf waive that objection, that

[Page 167]

jurisdictional requirement, nor can it refuse to apply the
prescription period when the Respondent has raised an
objection to jurisdiction on that basis.

And it's for this reason that all of the
municipal bonds that Renco discussed yesterday are simply
irrelevant. The Treaty's requirement is express, it's a
strict requirement, it's not subject to suspension by the
Tribunal just like the waiver requirement is not subject
to remedy by the Tribunal. It's a condition of
Renco's--excuse me, of Peru's consent to arbitrate, and it
can't be disregarded by importing rules from other legal
systems.

And in this regard, yesterday, Renco discussed
the Feldman versus Mexico Case, which is simply irrelevant
to these issues. And if you look at that case--I don't
have much time, so I won't get into detail, but that case
was dealing with the issue of estoppel. And in
Paragraph 55, the Tribunal summarized the Claimants'
arguments. The Claimants' arguments there, they said:
"It would be appropriate in the case if the Respondent
State discourages the Claimants from filing a lawsuit, and
a clear example is if the defendant expressly agrees not
to raise a defense based on a statute of limitations or
makes other representations of promises or other actions,
then they should be estopped from later arguing raising an

[Page 168]

objection based on a statute of limitations."

Nothing like that happened here. So, in that
case, the Tribunal was looking at the issue. They were
saying basically the Claimants were arguing that it was
entitled to some VAT or tax refunds, and they were saying,
well, Mexican officials told us that they were going to
pay us those refunds, and so we held off filing an
arbitration claim, but then they never paid us, and now we
filed, and they're telling us we are out of time, and the
Tribunal rejected that. They said it's a clear
limitations period. The only possible may be in
extraordinary circumstances where that wouldn't apply
would be if you had a formal agreement with a government
official that was of a significantly high level, and it
was formalized like a settlement agreement, and then they
revoked their word, but nothing like that is that basis
here.

So, in short, as Mr. Hamilton was saying,
dismissal is a necessary consequence of the Treaty and of
Renco's conduct and not of any purported abuse by Peru.
And Mr. Hamilton has described, and I talked yesterday
about the fact that Renco did not commit any abuse in
Renco I by raising its waiver objection, and that the
Tribunal agreed with Peru in that regard.

Yesterday, Renco argued that, while Peru did not

[Page 169]

abuse its rights according to the Renco I Tribunal by
asserting it waiver claim, it found that Peru didn't abuse
in rights in asserting that claim, but that's not the
issue here. That's exactly the issue here. Because
Renco I, they filed their claim with a defective waiver.
We object on the basis of that defective waiver. We are
found to have raised that objection in good faith not to
abuse any right, and in accordance with the Treaty's
strict jurisdictional requirements the Renco I Tribunal
dismisses the Claim for lack of jurisdiction.

Renco then files a new claim here in this
arbitration with the compliant waiver. Pursuant to all
the authorities that I just discussed, of course, the
submission of that claim to arbitration dates from the
date of that Notice of Arbitration that contains the
compliant waiver. It's a direct consequence of the fact
that they filed a non-compliant waiver early on and that
that claim had never been submitted to arbitration. It's
a direct consequence of their act of submitting that
defective waiver and a direct consequence of the Renco I's
dismissal of that claim and not a consequence of any abuse
by Peru.

Finally, just a few words on the
denial-of-justice claim.

First, yesterday, to clear up a few things, to

[Page 170]

make clear, Peru is not saying that Renco should have
brought the denial-of-justice claim earlier, nor is Peru
denying that a denial-of-justice claim requires the
exhaustion of local remedies. What Peru is saying is that
the essence of the denial-of-justice claim is exactly the
same as the Claim that is time-barred. And like I said in
reference to the Berkowitz Tribunal, this Tribunal needs
to look at what is the absence of the Claim.

And you can see here in Renco I the formulation
of the expropriation claim was that Peru violated the
Treaty because it directly or indirectly expropriated
Renco's investments because it recognized the assertion of
an allegedly baseless claim by the MEM in the INDECOPI
bankruptcy proceedings. That's the MEM's credit of
$163 million they said that was recognized in the
bankruptcy proceedings and that led to the expropriation.

What have they done now? They simply
reformulated that claim into a denial-of-justice claim by
saying that Peru's judiciary failed to nullify that
credit. But all that is alleged is that the Court failed
to reverse the earlier action. There is no independent
action of the Court that is actually challenged. It's
simply the failure to reverse what's alleged to have been
a treaty breach, which is time-barred. And as
Mr. Hamilton noted, Renco already has filed a Statement of

[Page 171]

Claim that ought to contain all of the facts in support of
its allegation. There is nothing to support a
denial-of-justice claim by the Court, so this is
akin--indeed, akin--to the Corona Materials Case, where
Respondents' failure to reconsider, to change the status
quo by reversing the denial of a mining permit was deemed
insufficient to constitute a denial-of-justice claim.

Here, too, the Court's simple refusal to reverse
the earlier decisions that had been in place for a long
time to recognize the MEM credit cannot give rise to an
independent denial-of-justice claim.

So, thank you for your attention.

PRESIDENT SIMMA: Thank you, Ms. Menaker.

This brings to an end the Respondents' rebuttal
claim, and we have now a 30-minute break. That means that
we are going to assemble again at--Martin, can you help
me?

SECRETARY DOE: I think it's going to be 23 past
the hour.

PRESIDENT SIMMA: 23 past the hour, right, so
4:23.

SECRETARY DOE: 4:23 in Europe and it will be
10:23 for those who are in Eastern time.

PRESIDENT SIMMA: Okay. Thank you.

(Recess.)

[Page 172]

PRESIDENT SIMMA: I give the floor to the
Applicant for its Rebuttal Statement.

Mr. Kehoe, you're going to share with
Mr. Llamzon and Mr. Soule?

MR. KEHOE: Yes.

PRESIDENT SIMMA: You have the floor, sir.

MR. KEHOE: Thank you. We don't have any
PowerPoints on.

REBUTTAL ARGUMENT ON TREATY ARBITRATION BY COUNSEL FOR
CLAIMANT

MR. KEHOE: Counsel from Peru quoted this
morning from a document filed by plaintiffs--in the St.
Louis litigation where those plaintiffs accused the
Claimants in this case of having polluted La Oroya. It
should go without saying that many Americans in America
file lawsuits that are baseless, hoping to get potentially
a sympathetic jury that will award them money, and
American lawyers who represent these people work on
contingency fees and oftentimes get a big percentage of an
ultimate verdict even if that verdict is potentially
unjust.

And it also should be noted that Peru is not in
that lawsuit, but, Peru, of course, as a sovereign, has
sovereign immunity to participate in lawsuits unless, of
course, they agree to do so, which we argue in this case

[Page 173]

they did agree to do so under the Stock Purchase
Agreement, and that's part of our claim, and we repeatedly
asked Peru to join the lawsuit and defend and indemnify
the Claimants in this case against the allegations because
Peru and Activos Mineros are actually liable for the
ultimate Award or jury verdict or settlement, and that
issue, of course, is for another day because they refuse
to join the lawsuit.

Secondly, at Slides 4 through 6, Peru claims
that it raised, claims quite emotionally that they raised
the waiver issue early and that we're misrepresenting the
facts when we say they didn't. To believe that, you would
need to disbelieve the Arbitration Tribunal in Renco I
because, as I showed you yesterday--and it's Exhibit R-8
in their award--I showed you yesterday at Slides 35
through 40 a number of quotes from that Tribunal, and I
ask you to please read that award, if you would.

And especially at Slide 37 where that Tribunal,
and I'm going to read it: "Yet Renco's compliance with
the formal and material requirements of Article 10.18 was
not put in issue until Peru filed its notification of
Preliminary Objections on March 21st, 2014, nearly three
years after Renco had submitted its claim to arbitration."

What I found confusing about the argument this
morning is that when arguing that the notice of the

[Page 174]

defective waiver was timely, the counsel showed you on
Slide 6--

(Audio drop.)

PRESIDENT SIMMA: There was a problem with
understanding, but why don't you continue. Maybe it was
just an instant.

MR. KEHOE: Okay. Sorry.

PRESIDENT SIMMA: Can you speak?

MR. KEHOE: I can.

PRESIDENT SIMMA: It's fine.

MR. KEHOE: Okay. No--I guess what I'm saying
is that I was confused by the argument this morning that
it was timely because on Slide 6, the PowerPoint that was
presented today, you saw language which, where it said
Renco has presented an invalid waiver in this proceeding
because it does not conform with the language required by
the Treaty, and that's right. But the date on that, on
Slide 6 and accurately is March 14--I mean March 2014.
That's the date that I just read to you from where the
Tribunal said that's the first time that this was put in
issue. So, it seems based on the argument that we heard
this morning, Peru finally agrees that the first time it
put this issue in play was in March 2014.

And then on Slide 7--I just want to make sure
that you're not confused by the advocacy and the dates.

[Page 175]

On Slide 7, there are five other examples of very clear
reference to the waiver--the reservation of rights with
the waiver, but that's April of 2014 and October of 2014.
They're all after March of 2014.

So, it seems now that we're in agreement that
the first time they actually clearly vocalized this was
after March of 2014. I'm just perplexed as to how that
fact that we heard this morning supports the Respondents'
argument that it raised it earlier. It didn't.

Third is the abuse-of-rights argument. Peru
argues that there could be no abuse of rights here because
the Tribunal did not find an abuse of rights in Renco I,
and they say that we argue that's not the point, and they
said, yes, it is the point. No, it's not the point. It
sort of misstates our argument, and I would like to make
it clear. The Tribunal in Renco I was very disturbed by
the conduct of Peru in waiting so long. The issue in that
case was the statute of limitations.

And we were worried about withdrawing and
deleting the language in the waiver even though we thought
it was superfluous because we were afraid that Peru would
then turn around and say, "All right, now this case is
over, we don't agree you can delete it." We disagree, and
we don't agree. So we said, "Well, darn, we're willing to
do it, it's superfluous, we don't need it, we don't want

[Page 176]

it now. Now, three years after we filed our Memorial
you're finally telling us you have a problem with it, and
they wouldn't agree." And so, we had no choice but to let
the Tribunal rule on whether it made the entire waiver
defective. One Member of the Tribunal thought that we
should be allowed to cure and, frankly, so do we. I mean,
it was a unique case, the first of its kind, but we didn't
have to go there; right? We offered to delete it, and
Peru said "no."

So, that's the context, and then we wound up
losing, and now Peru is asserting a limitations defense.
But we discussed this with the Renco I Tribunal, and this
ties back to the comment yesterday. So, counsel yesterday
morning said in the opening: There is no suggestion here
that Renco's reservation in its waiver was inadvertent.
In fact, Renco knew that it was unacceptable and insisted
to maintain the waiver that was non-complaint, and I said
that's inaccurate. We offered to delete it. I didn't
imagine anyone would say that, so let me come back in
rebuttal and put the record straight, to let me do that.

In a hearing with the Renco I Tribunal, I was at
a procedural hearing; Peru was saying they must have some
ulterior motive for keeping that ulterior language, and so
I said, now in rebuttal but I will respond very briefly to
the point that I heard this morning, which was that if the

[Page 177]

1 "reservation of rights" language didn't serve any more

2 than the Treaty already provided, why isn't Renco just

3 striking it? I mean, why hang on to something so tightly.

4 So, I said, the answer to that question lies in

5 the fact that Peru has not raised this formal defect issue

6 until long after Procedural Order Number 1. And when we

7 received their 1024 submission, which was the March 2014

8 submission that I just mentioned, we had no idea that they

9 objected to this formal defect until then, which was just

10 recently. We did understand that they objected to the

11 local bankruptcy proceedings where Doe Run was defending

12 itself, but we had no idea that they would take issue with

13 the reservation of rights that we think the Treaty allows

14 anyway. It's superfluous. It's superfluous language;

15 that's what we were saying.

16 So, if we could "with assurance strike the

17 language now with assurance that Peru would not then bring

18 another claim such that we're now in breach of the statute

19 of limitations, we would strike it. It is superfluous, so

20 it's wrong for Peru to argue that because we're hanging on

21 to something we must have an ulterior motive, and it must

22 mean something when we're telling you it doesn't. But as

23 I say, if Peru would commit no harm no foul, no statute of

24 limitations issue, we would gladly strike it."

25 So, that's on the record on the Transcript in

[Page 178]

1 Renco I. It was a hearing on the--I need my glasses. I

2 can't see the date. Oh, here, Friday, June 12, 2020.

3 And so, that brings me to what I showed you on

4 Slide 39 yesterday, when the Tribunal in Renco, when

5 rendering its Award said: "While this Tribunal cannot

6 prevent Peru from exercising in the future what it then

7 considers to be its legal right, the Tribunal can and does

8 admonish Peru to bear in mind that if the scenario should

9 rise, Renco's submission that Peru's conduct with respect

10 to its late raising of the waiver objection constitutes an

11 abuse of right. Keep that in mind. In the unanimous view

12 of this Tribunal, justice would be served if Peru accepted

13 that this time stopped running for the purposes of Article

14 10.18 when Renco filed its Amended Notice of Arbitration

15 on August 9, 2011."

16 So, that's the point we're making. And then

17 secondly, let me go on. It's Slide 40. And when the

18 Tribunal said again: "In reaching this conclusion, the

19 Tribunal does not wish to rule out the possibility that an

20 abuse of rights might be found to exist. If Peru were to

21 argue in any future proceeding that Renco's claims were

22 now time-barred under 10.18, to date Peru has suffered no

23 material prejudice as a result of the reservation of

24 rights waiver. However, Renco would suffer material

25 prejudice if Peru were to claim in a subsequent

[Page 179]

1 arbitration that Renco's claims are now time-barred under

2 Article 10.18."

3 So, those are the facts. That's the way this

4 played out. It was raised late. We offered to delete it.

5 Peru rejected it. They're the ones that caused the delay

6 by raising the waiver question so late. We easily could

7 have fixed it within the limitations period. We had

8 plenty of time before that in the case, but they didn't.

9 And fifth, and final point for me before I hand

10 it over--and I'm not sure who is going next--I think it's

11 Mr. Llamzon--is to the question of whether the limitations

12 issue is one of admissibility or jurisdiction. So, two

13 parts to this answer.

14 The first is, we believe the better view is that

15 the prescription theory should be treated as one of

16 admissibility; and if I may, the reason we believe this is

17 that the question of admissibility is that in

18 international law in particular and in the practice of the

19 ICJ, many investment tribunals hold that the traditional

20 distinction is that an objection to jurisdiction concerns

21 the authority and the power of a tribunal to decide a case

22 before it, whereas an objection to admissibility concerns

23 a defect in a particular claim, so that is our position.

24 But at the same time we are aware that both the United

25 States and Peru have taken the position that it's

[Page 180]

1 jurisdictional, and, of course, we heard the presentation

2 this morning where some tribunals have found that

3 prescription is jurisdictional.

4 And on that point I would like to note that

5 Renco's defense to the Treaty's three-year prescription

6 period applies equally, whether it's an objection on

7 admissibility--whether it's an admissibility issue or a

8 jurisdictional question, and the reason is twofold:

9 First, under Article 26 of the Vienna

10 Convention, Parties are bound to act in good faith in

11 exercising their treaty rights and the performance of

12 their respective obligations under a treaty. And because

13 this Arbitration Agreement arises and derives from a

14 treaty, the Parties must, under Article 26 of the Vienna

15 Convention, exercise their rights in good faith. The

16 principle of good faith precludes an abuse of rights and

17 process, and it precludes conduct that lacks candor to the

18 material advantage of one Party or to the material

19 disadvantage of another party. Such conduct is not only

20 shameful, it undermines the legitimacy of the arbitral

21 process. As I said, I had two points. That's the first.

22 The second is, tribunals for over a hundred

23 years have applied the principle of good faith to justify

24 a tribunal's jurisdiction. There are circumstances in

25 domestic realms in different situations where a court may

[Page 181]

1 find differently, but in the international arbitration

2 realm, for a hundred years, that has been the case. They

3 have applied the principles of good faith to find

4 jurisdiction. And this, of course, ties to the arguments

5 that I made yesterday.

6 We see this most recently in the case of Chevron

7 versus Ecuador where the Tribunal stated: "The Tribunal

8 has taken fully into account that the principle of good

9 faith may be more cautiously applied to justify a

10 tribunal's jurisdiction as compared to other

11 non-jurisdictional issues. Nevertheless, there is no

12 reason why the same principle of good faith should not

13 apply to jurisdiction (or admissibility) as well as to the

14 merits. It did so in the Kunkle arbitration decided

15 almost a century ago," and that Tribunal was comprised of

16 the late Johnny Veeder, Professor Vaughan Lowe and, of

17 course, Professor Naón. And with that, I will--unless you

18 have any questions--I'll hand the floor over to my

19 colleague.

20 PRESIDENT SIMMA: I don't have any questions or

21 request for questions.

22 ARBITRATOR THOMAS: I do.

23 PRESIDENT SIMMA: Please go ahead.

24 ARBITRATOR THOMAS: Mr. Kehoe, may I just ask

25 you one question of clarification, and it dealt with the

[Page 182]

1 question--I think I the way I made a note of it, I won't

2 follow the Transcript, but you said that the objection is

3 to the formal nature of the waiver was something which

4 arose later on, and you then went on to say something like

5 we did understand that they had problems with the--

6 (Overlapping proceedings.)

7 MR. KEHOE: Yes.

8 ARBITRATOR THOMAS: --subsequent proceedings.

9 MR. KEHOE: Yes.

10 ARBITRATOR THOMAS: Could you just explain to me

11 what was the nature of the objection to the ongoing

12 bankruptcy proceedings?

13 MR. KEHOE: I'm glad you asked you. You know,

14 in the interest of time I didn't want to get into it, but

15 I'm glad you asked it.

16 So, you heard from Mr. Llamzon yesterday that

17 MEM, the MEM credit--that Doe Run Peru went into

18 bankruptcy and that the Government asserted a credit for

19 the cost of $163 million to complete the final PAMA

20 project and then asserted a credit in the bankruptcy and

21 took it over. It's part of our denial-of-justice claim.

22 Doe Run Peru was defending itself as a debtor in the

23 bankruptcy, and Peru was sending us messages, letters,

24 saying you're violating the waiver provisioning because

25 Doe Run Peru is engaging in litigation outside the

[Page 183]

1 arbitration process, and our position was Doe Run Peru is

2 entitled to defend itself as a debtor in bankruptcy, and

3 that doesn't violate the waiver, so it had nothing to do

4 with the written aspect of the waiver. It was the

5 action--you know, we need two pieces; you need a valid

6 written waiver, and then you need to comply with the

7 waiver.

8 So, we had no idea that there was any question

9 about--every time they said "waiver," they were talking

10 about the bankruptcy. It wasn't until March that they

11 finally said, now we're talking about--they never said we

12 had two waiver objections, both a formal defect and your

13 action. And so that's where the confusion was. When they

14 said the word "waiver" early on, it was all in the context

15 of Doe Run Peru defending itself as a debtor in

16 bankruptcy. And we still don't think that. You may need

17 to deal with it, but we don't think that's a violation of

18 the waiver. You can't hamstring a third party from

19 defending itself.

20 PRESIDENT SIMMA: Thank you, Mr. Kehoe.

21 You may pass the baton on to--is it Mr. Llamzon?

22 MR. KEHOE: I think it's Mr. Llamzon, yes.

23 PRESIDENT SIMMA: Thank you.

24 MR. LLAMZON: Thank you, Mr. President and

25 Members of the Tribunal.

[Page 184]

1 So, I will be discussing the retroactivity

2 principle again.

3 The discussion so far under retroactivity really

4 feels, at least to me, like two ships passing in the

5 night. Both sides are supposedly applying Article 10.1.3

6 of the Treaty, but our interpretations are entirely

7 different.

8 So, Peru seems to take a position that once a

9 dispute could be identified pre-February 1, 2009, the

10 non-retroactivity principle would apply the capture even

11 post the 2009 breaches, February 2009 breaches, because

12 the subsequent acts were rooted in or cannot be decided

13 independently of these prior acts. And we say that that

14 interpretation would be entirely inconsistent with the

15 "continuing breach" doctrine in Article 10.1.3 and in

16 customary international law because acts that would have

17 been a breach that continue when the Treaty is effective

18 do not violate non-retroactivity. They would have not

19 ceased to exist in the words of Article 10.1.3.

20 But I thought our colleagues actually on the

21 other side gave a very helpful illustration of our

22 differences by using the Corona Materials case both

23 yesterday and this morning. So, if you have a claim

24 that's based on a denial of a license, you cannot make

25 that claim pass the non-retroactivity test by making the

[Page 185]

1 same request again and asking for reconsideration; and

2 there they made their Request for Reconsideration before

3 the Treaty took effect, and the State did not respond, and

4 then they claimed--the Investor claimed there that the

5 non-response after the Treaty took effect was a breach.

6 So, you can't manufacture a claim that meets the

7 non-retroactivity requirement in that way. We agree. You

8 know, as with everything, the continuing breach doctrine

9 is subject to an abuse; an abuse of rights is possible.

10 But that's really not our case here. It's not

11 even close, actually. We have three claims, and I

12 discussed them yesterday, but in the interest of time,

13 let's take Renco's first claim because Peru seems to

14 consider this first claim to be the worst violator of the

15 non-retroactivity rule and the set of facts from which

16 everything else stems, according to them.

17 And so, let's assume also that Berkowitz is

18 right, because Berkowitz is the other key case. And I

19 would commend you to read that case very closely, and

20 there they say let's assume that Berkowitz is right. We

21 must identify independently actionable facts, acts and

22 situations after February 1, 2009, but to be even more

23 precise, the test in Berkowitz--and you find this in

24 Paragraph 237 of the Interim Award--is, and I quote: "Can

25 that alleged breach be evaluated on the merits without

[Page 186]

1 requiring a finding going to the lawfulness of pre-Treaty

2 conduct. Okay.

3 So, the question under Berkowitz is: Can

4 Renco's fair-and-equitable-treatment claim be evaluated on

5 the merits without requiring a finding about the

6 lawfulness of conduct before February 2009? So, Peru

7 alleges that there are no such acts, but the reality is

8 actually the opposite. The source of all our claims are

9 acts Peru committed after February 1st, 2009.

10 And as I discussed yesterday, our

11 fair-and-equitable-treatment claim is based on an

12 extension right that we say was unfairly denied. Now,

13 this extension right is different than the extension we

14 sought in May 2006. That extension was sought for

15 multiple PAMA projects, not just the 16th PAMA, all but

16 one of which were subsequently completed in the

17 intervening years, and then the Global Financial Crisis

18 occurred in late 2008.

19 And so, the request that we made in March 5th,

20 2009, was a very different request from the one that was

21 made in 2006. This 2009 request covered only one project

22 because Renco had completed all the others. And more

23 importantly, its basis was different; it's based on the

24 ongoing Global Financial Crisis.

25 So, there's a fundamental difference between

[Page 187]

1 Corona Materials and this case. And Renco's request in

2 March 2009 was not simply seeking a reconsideration of its

3 2006 request.

4 Now, but even more importantly--and I really

5 must emphasize this--that March request and denial is just

6 one fact, okay? The fair-and-equitable-treatment claim is

7 based on many other facts all of which unquestionably

8 postdate February 2009 and can be an independent source of

9 breach. Now, there was a pattern of conduct after

10 March 10, 2009, independently actionable conduct, so that

11 one can make an evaluation of the merits of those claims

12 without needing to determine the lawfulness of any

13 pre-February 1st, 2009, conduct, which is really what

14 Berkowitz is all about.

15 You have a draft MOU that was negotiated between

16 DRP and Peru on March 27, 2009, where a compromise was

17 struck involving the capitalization of DRP's debt in

18 return for an extension. In fact, in April 2009, DRP and

19 the Government held a press conference announcing that the

20 solution had been reached, but ultimately the MOU was not

21 signed.

22 And then, in July 2009, Peru appointed a

23 Technical Commission that concluded that a 20-month

24 extension was needed to complete the plant plus time to

25 secure financing.

[Page 188]

1 And then, crucially, in September of 2009,

2 Peru's Congress passed a law granting DRP an extension of

3 13 months to complete the 15th PAMA Project. But in

4 October 2009, it intervened again. It passed implementing

5 regulations that undermined the new law, for example, by

6 requiring DRP to pay 100 percent of its gross

7 proceeds--sorry--not profits, but gross proceeds--into a

8 trust to be used to fund the completion of the Project,

9 which is an outrageous requirement. That made completion

10 of the 16th project impossible.

11 So, it's a series of acts, acts that taken

12 either individually and especially collectively we say

13 amount to a violation of the fair-and-equitable-treatment

14 standard of the Treaty. And these fall within the

15 independently actionable standard of Berkowitz. They do

16 not require the Tribunal to make a finding going to the

17 lawfulness of Peru's pre-February 1st, 2009 conduct. And

18 so even assuming that Berkowitz is entirely correct, and

19 you have valued our claims on that basis, we would still

20 meet the threshold easily.

21 And with that, I pass the baton on to my

22 colleague Cedric Soule.

23 PRESIDENT SIMMA: Thank you, Mr. Llamzon.

24 And the floor is now for Mr. Soule.

25 MR. SOULE: Thank you, Mr. President. Can you

[Page 189]

1 hear me?

2 PRESIDENT SIMMA: Yes, fine.

3 MR. SOULE: Thank you, Mr. President, Members of

4 the Tribunal.

5 I'm going to address again our last point, which

6 is that Peru hasn't invoked the expedited review mechanism

7 under Article 10.20.5.

8 It's remarkable that, in its presentation today,

9 Peru would accuse Renco of seeking that Peru not be heard

10 when, in fact, Peru has been heard. We've heard their

11 objections. We're at a hearing, so this is not about

12 preventing Peru from being heard. This was about

13 complying with the treaty requirements, which Peru says it

14 attaches great importance to.

15 It's also remarkable that Peru this morning

16 would have been outraged by what we said yesterday, which

17 is simply that procedural consultations do not displace

18 the treaty requirements. The clear treaty requirements

19 that to invoke the expedited review procedure you need to

20 state and plead your objection.

21 And it is remarkable still that, in their

22 rebuttal, in their Slide 10, Peru doesn't even state

23 Article 10.5 in full. They cut it to suit their own

24 argument. Article 10.20.5 says that the Respondent must

25 make an objection and request that that objection be

[Page 190]

1 decided under the expedited review procedure, and Peru has

2 not done that. In fact, you will note they haven't

3 responded to our characterization of their December 3

4 letter as not even having stated what their objection was,

5 let alone pleaded it.

6 I would just refer you to a few of the Legal

7 Authorities that Peru has cited on this issue. They cited

8 to RLA-14, which is Kenneth Vandevelde's treatise on U.S.

9 International Investment Agreements. He says that to

10 invoke this expedited review procedure, the Respondent has

11 to raise an objection. It hasn't raised an objection in

12 their December 3, 2019, letter.

13 They cite to another article, RLA-15, by a

14 former ICSID counsel, Senior Counsel. He says that

15 Respondent has to make an application, uses the word

16 "application." They haven't made an application. They

17 haven't stated what the objection was. They just said we

18 have an objection, we will plead it later. That's not

19 what the standard requires.

20 And then they accuse us of "misusing"--those are

21 their words--RDC versus Guatemala, and that's RLA-12. We

22 invite you, Members of the Tribunal, to look at RLA-12.

23 It's a letter that sets out clearly what the objection is.

24 It cites to case law. And it was sufficiently clear and

25 well-articulated that the Claimant in that case was then

[Page 191]

1 able to respond, which was not the case here because Peru

2 has to file their actual objection 17 days later on

3 December 20th, way past the 45-day deadline.

4 So, for those reasons we believe that Peru has

5 not invoked the expedited review procedure. Mr. Hamilton

6 this morning said that this was not the time for the

7 Tribunal to rewrite the Treaty or to bend the rules.

8 Indeed, it would be a significant departure from

9 Respondents' State practice and from everything that has

10 happened on all of these cases for this Tribunal to allow

11 Peru to invoke the expedited review procedure on the basis

12 of their vague December 3 notice.

13 And with that, I pass it back to my colleague,

14 Mr. Kehoe, to conclude our rebuttal.

15 PRESIDENT SIMMA: Thank you, Mr. Soule.

16 Mr. Kehoe?

17 MR. KEHOE: Thank you, Mr. President.

18 I do not have any comments other than just a

19 parting since I mentioned the name of the Tribunal and

20 it's not clear to me how well you can all see the slides

21 when they're presented, but of course, I'm sure you know

22 the Tribunal in Renco I was comprised of Yves Fortier,

23 Toby Landau, and Michael Moser as the Chair. I just want

24 to mention that.

25 And with that, we finish our rebuttal.

[Page 192]

1 PRESIDENT SIMMA: Thank you, Mr. Kehoe, so the

2 Claimant has finished its rebuttal, and we, without

3 further ado, are supposed to give the floor to Respondent

4 with regard to the bifurcation matter.

5 But before I do so, let me ask Martin how we

6 stand with regard to time spent.

7 SECRETARY DOE: Sure. I can mention the

8 Claimant has used 2 hours and 6 minutes in total up until

9 this point, and the Respondent has used 2 hours and 21

10 minutes in total up until this point. Working backwards,

11 that would be 39 minutes left for the Respondent and 54

12 minutes left for the Claimant.

13 PRESIDENT SIMMA: Thank you.

14 So, the floor goes to the Respondent for its

15 Opening Statement.

16 Mr. Hamilton?

17 MR. HAMILTON: Okay, very well. Shall I

18 proceed, Mr. President?

19 PRESIDENT SIMMA: Please. Go ahead, sir.

20 OPENING STATEMENT ON CONTRACT ARBITRATION BY COUNSEL FOR

21 RESPONDENTS

22 MR. HAMILTON: Thank you very much, Members of

23 the Tribunal.

24 Mr. President, I will just take 30 seconds if I

25 might, there was a question from the Tribunal related to

[Page 193]

1 the treaty issue that we had not heard before, and I will

2 simply say that we encourage the Tribunal to take a look

3 at the material violation of the waiver provision that

4 Mr. Thomas apparently has picked up on because it does,

5 indeed, as Mr. Kehoe admitted, form part of their

6 denial-of-justice issue. And in any event, the record is

7 quite clear that Peru more than satisfied its obligations

8 by timely flagging the waiver issue, and please disregard

9 the (sound interference) from my counterpart regarding the

10 factual record.

11 We now turn to the Contract Case. Parallel to

12 the Treaty Case is the Contract Case brought by the Renco

13 group and Doe Run Resources against the Republic of Peru

14 and Activos Mineros, a State entity formerly known as

15 Centromin. Members of the Tribunal, as I stated at the

16 outset, on the first hearing date, it is in the hands of

17 this Tribunal right now to determine how the treaty and

18 contract claims will go forward in this case. And, in

19 both cases, it's clear that the objective of Renco is to

20 drag them out in an inappropriate manner to avoid core

21 issues from being timely heard, the exact same approach

22 they took by trying to defer the waiver issue in the

23 previous case because they wished to avoid their days of

24 reckoning while they wait to see what happens with the

25 Missouri litigation and use you as a mere fall-back plan,

[Page 194]

1 Members of the Tribunal. It's not acceptable as a treaty

2 case, and it's not acceptable in the Contract Case.

3 Next slide.

4 Members of the Tribunal, the Republic of Peru

5 and Activos Mineros do not seek bifurcation often or

6 lightly. As a matter of fact, if you look at the totality

7 of the Republic of Peru's investment arbitrations, they

8 have not routinely sought bifurcation. As a matter of

9 fact, in our significant experience over many years

10 advising the Republic of Peru, the Renco Cases are quite

11 unique in terms of seeking bifurcation or separating core

12 issues out, and that's due to the very particular nature

13 of this overarching dispute.

14 And so, Peru does not raise bifurcation lightly.

15 It certainly is the case that there are States around the

16 region of Latin America and the world that always seek

17 bifurcation. It's just part of the process, it's part of

18 an effort to drag things out. That is not the case here.

19 Here, there is a very serious issue that the Tribunal

20 needs to consider up front, and the widely understood

21 factors relevant to considering bifurcation are plainly

22 satisfied. It is a set of threshold contractual issues

23 that are prima facie serious and substantial, distinct

24 issues from the core claims of the case, and it will

25 dispose of all or an essential part of the Claims.

[Page 195]

1 And the fundamental issue is depicted in a

2 figure that we provided previously to the Tribunal. This

3 is the fundamental issue: A serious misalignment of the

4 Parties.

5 Let's look at these step by step: The Contract.

6 The Parties to the Contract--please stay with

7 the prior slide, if you would--the Parties to the Contract

8 are DRP and Activos Mineros, formerly Centromin. Doe Run

9 Resources Corporation and The Renco Group are not parties

10 to the Contract. They simply are not parties to this

11 Contract and cannot avail themselves of the Arbitration

12 Clause. Activos Mineros nor Peru ever consented to

13 arbitrate with them this sort of dispute.

14 Similarly, the Guaranty in question terminated

15 in 2001. Here, again, DRP is a Party, Republic of Peru is

16 a Party, but not the Claimants before you. So, if you

17 look, then, to the Contract Case, you see that this

18 arbitration is misaligned because DRRC and Renco Group are

19 the Claimants but they're not parties to the Contracts

20 they're claiming upon.

21 And similarly, by the way, look to the

22 defendants in the Missouri litigations, and here you see

23 that the Parties to the Contract--DRP, Activos Mineros and

24 as to the terminated Guaranty, Republic of Peru--are not

25 parties to the Lawsuits in Missouri that are the real

[Page 196]

1 focus of Claimants' case and the real focus of their

2 concerns in general.

3 Next slide.

4 So, the Contract dispute as set forth in the

5 Notice of Arbitration centers on a claim by the

6 non-parties Renco and DRRC that Activos Mineros and Peru

7 have a contractual obligation to defend lawsuits--in other

8 words, to go and defend them for U.S. tort claims brought

9 against non-parties to the Contract.

10 To decide these issues, Tribunal, there are two

11 categories of issues that you will have to confront. The

12 first are threshold contract issues: Who are the Parties

13 and consent to arbitration.

14 Then there's the application of the Contract.

15 This is a whole other category of legal, environmental,

16 technical, financial, and scientific issues.

17 Next slide.

18 So, these two categories of issues are easily

19 divisible. On the one hand, is there a basis for

20 arbitration before this Tribunal? It is a fundamental

21 threshold issue. There is a fundamental misalignment

22 between the Claimants and the consent to arbitrate.

23 Punto finale, separately is an entire universe

24 and swathe of other issues relating to the Missouri

25 litigations, relating to the conduct and management of La

[Page 197]

1 Oroya under control of Renco over many years, and so there

2 are a whole range of issues. And even beyond this rough

3 illustrative list that we've indicated on Slide 4, there

4 are a whole swathe of evidentiary issues, starting with

5 the fact that Renco has full access to the Missouri

6 litigations and Peru does not. We raised this issue in

7 the earlier procedural phase of this case, and the issue

8 was deferred.

9 So, they have access to a whole mega universe of

10 issues related to the Missouri litigation and related to

11 these legal, environmental, et cetera, issues, and Peru

12 does not. So, we're looking at issues that can be easily

13 divisible to threshold issues versus the whole universe of

14 issues that will arise in the application of the Contract.

15 So, if you look at the face of the contract

16 itself, it's quite clear. The Parties are Centromin, now

17 Activos Mineros, and Doe Run Peru, and the Parties to the

18 now terminated Guaranty, Doe Run Peru and Peru. It's very

19 clear from the language of the documents themselves, and

20 it's very clear in the Arbitration Clause between the

21 Parties.

22 Next slide.

23 So, just to be clear, the Claimants before you

24 are not parties to the Contract, had no involvement in the

25 Guaranty. As a matter of fact, this has all been deeply

[Page 198]

1 briefed years ago in Renco I where the Tribunal did not

2 find it necessary to decide that issue.

3 And, you know, the fact that Renco I Tribunal

4 chose to decide on a threshold issue, it never reached

5 these other issues that were deeply briefed before it.

6 The Parties have argued and argued, and Peru insisted to

7 put the record of those materials into the case, and we

8 voluntarily did so.

9 And, in Renco I, it was very clear, based on

10 expert testimony, that Renco itself has no rights under

11 the Contract, not entitled to invoke the relevant

12 indemnity provisions, and that the role as Guarantor, it

13 was a short, four-term--four-day period of time, that

14 those obligations of Renco were extinguished when Renco

15 was released from its Guaranty four days after the

16 Contract was concluded, and we're now 22 years later.

17 So, fundamentally, Members of the Tribunal,

18 there is a serious and grave misalignment of the Parties

19 to the case and the Parties to the Contract. It must be

20 addressed up front.

21 Mr. Jijón will now explore in further detail the

22 relationship of these factors and these threshold issues.

23 Thank you.

24 PRESIDENT SIMMA: Thank you, Mr. Hamilton.

25 Mr. Jijón, you have the floor.

[Page 199]

1 MR. JIJÓN: Thank you very much.

2 PRESIDENT SIMMA: I think there is a problem

3 with echoes. Now there is a problem that we don't hear

4 you. We still cannot hear you.

5 (Pause.)

6 PRESIDENT SIMMA: It echoes.

7 It looks like Mr. Jijón was--

8 MR. JIJÓN: One of the victims of working in the

9 office even socially distant from Mr. Llamzon is that I

10 have been able to co-opt his screen. Hopefully, you can

11 see and hear me now.

12 PRESIDENT SIMMA: Perfect.

13 MR. JIJÓN: Thank you.

14 All right. I will move very quickly through the

15 application of the bifurcation standard.

16 I think the first key point here is that there

17 is really no question before this Tribunal as to the

18 discretion of an arbitral tribunal to bifurcate. This is

19 very clear from the UNCITRAL Rules and has been made clear

20 in numerous cases that are before the Tribunal.

21 The bifurcation factors have been laid out in

22 Philip Morris versus Australia and applied in various

23 different cases. There is a three-part test:

24 First, whether an objection is prima facie

25 serious and substantial?

[Page 200]

1 Second, whether the objection can be examined

2 without pre-judging or entering the merits?

3 And third, whether the objection, if successful,

4 would dispose of all or essential parts of the Claims

5 raised?

6 Now, these are questions that are to be decided

7 on the facts of each case, and obviously as Mr. Hamilton

8 recognized, Peru does not bring these objections lightly.

9 It does so in this case because all of these factors are

10 met.

11 Next slide.

12 First, with respect to the serious and

13 substantial factors. Here, the issue the Tribunal

14 considered is whether an objection can succeed. That

15 issue is serious and substantial where a tribunal cannot

16 prima facie exclude that this objection might be

17 successful. That's the Philip Morris Tribunal again. And

18 other tribunals, including those cited on your Slide 11

19 have highlighted that it is not necessary for a tribunal

20 to conclude at this stage that the objection is founded,

21 only that it might be.

22 Next slide, please.

23 Now, in this case, that is exactly what Peru and

24 Activos Mineros have done to this point. Claimants in

25 their response to the bifurcation requests have gone to

[Page 201]

1 great length to argue that they are, in fact, Parties;

2 that they are entitled to rights under the Contract and

3 Guaranty. With respect, that is not relevant at this

4 stage. What is relevant is whether these objections might

5 be successful.

6 And here, we see that on its face, the Contract

7 specifies what the role of Claimants was. They were

8 intervenors, not parties. The Additional Clause of the

9 Contract specified what their role as Guarantors of the

10 Contract entailed.

11 Next slide, please.

12 And as Mr. Hamilton noted, Peru in Renco I

13 already briefed significant Peruvian law to demonstrate

14 that the mere participation as intervenors and the

15 Additional Clause was not sufficient to constitute making

16 Claimants Parties. This really should be of no surprise

17 to the Members of the Tribunal. We've all seen cases, for

18 instance, where someone will sign a contract as a witness,

19 for instance. That does not automatically make them a

20 Party to that Contract. The issue is whether, as a matter

21 of law, they are a Party.

22 Now, just for your reference, the question of

23 who is a Party to the Contract has also been addressed

24 numerous times, including in other documents that the

25 Tribunal has before it. The Guaranty itself refers to

[Page 202]

1 Centromin and Doe Run Peru as the Parties to the Contract.

2 Likewise, the MOU that has been cited at various times by

3 Claimants in the Renco II proceeding, it also specifies

4 that the Contract was between DRP, Doe Run Peru, and

5 Centromin now Activos Mineros.

6 In addition, Peru is not a Party to the

7 Contract. It was a Party to the Guaranty. However, the

8 Guaranty is null and void. On your screen, you will see

9 Slide 16. Slide 16 shows the Assignment Contract of 2001

10 where Doe Run Peru assigned rights to another entity, an

11 affiliate called "Doe Run Cayman." This was done without

12 the express authorization of Peru; and that, therefore, as

13 a matter of Peruvian law, that voided the Guarantee.

14 Again, this was all briefed in Renco I.

15 And again, these are not issues that the

16 Tribunal has to decide now. It merely has to see that

17 Peru is bringing these objections in good faith as it has

18 over many years, and therefore, they are prima facie,

19 serious and substantial.

20 Going forward to the next factor, whether the

21 objection is intertwined with the merits.

22 Now, here, it's important to see that tribunals

23 consider whether objections pre-judged the merits. This

24 was--next slide, please--this was set out in Philip Morris

25 versus Australia and Mesa Power and Pey Casado. Two

[Page 203]

1 important things to note, here this does not mean that

2 there has to be a complete and utter break between the

3 objection and the merits; rather, as the Tribunal in Mesa

4 Power put it, whether the objection can be answered

5 without going into the full array of facts pertinent to

6 the merits; as the Tribunal in Pey Casado recognized,

7 there might be some degree of overlap between the evidence

8 relevant to the objection and to the merits.

9 And I think this leads to us an important

10 conclusion: We need to be very careful not to let the

11 word "merits" become some sort of shibboleth that is

12 enough to get rid of any objection and prevent

13 bifurcation. A claimant can't simply, for instance, say

14 that a legal issue that is the basis for an objection

15 constitutes a merits issue. The question really is for

16 the Tribunal to look at whether the issues are distinct

17 from the liability issues. It is not correct to say that

18 what a claimant or even a respondent has characterized an

19 issue as in a different context to be dispositive of

20 whether it can be bifurcated.

21 Next slide, please.

22 The key issue we have to remember is that

23 bifurcation is intended to promote efficiency. Obviously,

24 what we do not want to see in any proceeding is exactly

25 what has happened over the course of many long years in

[Page 204]

1 the dispute with Renco. There has been many years things

2 were dragged out. Now we see how the Renco I efforts to

3 avoid waiver are being thrown around again, and the key

4 issue here is important to see whether we can narrow the

5 issues in such a way as to make the case more efficient.

6 Next slide, please.

7 As Mr. Hamilton noted, there are basically two

8 key issues before the Tribunal and Peru's objections, who

9 are the Parties and what is the scope of the consent to

10 arbitrate. That is very different from the issues that

11 the Tribunal will have to address to determine liability.

12 When it comes to liability, there is a range of different

13 technical, financial, scientific, legal, environmental

14 issues, including the entire list that you see on your

15 slide.

16 For one example--next slide, please--only to

17 take the question of what is the proper interpretation of

18 the Contract's indemnity provisions. This alone will

19 require significant analysis as to the timing of the

20 various third-party claims, what is their nature, what was

21 Doe Run's responsibility for those, what was Doe Run

22 Peru's responsibility, and a series of complicated

23 technical and evidentiary issues as well as access to the

24 myriad and millions of pages filed in the proceedings

25 before Missouri which, as Mr. Kehoe noted this morning,

[Page 205]

1 Peru, of course, is not a Party; likewise Activos Mineros.

2 Next slide, please.

3 Finally, as to the question of whether the

4 objections will dispose of part of the Claim, here, the

5 issue is whether we can narrow the dispute. This, again,

6 has been seen in the Philip Morris Case, Mesa Power, and

7 Glamis Gold. We do not have to see in order to justify

8 bifurcation that the objection would completely end the

9 arbitration. It is sufficient for the purposes of

10 deciding whether to bifurcate that the Tribunal conclude

11 that it might narrow the scope of issues.

12 However, in this case, the fact is, if the

13 objections are found to be correct, then the entire

14 dispute will disappear. And the reason for that is

15 because consent, as we all know, is fundamental. On your

16 slide, you will see the colorful language by Mr. Park:

17 "Consent (even of implied from circumstances) remains the

18 cornerstone of arbitration."

19 Claimants have suggested that even if the

20 Tribunal were to rule that Respondents' objections are

21 founded, that would not result in a total dismissal of the

22 case because some sort of liability under the Peruvian

23 Civil Code would remain. It is important to note that is

24 clearly not correct. Consent is consent. The Respondent,

25 without going into whether there would be liability under

[Page 206]

1 the Civil Code merely notes that if Claimant is asserting

2 there is some other basis for Respondents' consent in

3 these cases other than the Contract and the Guaranty, it

4 has not said what that is. Clearly if Peru and Activos

5 Mineros have not given sufficient consent under these

6 instruments, the Tribunal does not have jurisdiction. And

7 if the Tribunal does not have jurisdiction, it must

8 dismiss the Claims. This is precisely what respondents

9 have asked be considered as a preliminary matter, and

10 these issues can be resolved in limine. That would result

11 in these cases not going forward and continuing to drag on

12 unnecessarily.

13 Thank you very much, Mr. President and Members

14 of the Tribunal.

15 PRESIDENT SIMMA: Thank you, Mr. Jijón.

16 Mr. Hamilton, are you going to add to this, or

17 is this the entirety of the Opening Statement?

18 We can't hear you.

19 MR. HAMILTON: We will rest there and reserve

20 our time. Thank you.

21 PRESIDENT SIMMA: Thank you very much. That

22 gets us to the Claimants' Opening Statement, and I call on

23 Mr. Kehoe.

24 MR. KEHOE: Yes, Mr. President. I think we just

25 need a minute for my colleague to load the files, the

[Page 207]

1 PowerPoints. Thank you.

2 (Pause.)

3 MR. KEHOE: I'm ready to begin, Mr. President.

4 PRESIDENT SIMMA: Go ahead.

5 OPENING STATEMENT ON CONTRACT ARBITRATION BY COUNSEL FOR

6 CLAIMANTS

7 MR. KEHOE: So, the Claimants oppose bifurcation

8 because we believe that it will lead to inefficiency; I

9 think both Parties agree that that's an important. It

10 will lead to inefficiency in resolving this dispute

11 between the Parties that has lasted for quite a long time,

12 and we believe that the factors that tribunals consider in

13 deciding whether to bifurcate a case all countenance

14 against bifurcation of these three particular objections

15 that Peru wishes to bring forward as preliminary

16 questions. I will explain why the Respondents', we

17 believe, contractual objections are so intertwined with

18 merits that it makes bifurcation impractical. And then my

19 colleague, Isabel Fernández de la Cuesta, will handle the

20 other two components of the standard that the Glamis Gold

21 Tribunal set forth and that many tribunals follow, which

22 is to focus on the substance of a Claim and potential

23 inefficiencies.

24 So, beginning with the first point, which is

25 that these facts are going to greatly intermingle--for

[Page 208]

1 some reason I can't see the slide numbers, so it makes it

2 hard to--I guess I'll just move along. It would be

3 helpful to see the slide numbers. Sorry.

4 PRESIDENT SIMMA: It's not visible, apparently.

5 MR. KEHOE: Oh, you can't see the slide numbers

6 either?

7 PRESIDENT SIMMA: No.

8 MR. KEHOE: Is there anyway, Heleina, that you

9 can pull the PowerPoint higher up so that we can see the

10 slide numbers at the bottom?

11 MS. FORMOSA: I could do that, but I can't. I

12 see it on my screen.

13 Martin, is this a potential setting with Zoom?

14 SECRETARY DOE: I don't believe so. I think it

15 has more to do with the particular aspect of your screen

16 that you're sharing.

17 MS. FORMOSA: Okay.

18 MR. KEHOE: We see it now.

19 MS. FORMOSA: You see them now?

20 PRESIDENT SIMMA: Yeah.

21 MR. KEHOE: Thank you.

22 So, you just heard them, I don't really need to

23 repeat them, although I'm here, so I will--that the

24 Respondents argue is that we're not parties to the Stock

25 Transfer Agreement, Peru didn't consent, and that

[Page 209]

1 Claimants have no substantive rights under these

2 agreements.

3 Okay. So, Slide 5.

4 So, as I mentioned, tribunals have developed

5 these three criteria and the over-reaching issue of

6 fairness and procedural efficiency governs, and now I'm

7 going to move to the fact that--and I'll move through it

8 quickly because Mr. Jijón already did it. I'm on the

9 first of those criteria which is that the objection must

10 not cause too much intertwining of the preliminary

11 objections with the ultimate merits in the case. And our

12 concern with this Request for Bifurcation--and I'll get to

13 it in a minute--is that the substantive allegations that

14 Peru is making here will essentially be a merits argument,

15 and so I'm going to move through--I think it's pretty

16 clear to the Tribunal; we take the position that we are

17 signatories to the Contract. The Renco Consortium made an

18 investment in this mine and smelter, and it's logical to

19 think that, between the different agreements, that it

20 didn't protect itself.

21 So, you've heard about the Additional Clause,

22 I'm going to move through it, it's in our papers. It's

23 our position that we are signatories to the Contract, and

24 I think it's hard to disagree with the fact that we're

25 signatories when we actually signed it.

[Page 210]

1 I'll go back.

2 That's signing the Stock Purchase Agreement,

3 signed by Jeffrey Zelms of Doe Run Peru and Marvin Koenig

4 of Renco. And then we move to the Additional Clause.

5 Again, Renco. The names wouldn't be mentioned there were

6 it not relevant for some type of substantive rights.

7 And again, so the Claimants won the bid for the

8 Complex; we're here on Slide 11 already, and you can see

9 on the slide the State acknowledges and guarantees that

10 the Special Committee acknowledges that the Renco

11 consortium, including Renco and Doe Run Resources, the

12 Claimants here, were awarded the bid. Now, the various

13 interrelated transactions associated with the Claimants

14 winning the bid by signing the Stock Transfer Agreement,

15 the Guaranty Agreements, and the other agreements all came

16 with various rights and liabilities that are at the heart

17 of this dispute. The Claimants argue they have

18 substantive rights. Whether or not the Claimants have

19 substantive rights and to what extent is a question for

20 the merits phase of the case, but certainly it's

21 intertwined with their request for the Preliminary

22 Objections.

23 And now I'm just going to go into a few details.

24 To support its objection, or to support its

25 Request for Bifurcation, we see some examples in its

[Page 211]

1 submission to this Tribunal of why Peru believes that it

2 is appropriate, and they make a series of legal arguments,

3 and we heard some of them this morning. They're found at

4 Paragraphs 29 to 36 of their submission.

5 So, we see here, for example, at Paragraph 32,

6 it states: "In Renco I, for example, Peru

7 established"--first of all, that's a misuse of the word.

8 It didn't "establish" anything. The Tribunal didn't

9 decide any of this. Peru argued. "On the basis of legal

10 analysis, authorities and expert opinion the following

11 with respect to the Contract," and there's a long

12 paragraph. One of the pieces of it says that Peru could

13 have not breached any obligation to Renco under the

14 Contract because Renco has no rights or obligations. We

15 just fundamentally disagree with that legal analysis, and

16 we have submitted our own Expert Reports and our own legal

17 analysis to provide that Renco is--does have substantive

18 rights under the Contract.

19 And, you know, I make that point simply because

20 again this goes to the merits. I didn't make a slide for

21 all of these. I'm just going to mention them here.

22 In Paragraph 34 of their submission, Respondents

23 state that the Claimants' position concerning the rights

24 and obligations as Parties referenced in the Guaranty are

25 superficial arguments, "superficial agreements," and

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1 likewise are at odds with the analysis of the Peruvian law

2 conducted in Renco I. Right, conducted by Peru. We

3 disagree with that.

4 But my point is, these are all intermingled with

5 the merits. My colleague is going to get to the other two

6 factors.

7 They say again at Paragraph 35 in their

8 submission: "The Guaranty was subsequently rendered null

9 and void," you heard counsel mention this, "as a matter of

10 Peruvian law and can no longer be the source of any rights

11 or obligations," so we disagree with that. But that is

12 sort of at the heart of the case; I mean, the Stock

13 Transfer Agreement and the Guaranty and the additional

14 paragraphs are merits.

15 You know, I agree to some degree with Mr. Jijón;

16 you know, you just can't say "merits" and have everything

17 go away, but their argument is a merits argument. In

18 fact, they characterize it themselves as merits.

19 In their submission to you on Page 9, the

20 heading is "merits." And they say: "The Claimants Fail

21 to Establish a Valid Legal Relationship Among the

22 Parties." We think we have established a valid legal

23 relationship, and we will, but that is a merits question,

24 and Peru, at least when it made its submission to you,

25 agreed with that.

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1 So, moving to the second objection, that they

2 did not consent to arbitrate, how does that relate to the

3 merits? This is a mirror image of the First Objection, in

4 our opinion; they argue that they did not consent because

5 the Claimants are not parties to the agreement and,

6 therefore, they should be bifurcated, and so I really

7 don't have much more to say on this issue other than it's

8 a mirror image of the earlier one.

9 And one additional point. Claimants'

10 request--and Mr. Jijón referred to this--in this

11 Arbitration--our Request for Arbitration also contains

12 claims for unjust enrichment and contribution under the

13 Peruvian Civil Code which fall within the broad, very

14 broad, Arbitration Clause. And they're obviously not

15 contract-based claims, but they derive--you have

16 jurisdiction over them because of the broad arbitration

17 clause, and the Respondent doesn't seek to bifurcate the

18 unjust enrichment and the contribution claims.

19 So, even if this Tribunal were to bifurcate the

20 issues relating to the alleged annulments and the various

21 rights and the extent to which Renco and Doe Run resources

22 have rights and obligations under the Contract and if you

23 were to determine that somehow they have no rights under

24 the Contract, it is our position that, under the broad

25 arbitration clause, you would still need to determine the

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1 extent to which they are entitled to compensation under

2 the Peruvian Civil Code for unjust enrichment and

3 contribution.

4 Turning to the third and final basis upon which

5 Peru makes its application for a preliminary decision is

6 that we don't have any substantive rights under the

7 Contract, and this really kind of ties back to their first

8 point because they don't agree with our legal positions on

9 certain issues, we don't have any rights under the

10 Contract.

11 So, I just put a long quote here. This is

12 Paragraph 43. They say: "Claimants' claims relate to the

13 indemnity clause and the Missouri Lawsuits. They're

14 inadmissible because they're not parties to the Contract

15 or the Guaranty. That's their first objection and that we

16 have no rights thereunder. In fact, the specific rights

17 and obligations related to third-party claims run

18 expressly only to the Investor or the Company and not to

19 non-parties. Respondents have no obligation to arbitrate

20 the extension of the indemnity clause (or any other

21 clause) to Claimants with respect to the U.S. lawsuits."

22 Now, we disagree with this, but whether or not

23 the Claimants have substantive rights under the Stock

24 Transfer Agreement and the Guaranty is intertwined with

25 the ultimate merits of the dispute. And as I said, it's

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1 also extraordinarily--well, the Peruvian Civil Code is

2 also extraordinarily relevant because even to the extent

3 that you found that somehow they have no rights under the

4 Contracts, we still have a very broad arbitration clause,

5 and the issues that you would be deciding in determining

6 the Claimants' rights under the Contract, whether or not

7 things were annulled or one expert is right or the other,

8 you're going to need to deal with.

9 And then I guess the environmental issues that

10 counsel this morning went through, all of these issues

11 that we could get rid of, all of these environmental

12 issues, it's our position that those environmental issues

13 are going to come up in the issue of unjust enrichment and

14 contribution anyway. We believe that Peru is going to

15 have to contribute to any potential jury Award or

16 settlement in the St. Louis case one way or the other.

17 And with that, actually--yeah, I think I've just

18 said what was on Slide 18, and here again, we see that, in

19 its submission, with respect to its third ground for

20 seeking bifurcation, Peru puts as the heading "merits."

21 Claimants fail--actually, I misspoke. When I said earlier

22 and when I just said that this was in their submission for

23 bifurcation, I misspoke. This was their submission in

24 response to--this was their response in January of 2019 to

25 the arbitration.

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1 So, in any event, they claim that Claimants

2 failed to establish a valid legal relationship among the

3 Parties and that it's a merits argument. And with that,

4 I'm going to hand it to my colleague, Isabel Fernández de

5 la Cuesta.

6 PRESIDENT SIMMA: Thank you, Mr. Kehoe.

7 The floor is to Ms. Fernández de la Cuesta.

8 Ms. Fernández de la Cuesta, you have the floor.

9 MS. FERNÁNDEZ de la CUESTA: Thank you,

10 Mr. Chairman.

11 I'm going to address the two remaining reasons

12 why bifurcation is not relevant in this case, and they are

13 that the contractual obligations lack substance--I'm

14 sorry, the contractual objections lack substance, and that

15 bifurcating this proceeding would result in significant

16 procedural inefficiencies.

17 Pardon me, I'm having some issues with the

18 screen, so just give me one second, please.

19 PRESIDENT SIMMA: Of course.

20 (Pause.)

21 MS. FERNÁNDEZ de la CUESTA: Okay, so turning to

22 why Respondents' three objections lack substance. Let's

23 focus on the First Objection, which is that Claimants are

24 not Parties to the Stock Transfer Agreement and the

25 Guaranty Agreement. And Mr. Kehoe just told you that they

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are. That they signed this Agreement, and we take the position that Claimants signed this agreement, they are Parties to those agreements and they have contractual rights under those agreements, including the right to arbitrate the dispute and the right to have Activos Mineros and Peru assume liability for those losses.

And at a minimum, Claimants are third-party beneficiaries of the Guaranty because the Guaranty acknowledges them as a winning consortium of the Mesa-La Oroya bid, and it recognizes that Claimants had established Doe Run Peru as part of the stock transfer transaction, and so they have, first of all, rights under those agreements, and because these objections lack substance, it is inappropriate for bifurcation.

Now, the same goes for the second objection, which is that Respondent haven't consented to arbitration, and we showed you also that Peru is a Party to the Guaranty Agreement, that Activos Mineros is a party to this Stock Transfer Agreement. And as you can see on the screen, Article 12 or Clause 12 of the Stock Transfer Agreement contains a broad arbitration clause that requires any dispute between the Parties derived in relation to this Contract to be resolved by arbitration under the UNCITRAL Rules.

Now, in addition to that, the Arbitration Clause

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is separable from the rest of the agreement under Peruvian law as well as under well-settled principles of separability under international arbitration practice; and, therefore, all of the signatories remain Parties to the Arbitration Agreement, even if they were no longer Parties to the Agreement, which they actually are.

So, Claimants continue to have, first of all, right under those agreements, including the right to arbitrate. And in any event, Respondents are still bound to arbitrate Claimants' extra-contractual claims for contribution and unjust enrichment because those are claims in relation to the Stock Transfer Agreement and, therefore, fall within the scope of the arbitration provision.

Now, moving to Objection 3, that Claimants lack substance--excuse me that, Claimants lack substantive rights under the indemnity provision and other provisions of the Stock Transfer Agreement, this objection, too, lacks substance, but what's more important is that these objections cannot be heard and decided without getting deep into the merits of the case.

Now, Respondents' assumption of liability under Article 6 or Clause 6 requires the Respondents to assume liability for third-party damages and claims relating to environmental contamination regardless of which member of

[Page 219]

the Renco Consortium or affiliated companies or individuals are sued. And the Plaintiffs in the United States have targeted Renco and Doe Run Resources in the St. Louis lawsuits, and Clause 6 covers these lawsuits. And so, Activos Mineros has an obligation to assume liability, any liability imposed on Claimant, and Peru has guaranteed that obligation, and that's where it lacks substance.

And now, let me move to the final factor, and let me explain why bifurcation would result in procedural--significant procedural inefficiencies. And there are two reasons for that:

The first one--and this is key--is that bifurcation would still require this Tribunal to hear extensive legal and factual issues during this preliminary phase as a matter of Peruvian law.

And the second reason is that this extensive evidence is actually intertwined with the merits.

So, if the Tribunal bifurcates, it will need to hear extensive evidence on these factual issues that I just said because it will need to do so to interpret the Agreement. Under Peruvian law--and you have this on the screen--contracts must be interpreted and performed according to the common intent of the Parties, and this common intent must be discovered not through a mere

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reading of the text, but rather through an adequate interpretation, and this is what Dr. Trazegnies testified in Renco I.

Now, that adequate interpretation cannot be based on simple proof of what the text says but rather it must be analyzed in its context. And so, as a result of this interpretation rule, Peruvian law relies heavily on extrinsic evidence to establish the context of an agreement and the Parties' intent in concluding or signing that Agreement. And so, the Tribunal would have to hear to decide this objection issues of contract interpretation and would have to hear all of this evidence on that point.

Now, Respondents dispute these principles, and you heard that again a moment ago. They argue that the structural instruments speak for themselves and that no consideration of additional questions is needed, and they showed you a few slides on this.

Now, this is incorrect. In the merits phase, we will show you why, but for purposes of this bifurcation request, what's important is that, as a threshold matter, this Tribunal would have to hear argument and expert testimony on the applicable fundamental principles of Peruvian contract law in order to properly adjudicate the contract claim here, and that further underscores why bifurcation is not appropriate.

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Now, that's just not a principle of Peruvian law that requires to look at the context of the Contract. Article--or Clause 12--excuse me, Clause 18 of the Stock Transfer Agreement itself accords "supplemental validity to background fact regarding the signing and the negotiation of those agreements," and specifically it mentions two documents. It mentions the answers to consultations of official character circulating during the bidding process for La Oroya, and then it also mentions the Bidding Conditions. So, I just want to take a moment to go through these two documents to show you the relevance of this evidence to the questions that Claimant--excuse me, that Respondents want to bifurcate.

So, if you look at the consultations and answers, you may recall the first privatization round for La Oroya failed because it did not attract Investors. Nobody wanted to bid on that.

And in the second round, Peru undertook steps to attract bidders including by providing answers to their questions. And so, if you look at Question 41, which is on this slide, Peru acknowledged in its official response that Centromin would remain liability for third-party claims. Peru asked the question--excuse me, Peru was asked the question: Would Centromin accept responsibility for all the contaminated land, water, and air until the

[Page 222]

end of the period covered by the PAMA? Answer: Affirmative. So, these answers gave a critical assurance to the consortium into admitting their bid and in signing the Stock Transfer Agreement, and these facts provide crucially important context on the Parties' intent on how and why they became Parties to the Stock Transfer Agreement and how they continue to have rights under the Agreement, and those are precisely Respondents' first and second objections.

And then let's look very quickly at the Bidding Conditions themselves because they require the bidding--the winning Consortium to establish a local subsidiary that would sign the Stock Transfer Agreement. And this is what Claimants did. They won the bid and then they established Doe Run Peru for this--the Stock Transfer Agreement. But Doe Run Peru was not involved in the negotiation of the Stock Transfer Agreement. Renco and Doe Run Resources negotiated that Agreement, and this is very relevant context to decide all of three Respondents' objections to whether Claimants are Parties and whether Claimants retain rights under those agreements.

And so, I listed on the slide a few more points that this Tribunal would have to decide or go into in deciding this objection, and the reason why this is relevant is because Respondents are asking this Tribunal

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to go into all of these merits questions as to whether the Guaranty Agreement is terminated or it's null and void and whether there is a difference between being Parties or Intervenors, and all of these background that go to the heart of the merit of the case is relevant in deciding those issues because they are so deeply intertwined.

So, in the interest of time, I'm not going to read through all of these additional background facts and legal issues that this Tribunal would have to go into, but I just want to underscore that the notion that we heard just a moment ago that there is, as they said, threshold contract issues that are different and apart from the application of the Contract is not true in this case based on the types of objection that Respondents have put forward the before this Tribunal.

And so, finally, very quickly, I just want to say that bifurcation would in this case for long rather than shortened and would increase the time--the length of these proceedings and it would increase rather than reduce the costs because these objections are likely to fail, they're intertwined with the merits, and they lack substance.

And I think with that, I'm going to turn it over Mr. Kehoe. Otherwise, I think we may be done with our presentation.

[Page 224]

PRESIDENT SIMMA: Thank you, Ms. Fernández de la Cuesta.

I have to confess that I did not understand the last sentence. Are you handing over?

MR. KEHOE: I think she's handing it to me, Mr. President.

PRESIDENT SIMMA: All right. Thank you.

Mr. Kehoe.

MR. KEHOE: We have no further comments, sir. Thank you.

PRESIDENT SIMMA: Thank you very much. This brings to an end the Opening Statements on The Contracts/bifurcation issue, and we are now having our second break, a break of 30 minutes, which means a break until 6:25, 6:25 Hague/Munich time, and that is, Martin, please?

SECRETARY DOE: 12:25 for those on Eastern time.

PRESIDENT SIMMA: Okay. See you again at 12:25 Eastern Standard Time, and another three hours earlier for Mr. Thomas.

MR. HAMILTON: Mr. President, might I make a procedural inquiry?

PRESIDENT SIMMA: Yes. Go ahead.

MR. HAMILTON: Thank you.

Following up on my comments yesterday and the

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exchange that included Mr. Kehoe as well, I just wanted to inquire, does the Tribunal have any questions that it would like the Parties to consider during this break before we come back for the rebuttal segment?

PRESIDENT SIMMA: Let me just make sure whether I'm right, and if--Martin, can you take me back to the breakout room just for a quick moment? We will be back shortly.

MR. HAMILTON: Thank you.

SECRETARY DOE: Okay.

(Pause in the proceedings.)

SECRETARY DOE: Great. I think everybody is back in the Main Hearing room, and you can resume.

You're on mute, Bruno. There we go.

(Pause.)

SECRETARY DOE: I think we can resume.

PRESIDENT SIMMA: We are ready to resume.

SECRETARY DOE: Yes.

PRESIDENT SIMMA: Okay. So, I go back to Mr. Hamilton or to both Mr. Jijón and Mr. Hamilton. Actually, there is going to be a question by Mr. Thomas.

Was your idea to hear the question right now and then answer it, or have the question asked and answered following the two rebuttals?

MR. HAMILTON: We're glad to hear your questions

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any time, Members of the Tribunal, but we thought it might be more efficient and effective for both Parties if we could hear the questions now before we take a break so we can consider and try to assist the Tribunal when we return.

PRESIDENT SIMMA: Okay. So, I give the floor to Chris, to Mr. Thomas.

ARBITRATOR THOMAS: Thank you, Mr. Chairman.

QUESTION FROM THE TRIBUNAL

ARBITRATOR THOMAS: My question was provoked by Slide Number 5 of the presentation made by the Respondent this morning, which referred to the withdrawal of the claim in the Treaty Case in terms of Doe Run Peru. And I have been wondering about Doe Run Peru for quite a while since I have been reading into this case, and I would like to ask about its involvement or lack thereof in the Treaty and the Contract Cases. And I would like you to think about this temporally, at the time of Renco I and at the present time.

So, it's possible that this relates both to the Treaty waiver, the material side of the Treaty waiver, and it's also possible that it pertains to the contract claim because it is identified in the Contract as the second Party to the Contract. And, of course, we've heard submissions made on the question of privity of contracts

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today.

So, it's more a question of fact than law. I would just like to have greater elaboration from both of your perspectives on why Doe Run Peru was withdrawn as a Party to the initial treaty claim and why it's not a Party to the existing contract claim.

And is there any evidence--it may not be on the record, but is there any evidence of any involvement--I'm not sure what the term is in Peru, but the Trustee in Bankruptcy or the liquidator. Is there any involvement between Renco, on the one hand, and the Trustee in Bankruptcy in relation to these legal proceedings? Was there any at the time of Renco I? Is there any in the more recent Renco II and III proceedings.

Is that sufficiently clear, Mr. Kehoe and Mr. Hamilton?

MR. KEHOE: Yes, it is perfectly clear to me.

MR. HAMILTON: Understood, Mr. Thomas.

ARBITRATOR THOMAS: Thank you.

And if it turns out that this is not something you can easily deal with within the half an hour, I accept that, I understand that. But I did want to raise this issue because it's been in my mind.

MR. KEHOE: Once again, it's a good question. Obviously I'm not going to answer it now. I do think

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we'll be able to give you some information, but to give you full--you know, every bit of information you need, then we may need to follow up with you. I have a very good idea, but I may miss a detail and then regret it.

ARBITRATOR THOMAS: Understood. Thank you.

MR. KEHOE: Thank you.

PRESIDENT SIMMA: Okay. Thank you. That gets us to the break. And the break we will extend to 6:40 Munich time, 12:40 Eastern Standard Time. Okay, so see you then.

MR. KEHOE: Thank you.

(Recess.)

PRESIDENT SIMMA: So, we reach the stage of the short rebuttals on the contract arbitration bifurcation issue, and I give the floor to Respondent for its rebuttal.

Mr. Hamilton or Mr. Jijón, you have the floor--whoever.

REBUTTAL ARGUMENT ON CONTRACT ARBITRATION BY COUNSEL FOR RESPONDENT

MR. HAMILTON: Thank you very much. I'm going to invite my colleague to project just a few slides that are material, you've seen before, just to help guide us.

Thank you very much.

Next slide.

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Mr. President and Members of the Tribunal, we will begin with a brief response to the query of the Tribunal, and Mr. Thomas in particular, that related to a reference in Respondents' presentation in the Treaty Case regarding the Amended Statement of Claim, and as Mr. Thomas mentioned, depending on your point of view, could have materiality for the Treaty or the contract case.

Fundamentally what occurred in 2011 was that Renco initially filed a Statement of Claim in April of that year that included two Claimants and two Respondents. It subsequently amended its Statement of Claim in August of 2011. Ms. Menaker will briefly discuss what occurred.

MS. MENAKER: Hi, Members of the Tribunal. I suggest briefly in response to Arbitrator Thomas's question on the Treaty front, as Mr. Hamilton noted, Renco initially filed its Treaty claim in Renco I. The Claimants were both Renco and DRP, and the Respondents were Peru and Activos Mineros. And Peru consulted or raised an issue with--with, excuse me, Claimants and noted that, of course, Activos Mineros cannot be a respondent in a treaty claim. And in response Renco then ended up filing--and let me back up to say that with their initial Notice of Arbitration, Renco filed a waiver on behalf of itself, on behalf of Renco and also filed a waiver on

[Page 230]

behalf of DRP because, as you know, under the Treaty as in other Treaties, U.S. treaties in particular like the NAFTA, you can file a claim on your own behalf; you can also file a claim on behalf of an enterprise that you own and control; and, when you do that, you need to file a waiver of the enterprise's right to initiate or continue any proceedings.

So, they filed two waivers. Then they filed an amended claim. They dropped Activos Mineros as a respondent. They also dropped DRP as a co-claimant, and they did not file a new waiver for DRP, so they only filed a waiver for Renco, no waiver for DRP.

In our objections, Preliminary Objections on waiver, we raised numerous arguments. As you know, we objected to Renco's waiver, including because of the language, the reservation that they took. We also objected on the ground that Renco should have included a waiver for DRP. And the basis was that their claim they originally filed did not change from their claim that they filed--the amended claim other than the named Parties. The substance of the Claim did not change. And we argued that that meant that the Claim would still be made on behalf of their Investment DRP and, therefore, they should have submitted a waiver for DRP.

And to the extent that they were acting

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inconsistently with that waiver, it should or acting inconsistently by having DRP initiate or continue local proceedings with respect to the same measure, then the Claim should be dismissed either because they were acting in violation of DRP's initial waiver that they purported to unilaterally withdraw, or because they should be deemed to have submitted the Claim on behalf of DRP and should have put in a compliant waiver on DRP's behalf.

And, in support of that, we noted that there were two different proceedings that DRP had, indeed, initiated and continued, and these were not defensive proceedings. Nor were they proceedings within the confines of the bankruptcy proceeding, so specifically there was a constitutional amparo DRP had filed initially against the MEM challenging the MEM credit in November of 2010. DRP lost. And then it filed an appeal, and it lost, and it filed a second appeal, which was the constitutional amparo which was months after the Amended Notice of Arbitration was filed.

So, that is an Affirmative Action taken by DRP in the Court to file this amparo and in violation of a waiver had a waiver been filed. And again, that was not governed by the Bankruptcy Code. It was governed by the Peruvian Code of Constitutional Procedure.

The second case was a Contentious-Administrative

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proceeding that was again filed by DRP in January of 2012. There, in that case also, DRP had lost in the first instance, and they also lost on appeal. They filed a cassation appeal, and both that cassation appeal was pending at the time that Renco won, as was the constitutional amparo that I just mentioned; both of those were pending, so that was the crux of our material waiver objection in that case.

So, thank you.

MR. HAMILTON: Thank you, Ms. Menaker.

And, Members of the Tribunal, it only underscores the dangerousness of this absurd abuse theory that Claimant is asking you to buy into and really to utilize to gut the Treaty requirements in the pending Treaty Case because there are a whole series of issues that unfolded in the first case in connection with the waiver, in connection with the ongoing local litigations which Renco then went in under the auspices of a different subsidiary of Renco on those cases. So, there are a real thicket of issues here.

The one thing I would just underscore that we said this morning, of course, is upon receiving that Amended Statement of Claim, Peru, in letters of August and September of 2011, with no filing obligation already flagged the waiver issue which it then, of course,

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repeatedly requested to be heard upon.

The final thing that we would say as to your query about DRP, is we draw your attention to the Framework Agreement between the Parties that is before the Tribunal, and at Section 3 of that Agreement, it explains in this joint Document the Parties acknowledge that the process for the liquidation of DRP referenced in the Notices, the dispute Notices, is ongoing. It also refers to the role of the Ministry of Energy and Mines including continued efforts to function on a consensus-based approach with the approval of the majority of the creditors.

And so, we would be glad to discuss that, if you ever reach it, but I refer you to that as one source of a Joint Statement about the status of DRP.

Next, we will briefly address the Contract Case, is it we could go to the next slide, please.

Now, Members of the Tribunal, we showed you this figure, which was also in our pleadings, showing the misalignment between the Parties to the Contract and the Guaranty and the Parties to the Contract arbitration. That is truly disturbing. It is inconceivable to us how that issue would not need to be addressed as a threshold matter. The Parties have been dealing with this issue for years. As we mentioned before, this issue was extensively

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briefed in 2014 and 2015. The fact that the Tribunal in the first case, which included the contract claims, did not reach this issue is simply because we won on our first line of defense.

And so, these issues are very well-known, very heavily briefed, and easily divisible from the deep swathe of issues relating to environmental conduct and all of the attendant technical and documentary issues. Literally, millions and millions of documents, a swathe that will be necessary if the case reaches that point.

And, fundamentally, what we heard from Claimants is now revealed; it's now there. There was not an emphasis that they are Parties, but rather careful slicing of words using the term "signatories." Signatories, and based on this very, very narrow role that these entities had, and their departure four days after in the case of Renco, four days after the original date of this Contract, they are seeking to use that to bring a range of contractual arguments and extra-contractual arguments.

So, they're not parties, there was no consent to arbitrate, and they want to magically bring extra-contractual claims in an arbitration.

If the fight that they want is whether signatories who are not parties can benefit from their Arbitration Clause, let's go. We know this very well

[Page 235]

under Peruvian law. It's been addressed in various matters. Certainly, the Tribunal may be familiar with contract disputes around the region dealing with this issue about signatories versus Parties. And it is a segregable issue. Respondents have not consented to arbitrate these claims. It must absolutely be dealt with up front.

Mr. Jijón, has a few additional observations.

PRESIDENT SIMMA: Thank you, Mr. Hamilton.

Mr. Jijón?

MR. JIJÓN: Thank you, Mr. President.

Very briefly, today, we heard at length Claimant argue and make an extra-contractual focus trying to say that Respondents' objections should be rejected on the basis of certain extra-contractual claims under the Civil Code. This extra-contractual focus only underscores the problem with consent.

What we did not hear is what is another basis for hauling Peru and Activos Mineros into this Arbitration if not for the Contract and Guaranty? Consent is consent, as I said this morning, it is fundamental. And the only basis for consent that has been alleged so far, as we know, is the Contract and the Guaranty. That is correct whether we're talking about liability under the Civil Code or under the Contract. And today we heard lots of

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arguments about the origins of the Contracts.

Similarly, these arguments on the formation of the Contract underscore why this is a serious objection and why this is an objection that should be heard now rather than with the liability piece. Whether there is liability under the Civil Code or under the Contract is completely different from whether there was consent or whether the Claimants can submit those liability disputes to arbitration. We don't agree with any of the argument put forward today on this issue by Claimants but that is not the point that the Tribunal has to decide now. The question before the Tribunal now is simply whether those issues, those substantial and serious issues, which Claimants wanted to argue about should be heard in a preliminary phase or whether they should be joined to the very separate also complex issues of liability that would have to be decided if this Tribunal let the case go forward.

Thank you.

PRESIDENT SIMMA: Thank you, Mr. Jijón.

Mr. Hamilton?

MR. HAMILTON: Thank you very much.

Can we stay on the prior slide, please.

Thank you.

So, just to close out on the Contract issue. As

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I mentioned, Peru does not request bifurcation lightly. It does not do so routinely. It only does so due to the serious nature of the fundamental cornerstone issue of consent that goes to the heart of this Request for Bifurcation. In that sense, this is a situation that is readily distinguishable from many cases relating to bifurcation. A recent example such as Eco Oro versus Colombia and other recent investment claims in Colombia as well. This is a different situation because we really have not only a cornerstone issue related to consent by signatories not parties, who were not even lingering signatories.

So, we have an easily divisible set of issues. One goes to threshold contractual issues. The other goes to a giant swathe of environmental issues, all of the millions of documents in the Missouri litigations, all of those technical documents, and all of that other universe of types of issues and experts that may be involved. As a matter of fact, if anything, what we heard today about disputes or arguments about what the Contract says, clearly have nothing to do with all this other vast swathe of issues.

So, in short, this issue is readily segregable and needs to be heard promptly. It doesn't need to take a year to hear this issue. It doesn't need to take two

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years to hear the issue. We think that a compact briefing schedule is perfectly appropriate to address this issue.

Now, to conclude, in summary, Members of the Tribunal, you have two sets of issues before you: The scope of the Treaty Case and the scope of the Contract Case. In the Treaty Case, the Treaty itself mandates temporal requirements. They cannot be escaped because one company wants to. They cannot be escaped because one company violated the Treaty in a previous case, a previous case where there was no finding of abuse and no opportunity to cure. This Tribunal is not authorized to make such findings at this point. There is consonance between the two parties to the Treaty, the United States of America and the Republic of Peru, regarding the importance and rigidity of these temporal requirements. Peru did not consent to arbitrate such claims, and the Treaty mandates dismissal of the Claims in the case.

Second, with respect to the Contract Case, bifurcation is plainly appropriate. Claimants are not parties to the Contract, Respondents did not consent to arbitrate with these Claimants, and these issues are wholly distinct from the application of the Contract and the swathe of related technical and legal merits issues. Bifurcation is permissible and certainly is necessary.

So, Members of the Tribunal, you actually have a

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big responsibility right now, a responsibility to apply the Treaty that is the basis for jurisdiction in the Treaty Case and thereby limit the scope or dismiss that case; and, second, to take into account the fundamental cornerstone issue of consent to arbitrate in the Contract Case.

I want to thank you very much for your patience and your attention during this Hearing on behalf of Peru and White & Case. Thank you very much.

PRESIDENT SIMMA: Thank you, Mr. Hamilton. That gets us to the Claimants' rebuttal on the matter, but the Claimant will get the five minutes' extra break that we agreed on yesterday.

And, of course, it would be open for Claimant to follow the example of Respondent and answer Arbitrator Thomas' question in one go-together with a short rebuttal.

Okay, so we start again at 7:10 Hague time. That is 13, 1310, 1:10 p.m. Washington time.

MR. KEHOE: Mr. President, can you hear me? This is Ed Kehoe.

PRESIDENT SIMMA: Yes.

MR. KEHOE: I would like to note for Martin Doe, when I tried to start the video, it says you cannot start your video because the host has stopped it. So, if you could just fix that within the next five minutes, that

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would be great.

PRESIDENT SIMMA: I'm sure that Martin will do his best.

MR. KEHOE: Okay. I just wanted to move it along.

SECRETARY DOE: You should be right there.

MR. KEHOE: Thanks so much. See you in a few minutes.

PRESIDENT SIMMA: Thank you.

MR. KEHOE: Thank you.

(Pause.)

MR. KEHOE: Mr. President, shall I begin?

PRESIDENT SIMMA: Yes, please.

REBUTTAL ARGUMENT ON CONTRACT ARBITRATION BY COUNSEL FOR CLAIMANTS

MR. KEHOE: We know begin, as you asked, and begin answering Mr. Thomas's question as best we can right now, and we would like an opportunity to follow up because it's an important point that you're right, it transcends both cases.

When Renco refiled its case, originally it filed it with Doe Run Peru--and Ms. Menaker was right, there were consultations; we were hoping to have a consolidated case and dialogue with colleagues at White & Case--they said they would oppose that, and we said "fine." But, as

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time went on, Renco became very concerned about losing control of DRP, and that's actually exactly what happened. DRP is now in bankruptcy, and the liquidator--MEM is the largest creditor for all the reasons we just discussed, and the liquidator has taken complete control over DRP, so Renco has lost 100 percent control over DRP.

So, you know, I think I can leave it at that for now. There has been a lot of attribution by Peru as to why Renco did or didn't do something, and even this morning, you know, talking about the waiver and the like, but Renco knows why it did or didn't do things. And having Doe Run Peru in bankruptcy, which ultimately happened, was not something--it's not a good thing for Renco to have DRP in a treaty case when Renco doesn't control it anymore and it's in bankruptcy.

With that, I will turn it over to my colleague, Isabel Fernández de la Cuesta, to rebut--to give a rebuttal on the Contract Case.

PRESIDENT SIMMA: Thank you, Mr. Kehoe.

Ms. Fernández de la Cuesta, you have the floor.

MS. FERNÁNDEZ de la CUESTA: Thank you, Mr. Chairman.

Just very briefly, I will make a few points. The first one is that, of course, we claim and take the position that the Claimants are parties to the Stock

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Transfer Agreement, so I want to be very clear about that because Respondent seems to be playing games with the wording.

Second of all, all relevant Parties consented to arbitration under Clause 12. That Clause is separable from the remaining--from the rest of the Agreement. And so, to the extent that Respondents were to be right, that Claimants are not parties to the Agreement, to the Stock Transfer Agreement, they would still be parties to the Arbitration Agreement in Clause 12, which is the basis for consent.

My third point is that the Claimants' extra-contractual claims are based on that same separability in that same consent, and those claims are based on the Civil Code and fall within the broad scope of the Arbitration Agreement which talks about any claims relating to the Contract, and these claims relate to the Contract.

And the fourth point, and probably my final point, is that this whole notion that, in this case, there are very discrete threshold issues and then a swathe of environmental matters that can easily be separated is not true. And it's not true because, under Peruvian law, and under the Stock Purchase Agreement itself, the Tribunal must take into consideration extrinsic evidence relating

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to how the Contract came about, how the negotiations came about, who the Parties were, and so on and so forth, to decide these Preliminary Objections, which are merits objections.

And so, I'm not even sure that all of these throngs of environmental issues would ultimately be part of this case, but even if they were, they were related to the merits objections that Claimants--excuse me, that Respondents have put forward.

And so, I would refer the Tribunal to Slides 28, 29, 30, and 31 of our presentation this morning where I went through Peruvian Law on the issue of the Parties' intent and the Stock Transfer Agreement and the express reference in that Agreement to extrinsic documents that have interpretative value, and that there itself, right there, shows that these issues cannot be bifurcated without causing inefficiency and without causing delay and without causing additional cost.

And the last point I would make is that Mr. Hamilton started his remarks by saying that Renco was trying to delay this case to avoid the reckoning day, and I would like the Tribunal to think who is really trying to avoid the reckoning day by causing this delay and bifurcation. Because, ultimately, the liability or environmental claims lies with Activos Mineros and on

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Peru, and the longer this procedure goes, the longer they avoid their liabilities under the Stock Transfer Agreement.

And with that, Mr. Chairman, I pass the floor to Mr. Kehoe.

PRESIDENT SIMMA: Thank you very much.

That brings to an end the last act in this drama, the Claimants' rebuttal of contract matters and, if I have followed it correctly, all the answers to the question by Mr. Thomas.

Chris, may I ask you: Are you fine with the answers or you need more information or...

ARBITRATOR THOMAS: Well, I think I can work on the basis of the existing record, although I do note that Mr. Kehoe indicated that he might wish to follow up on the point.

PRESIDENT SIMMA: Okay. Mr. Kehoe, if that is the case, you probably have to give Mr. Hamilton a chance comment, or does that go--I think so.

Mr. Kehoe, let me ask you.

MR. KEHOE: And, first of all, let me apologize for having my video on during most of Ms. Fernández's presentation; I didn't realize it.

So, Mr. Thomas, I think I just--I think it was more of a caveat, that obviously I want to be able to

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elaborate on that point and not to be, which I know the Tribunal wouldn't do, but not to be kind of boxed in, and I didn't give you an awful lot of facts. I just explained to you, you know, the timing of the withdrawal, the reason for the withdrawal. You asked what's going on with the liquidator, and so I don't think--if you have more questions about that, then I would like an opportunity to give you a more fulsome answer; it feels like you may.

And so, if that's the case, we can make a written submission, but we're not asking for permission to do that right now.

PRESIDENT SIMMA: Okay. Chris, you probably have the last word on this matter.

ARBITRATOR THOMAS: Why don't we leave it on this basis. The Tribunal will discuss after the Hearing how it wishes to proceed in terms of the deliberative process.

And given the fact that you didn't have a lot of time to respond to this, obviously the Respondent was in a position to explain its perspective in relation to the treaty claim, but it may be that we might ask for something in writing--speaking entirely personally--simply because if it turns out that there is something of real relevance here to the disposition of a question that's before us, it would be better to be doing it on the basis

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of receiving any further information we think is necessary to receive. I didn't want to take anybody by surprise by drawing an inference from something which has been said in oral argument without necessarily being able to see a document.

But may I suggest we just leave it on that basis and I can discuss with my colleagues and we can see whether we have a need to follow up?

MR. KEHOE: That's good for the Claimants, yes.

PRESIDENT SIMMA: Okay. Good.

MR. HAMILTON: Mr. President, if I might very briefly, first, Peru and Activos Mineros would be glad to provide clarification if that would assist.

Second, just as a factual matter, I think it's important to note that DRP was removed from the initial Statement of Claim in Renco I because the Statement of Claim was not formulated in a manner consistent with the Treaty. It was a procedural issue that was coordinated and discussed between the Parties that led to their decision to submit an Amended Statement of Claim.

And, finally--and again, you can look at the joint agreement of the Parties and the Framework Agreement--the Republic does not control the bankruptcy proceeding. It is a creditor-controlled process. The liquidator is not the State--it is the liquidator

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appointed by creditors--and the Ministry of Environment doesn't control and dictate what happens in this creditor-controlled process.

Beyond that, I think for Mr. Kehoe or I to say more would certainly open up a whole range of issues, and it would complicate everyone's afternoon, so we will leave it at that.

(Overlapping speakers.)

MR. KEHOE: Mr. President, I disagree with that. I would ask to be able to respond to that. Mr. Hamilton, in the Contract Case, has referred to the Treaty, and I haven't objected, and I wouldn't normally, but I should be allowed to respond to what he just said. It was...

PRESIDENT SIMMA: Right. May I suggest that you let the Tribunal deliberate on this matter.

MR. KEHOE: Sure.

PRESIDENT SIMMA: I will get back to you if there is need for further clarification with regard to the contract claims. We're not in the same, I would say, "hurry" as we are with the treaty claim, so there would be the time, so let's see what comes out.

MR. KEHOE: Yes.

PROCEDURAL DISCUSSION

PRESIDENT SIMMA: Okay. That leaves us with a couple of questions. The first question is the question

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of Post-Hearing Briefs.

Now, with regard to the treaty claim, the Tribunal has about two-and-a-half weeks' time to come up with the Award in the 10.20.5 procedure, so the Tribunal does not need or does not expect you to come up with Post-Hearing Briefs at least on the treaty claim. We have the same feeling with regard to the contact claim except if the Parties really insist on writing these briefs.

But, as I said, it would make no sense with regard to the Treaty.

So, the bottom line, the Tribunal does not need Post-Hearing Briefs except if you really are eager to produce them.

Respondent? Mr. Hamilton?

MR. HAMILTON: On behalf of Peru and Activos Mineros, we are not anticipating Post-Hearing Briefs at this time, Mr. President.

PRESIDENT SIMMA: Okay. Mr. Kehoe?

MR. KEHOE: And we're the same, Mr. President. We are happy to not have Post-Hearing Briefs.

PRESIDENT SIMMA: Good. Thank you.

The other point is the question of the Transcripts, the Transcripts' examination and correction, and here I think the same is valid as I said before. With regard to the treaty claim, the Tribunal has so little

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time, and I think it would really come to the correct decision in the case without even on the basis of Transcripts that might not have the ultimate blessing by the Parties, so my suggestion would be that you please go about the procedure regarding the Transcripts, but we will not need them at least for the Decision on the treaty claim. The Decision would have to be made by the end of the month.

Would that be fine with you, too?

Mr. Kehoe, we start with you this time.

MR. KEHOE: Yes. That's perfectly fine with us.

PRESIDENT SIMMA: Mr. Hamilton?

MR. HAMILTON: Yes, Mr. President. Thank you.

PRESIDENT SIMMA: And let me ask my colleagues first.

To my colleagues, do you have any organizational issue that I might have forgotten to raise?

Chris?

ARBITRATOR THOMAS: Nothing comes to my mind at this point. Thank you.

PRESIDENT SIMMA: Thank you.

Horacio?

ARBITRATOR GRIGERA NAÓN: Nothing on my mind, either.

PRESIDENT SIMMA: Okay. Fine.

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Parties, Mr. Hamilton, any matter that I, in my innocence, might have forgotten to raise?

MR. HAMILTON: There are many things on the mind of the whole world these days, but I don't think we have anything in addition to raise at this time with the Tribunal. We very much appreciate your patience and time, and I extend courtesies to Mr. Kehoe as well.

PRESIDENT SIMMA: Mr. Kehoe?

MR. KEHOE: Thank you. Thank you, Mr. President.

I actually do have one question for the Tribunal.

PRESIDENT SIMMA: Okay.

MR. KEHOE: And for Mr. Hamilton, to whom I extend my gratitude as well.

So, Article 10.20.5, as you note, gives you 17 more days, and if we read it carefully, it's--I mean, we were reading it, it says, "on a showing of extraordinary circumstances," we can have the extra 30 days; right? Because 180 days expired on May 31st, and the 210 days, which is the extra 30 days we get to bring us to June 30th, requires a showing of extraordinary circumstances.

So, would it be proper for you to ask the Parties, which I think we will both agree, that there were

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extraordinary circumstances here and we make a showing to you and you approve it and we get the extra 30 days, or is that not necessary?

PRESIDENT SIMMA: That is a question which I would like to briefly discuss with my colleagues. I hope it hasn't been our appearance on the video, on the picture, that we look so fatigued and stressed that you do not consider us capable of coming up with an award, but I will make sure how my colleagues feel, okay?

MR. KEHOE: No, no, no, no, no. Just so you understand, all I'm saying is that May 31st has already gone by--we're already past that--and so, in order to have the 17 days, we all have to agree extraordinary circumstances would enable us to get us the extra 30 days.

PRESIDENT SIMMA: Okay. Right. Of course, if that is the situation, yeah.

MR. KEHOE: Yes.

(Overlapping speakers.)

MR. KEHOE: The Claimants agree that there were extraordinary circumstances that warrant the extra 30 days.

PRESIDENT SIMMA: May I ask, Mr. Hamilton? Sorry for my mistake. I really thought that the end of June was--

MR. KEHOE: Yeah.

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PRESIDENT SIMMA: Mathematics was never my great--

MR. KEHOE: Well, you have a skill set somewhere else.

PRESIDENT SIMMA: Since we are already two weeks past the time it would be actually wonderful if you could agree the circumstances exist.

Mr. Hamilton?

MR. HAMILTON: The Respondents are glad to cooperate with Claimants and the Tribunal to confirm the availability of the indicated period of time to reach a conclusion.

PRESIDENT SIMMA: Okay. Thank you very much.

Then I think all that remains for me is to thank you for, let's say, having been available for this having gone through this exercise in a very amicable, cooperative way. And I would like to thank all the people that are involved in this technological exercise--Registry people, the Interpreters, Court Reporters, Law In Order--I have to find out what that meant, "Law In Order," but apparently the law was in order. So, thank you, and we will do our best. Thank you very much.

MR. KEHOE: Thank you very much, all of you.

MR. HAMILTON: Thank you. Buenos tardes.

(Whereupon, at 1:31 p.m., the Hearing was

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concluded.)

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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