italaw181265.pdf

This HTML version is machine-generated. Always consult the original document.

[Page 1]

IN THE MATTER OF AN ARBITRATION UNDER THE

UNITED STATES - COLOMBIA TRADE PROMOTION AGREEMENT, SIGNED

ON 22 NOVEMBER 2006 AND ENTERED INTO FORCE ON 15 MAY 2012

and -

THE ARBITRATION RULES OF THE UNITED NATIONS COMMISSION ON

INTERNATIONAL TRADE LAW, AS REVISED IN 2013

(the "UNCITRAL Rules")

PCA Case No. 2018-56

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

In the Matter of Arbitration Between:

-x

ALBERTO CARRIZOSA GELZIS
FELIPE CARRIZOSA GELZIS
ENRIQUE CARRIZOSA GELZIS

Claimants,

and

THE REPUBLIC OF COLOMBIA,

Respondent.

-x

VIDEOCONFERENCE: HEARING ON JURISDICTION

Monday, December 14, 2020

Washington, D.C.

The hearing in the above-entitled matter

convened at 9:04 a.m. (EST) before:

MR. JOHN BEECHEY, CBE, Presiding Arbitrator

PROF. FRANCO FERRARI, Co-Arbitrator

MR. CHRISTER SÖDERLUND, Co-Arbitrator

[Page 2]

ALSO PRESENT:

Registry of the Permanent Court of Arbitration:

MR. JOSÉ LUIS ARAGÓN CARDIEL
PCA Secretary of the Tribunal

MR. MARKEL EGUILUZ PARTE
Assistant Legal Counsel

MR. LUIS POPOLI
Case Manager

Assistant to the Tribunal:

MR. NICCOLÓ LANDI

Court Reporters:

MS. DAWN K. LARSON
Registered Diplomate Reporter (RDR)
Certified Realtime Reporter (CRR)
Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of America
[email protected]

SR. VIRGILIO DANTE RINALDI, S.H.
D.R. Esteno
Colombres 566
Buenos Aires 1218ABE
Argentina
(5411) 4957-0083

Interpreters:

MS. SILVIA COLLA

MR. DANIEL GIGLIO

MR. CHARLES ROBERTS

[Page 3]

APPEARANCES:

On behalf of Claimants:

MR. PEDRO J. MARTÍNEZ-FRAGA
MR. C. RYAN REETZ
MR. CRAIG S. O'DEAR
MR. DOMENICO DI PIETRO
MR. DILMUROD SATVALDIEV
MS. RACHEL CHIU
Bryan Cave Leighton Paisner, LLP
200 S. Biscayne Boulevard
Suite 400
Miami, Florida 33131
United States of America

MR. JOAQUIN MORENO PAMPIN
RRM Legal

[Page 4]

APPEARANCES: (Continued)

On behalf of Respondent:

SR. CAMILO GÓMEZ ALZATE
DRA. ANA MARÍA ORDÓÑEZ PUENTES
DR. ANDRÉS FELIPE ESTEBAN TOVAR
SR. GIOVANNY ANDRÉS VEGA BARBOSA
SRA. ELIZABETH PRADO LÓPEZ
SRA. MARÍA ANGÉLICA VELANDIA
Agencia Nacional de Defensa Jurídica del
Estado
Cra. 7 No. 75-66, pisos 2-3
Bogota D.C., 110221
Colombia

SRA. DINA MARÍA OLMOS APONTE
Fondo de Garantías de Instuciones Financieras

SR. JUAN PABLO BUITRAGO LEÓN
Superintendencia Financiera

SRA. MANUELA BARRERA REGO
Banco de la República

MR. PAOLO DI ROSA
MS. KATELYN HORNE
MR. BRIAN VACA
MS. CRISTINA ARIZMENDI
MR. KELBY BALLENA
Arnold & Porter Kaye Scholer, LLP
601 Massachusetts Avenue, N.W.
Washington, D.C. 20001
United States of America

MR. PATRICIO GRANÉ LABAT
Arnold & Porter Kaye Scholer, LLP
Tower 42, 25 Old Broad Street
London EC2N 1HQ
United Kingdom

[Page 5]

APPEARANCES: (Continued)

Non-Disputing Party - United States of America:

MS. LISA J. GROSH
MR. JOHN D. DALEY
MS. NICOLE THORNTON
MR. JOHN BLANCK
MS. AMY ZUCKERMAN
MS. AMANDA BLUNT
MS. CATHERINE GIBSON
Attorney Advisers
Office of International Claims and
Investment Disputes
Office of the Legal Adviser
U.S. Department of State
Suite 203, South Building
2430 E Street, N.W.
Washington, D.C. 20037-2800
United States of America

[Page 6]

C O N T E N T S

PAGE

PRELIMINARY MATTERS.........................................7

OPENING STATEMENTS:

ON BEHALF OF THE CLAIMANTS:

By Mr. Martínez-Fraga.......................................14

By Mr. Reetz................................................79

By Mr. Martínez-Fraga.......................................89

ON BEHALF OF THE RESPONDENT:

By Ms. Ordóñez.............................................104

By Mr. Grané...............................................112

By Ms. Horne...............................................148

By Mr. Di Rosa.............................................166

[Page 7]

P R O C E E D I N G S

PRESIDENT BEECHEY: If we are all present, I will open this Hearing on Jurisdiction in PCA Case Number 2018-56 between Alberto Carrizosa Gelzis, Felipe Carrizosa Gelzis, and Enrique Carrizosa Gelzis and the Republic of Colombia.

First of all, my thanks to all of you for enabling yourselves to be present on a day when Google chose to crash. That is an achievement in itself.

We have a timetable sorted out. The intention is that there will be some introductions and housekeeping, and then we will hear the Opening Statements from the Parties. And 2.5 hours have been allocated to the Parties each for that purpose.

In terms of the day, we are going to break at around 3:15 and again at 4:45. Having spoken to my two colleagues, and with your indulgence, we would like to reduce the length of the longer break from an hour to 45 minutes so that we can try to end at 8:30 p.m. GMT rather than at 8:45. Unless that meets with violent opposition, perhaps we can proceed on that basis, but otherwise, the timetable, as indicated, will be as I've just set out.

There is one matter of housekeeping to which I'll raise now, and we can come to it in just a moment when

[Page 8]

we've gone through the introductions; and that is the one thing that is not clear on the timetable, is the length of time that the United States would wish to take for its submissions tomorrow morning.

So, Ms. Thornton, at an appropriate moment, in a few minutes' time, perhaps you would either consult, or if you have already consulted, let the Tribunal know what sort of time frame you're looking at for tomorrow. That would be helpful.

MS. THORNTON: Yes. Thank you.

PRESIDENT BEECHEY: And I'll ask you--

MS. THORNTON: I'm sorry.

(Overlapping speakers.)

PRESIDENT BEECHEY: I'll come--if I may, I will give you some advance notice.

MS. THORNTON: Oh, sure.

PRESIDENT BEECHEY: What I want to do is to invite the Parties to introduce their teams, and then we will hear what is to be said about that. And then there will be a reminder from me that this Hearing is being transmitted on live feed in English and in Spanish. And then after introductions and having heard from the U.S. about tomorrow morning, we will proceed with the Opening Statements, unless there is anything else the Parties wish to raise.

[Page 9]

So, without more ado, might I hand over to Claimants and invite the team to introduce itself.

MR. MARTÍNEZ-FRAGA: Thank you, Mr. President. Pedro Martínez-Fraga; and with me is Ryan Reetz, Domenico Di Pietro, Craig O'Dear, and Rachel Chiu. Also with us are the three Claimants: Alberto Carrizosa, Felipe Carrizosa, and Enrique Carrizosa.

Thank you, sir.

PRESIDENT BEECHEY: Thank you very much indeed.

MR. MARTÍNEZ-FRAGA: Also--sorry. Mr. Dilmurod is also here with us. Thank you.

PRESIDENT BEECHEY: Very well. Thank you very much indeed.

And for Respondent.

MR. GRANÉ: Good afternoon, Mr. President, Members of the Tribunal. Patricio Grané on behalf of Respondent.

Today with us we have Ana María Ordónez and Andrés Esteban from the Agencia. And there are other colleagues who will not be active participants, so unless you indicate otherwise, Mr. President, I will not read their names, but they have been duly communicated in our submissions. And my colleagues include my partner Paolo Di Rosa in Washington, D.C.; my colleague Ms. Katelyn Horne, also in D.C.

[Page 10]

PRESIDENT BEECHEY: Thank you very much indeed. Ms. Thornton, introductions, please, and an indication of time.

MS. THORNTON: Yes. Thank you very much, Mr. President, and thank you for allowing us to join this Hearing. So, first, I'll go through the list of representatives for the United States that will be observing within this Hearing, and that is Lisa Grosh, John Daley, John Blanck, Amanda Blunt, Catherine Gibson, Amy Zuckerman, and myself.

And we expect to keep our submission at the top of tomorrow's hearing to approximately 15 minutes, if that works for the Tribunal and the Parties.

PRESIDENT BEECHEY: Thank you very much indeed. That is 15, 1-5; right? Thank you very much indeed. That is most helpful.

All right. Before we go to any more housekeeping matters the Parties have, may I take it that no technical difficulties are being experienced at the moment, that everybody can hear and see?

I would ask, please, that whilst not actually speaking or intervening, perhaps you would be kind enough to ensure that systems are on mute.

And with that, Claimants, are there any housekeeping matters to be raised on behalf of the

[Page 11]

Claimants?

MR. MARTÍNEZ-FRAGA: None whatsoever, Mr. President.

PRESIDENT BEECHEY: That's a most welcome intervention. Thank you very much indeed, Mr. Martínez-Fraga.

Respondent?

MR. GRANÉ: Mr. President, I am afraid that there is one issue that we wish to raise.

PRESIDENT BEECHEY: Yes.

MR. GRANÉ: It is a point of order and it's before Claimants begin with their presentation and it concerns the PowerPoint presentation that Claimants have sent before the commencement of the session.

And, of course, Mr. President, as you know, Procedural Number 3, in Section 50, says that PowerPoint presentations and demonstratives can be used, but that exhibits that are cited in those presentations need to be clearly reflected in the presentations, and they must only refer to exhibits on the record.

Now, we have taken a very quick look at the presentation, and Slides 2 and 3 contain news articles from August 2018 and September 2017. There is no indication of an exhibit number in those Slides. We have quickly checked the record in the time that we had, and we

[Page 12]

did not identify any exhibit that contains those news articles.

And so, through you, Mr. President, I would like to confirm that those news articles are on the record, and, if they are not on the record, they should be excluded and should never have been included as they would be contrary to Procedural Order Number 3, Section 50, and also P.O. 1, Section 9.3.

Thank you.

PRESIDENT BEECHEY: Okay. Mr. Martínez-Fraga.

MR. MARTÍNEZ-FRAGA: Sure, of course. Thank you, Mr. President, Members of the Tribunal.

The slides that counsel is referring to are not being presented as demonstrative exhibits. They don't purport to summarize evidence and facilitate the understanding of evidence. They are also not being presented as evidence. The truth of the matter asserted is also not being proposed. They are thematic records, newspaper records of public records available everywhere, and they are extremely relevant and central to our undertaking today. We feel that the Tribunal and all concerned would be better served, of course, by considering them.

MR. GRANÉ: Mr. President, we object. We have not heard anything in what Claimants' counsel has said

[Page 13]

that would justify the violation of the very clear procedural rules.

PRESIDENT BEECHEY: Mr. Martínez-Fraga, it is right, isn't it, that no advance notice was given that this material was going to be included?

MR. MARTÍNEZ-FRAGA: That's correct, no advance notice was provided. That's right.

PRESIDENT BEECHEY: Very well. If the Parties will bear with us for just, I hope, a very short moment. I'm going to ask that the Members of the Tribunal to go into the breakout room. We will just consult very quickly and then come straight back. I don't want to delay matters any further than I have to.

José, can we go to the breakout room, please.

(Tribunal conferring.)

(Comments off microphone.)

PRESIDENT BEECHEY: Very good. I can see Mr. Grané and Mr. Martínez-Fraga, and, therefore, I'm inclined to proceed.

Mr. Grané, we're going to uphold that objection.

Mr. Martínez-Fraga, would you please not use those two Slides?

MR. MARTÍNEZ-FRAGA: Of course, Mr. President.

PRESIDENT BEECHEY: Subject to that, are there any other housekeeping matters to raise?

[Page 14]

MR. MARTÍNEZ-FRAGA: Not on Claimants' behalf, Mr. President.

PRESIDENT BEECHEY: Mr. Grané?

MR. GRANÉ: None from Respondents. Thank you, Mr. President.

PRESIDENT BEECHEY: In that case, Mr. Martínez-Fraga, the floor is yours.

MR. MARTÍNEZ-FRAGA: Thank you, sir. Let's get to work.

OPENING STATEMENT BY COUNSEL FOR CLAIMANTS

MR. MARTÍNEZ-FRAGA: Mr. President, Respected Members of the Tribunal, Counsel, Representatives of the Republic of Colombia, it a privilege for our firm to represent Claimants in this proceeding.

The three Claimants are brothers, U.S. citizens living in Colombia. They and other shareholders of the former savings and loan bank known as Granahorrar share the regrettable distinction of, first, having been the victims of corrupt and unlawful regulatory excesses on the part of the Colombian banking authorities, Fogafín and the Superintendency of Banking.

Then, when they were made whole by a pillar of the Colombian judicial system, the Council of State--the highest ranking court and a court of last resort, "in pari materia"--with the Constitutional Court and the Supreme

[Page 15]

Court, Colombia's Executive Branch, through its banking instrumentalities, filed fraudulent papers with the Constitutional Court, which caused the Claimants in this case to lose the totality of the investment the Council of State itself had provided to them on November 1, 2007.

Those papers were fraudulent because then, as now, you cannot use tutelas to represent the rights of a government agency. That is against the law. The tutelas are meant to preserve fundamental personal rights. To add insult to injury, they were incompetent and filed it late anyways, but it was still accepted.

Corruption, which resulted in the extreme injustice visited upon Claimants with the Constitutional Court's denial for the annulment of the June 25, 2014, annulment motion was actually discussed by Colombian jurist Javier Tamayo Jaramillo in a symposium at the University of California at Berkeley School of Law in December 2017. But we don't need Dr. Tamayo to explain the extreme and unprecedented judicial activism that led to the filing of this claim. The story is clearly told in the extensive record before this Tribunal.

But his description is notable for its similarity to the events of this very specific proceeding. As Dr. Tamayo describes that the Constitutional Court in Colombia has come to corruptly dominate political and

[Page 16]

legal matters in that country, has exceeded its powers on matters pertaining to the rule of law. The mechanism through which this corruption is accomplished is the very tutela mechanism that is critical to understand the ratione temporis, among other arguments that will be presented here today. It was exactly the mechanism that was used against the Claimants in this proceeding.

The tutela action empowers and facilitates unlimited and uncontrolled judicial activism by the Constitutional Court. The Court has become unduly political as a result of the nomination and election mechanism of magistrates. We have seen this demonstrated in this very proceeding with the Republic's own Expert, Dr. Ibáñez, who was rewarded with an appointment to the Constitutional Court after his written testimony was submitted but before the proceeding was even concluded.

This judicial activism has become a lethal weapon to pay favors to those who nominate or elect these judges. It is through this process that the corruption of justice of the Executive and of the political class is forged.

Dr. Tamayo observes that the control of constitutionality and the application of the tutela mechanism are a "shipwreck."

Use of this tutela mechanism has drawn the Court into corruption scandals involving the selection to review

[Page 17]

certain rulings, and that, we will show, was the case here, and it's a critical ratione temporis issue. This is precisely what occurred on June 25, 2014, when the Constitutional Court, despite two very powerful dissents in a 93-page document that, of course, Respondent would have this Tribunal think that it is just a mere single page piece of paper denying a Motion for Reconsideration, the labor of the Colombian judicial system silencing Claimants' cry for justice in that very judicial proceeding.

Despite significant effort and some progress, Colombia continues to struggle with corruption in its judicial ranks. In 2018, while this very proceeding was pending, Colombia's former Anticorruption Director Luis Gustavo Moreno Rivera pled guilty to money laundering and a bribery scheme directed to the target of a criminal investigation in that country. The Director's cooperation led to investigation and indictments of three Supreme Court Justices, multiple legislators, and Parliamentary officials. This corruption scandal was described by Colombian media as "the gravest ever to hit Colombia's Supreme Court.

"In addition to involving figures of the highest echelon to the judiciary, this case was concerning because the allegations suggest the repetition of consistent

[Page 18]

pattern of corruption involving several top judicial officials, which could point to a long-running scheme operated by a structured network." End of citation.

Furthermore, the case involves powerful political elite seemingly engaged in perverting the course of justice at the highest level.

In 2018, news reports confirmed by Colombia's Attorney-General's press release indicated that the former Colombian Supreme Court Justice Francisco Ricaurte Gómez, was arrested for charges of criminal association, bribery, influence, peddling, and abuse of privileged information.

It is this judicial environment that compels Claimants to seek justice before an impartial tribunal.

On November 1, 2007, the Council of State, a Tribunal of final instance I have mentioned, and of equal hierarchy with Colombia's judicial system as the Supreme Court and the Constitutional Court, issued a final judgment in favor of Granahorrar shareholders and against Fogafín and the Superintendency of Banking in the amount--in the dollar amount at that time of $114,183,417.80.

The Council of State's November 1, 2007 Final Judgment was scathing in passing on Fogafín's and the Superintendency of Banking's acts and omissions as to Granahorrar and the Council of State, by way of

[Page 19]

example--and this is a pillar of that judicial system--expressly found in its opinion that Fogafín and the Superintendency of Banking together, during the course of just a mere 12 hours, had created an economic crisis for Granahorrar that was artificial and scarcely indicative of Granahorrar's considerable solvency and historical performance record.

The final judgment in favor of the shareholders, in part, read: "The foregoing, when added to the wrongfully substantiated insolvency claim that the Superintendency of Banking had asserted against Granahorrar, together with the Central Bank's decision to undertake the Capitalization Order as part of the task to reduce to a nominal value Granahorrar's shares, demonstrates the illegality of the administrative agency's actions."

And the reason why this Court must vacate the first instant trial judge's judgment, which is appellant--which, as appellant made clear, did not at all address the material allegations asserted and had not accorded any weight to the probative evidence on which plaintiffs had based their arguments. And that's Claimants' Memorial at 36-39, Exhibit C-22 at Pages 51 and 52.

MR. DI PIETRO: Pedro, I'm sorry for

[Page 20]

interrupting.

Mr. President, I hate to interrupt, but it looks like we have a corrupted version of this slide that we are using, so if we could stop for five minutes and we can upload the correct version. I apologize. Is that acceptable, please?

PRESIDENT BEECHEY: Not at all--and my apologies to your colleague for the fact that his flow will be interrupted. But if you think that the slide deck is corrupted, then it clearly has to be put right.

MR. DI PIETRO: Okay. So, if we could move to the breakout rooms.

PRESIDENT BEECHEY: Yes. We will go to the breakout rooms. Again, my apologies to both Parties for the slide hiatus.

Would you let us know, please, Mr. Di Pietro, and as soon as you're ready, we will resume?

MR. DI PIETRO: Thank you very much. And again, apologies.

PRESIDENT BEECHEY: Not at all. Okay. Thank you.

(Pause.)

PRESIDENT BEECHEY: Ladies and gentlemen, I can't see you because the screen is being shared at the moment.

Mr. Martínez-Fraga, are you ready to recommence?

[Page 21]

MR. GRANÉ: Mr. President, if I may before counsel starts, can we please request to have a copy of the PowerPoint presentation that Claimants will be using now? We don't know what may have changed in the time that we have been away.

Also, in the time that we have been away, we have continued to review the presentation, and we've identified other slides that appear to be referring to documents that are not on the recorded. This is very regrettable, Mr. President.

PRESIDENT BEECHEY: Yes.

MR. GRANÉ: But we don't wish to interrupt when we get to those slides, but we find ourselves in the situation that we will need to do that.

PRESIDENT BEECHEY: Well, the first thing that is going to happen--I think it's Ms. Chiu who sharing her screen. Would you mind unsharing so we can go back to a gallery view? Thank you very much indeed.

Mr. Grané, I have heard what you have to say. Mr. Martínez-Fraga, what do you want to do?

Because either we take this pack down until it has been looked at by both sides and it's been blessed and then it's shared as a sort of ex post facto event, or--or what do you want to do?

MR. MARTÍNEZ-FRAGA: I'm not aware of any

[Page 22]

documents that we--that are new that are not of record, Mr. President. So, I'm fine for taking it on a going-forward basis. If we put up a document and it's a new document that somehow they allege is not part of the record, then let's take it up then. I don't mind being interrupted for that purpose, but I can't speak for what they say they see or don't see.

MR. GRANÉ: Well, I can give you a preview--

PRESIDENT BEECHEY: Let's deal with it--go ahead.

MR. GRANÉ: I can give you a preview, Mr. Martínez-Fraga. Slides 63, 103, and 104, just to cite a few. There are no references to exhibits. We have looked quickly. We cannot find any document on the record that would match what you have on the screen.

PRESIDENT BEECHEY: Two things before you answer that, Mr. Martínez-Fraga. Two things.

First of all, would you please ensure that a soft copy of the entire pack is sent across to Respondent now? Don't send it to us yet; just to Respondent.

We have a break due to come up at around 3:15 or so. That will then be an opportunity to deal with these matters as between counsel, I hope. If it's a question of waiting until Slides 63, or 100 on, I think it unlikely we will get that far, Mr. Grané. So, if anything else pops up in the meantime, then clearly you will let me know, but

[Page 23]

otherwise I think we might continue until the break. And then, if there isn't a suitable result, we will deal with it straightaway.

Does that work?

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

PRESIDENT BEECHEY: Very well.

All right. Mr. Martínez-Fraga, if you wouldn't mind getting that pack over to your colleagues on the other side as soon as you can, that would be grateful.

MR. MARTÍNEZ-FRAGA: We are doing that right now, sir.

PRESIDENT BEECHEY: Thank you very much.

All right. We are back with a slide on the screen.

You have gone mute. You are on mute.

MR. MARTÍNEZ-FRAGA: Yes, sir.

Back on the record, sir.

May I, Mr. President?

PRESIDENT BEECHEY: You may.

MR. MARTÍNEZ-FRAGA: Thank you, sir.

It is important to point out to the Tribunal that at this point the Granahorrar shareholders--and we're talking about November 1, 2007. This is a critical date, because we say that, at this point, all judicial labor in the domestic proceeding that the Granahorrar shareholders

[Page 24]

had undertaken back on July 28, 2000 came to an end. They won. They were restored. They were made whole, in large part, and they prevailed before a Tribunal of last instance.

Now, let me be very clear what happened: At that point Fogafín and the Superintendency of Banking filed Tutela Petitions with the Council of State that were denied. They then appealed the denial of those Tutela Petitions. That was denied. They then filed for a motion for clarification an additur and remittur. That, too, was denied, and it was after the end of all domestic judicial labor had taken place on November 1, 2007, that the fraudulent, corrupt tutelas were filed by the Superintendency of Banking and Fogafín with the Constitutional Court. At that point the Granahorrar shareholders, Claimants in this case, were dragged into a proceeding before the Constitutional Court after having prevailed completely in 2007.

So, what happens in 2007 is critical because that's really the start of the pre-Treaty action that is of relevance; not materially relevant for purposes of the actual breach and dispute, but that contextualizes what occurred here. They won in 2007. November 1, 2007, they are dragged into a proceeding before the Constitutional Court.

[Page 25]

This occurred three years and six months before the TPA entered into force on May 15, 2012. Claimants emphasize this fact because, in exercising Claimants' right and prerogative to formulate its claims, particularly as here in the jurisdictional stage, it is critical to observe that, once the end of all judicial labor was reached, an extraordinary series of events now took place. Again, at this point, it is Colombia filing these tutelas. And after filing tutelas with the Council of State and after losing, then we are before the Constitutional Court.

It is here that both Fogafín and Superintendency of Banking, in November 2008 and February 2009, that the tutelas were perfected. So, as I said before, not only were they illicit. They were untimely, but still accepted. The Constitutional Court conveniently exercised jurisdiction over the tutelas, notwithstanding that based on Colombia's own Expert testimony on the subject, 0.33 percent of the time are tutelas accepted, meaning one-third of 1 percent or one out of every 300.

You will see from the timeline that this remarkable event led to the Constitutional Court's issuance of its May 26, 2011 Final Judgment, which purported to revoke the November 1, 2007 Council of State's Final Judgment, the final judgment of a peer

[Page 26]

tribunal of equal hierarchy in final instance.

The May 26, 2011 Constitutional Court Judgment was issued almost one year before the TPA's entry into force.

The Final Judgment was so shocking to the conscience of the very Council of State--in other words, to a very entity of the State--that it prompted the participation of the President of the Council of State, Dr. Mauricio Fajardo Gómez, who filed a petition seeking the annulment of the Constitutional Court's pronouncement.

So, you have a battle between two ---final instance, nonrecourse Tribunals on this issue. So, there's an institutional crisis that clearly arose.

The Granahorrar shareholders filed two similar petitions for annulment. Now, these are not tutelas. These are petitions for annulment. Totally different. Unlike the tutelas, which are admitted one-third of 1 percent of the time, the Constitutional Court has granted petitions for annulment 4 percent of the time. The Constitutional Court's website, however, contradicts this and says that it is really 20 percent of the time. The Constitutional Court's generous reading further underscores the institutionality of the annulment process.

The Council of State's petition for annulment asserted that the Constitutional Court's May 26, 2011

[Page 27]

Judgment was extreme and dangerous. Its president noted in that paper that "even more complex, questionable, and grave is that the Court"--the Constitutional Court--"seizes for itself the attribution of a judge and extends its authority to adjudicate the specific merits of the case, which role is reserved for the Council of State." And that's end of citation. That is at Claimants' Memorial on Jurisdiction at 55, citing to Exhibit C-25 at Page 41.

Almost three years after admitting the fraudulent tutelas, on June 25, 2014, the Constitutional Court issued an "auto," an order, denying the petitioner's petition for annulment. This judicial measure is the State measure that Claimants have alleged as constituting a breach of the Colombia-U.S. TPA.

Can you please put up the slide?

The June 25, 2014 Order rendered final the Constitutional Court's May 26, 2011 Judgment, and simultaneously caused the Council of State's Judgment in favor of Granahorrar shareholders and against Fogafín and the Superintendency of Banking to be null and void.

Let me be perfectly clear: the June 25, 2014 Order--which, as I've said, it is very voluminous document with two very compelling dissents--had a foundational effect on the November 1, 2007 Judgment entered in favor

[Page 28]

of the shareholders, and it also had a foundational effect on the May 26, 2011 Judgment that the Constitutional Court had issued. It had the effect of making that and rendering that May 26, 2011 Judgment final. It had, therefore, the effect of nullifying the November 1, 2007 Final Judgment from the Council of State.

So, the corollary is that, prior to that time, the Parties' respective rights were unsettled. The pendency of the petition for annulment had to be finalized. It had to run its entire course before the actual rights of the various Parties could be crystallized and made final and determined. So, this is —more than just a perfunctory order. This is a very significant judicial event that marks the end of all judicial labor before the domestic courts.

Claimants have elected their right to formulate these claims, particularly at this jurisdictional stage, based upon the June 25, 2014 Order denying the Granahorrar shareholders' petition for nullification and constituting the end of all judicial labor.

Fortunately, hardly is this scenario of having a Claimant fashion and structure and cast their own claims in a way that makes sense to them, and this is not an issue that--where Respondents can come in, put up a timeline, and say, no, no, that's not the correct State

[Page 29]

measure. The correct State measure, of course, predates the entry into force of the Treaty and, therefore, you are precluded from arguing this case altogether because of the non-retroactive application of the Treaty.

At the jurisdictional stage, it is particularly foundational that a Claimant be allowed to shape and cast its own place. The Tribunal in the ECE Projektmanagement Case offered a helpful and informed observation on this subject. It stated: "It is for the investor to allege and formulate its claims for breach of relevant treaty standard as it sees fit. It is not the place of the Respondent State to recast those claims in a different manner of its own choosing and the Claimants' Claims accordingly fall to be assessed on the bases on which they are pleaded." That is at Claimants' Reply Memorial at Pages 22 and 23, Paragraph 1.

Respondent's attempt to recast Claimants' case is particularly inappropriate, as we've said, at this stage, where the Tribunal is addressing jurisdictional issues.

Put up the Infinito Gold, please.

On this particular principle, the Tribunal in Infinito Gold v. Costa Rica was very, very informative. It noted: "At the jurisdictional stage, a Tribunal must be guided by the case as put forward by the Claimant in order to avoid breaching the Claimant's due process

[Page 30]

rights. To proceed otherwise is to incur the risk of dismissing the case based on arguments not put forward by the Claimant, at a great procedural cost to that Party." That is Claimants' Reply Memorial at 23, Paragraph 2.

Here, Claimants' Claims arise from the Order, the "auto," 188/14, the Constitutional Court's June 25, 2014, denial of the petitions for annulment of that Tribunal's May 26, 2011 Judgment. Specifically, it took the Constitutional Court no less than three years and 30 days to issue this final order, which comprises 93 pages and two extremely compelling dissents.

There is one predicate that we would like to raise as a condition before entering into the discussion in detail of ratione voluntatis, temporis, materiae, and personae. That proposition is that a substantial number of court cases that Respondent relies on merit reading and rereading. Yes, the Tribunal heard counsel correctly. Claimants respectfully invite the Tribunal to recall that on more than just a handful of occasions in its Reply Memorial, Claimants actually urged the Tribunal to read and to consult with care specific Awards upon which Respondent purports to rely. And the Claimants tendered this invitation on no less than 37 occasions.

So, please put up the slide. And it's three slides.

[Page 31]

The slide is now on your screens. Claimants persist in encouraging the Tribunal to engage in this task because this authority actually supports a finding of jurisdiction and provides no basis for the alleged propositions for which the Awards actually are cited.

During the discussion of ratione voluntatis, temporis, materiae, and personae, detailed reference will be made to the actual language and holding of many of these Awards.

Claimants meet the ratione voluntatis consent jurisdictional requirement.

Put up the slide, please.

In this case, it is not disputed that Article 12.1.2(b) of the TPA provides Chapter 12 financial services investors with procedural right to assert ISDS claims. It is very clear that 12.1.2(b) allows and provides for ISDS claims to be filed by financial services Chapter 12 investors.

This fact is extremely important, and we will analyze it in considerable detail. It also is not disputed, because it cannot be contested, that Chapter 12 financial services investors may assert direct ISDS claims against the signatory State based upon two treatment protection standards: 10.7, expropriation and compensation, and 10.8, transfers.

[Page 32]

Put up the slide of 12.1.2, please.

It is also important to note that Articles 10.12, denial of benefits, and Article 10.4, special formalities and information requirements, which are also incorporated into 12.1.2(b), are not protection standards. These two provisions, understandably, provide the Host State with rights and transfer obligations to the investors. This is important because one of the factors that the Tribunal should be aware of is that, under the readings suggested by Respondent of 12.1.2(b), the financial services Chapter 12 investors are only provided with two, enforceable by ISDS, treatment protection standards: 10.7, expropriation and compensation, and 10.8, transfers. 10.12 and 10.14 are not enforceable treatment protection standards. They just aren't. So, that is critical because it will point out to a lack of symmetry between the way investors in the Chapter 10 common, regular, investment chapter are treated and investors under Chapter 12.

So, so far, we likely are in general agreement with the Respondent. But there are a number of fundamental propositions in the context of ratione voluntatis with respect to which Claimants and Respondent, very respectfully, disagree.

The first is a simple one. Claimants opine that

[Page 33]

Articles 10.7 and 10.8, 10.12 and 10.14, which are incorporated from Chapter 10 to Chapter 12, are aimed at supplementing Chapter 12 and not limiting Chapter 12. In other words, the expropriation 10.7 treatment protection standard is incorporated into Chapter 12 for a simple reason: It is not there. And the same happens with transfers, denial of benefits, and formalities and information. These are provisions that are transferred from 10 to 12 to supplement 12.

Similarly, we say that section (b) from Chapter 10--this is the dispute-resolution provision. We say that is transferred from 10 to 12 also to supplement Chapter 12, but not to limit Chapter 12. And this distinction is a foundational difference between the two Parties, and one that this Tribunal will have to look at with care in terms of what MFN practice, 12.3, is available and what national treatment practice, 12.2, is available.

So, this is very important.

Now, Respondent, however, asserts that the importation of Section (b), the investor-State settlement provision, 10.7, 10.8, are meant not to supplement existing rights contained in 12, but rather to limit them or, if not altogether eviscerate all substantive rights contained in Chapter 12. Of course, we do not opine that

[Page 34]

that is even a reasonable construction because it leaves all of Chapter 12 without real meaning, unless, of course, that is relegated somehow to State-to-State arbitration. And we will talk about that in due course.

The second limiting factor, or differentiating factor, is that Claimants submit that, even assuming that the importation of Articles 10.7, 10.8 limits Claimants to the exercise of ISDS rights to only those two provisions, Claimants would still have consent to arbitrate fair and equitable treatment, even without having to engage in an Article 12.3 Most Favored Nation practice, and we will say how in just one second.

Respondent, however, asserts that the financial services investors cannot bring claims based on FET that there isn't any consent to arbitrate FET because doing so, of course, would be tantamount to importing consent, and that is proscribed.

Now, Respondent is wrong. Respondent is wrong because it conveniently elects to ignore the language forming part of Article 10.7, expropriation.

Please put up the slide of 10.7.1(a) through (d).

Now, quite significantly, when we look at Article 10.7, it looks at first like a standard expropriation article that has the four basic elements. You need--it has to be for a public purpose; there must be

[Page 35]

some sort of compensation; there cannot be any discriminatory action; and, of course, it has to be in keeping with basic and fundamental due process. So, those four elements are there.

But then when we focus on due process, this is what we see. It says--and we are looking now at Article 10.7.1(d)--it says: "In accordance with due process of law and"--the conjunction--"Article 10.5."

Can you please put up 10.5?

Now, Article 10.5, the minimum standard treatment, at 10.5.1 reads: "Each Party shall accord to covered investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security." End of citation.

Article 10.5.2(a) avails itself, but this time in the very text, of the very same "for greater certainty" language that we will later see in Article 10.4, Footnote 2, the MFN equivalent of Chapter 10. And it provides: "Fair and equitable treatment includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world." End of citation.

Therefore, because Article 10.5, Minimum Standard of Treatment, explicitly and textually, forms part of

[Page 36]

Article 10.7, expropriation and compensation, and we all agree 10.7 expressly is incorporated into 12.1.2(a) and (b). It follows and it cannot be denied that the Parties consented to submitting to ISDS, investor-State dispute arbitration, under Chapter 12 FET and denial of justice as part of the Minimum Standard of Treatment set forth in Article 10.5. We don't see how can you work-around it. 10.7 is incorporated. 10.7 includes 10.5. It is textual. We don't understand the countervailing argument.

The proposition that Respondent, Mr. President and Members of Tribunal, asserts, namely that the Parties did not consent to having financial services investors arbitrate claims for violation of fair and equitable treatment, asks the Tribunal to omit the textual, explicit, and uncontroverted reference to and incorporation of Article 10.5 into Article 10.7.1(d). The proposition is simply untenable and not justiciable. The argument, regrettably, never should have been raised.

Therefore, no matter how we examine and reexamine Respondent's argument, not even with non-Euclidean geometry are they capable of squaring the circle.

Put up the next slide, please.

For the sake of completeness, Claimants also submit that, in addition to having FET incorporated into Chapter 12 pursuant to the explicit language of

[Page 37]

Article 10.7, there are four Articles in Chapter 12 that on separate and additional grounds, demonstrate that the contracting Parties intended to provide financial services investors with fair and equitable treatment protection under Articles 12.4, 12.5, 12.10.4 and 12.11.

All four of these provisions infuse Chapter 12 with substantive protection obligations under Contracting Parties that create corresponding rights held by financial services investors.

Now, there's a third substantial point of disagreement between the Parties, and this concerns the extent to which the qualifying Footnote 2 to the MFN Clause contained in Chapter 10, that is Article 10.4, Footnote 2, limits Claimants' right to exercise the broad scope of its Article 12.3, counterpart provision, right to import more favorable treatment from the Colombia-Switzerland BIT that would allow for the enhancement of the existing three-year limitations period by two additional years.

So, as to provide Chapter 12, financial services investors with equal treatment of five-year limitations period. Equal to that which Colombia provides to Swiss investors under that BIT.

Put up the slide, please, 10.4.2.

Footnote 2 to Article 10.4 reads: "For greater

[Page 38]

certainty, treatment 'with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or disposition of the investment' referred to in Paragraphs 1 and 2 of Article 10.4 does not encompass dispute-resolution mechanisms, such as those in Section B that are provided for in international investment treaties or trade agreements." End of citation.

Now, Respondent's argument on this point are less than clear and I really can't do justice to it. I know they will, of course. They are most coherently set forth on Pages 126 through 127 in Paragraph 268 of Respondent's answer on jurisdiction, and Page 152, Footnote 714 of Respondent's answer on jurisdiction.

As best as Claimants can discern, however, Respondent argues that the Footnote 2 qualification to the investment Chapter MFN 10.4 must be read as somehow forming part of 12.1.2(b) because it was the Parties' intent to have the Footnote 2 limitation apply to Chapter 12, and specifically to Article 12.3, the MFN counterpart to 10.4.

Now, that proposition, we say, is untenable for many, many, many reasons, but the simplest and the most self-evident reason is that Article 10.4, Footnote 2, no matter how hard one tries, it is simply not listed in 12.1.2. In other words, we take 12.1.2, we look at it and

[Page 39]

we see 10.7, 10.8, 10.12, 10.14, and Section B brought in, but there is no reference to Article 10.4 in delimiting Footnote 2. It is just not physically there.

Moreover, of course, 10.4 does not form part of Section B, so that when B is transferred from 10 to 12, it is not there. We can't read it in there. There is no way of having that limitation transferred over to Chapter 12.

Now, it makes it all the more mystical and somewhat metaphysical because Chapter 12 already has a Most-Favored-Nation Clause, 12.3, and, of course, that clause does not have the limiting language. So, we are at a loss to see what argument, what possible doctrinal construct takes the Footnote 10.4 limitation from 10 to 12, where it is not at all present in 12.1.2(a) or (b) and does not, of course, form part of Section B imported from 10 to 12. So, that is an important difference.

Put up 10.2, please.

In addition to asking the Tribunal to read 12.1.2(b), an entire Article, and qualifying language that simply reading into it qualifying language and an entire Article that simply is not present in the provision, Respondent also invites the Tribunal to turn a blind eye to the imperatives contained in Articles 10.2.1 and Article 10.2.3. So, it is really Article 10.2, 1 and 3.

[Page 40]

Now, you have these provisions on your screens.

Article 10.2.1 reads: "One, in the event of any inconsistency between this chapter, 10, and another chapter, the other chapter shall prevail to the extent of the inconsistency."

In that same connection, Article 10.3, 10.2.3 reads: "This chapter does not apply to measures adopted or maintained by a party to the extent that they are covered by Chapter 12, Financial Services, our chapter."

So, it is beyond cavil that in grafting Article 10.4, Footnote 2, onto Chapter 12, would create a rather stark conflict between the scope of Article 10.4, Footnote 2, and its counterpart provision, 12.3, the financial services MFN Clause, which is formally--this conflict is formally and substantively and 12.3 is substantially and formally different from its Chapter 10 counterpart.

And Respondent's argument that Article 10.4 and its restrictive footnote must be read into Chapter 12, because, inexplicably, the Parties, the signatory States so intended as yet another argument that is not justiciable, that cannot be justified under any reasonable scenario, fact, logic, or equity, there is another glaring example of let's just throw up everything and just see what sticks.

[Page 41]

But there's a fourth fundamental difference between the Parties also undiscernible on these topics, and this concerns the extent to which the scope of Article 12.3 for the importation of more favorable limitations period is appropriate because of the ordinary meaning of 12.3 was intended, we say, to be much broader than its 10.4 counterpart, and to make available to financial services, we say, investors' more favorable procedural rights.

We say, well, you look at 10.4, and you look at 12.3. There are differences, Point Number 1. And Point Number 2, those differences matter. And Point Number 3, those differences are in the very body of text, and Point Number 4, those differences are also in the presence or absence of qualifying language.

Now, let's get to work on this with greater rigor. The Parties intended for the word "treatment" within the meaning of 12.3 to be broader than its 10.4 investment chapter counterpart. It couldn't be clearer. Beyond the proposition that Article 10.4, Footnote 2 somehow is contained in Chapter 12, Respondent argues that 12.3 MFN for some reason is no broader than its 10.4 footnote to counterpart, and, therefore, must be construed as such.

This argument also asks the Tribunal to turn

[Page 42]

their blind eye to the ordinary meaning of the language forming part of Articles 10.4, 10.3, respectively.

Secondly, to the Parties' treaty practice, I think that tells us something, and, third, to the majority of Awards holding that MFN provisions, unless specifically restricted as in the case of Article 10.4, Footnote 2, should be extended to procedural rights concerning ISDS.

Put up the next slide, please.

The term "treatment" applies to the following language contained in 10.4.1 and 10.4.2 with respect to the establishment, acquisition, expansion, management, conduct, operation, sale and other disposition of investment. This is the qualifying language that we find in so many investor chapters and, particularly, in trade agreements where you have both an investor chapter, a regular investor chapter, such as 10, and a financial services investor chapter, such as 12.

This is the qualifying language that we typically find virtually in every single of the 20 or so agreements with the MFN Clause in the general investment chapter. This qualification is important because the presence or absence of such language has to be accorded interpretive significance. We just can't ignore it.

The Footnote 2 qualification to the scope of Article 10.4 must be understood as a limitation to the MFN

[Page 43]

practice, circumscribed only to Article 10.4.

Please put up the next slide, 12.1.2.

The ordinary meaning of Article 10.4, Footnote 2, cannot be being engrafted on 12.3 because Article 10.4 as we have seen does not form part of 12.1.2(a) or (b).

Put up 12.3, please.

The qualifying Footnote 2 to Article 10.4 is not present in Chapter 12, Article 12.3. The complete absence of this qualifying language, along with the immediately referenced propositions, based on an ordinary meaning analysis, compellingly establishes that the term "treatment" in 12.3 is broader than the scope of that word as used in 10.4.

The Article 12.3 MFN Clause does not contain the establishment language that we have seen. The absence of these activities, and notably they are all verbs, mostly intransitive verbs, in Article 12.3, further bolsters the ordinary meaning analysis suggesting that Article 12.3 has a broader scope than its Article 10.4 counterpart.

The Footnote 2 qualification to Article 10.4 illustrates the signatory States' treaty practice of clearly and explicitly identifying, in ordinary language, any limitations or qualifications to the scope of the Treaty protection standard generally, and of an MFN Clause, in particular.

[Page 44]

You now have up on your screens some notable examples of the signatory States' treaty practice in this regard, namely explicitly stating restrictive qualifying language in an investment MFN Clause and broader, unrestricted MFN treatment scope pertaining to MFN Clauses contained, as with Article 12.3, in financial services chapters.

But there's another fact that should be considered. The structural difference between a trade protection agreement and a BIT further inform and contextualize the Footnote 2 qualification to Article 10.4. Of relevance with respect to the question of the Article 12.3 scope is that the TPA before this Tribunal has no less than three MFN clauses, three national treatment clauses, as well, each in a very separate and particular chapter.

And it is clear that if we are going to analyze the scope of these provisions, separately or together, we have to analyze them in the context of the very chapter in which they are found, in addition to obviously their ordinary meaning and plain language. So, this is a big difference from the type of analysis that we would normally undertake and with just a Bilateral Investment Treaty.

It is clear that the Footnote 2 restriction on

[Page 45]

the scope of Article 10.4 conflicts with the Article 12.3 scope. Moreover, it is obvious that Chapter 12 already has an MFN provision, as we have discussed, and for this additional reason, any restriction on the scope of Article--on the scope of Article 10.4 as well in the very text of Article 10.4 itself must be viewed as standing and only limited to Chapter 10, investors and investments.

Therefore, it cannot follow that the signatory States did not consent to a Chapter 12, Article 12.3 MFN provision that would be as narrow in scope as the Chapter 10 counterpart.

You now see on your screens Article--again, Article 12.1.2(b). Respondent asserts, primarily relying on the expressio unius--unius est exclusio alterius axiom, that somehow the incorporation of Section B into Chapter 12 from Chapter 10, as well as the incorporation of the other Chapter 10 importations that we have seen, eliminates the enforcement on the part of financial services investors of all, without exception, substantive provisions contained in Chapter 12.

Claimants very respectfully submit that this construction of Chapter 12 is flawed because of three very rudimentary reasons that have the effect of completely eviscerating Chapter 12, financial services, and of transferring Chapter 12 investors into Chapter 10 and then

[Page 46]

just providing them with two ISDS enforceable rights, expropriation and transfers.

If that's the reading, what sense--we ask the Tribunal to respectfully consider, what sense would there be to having a financial services chapter at all? Why are these investors segregated from all other industry sector investors and provided with their own chapter if what we are going to do is treat them no differently than having them in 10, and just limiting their ISDS rights to two? It makes no sense.

First, Respondent misapplies, we say, the expressio axiom. Now, notably the expressio axiom does not form part of any VCLT analysis. It is not. But if you're going to apply the axiom, then at least it should be appropriately applied, and we don't think that it has been and here is why.

The expressio axiom only can be applied to one set of listings at a time. Analytically, it cannot be simultaneously applied to two or more sets of elements within a particular category. Therefore, while certainly Respondent would be perfectly correct in concluding that the only substantive provision incorporated from 10 into 12 are the four that explicitly are referenced in 12.1.2(b), it does not and cannot at all of necessity or logic follow that the incorporation of these four

[Page 47]

Chapter 10 provision voids the enforceability of all Chapter 10 treatment protection standards and substantive provisions including national treatment and MFN.

Put up the slide, please.

This interpretation would relegate all Chapter 12 substantive provisions as existing only in furtherance of State-to-State arbitration, a proposition that is not supported by the ordinary meaning of Chapter 12's entire text. Its context, object and purpose, or even the very workings of State-to-State arbitration, which does not provide for compensatory damages of any kind for derivative investor standing, so it's not a methodology that exists so that investors can assert their own claims through that vehicle.

No, the Investor-State--or State-to-State arbitration concerns macroeconomic, maintenance, enhancement, and change of the Treaty, and does not provide for the making whole of microeconomic concerns, which is what investor claims are all about. The investors cannot be made whole. Compensatory damages are not awarded, but, moreover, there is also no empirical data which suggests as much, that Chapter 12, the totality of it, exists for purposes of State-to-State arbitration.

Here's why. There have only been five State-to-State arbitrations in the history of Investment

[Page 48]

Law. And, of those, only four reached a panel order. So, there was not empirical body from which the drafters of the TPA on May 15, 2012, when it was entered into, drew from to somehow reach this conclusion. It just makes no sense, no matter how one turns it. And this inveighed a very narrow application of State-to-State arbitration. It was never, of course, meant to supplement the consequence of denying financial services investors ISDS rights and limiting them only to two rights.

Now, this is important. Please put up 12.19.1.

In contrast to what I've just said regarding the limitations of State-to-State arbitration, Article 12.19, investment disputes in financial services, specifically references "an investor of a party submitting a claim to arbitration under Section B of Chapter 10, Investor-State Dispute Settlement, and the Respondent invokes 12.10 as a defense, the following provisions shall apply."

So, you see that 12.19 doesn't make 12.10 the exception. That's a prudential measure exception, apply as an exception, as something noteworthy and particular. It assumes that Chapter 12 provisions apply. And the question this Tribunal should ask itself, we very respectfully submit is, when a claim is brought pursuant to, let's say, 10.7 under 12.1.2(b), by a financial services investor, what law applies?

[Page 49]

Well, we say, the law that applies obviously must be Chapter 12, and so does the text. You also see that in Article 12.19.1, it does not place any restrictions on "a claim to arbitrate under Section B of Chapter 10, Investor-State Dispute Settlement." It actually references the application of 12.10, understandably as possibly being invoked by a Host State in such a proceeding.

In contrast to Respondent's interpretation of Article 12.1.2(b), as rendering all of Chapter 12 provisions of no force and effect, without remedies, we, Claimants, offer a reading that provides the substantive provisions of Chapter 12 with a fulsome and robust effect. And here the Tribunal's observations in Eureko v. Poland, a Partial Award at Paragraph 248 are helpful.

It says: "It is a cardinal rule of interpretation of treaties that each and every operative clause of a treaty is to be interpreted as meaningful rather than meaningless. It is also established in the jurisprudence of international law, particularly that of the Permanent Court of International Justice, that Treaties, and hence their clauses, are to be interpreted as to render them effective rather than ineffective." That's at Claimants' Reply, Memorial at Page 129, Paragraph 171, Footnote 155.

Put simply, the expressio axiom cannot

[Page 50]

simultaneously be applied to Articles from Chapter 10 and Articles from Chapter 12. If it is to be used as an interpretive tool at all with respect to Article 12.1.2(b). To have it apply otherwise would be to divest Chapter 12 of all relevance and materiality, which would be, of course, a reductio ad absurdum.

Next slide.

Respondent now has elected in this case not to present any evidence of any kind, Expert, fact, or documentary. Colombia has taken the position that neither factual nor Expert testimony or other evidence contemporaneous with the entry into force of the NAFTA on January 1, 1994, the template predecessor to the TPA that is before us, is at all necessary.

Now, how Respondent presents its case, or how it responds to Claimants' Expert and Fact Witnesses and documentary evidence, of course, is Respondent's prerogative. And this is a sixth difference that we have with Respondent.

But Claimants and Respondent have a difference of opinion on the principles that govern the extent to which such evidence that Claimants have proffered should be considered by this Tribunal. So, we have a difference of Opinion as to governing rules that go to the extent to which this evidence should be considered by the Tribunal.

[Page 51]

I'll try to sharpen that in just a second.

In support of this assertion, Respondent very generally argues on Page 126 of its Rejoinder Memorial that VCLT Article 32, supplementary means of interpretation, is never triggered because of the absence of any ambiguity that would serve as a condition preceding to any consideration of this Article. Now, this proposition, we say, is incorrect for two reasons.

First, under Article 31 VCLT, a good-faith interpretation of the ordinary meaning to be given to the terms of the Treaty must be considered, together with context, object, and purpose. Now, context, object and purpose can best only be understood by reference to evidence contemporaneous with the entry into force of a treaty.

In this case, evidence as of January 1, 1994, the entry into force of a NAFTA, November 2006, the signing of the TPA, and May 15, 2012, the entry into force of the TPA.

Now, second, and of equal significance, Respondent completely misstates the stricture of Article 32 of the VCLT supplementary means of interpretation.

And put up the Slide please.

It so, happens that Respondent omits 50 percent of the disjunctive that Article 32 makes clear

[Page 52]

that: "Recourse may be had to supplementary means of interpretation, including the preparatory work of the Treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of Article 31." End of citation.

I emphasize the word "confirm." We need not have an ambiguity to consider extraneous evidence that purports to shed light on the context, object and purpose of the Treaty language. All we need is that--that evidence can be used to confirm, even in light of a scenario, which is hardly the case here, where the Treaty itself lacks any ambiguity.

There is simply no rule of interpretation forming part of a VCLT holding that only where an interpretation is ambiguous or obscure is recourse to supplementary means of interpretation triggered. In fact, there is no such rule anywhere in public international law.

Respondent turns the rule on its head. Moreover, supplementary means of interpretation are not limited to preparatory work of the Treaty. The language of Article 32 is very eloquent in using the word "including." "Including" means, of course, that it is non-exhaustive.

Now, Mr. Olin Wethington testifies with respect to the negotiation, drafting, implementation, and operation of Chapter 14 of the NAFTA, the template

[Page 53]

predecessor to Chapter 12 of the TPA, as of the 1993 and January 1,1994, relevant time frame. That's the relevant time frame.

At that time, his testimony asserts that: "Financial market liberalization demand an enforceable MFN and national treatment substantive treatment and protection standards that would provide financial services investors with ISDS enforceable rights beyond just expropriation and transfer. National treatment and MFN protection standards were made available under the NAFTA to financial services investors." And that's Mr. Wethington at Paragraph 23, First Witness Statement.

At the time of the subject matter of Mr. Wethington's testimony, Mr. Wethington, the former Assistant Secretary of the Treasury for International Affairs, was only accountable to the Secretary of the Treasury, Secretary Brady, and to the President of the United States. That's Paragraph 23.

Claimants respectfully remind the Tribunal that the propositions contained in Mr. Wethington's two Witness Statements notably have not been challenged from an evidentiary perspective. Glaring, because of its absence as evidence from any of Colombia's negotiators of the TPA of any rank of Government.

[Page 54]

Put up the slide, please.

(Interruption.)

MR. MARTÍNEZ-FRAGA: Mr. Wethington's testimony with respect to--

PRESIDENT BEECHEY: Just a moment. Excuse me.

Was there an intervention just now?

MR. POPOLI: Mr. Chairman, that was the Spanish court reporter. She is not receiving interpretation. If you can bear with us for a minute.

PRESIDENT BEECHEY: Well, it may be that this is an appropriate moment to pause for our 15-minute break while we sort all that out.

MR. POPOLI: Of course.

(Interruption.)

MR. POPOLI: It seems to be solved.

PRESIDENT BEECHEY: All right.

Mr. Martínez-Fraga, would you kind enough to finish this particular point and then we will stop for our 15-minute break.

MR. MARTÍNEZ-FRAGA: Let's consider it finished.

ARBITRATOR FERRARI: You're sure? All right.

MR. MARTÍNEZ-FRAGA: Yeah. I'll come back to it later.

PRESIDENT BEECHEY: We will start again then, please, at--what is it?--11 minutes to 4:00 local time

[Page 55]

here. 11 minutes to the hour, if you don't mind. Very well. Thank you very much.

(Brief recess.)

PRESIDENT BEECHEY: Mr. Martínez-Fraga, are you ready to start?

MR. MARTÍNEZ-FRAGA: Yes, sir. Thank you so much. And I want to thank Mr. President and the Tribunal for that break because I myself was falling asleep. Thank you so much.

PRESIDENT BEECHEY: We wouldn't dare answer that question because it might incriminate us, whatever we were to say in response.

MR. MARTÍNEZ-FRAGA: I'm just confessing for myself, sir.

PRESIDENT BEECHEY: All right. Let me confess to you this. We are running a few minutes late. We are due to finish the Claimants' presentation after about 4:45 local time here. So, we will go on another five or six minutes to make up some of the time that we've lost, and then we will stop. All right?

MR. MARTÍNEZ-FRAGA: Thank you, sir.

PRESIDENT BEECHEY: Very good.

MR. MARTÍNEZ-FRAGA: Thank you.

Glaring because of its absence, its evidence from any of Colombia's negotiators of the TPA of any rank of

[Page 56]

Government whatsoever.

Put up the next slide, please.

Mr. Wethington's testimony with respect to ISDS rights available to U.S. investors concerning national treatment and MFN and not just expropriation and transfer is supported by the relevant and contemporaneous evidence offered at the September 28, 1993, House Committee Hearings on the workings of Chapter 14. Now, this Hearing was dedicated only to Chapter 14, the counterpart to our Chapter 12.

You see on your screens an excerpt from Mr. Barry S. Newman, his testimony before the House Committee on September 28, 1993, regarding Chapter 14. Mr. Newman was the Deputy Assistant Secretary for International Monetary Affairs of the Department of the Treasury, and he reported directly Mr. Wethington. The language that we have highlighted is the most important of the quote contained in the blue box. Notice that he speaks of "any violation of an investment protection," any violation of an investment protection.

He also mentions that "an investor would be able to bring a direct action against the offending NAFTA country." This reference obviously is not to state-to-state arbitration. In addition, he references that the action would be "for the financial harm caused by

[Page 57]

the violation." So, it's a money damages that state-to-state could not proffer, in any case.

As we have discussed, there is no way that this can be somehow grafted to state-to-state arbitration.

Put up the next slide, please.

Now, what follows is an exchange between Mr. Newman and the late Honorable Henry B. González, Chairman of the House Committee. He references robust national treatment rights that investors, i.e., firms will be able to bring against host States.

Put up the next slide, please.

This is Mr. Ira Shapiro, general counsel to the U.S. Trade Office. In the excerpt before you, I want to emphasize that the kind of dispute that General Counsel Shapiro is referencing is one that concerns "our faith in the Mexican court system." He clearly is not referring to the type of dispute that would be the subject matter of State-to-State arbitration, and no court would have subject matter jurisdiction over any such thing.

Put up the next slide, please.

As you can see in the slide before you, the SPAC Report, during the relevant time frame, contemplates that "the NAFTA provision shall serve as the starting point and model for all future trade negotiations."

Put up the next slide, please.

[Page 58]

That Report viewed national treatment as an enforceable right available to all U.S. service providers in México.

Put up Slide 3 of the SPAC Report, please.

Now, as you can see from this excerpt from the Report, robust ISDS rights for financial services investors were contemplated in order to strengthen "the procedures for obtaining binding Awards of money damages and enforcement of those decisions."

We submit respectfully to this Tribunal that Colombia has no response to this contemporaneous evidence. It has offered none. The most that it can muster now is to point to a non-party submission that the Trump administration has filed at this time, in 2020, 26 years after the NAFTA and 8 years after the entry into force of the TPA in the very middle, in the very midst of an arbitration.

Now put up the next slide, please.

Now, not surprisingly, when the issue concerning the arbitrability of Article 1405, the counterpart provision to 12.2 in our TPA, the national treatment of the NAFTA, was raised in the Fireman's Fund Insurance v. México proceeding in 2003, the actual relevant time frame, and not 2020, the United States' non-disputing party submission had a very different look

[Page 59]

to it. It had a very different tone to it. What it viewed as then extremely, extremely important was a very banal, I shall say, issue concerning the following: "whether a bank holding company under United States law would be considered a 'financial institution' within the meaning of Article 1406." That's the issue that it saw as important.

The venerable public international law principle of contemporaneity renders irrelevant the Trump administration's U.S. non-disputing party submission filed in 2020 as at all having interpretive weight concerning what was meant on January 1, 1994, the entry into force of the NAFTA, or May 15, 2012, the entry into force of the TPA.

Do not put up the following slide.

The principle of contemporaneity is critical to the appropriate consideration of context, object, purpose, element of any VCLT analysis.

And by way of example, in Daimler v. The Argentine Republic, in exploring the scope of the word "treatment" in the MFN Clause of Article 3 of the Germany-Argentina BIT, the Tribunal affirmed the principle of contemporaneity and in so affirming in Paragraph 220 of that Award observed: "In order to shed light on whether the contracting parties intended for the term 'treatment'

[Page 60]

to encompass the BIT's international dispute settlement provision, one must apply the classical rule of interpretation known as the principle of contemporaneity. This principle, particularly pertinent in the case of bilateral Treaties, requires that the meaning and scope of the term 'treatment' be ascertained as of the time when Germany and Argentina negotiated the BIT. This BIT was adopted in 1991.

"Unfortunately", the Tribunal goes on to say, "neither disputing Party has submitted any direct evidence, for example, from the Treaty's drafting history, revealing the particular understanding of treatment maintained by Germany and Argentina of that date. The Tribunal must, therefore, look for clues to the meaning generally ascribed to the term by the broader international community of states at the time, 1991, in that case."

Here in the case before this Tribunal, one party, Claimants, has submitted direct evidence revealing the specific understanding and applicability to ISDS of all substantive provisions comprising Chapter 12 of the TPA, including 12.2, national treatment, 12.3, MFN, and the relevant time frames. This evidence remains unrebutted from an evidentiary perspective.

Respondent also seeks to circumvent a reading of

[Page 61]

Chapter 12 that provides financial services investors with the right to arbitrate more than just one expropriation and transfer claims by citing to dicta in the Fireman's Fund case, but this effort also fails.

Now, in its May 15, 2020, submission titled "Claimants Observations Concerning Non-Disputing Party Submission of the United States of America," Claimants identified 13 grounds demonstrating why the dicta in the Fireman's Fund case cannot apply to this case. I will not go through the 13 grounds. But there are two grounds that do merit mention.

First, Fireman's Fund was a Chapter 11 investment case. It was never brought pursuant to Chapter 14, the financial services framework. We all know that.

And, second, the parties in Fireman's Fund never arbitrated NAFTA Chapter 14 claims. It was never arbitrated, even though the Claimants in that case allege that México had violated 1405, Chapter 14's national treatment provision. That claim never was contested, therefore, it was never briefed, and, therefore, it was never submitted for adjudication. Therefore, the Tribunal never considered any authority, evidence, or argument, as is the case before this Tribunal regarding the context, object, purpose of Chapter 14, treatment protection standards.

[Page 62]

Now, Respondent has raised four, what we call, the technical defenses. I will say at the very outset that three of the four should be just outright dismissed based on Claimants' traveling on Article 11 of the Colombia-Swiss BIT. The defenses never should have been raised for a multitude of reasons, but we are forced to respond to them.

Now, the first one is the fork-in-the-road defense, and this is very interesting and curious. Respondent plays ping-pong between the two treaties, the Colombia-Swiss BIT and the U.S.-Colombia BIT, even though it spills a lot, a lot of ink, no less than 50 pages, saying that the argument, I should say, that the Colombia-Swiss BIT doesn't apply. It still goes on to make this argument, so it pools the fork in the road from the Colombia-Swiss BIT and brings it over here. We feel that it is really not at all a justiciable issue.

Why? Because of the relevant time frames. On June 25, 2014, at that point, that's the end of all judicial labor. So, how could there be a fork in the road? It makes absolutely no sense. We are not choosing domestic litigation over arbitration. We are choosing arbitration because there is nowhere else to go.

Now, before, on November 1, 2007, how could there be a fork-in-the-road issue? First of all, there was no

[Page 63]

Treaty in place. Secondly, we won. Claimants won everything. They dragged us into 2011 and beyond. So there, there couldn't have been a fork in the road.

And, of course, in 2011, there couldn't have been a fork in the road for several reasons. First, there couldn't be no fork because there was no Treaty in place; but, secondly, Claimants had to exhaust all judicial remedies, and part of the annulment proceeding is critical to that.

So, let's move forward from this, please.

So, that's--we don't even understand how it could conceptually be raised in good faith.

The consultation negotiation defense is also raised. Now, this one is really particularly quizzical for a number of reasons. The defense is inapplicable based, really, on eight propositions, but we will only cite to three that command attention because of the expediency with which the defense can be eliminated.

First, the consultation and negotiation defense is not present at all in Chapter 11 of the Colombia-Swiss BIT. That should be the end of the analysis point-blank, but even if it somehow were or even if Article 10.15 of the TPA applied, the negotiation and consultation provision of that Article is permissive and not mandatory. That provision provides that the word "should" as in "in

[Page 64]

the event of the investment dispute that Claimant and Respondent"--so it is bilateral; they also have an obligation under this provision--"the Claimant and Respondent should initially seek to resolve the dispute through consultation and negotiation."

So, there was no language that says that it's mandatory and failure to abide by it would by divest this Tribunal from jurisdiction, but there's also absolutely no doctrine or case, even if you could modify the textual language with a subsequent case that suggests that the permissive "should" is somehow mandatory, let alone, anything other than procedural and directional, nothing suggesting that it is jurisdictional.

But put up the next slide, please.

But the real reason, beyond the technical, clear arguments, they are basically hornbook law. The real reason why it really doesn't make any sense is because on January 24, 2018, three years ago--

MR. GRANÉ: Mr. President, I'm sorry to interrupt, but I believe that it's time for me to raise one of the objections. I don't see any reference to an exhibit in this slide. I may be wrong, but let me go back. I can't see a reference. So, if counsel could please specify whether this is a document on the record.

MR. MARTÍNEZ-FRAGA: Yeah, it is. It's attached

[Page 65]

to the Request for Arbitration. It's a letter that I sent to the Colombian authorities inviting them to settle the case, to discuss settlement, and to which the Colombian authorities responded. So, it's a clear admission by a party. I don't see how you would be harmed by it. You wrote it.

MR. GRANÉ: Let me, perhaps, restate, Mr. Martínez-Fraga. Is this a document on the record?

MR. MARTÍNEZ-FRAGA: The answer is yes. It's part of the Request for Arbitration.

MR. GRANÉ: Okay. We will check. We reserve our rights, Mr. President, while we check this.

MR. MARTÍNEZ-FRAGA: As you can see--may I, Mr. President?

PRESIDENT BEECHEY: Of course, you may.

MR. MARTÍNEZ-FRAGA: Thank you, sir.

As you can see on your screens, I wrote to Mr. Nicolás Palau Van Hissenhoven and invited Colombia to explore a "possible nonarbitral settlement of this proceeding." And he responded. He responded on February 16, 2018.

Can you put up his response, please.

And here's his response, which is interesting because it has this word "bodoque," which it's a very Castilian word. But apparently in Colombia, what it

[Page 66]

actually means is garbage.

So, you can see that he ignores to negotiate and asserts that a formal response is forthcoming with respect to the Request for Arbitration, and, moreover, again, on December 20, 2019, on Page 340 of Claimants' Reply Memorial, in bold lettering, Claimants invite a Respondent's representative "at their convenience prior to the Hearing on Jurisdiction to consult and negotiate a settlement of the present dispute."

Well, one year later, Respondent has not provided Claimants with any response to this overture. So, I mean, we don't really understand any of this. Notably, that was four years short of one year from today. So, Colombia raised this defense, that's the fork in the road. It's just a complete frivolity, I dare say.

Hence, Colombia received an invitation to negotiate three years ago and was nonresponsive, characterizing the letter containing the offer as garbage. One year ago, an offer was tendered, and Colombia does not respond at all.

Put up the next one, please, the next slide.

Again, and for the sake of completeness, we are compelled to point out to the Tribunal that the authority even--it's not relevant, but the authority on which the Respondent relies in an effort to circumvent the

[Page 67]

permissive treaty language, which, of course, is inimical to basic treaty interpretation, we encourage the Tribunal to read these cases. Yes. We are asking the Tribunal to read Respondent's cases. They are completely inapposite at the most rudimentary level.

Put up the slide of Notice of Intent.

They also raise a Notice of Intent defense, which also is not justiciable under any analysis. The technical consent defense that Respondent relies upon, there are three reasons why it is not justiciable. First, there is no such requirement under, again, Article 11 of the Colombia-Swiss BIT. This should be the end of analysis, but for the sake of completeness, we'll work with it.

Second, there is no language in Article 10.16.2 of the TPA at all suggesting that a Notice of Intent provision is jurisdictional in nature. That provision, much like the consultation negotiation provision, is intended to promote settlement by alerting the Respondent of a potential claim with respect to which Respondent may likely not have any notice that may then possibly lead to a settlement discussion. It is clear that the provision is intended to promote settlement and not to create jurisdictional hurdles to perfecting a claim.

Third, the Tribunal in Chemtura v. Canada, cited in Claimants' Reply at Paragraph 675, observed and held

[Page 68]

that a Notice of Intent clause will not be enforced where, first, it is established, as here, that the Parties have been aware of the dispute prior to the filing of a Request for Arbitration.

Second, where there is no evidence of a bilateral intent to settle the dispute--that is certainly clear--or, third, where non-enforcement does not prejudice Respondent, and they can't show any prejudice, nor have they even intended or tried to do so.

Put up the next one, please.

Notably, Article 10.16.2 of the TPA, not surprisingly, is premised on Article 1119 of the NAFTA, of course, the template in which the entire Colombia-U.S. TPA is based. Therefore, we particularly find it helpful to bring to the Tribunal's attention B-Mex v. México, cited at Paragraph 672 and 674 of Claimants' Reply Memorial because it is a NAFTA case of this identical issue. And, among other things, the Tribunal in that case provided that the Notice of Intent requirement "does not condition the Respondent's consent to arbitration" and "failure to issue a Notice of Intent, therefore, does not deprive the Tribunal of jurisdiction over them."

Put up the next slide, please.

Now, on the screen is Respondent's Legal Authority on this issue. It actually, of course, supports

[Page 69]

a finding that Notice of Intent is not jurisdictional and not a jurisdictional requirement. We encourage the Tribunal to read their own authority.

The fourth non-justiciable and somewhat baffling defense is the waiver defense. Now, this defense, again, is odd that it's being raised because, again, it is not part of Article 11 of the Colombia-Swiss BIT, but for the sake of completeness, we'll indulge them and address it.

Put up Slide 59, please.

Even if we were--but even if it were, Article 10.18.2(b), were applicable, the elements of the waiver condition to attach simply are nowhere present. And here's why. I'll give you two reasons.

First, there is no identity of anything. One is a human rights case and the other case is a breach of an international treaty for investor protection or a trade protection treaty having rights for investors under a financial services chapter. So, these are different.

And secondly--and this is extremely important--in the human rights case, that case is before the Inter-American Commission on Human Rights. Now, there is something that is very interesting. The Inter-American Commission on Human Rights cannot award compensatory damages. It just doesn't really matter if the petitioner--which, by the way, there is also an identity

[Page 70]

of party difference--if the petitioner asks for compensatory damages, the Inter-American Commission on Human Rights cannot award money damages.

So, that's completely different.

Now, why is that baffling? Well, that's baffling because Colombia is a Respondent to that proceeding, and Colombia knows perfectly well that the damages sought there are really prescriptive admonition. That's the only thing that that Inter-American commission can do.

Now, here is why it is evenly--additionally baffling. The law on this issue of waiver is very clear. It says that the waiver can be exercised at any point--and all the cases are in unison on this--at any point before the Merits Hearing.

Now, we have, of course, advised Respondent that we're willing--if the Tribunal so finds, we're willing to waive that proceeding and proceed to a merits hearing if the Tribunal finds, for whatever reasons, which it should not anyway, that the waiver provision attaches to that type of proceeding, where, really, none of the core elements are met and, most importantly, the core element of damages. After all, the waiver proceeding has, as its principle objective, preclusion of double recovery. It is, here, impossible.

We are going to look now at ratione temporis.

[Page 71]

The ratione temporis issue before the Tribunal is extremely simple. It really is. It is based on two basic questions. The first is: Does a treaty apply retroactively? No, it does not. A treaty does not apply retroactively, so the intertemporal question is raised. We don't see how it is relevant, because our claim is the dispute that we cast and identify. We identify a State measure, A, the June 25, 2014 ruling, and, B, as that measure as breaching the TPA. And we explained why that measure breaches the TPA.

The second issue, of course, is the issue of whether the Claim was properly filed in time, and there, of course, it's--we've stated that we are relying on the Colombia-Swiss BIT to enhance existing rights from three years to five years. And you will hear Professor Loukas Mistelis testify to this issue, and we've submitted a lot of Authority on it, but it's very notable to understand that this is a paradigmatic, we argue, exercise of MFN practice.

Why? Because, since we are dealing with a limitations issue, the enhancement of the already existing right is quantifiable. So, there's really no way that anyone can credibly argue that, by importing an additional 24 months, the Treaty is being rewritten. The only way that that can possibly be argued, and that seems to what

[Page 72]

Respondent is saying, is by saying: "Oh, wait a minute, here's why you can't do it." Because it is 10.4 that applies to Chapter 12. But we have already seen that movie, and we know that 10.4 is nowhere present in 12.1.2(b). We also note that 10.4 did not form part of Section (b) in Chapter 10. And for that reason, when Section (b) was incorporated into 12.1.2(b), it also was not there.

So, we don't really understand how that issue is at all relevant unless, of course, we buy into Respondent's argument that, no, that the relevant--that somehow the material State action that should be the operative claim predates the Treaty. But we are not alleging that there is any measure--that we are traveling on any of those measures that predate the Treaty--true, there were many. But we're not traveling on those.

Now, that brings, before the Tribunal, I think, a very interesting question, but one that has been explicitly answered without any minority view, and it's the following: Can a Tribunal inform itself in passing on a jurisdictional question on facts that predate the entry into force of the Treaty? Again, can a Tribunal inform itself in passing on a jurisdictional question having to do with ratione temporis on facts that predate the Treaty?

And the answer to that question is, of course, yes.

[Page 73]

We cited a lot of Authority for that proposition. The law books are full of them. Not only is there a lot of Authority for that proposition, which we've cited, but it's not controverted. No--there is no doctrinal writing that questions it. There aren't any cases that really question it. None of that is applicable here. It doesn't mean that the Tribunal relies on pre-Treaty acts or omissions. No, that is not what we're saying.

We are saying that in looking at the June 25, 2014 State measure, the Tribunal clearly and unequivocally can look to the extent to which preceding factual acts such as the domestic dispute contextualize the international dispute postdating the Treaty.

So, on one side of May 15, 2012, the Tribunal has a series of domestic disputes. On the other side of May 12--May 15, 2012, the Tribunal has the Claim arising from the June 25, 2014 State measure. The Tribunal can go back pre-Treaty and inform itself on: Gee, what happened there? How is that related to what is happening here?

My colleague Ryan Reetz shortly will talk about ratione materiae there as well. I'm sure he will discuss the Mondev Case and how it is that, even where it is argued that the that the investment was extinguished, that the actual events predate the entry into force of the Treaty, how that is just really not what we have here and

[Page 74]

how there are circumstances--as here; many of them, actually; law books are full of them, and we have cited many of them--where, of course, the Tribunal is privileged to look to pre-Treaty action. But even if it does not, it really doesn't matter. We are saying that is the June 25, 2014 93-page with two dissents--that's what we are talking about.

By the way, those two dissenting justices, while Justice Rojas Ríos is now the Head of the Constitutional Court under a different administration, at that time both justices were removed for expressing their opinion. Yes, both justices were removed for expressing their opinion.

So, that--please put up the plenary timeline.

So, what's important to understand that, while can you look at everything pre-Treaty, we rely on post-Treaty State action, and that's our position. And Respondent can't walk here before this Tribunal and say, "Oh, no, no, no. They really should have--this is where we damaged them, so it predates the Treaty." That just--it doesn't make sense.

Please put up Slide 99.

Now, this is extremely important. Not surprisingly, the TPA does not contain any of the tests that Respondent relies on.

Here's what I mean.

[Page 75]

Respondent relies, basically, on four cases to argue that there's a test that has two parts. They say, well, you know, in order for a State measure to be actionable, first it has to alter the fundamentally--the existing status quo first. That State measure--so that would be the June 25, 2014 measure--would have to alter fundamentally the status quo. That test doesn't exist, we submit. There is no test that says that. But even if it did, we will address it.

Then the second thing they say is, under this two-part test that we glean from the Authority but is stated nowhere, the State measure must be independently actionable. In other words, it cannot be related to anything at all that predates the Treaty. If it is, then it's not independently actioned, and for that reason ratione temporis, of course, cannot be met.

Well, in addition to the tests not being present anywhere, what is very important to understand is that, even if that were the test, the June 25, 2014 action, of course, it is independently--one that foundationally changes the status quo. That's how we started our conversation today, by saying that what happened on June 5, 2014 renders final the May 26, 2011 Judgment, and renders final and void the November 1, 2007 Final Judgment from the Council of State. That is how we began our

[Page 76]

conversation, and it is not necessarily how we are going to end it, but it is very important to say that, with respect to this test, Respondent foundationally relies on a case called Spence v. Costa Rica.

Now, I want to supplement their argument by saying that there is some language in that case that didn't make it to the brief which the Tribunal cited to and emphasized, and I'll share it with the Tribunal so we can have a complete record.

It says--this is the Spence Tribunal talking about how reliable their case is as precedent: "The jurisdictional aspects of this case are heavily fact-specific. Although interpretations of law (notably CAFTA Article 10.1.3 and 10.1.8) are necessary, the Tribunal's assessment ultimately turns on appreciations of fact. The Tribunal thus cautions any reading of this Award that would give it wider precedential effects."

But here's the rub. We feel that Spence was correctly decided. We feel that the facts in Spence were such that it was correctly decided. It is just not applicable to this case at all. Now, they, of course, rely on other cases that they say raise the Spence test. I'll mention those very quickly.

One is Corona Materials v. Dominican Republic.

The second is EuroGas v. Slovak Republic. Let me stop

[Page 77]

there for a second. Both of those cases were properly decided. In both of those cases, what was alleged to have been State action was no action. What was alleged to be State action was no action. In both of those cases, it was the purport of Claimants that there was a breach that postdated entry into force of the Treaty, but they couldn't point to anything. In fact, what they alleged as a breach was non-action by courts that had pending disputes that predated the Treaty. Now, that's those two cases.

Now, but the one that is really off-the-rails under any, any, any analysis is the--this third case they have--oh, yes--ST-AD. ST-AD v. Bulgaria. Now, that's a very interesting case, because that case dealt with neither a limitations provision nor an entry into force provision, but rather with a fraudulent Claimant who sought to raise claims that existed before the Claimant ever became an investor in the BIT. It was later dismissed on additional grounds; they came in with a fraudulent German straw Claimant. The case is--it's interesting reading, but not at all relevant.

So, the final thing that we want to point out to the Tribunal on ratione temporis is that Respondent spends a lot of time saying that we rely on the discredited Maffezini Case. Nothing could be farther from the truth.

[Page 78]

Let me tell you the cases we rely on and that we encourage the Tribunal to look at.

Siemens v. Argentina, great case.

AWG v. Argentina, great case. Suez v. Argentina, great case. RosInvest v. Russia, great case. And if I had to--National Grid v. Argentina, also a great case. But if I had to point to one case, one case that the Tribunal should read, of course, it's the Impregilo v. Argentina case. Why? Not only was it rightfully decided, but there is a very nice scholarly analysis of the lay of the land on this issue. And basically--what that case basically says is, while this is a real mess, some Tribunals say that MFN practice could not reach or bring in procedural rights; others say they do, and this is horrible, because this shouldn't happen on an ad hoc basis. But what the Tribunal does there and, the majority of cases, what they hold--and you will hear from Professor Mistelis on this--is that, in fact, in fact, of course MFN practice can reach out to procedural rights, and the ejusdem generis argument is not a good argument, nor could it ever be. Why? Because the generis portion is the same, meaning that procedural rights are no different from substantive rights because both have a common purpose and objective, which is to protect investors and investments.

Lastly, one final consideration before I turn it

[Page 79]

over to Mr. Reetz, and it's the following: For the sake of completeness, the Tribunal should bear in mind that, under Colombian law, a limitations period is neither substantive nor procedural, but a hybrid creature, a third thing. So, that may weigh into the Tribunal's analysis. We don't know, but for the sake of completeness, we are sharing it.

And, with the respect and indulgence of the Tribunal, I would like to tender the floor to Mr. Reetz.

PRESIDENT BEECHEY: Thank you, Mr. Martínez-Fraga.

Mr. Reetz?

MR. REETZ: Thank you, Mr. President.

We are sharing a camera and a speaker here, so if we can just have a moment.

Turning the Tribunal's attention to ratione materiae, on that subject there are really just a few key points to keep in mind.

First, Claimants clearly made an investment by investing in shares of Granahorrar and having the rights that arose from that investment under Colombian law.

Second, the form of the Claimants' investment changed over time because of actions undertaken by Respondent, but Claimants' investment itself continued to exist. And, third, the investment was entitled to protection at the

[Page 80]

time it was finally extinguished by the Constitutional Court's Decision in 2014.

Of course we start with the relevant definitions of "investor" and "investment" in Article 12.20. As you see from the slide, investor of a party is defined as including a person that "attempts to make, is making, or has made an investment," confirming that Chapter 12 covers not only investments that are in process, but investments that have already been made.

The term "investment" is also defined in Article 12.2.0, albeit by reference to the definition in Article 10.28 of the general investments chapter with a few qualifications that are not relevant here.

Turning to 10.28, that Article defines investment quite broadly as "every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment." And the Article goes on to identify a number of different forms that an investment may take, including "an enterprise" and "shares, stock, and other forms of an equity participation in an enterprise."

The investments made by Claimants were in precisely this form; that is, equity participation in Granahorrar.

Now, as I mentioned, and as the various

[Page 81]

submissions and Witness Statements have detailed, Claimants' investments were transformed over time by a series of actions taken by Colombia, including the initial regulatory actions, the later merger with BBVA, the Council of States' recognition and crystallization of the Claimants' rights in the form of its 2007 Judgment, the tutela actions pursued by Fogafín and the Superintendency, and, ultimately, the Constitutional Court's finally extinguishing all of Claimants' domestic law rights in its 2014 Order.

All of those changes were the result of actions by Colombia. None of them represented voluntary actions by Claimants to transfer or abandon or dispose of their investment. As a result, Claimants' investment subsisted up until the time of the Constitutional Court's 2014 order.

Now, the Mondev Case gives us a good example of how an investment receives Treaty protection throughout its life until all of the Claimants' rights have been finally extinguished. In that case, the Claimants' original investment in a real estate development contract was eliminated, allegedly by Government action, before the NAFTA entered into force, so that all the Claimant had was its remaining rights in litigation.

The United States contended that there was no

[Page 82]

investment left by the time the NAFTA entered into force, but the Tribunal disagreed. The Mondev Tribunal found that once an investor has made an investment the investment continues to receive protection throughout its existence, even if all that is left of it is a claim for compensation. As we see in the second paragraph here on the screen, the Tribunal noted that the shareholders, even in an unsuccessful enterprise, retain interest in the enterprise arising from protection of their commitment of capital and other resources. The intent of NAFTA is evidently to provide protection of investments throughout their lifespan.

Recognizing the original character of the investment here, notwithstanding the State's unilateral transformation of it into a different form, is necessary to effectuate the Treaty's purpose, which is to provide protection of investments throughout their existence.

The Saipem Case presented a parallel question about the treatment of an investment throughout its lifespan. As the Tribunal will recall, the investor-State dispute in Saipem concerned the State's treatment of an underlying ICC commercial arbitration in which Saipem had received an Award in its favor on a commercial contract claim. In that investor-State case, the Respondent argued that the dispute before the Tribunal did not arise

[Page 83]

directly out of an investment, as required by Article 25 of the ICSID Convention, because the investors' original investment was supplanted by the ICC Award in its favor. However, the Tribunal found that the rights embodied in the ICC Award were directly traceable back to the original investment. That investment was Saipem's rights under the original contract, which did not stop being an investment when it was crystallized by the ICC award.

Whatever the terminology used, crystallization, instantiation, incorporation, or the like, the fact remains that the original investment persists, however it may be transformed by the State, and is entitled to protection.

Now, in an effort to denature Claimants' investment in Granahorrar in this case, the Respondent points to a particular footnote in Chapter 10 of the TPA's definition of "investment." And that's Footnote 15, which states that the term "investment" does not include an order or judgment entered in a judicial or administrative action. And Colombia would have the Tribunal believe that it could shortcut the entire ratione materiae analysis by relying on this footnote to conclude the Claimants did not have an investment here, but Colombia's argument overlooks at least three critical facts.

First, Footnote 15 occurs within a particular

[Page 84]

context in the definition of "investment." Together with Footnote 14, it's a footnote that subparagraph G of the definition, which concerns licenses, authorizations, permits and similar rights conferred pursuant to domestic law. These provisions are best understood as qualifications of that particular category of rights and not as a blanket disqualification of judgments from ever receiving protection under the TPA.

Rather, Footnote 15 is best understood as providing that a judgment, in isolation and by itself, is not an investment under the Treaty. This makes sense, because speculative investment and judgment of assets does not invoke the underlying purposes of the TPA. In contrast, though, a contrary reading of the footnote, one which would categorically any protection in connection with judgments, would undermine the policy considerations expressed in Mondev and Saipem.

I'm going to ask my colleague, Ms. Chiu, to please hold on the next two slides--we will eventually skip over them--but I do want to say that, second, the existing scholarship on this point which, of course, can be an important subsidiary means for determining law under Article 38 of the ICJ statute also calls Colombia's broad reading of Footnote 15 into question. The so-called "judgments footnote" dates back to the 2004 United States

[Page 85]

Model BIT where it appears as Footnote 3. And in addressing that Model BIT, Professor Vandevelde explains that the footnote cannot have its apparent literal meaning.

MR. GRANÉ: Mr. President, I'm sorry to interrupt, but Claimants leave us no option. Now, they are not showing the slide with the Authority that is not on the record, but they are referring to it. They are citing from it. They did the same thing with the first two slides. I did not want to interrupt at that time, but it is inappropriate to identify Legal Authority, be told that they cannot rely on it, and then go on the record reading it. So, we raise an objection, Mr. President.

MR. REETZ: Mr. President, we are simply seeking to make the Tribunal aware of Legal Authority that is relevant and important. We were told by the Procedural Order not to use the slides, and we, of course, respect that.

PRESIDENT BEECHEY: Well, it's a little bit more than surface deep, isn't it, Mr. Reetz? If this is an Authority which is in the Arbitration record and has been relied upon in the presentations that have been put together, fine. If it's coming new now, then at the very least it ought to have been referred to Mr. Grané and his colleagues before it was brought to us.

[Page 86]

MR. REETZ: I understand, Mr. President. But this is new Authority. They are certainly aware of it, because it was discussed less than a month ago in a different proceeding. So, it should not be coming as any sort of surprise, but I understand if the President prefers that we not refer to it at this time.

PRESIDENT BEECHEY: Well, I'm not sure if it's a question of "prefer." There are some ground rules here which we are not going to observe in a way which becomes absurd, but there are certain prescriptions here and it seems to me reasonable to ask you to follow them. And if the objection is taken on this occasion, I think, subject to control from my colleagues, I'm inclined to uphold it.

MR. REETZ: Mr. President, I understand. Thank you. We'll move along.

Apart from the scholarship that we encourage the Tribunal to review on this point, the third and final fact overlooked by Colombia in this regard is that Claimants did not invest in the 2007 Judgment, but rather in Granahorrar. This was, perhaps, the most classic form of investment that one can make. The fact that the form of investment transformed over time, and at one point some of Claimants' rights were crystallized or affirmed in the 2007 Court of State Judgment--Council of State Judgment, excuse me, does not place their investment beyond the

[Page 87]

protection of Treaty.

Now, apart from the question of Footnote 15 to Chapter 10 of the TPA, Respondent has raised an additional objection to jurisdiction ratione materiae, and Respondent contends that Claimants' investments were supposedly not made in conformity with Colombian investment regulations and, therefore, cannot support jurisdiction ratione materiae.

This argument fails for multiple reasons as well. We've addressed it very thoroughly in our papers, and in the interest of time, I'll just provide a very brief recap here.

First and most fundamentally, there is no requirement in the TPA that investments must be made in conformity with the laws of the host State, which is the requirement the Respondent alleges was somehow breached.

Second, the jurisprudence is fairly clear that, if such a conformity requirement is not expressed in the Treaty, it may not be inferred or imposed. And the cases cited by Respondent do not at all support the proposition that the Tribunal may somehow find a conformity requirement by implication. They either involve treaties that contained express conformity requirements, or found no bar to jurisdiction, or relied upon fundamental principles of international law to deny jurisdiction under

[Page 88]

particularly egregious circumstances.

For example--and we can skip to the next slide--the Phoenix Action Case expressly distinguished between Treaty conformity requirements and fundamental principles of International Law. And the SAUR v. Argentina Case makes it plain that where there is no express conformity requirement in the Treaty the Respondent State must show a serious violation of International Law in connection with the investment in order to defeat jurisdiction ratione materiae.

And even where an express conformity requirement does exist, which it does not here, the Tribunal must consider questions of proportionality as is shown in the Hochtief Case.

Finally, we've discussed the particular details of Colombia's foreign investment registration framework in our written submissions. Even if there had been a showing the Claimants somehow invested in violation of those regulations, the nature of those regulations is such that it would be disproportionate to deny Treaty protection based on a failure to comply with them. That's particularly the case; whereas here, Respondent was at all times aware of the investments in question.

To conclude on the subject of jurisdiction ratione materiae, then, Claimants clearly had an

[Page 89]

investment in their shares of Granahorrar. Colombia's attempts to rely upon a stilted reading of Footnote 15, and upon an inferred violation of its foreign investment regulations, are insufficient to deny Claimants' investment protection under the TPA.

And with that, I'd like to return the floor and microphone to Mr. Martínez-Fraga to discuss jurisdiction ratione personae.

PRESIDENT BEECHEY: Thank you, Mr. Reetz.

MR. MARTÍNEZ-FRAGA: Mr. President, would it be possible, sir, to get a time check, how much time is left?

PRESIDENT BEECHEY: Under correction from the Secretariat, I think we said we were going to go until 5, didn't we, this evening. So at the moment you have got 18 minutes until 5:00 p.m. And then I think we would allow you a few extra minutes to make up for the lost time on the way.

MR. MARTÍNEZ-FRAGA: Thank you, sir. May I, sir?

PRESIDENT BEECHEY: You may.

MR. MARTÍNEZ-FRAGA: Thank you.

Nowhere are the conceptual differences between Claimants' and Respondent's theoretical and practical understanding of the governing law more salient and stark than with respect to ratione personae. There are 25 foundational differences with respect to which this

[Page 90]

Tribunal will have to exercise its judgment.

The task, according to the Treaty governing customary international law has two conceptual parts, the "what" and the "how." The "how" concerns the methodology for applying the test. The "what" are actual factual categories comprising the test. Set forth below are 10 propositions constituting the "how."

First, Claimants opine that the governing test under ratione personae requires application of Article 10.22.1. The governing law provision of our TPA. Put up Slide 10.22.1.

It is significant that Article 10.22.1, provides that: "The Tribunal shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law." End of citation.

The conjunction "and" matters. This means that "applicable Rules of International Law" must be applied.

Second, because the Tribunal shall decide issues in accordance with "applicable Rules of International Law," end of citation, the test governing dominant and effective nationality is a mandatory test and not a discretionary determination that a Tribunal would exercise based on its own discretion. The Respondent seems to think otherwise.

Respondent opines that the "how" and the "what,"

[Page 91]

meaning the elements of the test and how the test is to be applied, are both discretionary. Claimants say read Article 10.22.1 and read applicable Rules of International Law. It is mandatory and not discretionary.

Third, Claimants submit that, by incorporating the term "dominant and effective nationality," into Article 12.20, the definitions of the TPA, Article 12.28 of the investment chapter counterpart, the signatory States further underscored the interest in having customary International Law applied to issues in dispute concerning the TPA.

Fourth, all factors to be considered are to be weighed equally. Customary International Law is very clear on this point. There is no divergent view on this issue, but Respondent sees it otherwise.

Fifth, the entire life of the individual is to be considered in determining dominant and effective nationality, notwithstanding that particular importance may be placed on specific time frames, such as the accrual of the right asserted, June 25, 2014, and the time of the filing of the arbitration, January 2018.

Sixth, the presence or absence of a scheme pursuant to which nationality was acquired shall be taken into consideration. The practical workings are simple: The absence of any such scheme or single-purpose

[Page 92]

enterprise would give rise to a presumption of good faith and legitimacy on the part of the dual national.

Respondent thinks otherwise and would read this element out of any such consideration in its entirety.

Seventh, when the Claimant became a dual citizen and acquired the second nationality is a factor that the Tribunal must consider in determining the Claimants' dominant and effective nationality under the TPA.

Now, for this reason, the conjunctive "dominant and effective nationality test" requires that where, as here, the dual nationality always was in effect and, therefore, effective, a presumption of legitimacy must be accorded to the Claimants' allegation that non-host State represents her or his dominant and effective nationality.

Again, a presumption of legitimacy that the non-host State represents the dominant and effective nationality. Respondent merely suggests that where the "effective prong is met" there is no consequence arising from meeting that requirement and should just not be taken into account, just stipulate it was met and let's move on to dominant. There is no connection between dominant and effective. We say, yes, there is a connection between dominant and effective.

Eighth, customary international law, since the very inception of the dominant and effective nationality

[Page 93]

test has viewed this doctrinal category as expansive and not restrictive. Now, what do I mean? This policy proposition is a simple one.

The signatory State, in having a dominant and effective nationality standard, clearly intended to broaden the scope of the universe of existing and prospective investors to make this available to dual nationals, dual citizens, of course, as qualified by the test.

So, the idea was, let's have more of these types of individuals having dual nationality but, of course, not ones that are Treaty shopping in play. Let's give them protection. Why? So, that we can retain investment and why? So, we can attract investment.

So, in this way, an entire new category of investors was accorded rights and obligations, of course, under the Treaty.

Therefore, the Claimants submit that the dominant effect of nationality test represents a doctrine that is expansive in nature, one that supplements the set of qualifying investors under the Treaty and, moreover, it does so by ferreting out illicit Treaty shopping where alleged Claimants acquire citizenship status for purposes of precisely wrongfully using or usurping Treaty protection.

[Page 94]

No such factual matrix is at all here present.

The guiding principles of customary international law suggest that a holistic approach to analysis of all potentially relevant factors is to be undertaken.

Ninth, the test is qualitative and not quantitative. By way of example, it stands to reason that, if a dual citizen lives in the host State, having her primary residence in that jurisdiction would, of course, follow that to some extent the dual citizen would have a club membership in that jurisdiction, drive a car in that jurisdiction, grocery shop in that jurisdiction, and conduct similar everyday commerce in the jurisdiction.

It is understood that, if the dual citizen had a pet, the pet would also be dog--would be walked in that jurisdiction. But that's not the test. The qualitative approach, however, would require the Tribunal to test the extent to which, together with other factors, the dual citizen would also have a social, civic, family and other economic ties to the competing states.

The exercise concerns more than just bean counting. 55 years of development and refinement of the customary International Law with respect to this doctrine requires the Tribunal to probe beyond everyday logistical factors in cases in which the primary place of residence is in the host State.

[Page 95]

Tenth, the factors to be considered are non-exhaustive. Please put up the slide.

Up on your screens you have before you a summary of principles consulting--constituting the methodology for the application of the dominant and effective nationality test, what we have been identifying as the "how." These elements are clearly defined in the authority and doctrine. Respondent makes no mention of them whatsoever. The difference of opinion is extremely meaningful. What follows is a non-exhaustive listing of the "what."

Eleventh, what is the dual citizen's primary language? Now, here, the testimony will show that when the Claimants think of people who are dear to them, think about ideas that matter to them, they think of these things in the English language.

Twelfth, the dual citizens profiled in terms of Treaty considerations. Here, the evidence shows that these are exactly the type of people and the type of investors that were sought by the dominant and effective nationality test. People who create jobs, who create opportunities, who bring wealth, and who do not move capital.

Thirteenth, healthcare considerations. Where do these so-called "dual nationals," where do they go for healthcare when they really need healthcare?

[Page 96]

Fourteenth, where do the dual nationals file tax returns? That is extremely important. If someone considers themselves primarily a Colombian citizen, why on God's good green earth would they be filing tax returns in the United States of America?

Fifteenth, has the dual national voluntarily applied for the selective service military in the alleged dominant and effective jurisdiction? Well, why would anyone apply for selective military service involuntarily if they did not consider themselves primarily a national of that country. You'll find that Alberto Carrizosa did exactly that.

Sixteenth. What does the dual citizen consider himself or herself to be in terms of the primary nationality? Now, this is a very important one because it gets confused with how the dual citizen holds him or herself out. This is a subjective consideration. What do--what does the dual citizen believe she or he is in terms of primary nationality?

Of course, Seventeenth, how does the dual citizen hold herself out to the world? Here you'll find that all three Claimants travel with their U.S. passport, for example. All three Claimants--Felipe Carrizosa, when he was applying for a job in Germany, he filled out the forms and said that he was a U.S. citizen.

[Page 97]

Alberto Carrizosa, when he was applying to colleges in the United States, he filled out the form as if he were a U.S. citizen, which is what he was. It is how he considered himself, primarily a U.S. citizen. Now, he could have probably done better, not that Boston University is a bad place, but he may have done better if he had written down that he wasn't a U.S. citizen.

Nineteenth, how and why was nationality obtained? Here, I'd like to quote from the Claims Tribunal from Diba v. Islamic Republic of Iran, actually a case that Respondent cites to, in Paragraph 11 and it says: "The sincerity of the choice of national allegiance they claim to have made," is to be examined. And here, it--you'll find that it couldn't be any clearer.

Twentieth. Where does the dual national have most of her personal net worth? Well, the testimony before this Tribunal is uncontroverted. All three Claimants have the majority of their personal net worth outside of Colombia and in the United States of America, if that matters.

Twenty-first, place of residence should be examined. In this connection, the reasons binding the Claimant to the primary residence in corresponding totality of circumstances that are to be examined.

Now, you know, the dominant and effective test

[Page 98]

would fail completely if each time there is a dual citizen whose primary nationality is not that of the host State where the dual citizen lives, if it's a test where, because you live there, because the primary residence is in the host State, then you are absolutely, automatically a member of that, a national of that host State, primarily. The dual--the dominant and effective nationality test, of course, would fail.

Of course, Twenty-second, cases addressing a dominant and effective nationality consider the Claimants' cultural affinity such as holidays, lifestyle, work ethic, general disposition.

Twenty-third, education is a critical factor. By way of example, Alberto Carrizosa attended elementary and middle school in Bogotá, but in an Anglo-American school. In fact, originally named the Anglo-American school called Colegio Nueva Granada. He attended high school at Gulliver Preparatory School in Miami, Florida, here in the U.S., class of 84.

From 1984 to '88, Mr. Carrizosa--Alberto Carrizosa attended Boston University where he received a BS in business administration. Mr. Felipe Carrizosa also attended Colegio Nueva Granada in Bogotá as a child. His high school years took place in Miami, Florida, and he also graduated from Gulliver Preparatory School, Class of

[Page 99]

'86.

Between 1987 and 1990, he attended Lehigh University in Bethlehem, Pennsylvania, where he received a BS in civil engineering. He did receive an M.B.A. from INALDE Universidad de la Sabana in Colombia.

Mr. Enrique Carrizosa attended elementary school in Miami, Florida, at Gulliver Academy and then McGlannan School as well. He then resided in Colombia for three years and, like his brothers, attended Colegio Nueva Granada. He enrolled in Northwestern University in Chicago, Illinois; he graduated in 1998 with a Bachelor of Science in industrial engineering.

Between the years 2000 and 2003, Mr. Enrique Carrizosa was enrolled in the Kellogg School of Management at Northwestern University, where he received an M.B.A.

Twenty-fourth, the family matrix constitutes an important consideration that is deeply intertwined with cultural affinity, language and education. We submit to the Tribunal that sustained analysis of this factor also compellingly demonstrates the Claimants' dominant and effective nationality is that of the United States.

Twenty-fifth, retirement and estate planning. I think that you will find that the uncontroverted evidence and testimony is that all three Claimants engage in very significant estate planning with the aspiration of

[Page 100]

retiring in the United States.

Now, the Respondent, of course, has a very different understanding of the test, and they basically follow the Ballantine v. Dominican Republic construct. But before we get to that, I want to show a couple of slides that try to illustrate, and even though they appear to be before--

Micula--could we please first put the slides--yeah.

--that try to illustrate graphically to some extent. And, again, we want to emphasize it's not a bean-counting exercise. It's a qualitative analysis. A graphic to help illustrate these factors for each of the Claimants, even though, again, it's a qualitative.

Now, as more fully explained in Paragraphs 801-815 of Claimants' Reply Memorial, the qualitative analysis in Micula v. Romania is instructive. There, the Tribunal found the Claimants' retirement plans, voluntary place of pension funds, location of personal assets and family ties to Sweden to outweigh the permanent and physical place of residence and professional and economic interest present in the host State, Romania.

Put up slide of Respondent's abbreviated iteration on the test, please.

Respondent asserts that the test is a very

[Page 101]

different one. It is what we call the one-divided-by-four test. Respondent, in fact, uses the permanent and habitual place of residence and divides the single factor into four elements: First, location of permanent habitual residence; two, center of Claimants' family, social, personal, and political lives; three, Claimants' center of economic lives; and, four, how Claimants have identified themselves in terms of nationality.

Now, we submit that only four is one that is capable of deviating from the first three if you have a situation, as here, where the Claimants' primary place and habitual place isn't that of the host State. That analysis would not make sense because it's a test that could never be met under this very common rubric.

Let me be very clear, to Tribunal. Again, under this test, every dual national having a primary residence in the host State would be unable to meet the dominant and effective nationality test. It simply would not be possible. That is not what the test is about.

Now, Colombia's abbreviated iteration of the dominant and effective nationality test invites the Tribunal to turn a blind eye to interpreting the Treaty pursuant to Article 10.22.1, in keeping with rules of customary international law and to embrace a purely discretionary ad hoc approach.

[Page 102]

Now, what really happened here is that in between the filing of our first Memorial and the Second Memorial, the Ballantine v. Dominican Republic case was decided, a case where Respondent's counsel represented the Dominican Republic, and that case just cites to these four elements. We feel that the case is not properly decided. We don't think it is thoughtfully reasoned, but, moreover, there's a Separate Opinion in that case. It was only a majority Opinion.

We feel that the Separate Opinion is, of course, much more on point, and because it actually takes into account Article 10.22. So, we invite the Tribunal to consider both, but to see also in our papers--we are running out of time--in our papers we have distinguished and analyzed Ballantine very, very carefully. And if you read Ballantine, and you read the papers, which I know the Tribunal has, then the Tribunal will be able to reach its own appreciation of what the actual test is and whether or not it is actually mandatory v. permissive.

And with that, I would like to thank the Tribunal, Mr. President, members of the Tribunal, and all attendees for your grace and patience in sitting through this presentation.

PRESIDENT BEECHEY: Thank you, Mr. Martínez-Fraga.

[Page 103]

Are there any questions from my colleagues before we adjourn?

ARBITRATOR SÖDERLUND: No, thank you.

PRESIDENT BEECHEY: Very well. That brings us to our next break. It is now just on 5:00 p.m. Let's start again at quarter past the hour, and we will hear from Respondent. Thank you very much indeed.

(Brief recess.)

PRESIDENT BEECHEY: The floor is yours, I think, if you are leading off; is that right?

MR. GRANÉ: Yes.

Mr. President, before we begin, may we get a clarification from the Tribunal as to when you intend, sir, to take the 45-minute break so that we can organize our presentation.

PRESIDENT BEECHEY: Yes. Yes, of course. It's as advertised on the sheet that came from the PCA today. We will adjourn at 6:30 p.m. GMT, and then we will stop for 45 minutes rather than an hour and start again at 7:15 GMT, which should let us finish at 8:30 as originally planned.

MR. GRANÉ: Thank you very much, sir.

PRESIDENT BEECHEY: Not at all.

MR. GRANÉ: If it pleases the Tribunal, I will invite Ms. Ana María Ordóñez from the Agencia to make an

[Page 104]

introduction.

PRESIDENT BEECHEY: Yes, of course.

MR. GRANÉ: And she will do so in Spanish, so this may be a good opportunity to switch to the Spanish translation for those who require it.

MS. ORDÓÑEZ: Thank you very much.

PRESIDENT BEECHEY: The floor is yours.

MS. ORDÓÑEZ: Thank you, Mr. President.

OPENING STATEMENT BY COUNSEL FOR RESPONDENT

MS. ORDÓÑEZ: Good afternoon, Mr. President, Members of the Tribunal. My name is Ana María Ordóñez. I am the Director of International Matters at the National Agency for the Legal Defense of the State. We defend the State in connection with human rights and other legal matters and the International Criminal Court.

With me are the officials from the Superintendency from the Agency of Banks and from Fogafín.

I appear before you here representing Colombia, and this is an enormous responsibility because I am representing a State. It is an honor to introduce the Opening Statements by the Republic of Colombia. Colombia is a democratic State. It respects the law and international treaties. It has a clear suppression of powers, and that guarantees a legislative branch, highly representative a judiciary that is fully independent and

[Page 105]

has a full institutional architecture and also has an executive that follows the law.

We are an open country, open to investment.

Since 1991, we have welcomed millions of investments in our territory in more than 10 sectors of importance, economically and socially. We have had a number of agreements for investment to provide security to these investments.

Last year we received $14 billion in foreign investment. This opening for an investment is something that we're proud of, and that is why we take its protection very seriously. We would like to underscore that the protection presupposed by the international investment regime has strict access requirements. The main one has been unequivocally recognized by international tribunals and international public lawyers, recognition by the State of submitting their disputes, investment disputes to arbitrations, and that consent is not unconditional and restrictless. It is expressly established in investment treaties.

Colombia has consented to open the doors to international arbitration and to submit the controversies with the purpose of protecting investment and foreign investors. But with the understanding is that the key to these doors is in the hands of foreign investors that meet

[Page 106]

all the requirements set forth in international law and the treaties. This is not the case of Messrs. Carrizosa, the Claimants in these proceedings. We have shown that Claimants cannot show that they meet the essential requirements to have access to jurisdiction.

Messrs. Carrizosa do not have the keys to this lock.

Colombia is concerned to see that ISDS loses legitimacy when resort is had to Tribunals such as this when, with untenable arguments, one tries to bring about a controversy that does not meet the requirements of the Treaty between Colombia and the United States.

I have five main ideas that I would like to leave with the Tribunal, five ideas that show the reproachable and abuse of practice of the Claimants.

First idea: The consent by the State cannot be imported via the Most-Favored-Nation Clause. We heard very elaborate and improbable theories put by the Claimants to try to fabricate fruitlessly the consent by Colombia to this dispute. The Parties to the Treaty, Colombia and the United States, we both had to hear the Claimants change the common understanding in connection with the provisions of the Treaty that the Parties have had after they entered into the Treaty.

This common understanding has been confirmed by the U.S. in writing and these proceedings. Claimants

[Page 107]

asserted that the Most-Favored-Nation Clause of Chapter 12 in the Treaty is sufficient to disavow the main terms that the Parties provided when they consented a dispute to be submitted to a Tribunal--that is to say, a direct attack to one of the main principles of international law and of arbitration and of itself. The Tribunal requires an express power by the Parties to exercise its jurisdiction. Nowhere in the Treaty, not even in Chapter 12 invoked by Claimants, can we see that a Tribunal has the possibility of important--a different provision of a Treaty in connection with investment resolution disputes to expand on the consent of these issues.

This is putting the cart before the horse, and in connection with the BIT with Switzerland, well, we are trying to drive away from reality the measures that are not included in the temporal jurisdiction of the Treaty. As Colombia has explained, and we will remind you of in this Hearing, the Claimants don't have the jurisdictional requirements with the BIT with Switzerland.

The second idea is that the disputed measures are not within the temporal scope of the Treaty. The Claimants' claim is against principles of public international law in connection with the Law of Treaties. One of the principles is nonretroactivity for international obligations and the consequent lack of

[Page 108]

jurisdiction of an international tribunal in connection with disputes that do not respect the temporal limitations established by the Parties that signed the Treaty.

The 2018 Decision that, according to the Claimants, deprive them of their investments was handed down a year before the Treaty came into force. More than three years went by before knowledge was had of the Constitutional Court Decision of 2014. Now they resort to that decision to do away with the limitations imposed by the Treaty and by international law. The dispute brought about by those measures came into being ten years before the entry into force of the Treaty.

Third idea: The dominant nationality of the Carrizosa brothers is the Colombian nationality. This is a claim that lacks one of the basic jurisdiction requirements, and this is part and parcel of the essence of arbitration--that is to say, to have international investors. In spite of the fact that now they are trying to argue otherwise, all of the pertinent factors amongst which the place of habitual residence and the center of economic and political and family life of Messrs. Carrizosa on the relevant dates, that place was Colombia.

Their dominant nationality and their effective nationality in the vital dates is and has always been

[Page 109]

Colombia. There are countless pieces of evidence that show this. Just to mention some, the Tribunal must bear in minded that the Carrizosa brothers have resided in Colombia during the critical dates for this Arbitration. They have had their economic and family life in Colombia. They have continued the legacy of their Colombian father in the field of business in Colombia. They have conducted political and civic activities in Colombia. For example, they have voted in Colombia and they have made donations to electoral campaigns, from candidates, to the Presidents of the Republic, to the election of Members of the Council of City of Bogotá.

For Colombia, it is reproachable, at least, that their own nationals are trying to do away with the requirements of the Treaty in the field of jurisdiction and establish an international situation without merits and without jurisdiction. The only truth is that the dominant nationality of the Carrizosa brothers is the Colombian nationality. Any other statement is an illusion.

Fourth idea: A judicial decision is not an investment covered by the Treaty. We are here 22 years after the facts claimed by the Claimants to debate about the desperate attempts by Claimants to submit Colombia to an international arbitration to question judicial measures

[Page 110]

that are not covered under the Treaty. Claimants invoke as the alleged investment a judicial decision of 2007, in spite of the fact that the Treaty expressly excludes those kinds of measures.

The literal language of the Treaty is clear. The term "investment" does not include a resolution or a decision that is handed down by a judicial or Administrative Court. Although Claimants say that the intentions of the Council of State of 2007, that that decision was an investment, this is not a qualified investment under the Treaty.

This is my fifth and last point--(audio interference)--have access to ISDS. It is undeniable that Claimants have not met the requirements to activate this mechanism. One of the many defects and irreparable defects of the claim by Claimants is that they did not submit a Notice of Intent to--for the State to understand their claims. They didn't do that during negotiations and also in the consultation stage.

The Legal Arguments submitted by Colombia are based on the specific terms of the Treaty. I'm just asking for the Tribunal to determine its lack of jurisdiction. We are asking the Tribunal to apply the Treaty and to respect the will of the signatories and also to safeguard the Agreement enshrined in the Agreement

[Page 111]

between Colombia and the U.S. Claimants are trying to force this lock, and we have shown that they did not have the keys to this lock.

Members of the Tribunal, you are the ones that are called upon to uphold the jurisdictional requirements of the Treaty. I would like to end by emphasizing what this arbitration means to Colombia. The alleged foreign investors have initiated against Colombia wanton lawsuits and multiple actions in different international fora.

Colombia has had to allocate considerable economic resources paid by taxpayers to attend to this reproachable strategy by Claimants and Claimants' families. So, we are talking about a number of lawsuits in Colombia and also two international arbitrations in the field of ISDS and an international proceeding before the International Commission on Human Rights--Inter-American Commission, the Inter-American Commission on Human Rights. So, these are unfounded, the unfounded explanation--by the Carrizosa brothers, so this wanton arbitration. And we have come to this because of the system.

I will now give the floor to Patricio Grané. He's going to continue with the Opening Statements for the Republic of Colombia. Thank you very much for your attention.

PRESIDENT BEECHEY: Thank you very much,

[Page 112]

Ms. Ordóñez.

MR. GRANÉ: Thank you.

Mr. President, Members of Tribunal, I will start with a point that should be obvious. And it's that we are here today to address Colombia's jurisdictional objection to this arbitration. It is obvious and, yet, it bears stressing simply because even after the proceeding was bifurcated, Claimants have continued during its Jurisdictional Phase to focus on their arguments going to merits.

Even the testimony of their fact witnesses and Experts during this phase has focused on the merits, including on quantum issues, and they do this because they hoped to divert the Tribunal's attention from the jurisdictional requirements which they cannot meet.

Colombia will not address Claimants' arguments on the merits, but the fact that we will not do so should not be construed as acceptance. And for the avoidance of doubt, Colombia expressly and categorically rejects all of Claimants' claims and expressly reserves the right to respond to them should they survive this Jurisdictional Phase, which they should not for the reasons that we have not identified in our written submissions and that we will cover again during this week.

We saw during the Claimants' presentation today

[Page 113]

that they continued to argue the merits, and we saw further that they have no reservation in violating the procedural rules in order to do so, even introducing new and unfounded arguments. And I will return to this point later in my presentation.

In our presentation this afternoon, we will focus on the four specific objections raised by Colombia. First, I will address ratione temporis. My colleague Ms. Katelyn Horne will address the objection on ratione voluntatis. And my partner Mr. Paolo Di Rosa will address the objection to ratione personae and the objection to ratione materiae. But, first, I will offer a brief summary of the facts that are relevant to the jurisdictional objections raised by Colombia.

Astrida Benita Carrizosa, who is the Claimant in the ICSID sister arbitration, was born in the United States and later married a Colombian businessman, Julio Carrizosa Mutis. They had three sons, who are the three Claimants in the present arbitration and who are in attendance today.

In the 1980s, Claimants used Colombian holding companies to acquire shares in Granahorrar, a Colombian financial institution. In 1998, Colombia experienced a nationwide financial crisis. Granahorrar was affected by that crisis, but its situation was exacerbated by an

[Page 114]

acrimonious and public shareholder dispute that lasted from late 1997 to mid-1998. That dispute was the result, in part, of alleged irregularities in the Carrizosa's family business dealings. You see in this Exhibits R-0062 and R-0063 on the record.

And even the President of Granahorrar explained at the time that the shareholder dispute was a major cause of a decrease in the deposits and a serious liquidity crisis suffered by Granahorrar. This is in Exhibit R-0008.

As of late July 1998, Granahorrar had lost approximately USD 226 million in savings accounts and Certificates of Deposit. Faced with this liquidity crisis, which is of its own doing, Granahorrar turned to the Colombian Regulatory Authorities to request urgent assistance and Granahorrar received that assistance, including hundreds of millions of U.S. dollars in liquidity infusions from Colombia's Central Bank, which is the Banco de la República, and from the Fondo de Garantía de Instituciones Financieras, or Fogafín, which is the State's guarantee fund for financial institutions.

Colombia ultimately provided nearly half a billion U.S. dollars in liquidity assistance to Granahorrar.

Despite those massive cash infusions from the

[Page 115]

State, Granahorrar continued to struggle, and on October 2, 1998, it defaulted on its payment obligations and became insolvent.

The Financial Superintendency then gave Granahorrar one more chance by issuing what's called or what we have referred to as the Capitalization Order. That order directed Granahorrar to make efforts to immediately raise capital from its shareholders or from third parties to address this insolvency. And this order is Exhibit R-0038.

Now, Granahorrar or, rather, its shareholders failed to comply with that Capitalization Order and inject the requisite capital. Fogafín was, therefore, forced the next day, October 3, 1998, to issue what we have referred to as the Value Reduction Order. That order, which is Exhibit R-0042, directed Granahorrar to reduce the nominal value of its shares to 1 Colombian cent. Fogafín then did what its shareholders had failed to do. It capitalized Granahorrar in order to save it.

Now, these two measures, the Capitalization Order and the Value Reduction Order, is what we have referred to as the 1998 Regulatory Measures, and it is what gave rise to the present dispute.

I will come back to this point when I discuss Colombia's jurisdictional objections ratione temporis, but

[Page 116]

I will give you a few examples of what Claimants have said in respect of the 1998 Regulatory Measures.

In the very first page of their Notice of and Request for Arbitration, Claimants said that this case--"This case is about the inordinate abuse of regulatory sovereignty." Regulatory sovereignty. By referring to regulatory sovereignty, Claimants, of course, are referring to the 1998 measures issued by the Central Bank and Fogafín in 1998.

In their Memorial, at Paragraph 5, the Claimants say that: "The value of Claimants' investment was reduced based upon a discriminatory, irregular, extreme and excessive and unprecedented treatment on the part of"--this is important--"the Central Bank of Colombia, the Fondo de Garantía de Instituciones Financieras, and the Superintendency of Banking."

Also, in their Memorial, at Page 12--it doesn't have a paragraph number, but it is Page 12--Claimants said that: "In a nutshell, Colombia's financial regulatory authorities unlawfully expropriated Claimants' investment in that jurisdiction."

Again, Claimants made it clear that their case is about the 1998 Regulatory Measures. Six years later, in 2005, BBVA purchased Granahorrar from Fogafín. And shortly after that, in 2006, Granahorrar was dissolved and

[Page 117]

merged into BBVA. As a result, at that time, Granahorrar ceased to exist as a separate legal entity, and Granahorrar shares also ceased to exist.

In July 2000, Claimants and their mother, through their Colombian holding companies, filed a lawsuit in a Colombian court against the Colombian financial regulatory authorities for their adoption of the 1998 Regulatory Measures seeking monetary compensation for the very same regulatory measures that had saved Granahorrar.

That lawsuit you find at R-0050, Exhibit R-0050.

Now, the First Instance Court in that lawsuit issued a judgment in 2005. This is Exhibit R-0051. That ruling rejected the Claimants' claims and upheld the 1998 Regulatory Measures on the merits. Claimants then appealed that ruling to the Council of State, which is the highest judicial body on administrative matters in Colombia.

That appeal yielded the 2007 Council of State Judgment, which is Exhibit R-0054, which reversed the 2005 Administrative Tribunal Judgment. In response to the 2007 Council of State Judgment, the Colombian regulatory agencies filed what's known as a Tutela Petition. Under Colombian law, a tutela enables a petitioner to seek judicial recourse for violations of fundamental rights, and it was in that context that the Constitutional Court

[Page 118]

reviewed the 2007 Council of State Judgment. And, through a decision issued in 2011, the Constitutional Court reversed the 2007 Council of State Judgment, and that is another key measure challenged by the Claimants and that is found in Exhibit C-0023, the 2011 Constitutional Court Judgment.

And, for instance, in Notice of and Request for Arbitration, Paragraph 220, Claimants said that: "Colombia engaged in judicial expropriation because the outcome of the Constitutional Court's Opinion"--referring to Exhibit 23, so the 2011 Judgment--"was to deprive in its entirety the U.S. Shareholder of their property."

Claimants added that the 2011 Constitutional Court's Judgment "is the typical"--I'm sorry--"is the type of judicial action that treaty-based investor-State Arbitration Tribunals have identified as an actionable taking of property in violation of public international law."

So, Claimants have invoked the TPA as the basis for this Tribunal's jurisdiction, but the TPA, as the Tribunal knows, entered into force in May 2012, after the regulatory measures and after the 2011 Constitutional Court's Judgment was issued. What that means, as I will explain in some detail in the ratione temporis objection,

[Page 119]

is that Claimants cannot claim that either the 1998 Regulatory Measures or the 2011 Constitutional Court Judgment constitute breaches of the TPA.

The 2011 Constitutional Court Judgment was final. Nonetheless, in an attempt to fabricate jurisdiction, Claimants submitted to the Constitutional Court an extraordinary nullification request which was rejected by the Constitutional Court through the 2014 Confirmatory Order. I will also return to this point on the finality of the Constitutional Court's Judgment, given what we have heard from Claimants.

You will note from the timeline on your screen that this 2014 Confirmatory Order is the only measure that Claimants can point to that occurred after the TPA entered into force. But the 2014 Order did not alter or affect the preexisting and final 2011 Judgment in any way, and it does not establish jurisdiction, as I will explain later in my presentation.

Having failed to obtain damages for the 1998 Regulatory Measures in the Colombian judicial system, Claimants decided to try their luck on the international stage. So, in 2012, Claimants and their mother filed a petition before the Inter-American Commission on Human Rights challenging the 1998 Regulatory Measures and the 2011 Constitutional Court Judgment. They later updated

[Page 120]

that petition to include claims concerning the 2014 Confirmatory Order.

A few years later, in January 2018, Claimants then opened a third front by filing a Request for Arbitration at the PCA asserting claims under the U.S.-Colombia TPA. On that very same day, their mother commenced yet another proceeding by filing at ICSID a Request for Arbitration, and that ICSID Case is practically identical to the present Arbitration.

In fact, there is an almost complete overlap between these various proceedings. The claims in the Inter-American proceeding are based upon the very same facts and measures that are at issue in this Arbitration, which are the very same facts and measures that are at issue in the parallel PCA--ICSID Arbitration and which, with the sole exception of the 2014 Order, the very same facts and measures that were at issue in the Colombian litigation.

This means that, after having their claims heard exhaustively up and down the Colombian judicial system, Claimants and their mother are attempting not two, but actually three, bites at the proverbial apple at the international level.

With that, I conclude my very brief summary of the relevant facts, and I will now turn to Colombia's

[Page 121]

1 first objection concerning this Tribunal's lack of

2 jurisdiction ratione materiae.

3 Colombia's objection ratione temporis is based,

4 on the one hand, on the fundamental principle of

5 nonretroactivity of treaties under customary international

6 law and Article 10.1.3 of the TPA, and, on the other hand,

7 on the three-year Limitation Period under Article 10.18.1

8 of the TPA.

9 Now, the straightforward application of these

10 provisions means that Claimants' claims, in their entirety

11 and without exception, lie outside the jurisdiction of

12 this Tribunal. And this conclusion is manifest.

13 Claimants have admitted that their claims are based on the

14 facts that predate the entry into force of the TPA. This

15 is not a case of Respondent attempting to recast the

16 manner in which Claimants have presented their case, as we

17 heard incorrectly from Claimants' counsel earlier today.

18 They have also admitted that the dispute arose

19 more than a decade before the TPA entered into force.

20 Now, these submissions are found not only in Claimants'

21 written submissions in this Arbitration, but also in their

22 petition before the Inter-American Commission on Human

23 Rights which is part of the record in this Arbitration.

24 Another submission by Claimants is that their

25 claim lies outside the three-year Limitation Period under

[Page 122]

1 the TPA. This is an admission from Claimant, and knowing

2 that, they have tried to circumvent that Limitation Period

3 by invoking an MFN Clause to import a more favorable

4 condition of consent in the form of a longer Limitation

5 Period. But that, too, fails because they manifestly

6 failed to meet the longer Limitation Period under that

7 other Treaty that they tried to import, impermissibly,

8 through the MFN Clause.

9 I will discuss the above in my presentation,

10 which I will divide in two parts. First, I will address

11 the application of the nonretroactivity principle; and,

12 second, I will address the application of the Limitation

13 Period both under the TPA and under the provision that

14 Claimant tries to import from the Switzerland-Colombia

15 BIT.

16 As we have explained in our written submissions,

17 the application of the nonretroactivity principle in this

18 case means that this Tribunal lacks jurisdiction ratione

19 temporis for two reasons. First, Claimants' Claims are

20 based on acts that took place before the TPA entered into

21 force, and second, the present dispute arose before such

22 entry into force.

23 As this Tribunal knows, the customary principle

24 of nonretroactivity is codified in Article 28 of the

25 Vienna Convention on the Law of Treaties and Article 13 of

[Page 123]

1 the Articles of State Responsibility. The TPA is subject

2 to that principle. Colombia and the United States wanted

3 to make sure that investors understood that the TPA would

4 not constitute an exception to this fundamental principle

5 of treaty law.

6 For that reason, they included Article 10.1.3,

7 which you have on your screen, and which states that, for

8 greater certainty, Chapter 10 of the TPA does not bind any

9 party in relation to any act or fact that took place or

10 any situation that ceased to exist before the date of

11 entry into force of this agreement.

12 The TPA, as I said, entered into force on 15

13 May 2012, therefore in accordance with this principle of

14 customary international law, which is enshrined also in

15 Article 10.1.3, and measures not capable of breaching the

16 TPA if it occurred before that date, before 15 May 2012.

17 You will recall that in my belief introduction, I

18 cited examples from Claimants' submissions where they

19 unequivocally challenge the 1998 Regulatory Measures and

20 the 2011 Constitutional Court's Judgment, and there are

21 many other examples in addition to the ones that I cited.

22 For instance, in Paragraph 437 of their Memorial,

23 Claimants say: "The regulatory treatment imposed by the

24 Republic of Colombia on Claimants are discriminatory and

25 in breach of the provisions under Article 12.2 of the

[Page 124]

1 TPA."

2 Again, I emphasize the reference to "regulatory

3 measure," which can only refer to the 1998 Regulatory

4 Measures, not the 2014 Confirmatory Order, which is not a

5 regulatory measure. It is, rather, a judicial decision.

6 Similar admissions are made in respect of the

7 2011 Constitutional Court Judgment. For example, in

8 Paragraph 45 of their Memorial, Claimants say that: "The

9 Constitutional Court's Opinion"--referring to the 2011

10 Judgment --"represents an emblematic denial of justice."

11 And there is Paragraph 97 of the Memorial, which

12 you have on screen, where Claimants state that it is

13 inviting the Tribunal to determine whether the 2011

14 Constitutional Court's Opinion is so extreme in its

15 alleged manifest deficits as to warrant the conclusion

16 that actions were undertaken to the detriment of the

17 Claimants, inviting the Tribunal to pass judgment on the

18 legality of the 2011 Constitutional Court's Opinion under

19 international law.

20 Even Claimants' damages case confirms that their

21 claims are directed at pre-Treaty conduct. Claimants'

22 Damages Expert admits in the very first page of his Report

23 that was hired to quantify "damages incurred by the

24 Claimants as a result of the Colombian Government's

25 actions through its agencies (Central Bank, Fogafín, and

[Page 125]

1 Superintendency of Banking) to expropriate Granahorrar,

2 resulting in loss of value of Claimants' interests in

3 Granahorrar." So, they base their damages case, the

4 alleged loss that they suffered, on the regulatory

5 measures that were adopted years before the entry into

6 force of the Treaty.

7 But Claimants now attempt to recast their case

8 when they were confronted with these objections. Even

9 today during their Opening Presentation, we saw that

10 Claimants were willing to keep changing their case at

11 every turn, providing Colombia a moving target.

12 We were witness to the lamentable spectacle of

13 Claimants making new, unfounded, and, frankly,

14 irresponsible arguments about corruption and fraud. There

15 is no evidence on the record to support that argument.

16 None whatsoever. In fact, Claimants did not argue in any

17 of their submissions that there had been corruption and

18 fraud in relation to the judicial Decisions at issue in

19 this case. But that did not prevent Claimants from making

20 those unsubstantiated and reckless arguments today. And

21 Colombia hereby raises a formal objection and reserves all

22 of its rights in relation to those inappropriate

23 statements by Claimants.

24 Returning to the issue of jurisdiction that is

25 before the Tribunal, after Colombia pointed out that the

[Page 126]

1 principle of nonretroactivity in Article 10.1.3 preclude

2 claims against the 1998 Regulatory Measures and the 2011

3 Judgment, Claimants quickly changed tack. In their Reply,

4 Claimants argued instead that all their claims are based

5 upon the 2014 Confirmatory Order, which is Exhibit R-0049.

6 But even that last-minute move on the part of the

7 Claimants does not bring their case within the temporal

8 scope of the TPA because, pursuant to the principle of

9 nonretroactivity, claims based on acts or facts that are

10 rooted in pre-treaty conduct fall outside of a Tribunal's

11 jurisdiction. This has been repeatedly affirmed by

12 investment Tribunals including Corona v. Dominican

13 Republic, Spence v. Costa Rica, EuroGas v. Slovak

14 Republic, and others. All of these Authorities are on the

15 recorded.

16 In its non-disputing party submission, the United

17 States confirmed the legal rule that there is no liability

18 under the TPA for claims based on alleged breaches that

19 are rooted in pre-treaty conduct. In determining whether

20 an act is sufficiently patched from pre-treaty conduct,

21 Tribunals have considered the status quo that existed

22 before the Treaty came into force and asked whether that

23 status quo changed as a result of the post-treaty conduct.

24 Tribunals including Spence v. Costa Rica have also

25 analyzed whether a post-treaty act is independently

[Page 127]

1 actionable.

2 The fact is that Claimants' claims, now on the

3 basis of the 2014 Order, are deeply rooted in pre-treaty

4 conduct. And specifically, as Colombia has shown and will

5 reiterate, that 2014 Order did not alter the status quo

6 that existed prior to the entry of the TPA and is not

7 independently actionable.

8 So, starting with the status quo analysis, it may

9 be helpful to recall the findings of the Tribunal in

10 Corona, which Claimants' counsel referred to in his

11 presentation. In that case the State denied the

12 Claimant's application for a mining license before the

13 critical date on the Treaty. After such critical date,

14 the Claimants requested reconsideration of the license

15 denial. The Claimants then filed for arbitration, arguing

16 that the Tribunal had jurisdiction ratione temporis

17 because the Reconsideration Request post-dated the

18 critical date. The Tribunal in Corona observed that the

19 Reconsideration Request filed by the Claimant after the

20 critical date--and I quote from Paragraph 2.11, which you

21 have on the screen--"only aimed at having the same

22 administration review its own Decision." Accordingly, in

23 the view of that Tribunal, the Respondent's post-critical

24 date conduct was "nothing but an implicit confirmation of

25 its previous Decision."

[Page 128]

1 Now, the same is true of the 2014 Order,

2 Mr. President, Members of the Tribunal. You will recall

3 that through that Order, the Constitutional Court rejected

4 Claimants' extraordinary nullification request and thus

5 left unaltered the existing 2011 Judgment.

6 Now, Claimants argue, and we heard this again

7 today, that the 2011 Judgment was somehow not final and

8 binding. Simply put, that is wrong as a matter of

9 Colombian law. That 2011 Judgment was final when it was

10 issued. It was not subject to appeal or other recourse.

11 I would like to direct your attention to the

12 screen, where you have Article 241 of the Colombian

13 Constitution. It quotes the Judgment: "The judgments by

14 the Constitutional Court are final." There is no way

15 around this. Article 49 of Decree 2067 of 1991 also

16 provides that "there are no appeals for Constitutional

17 Court Judgments."

18 Now, Colombian law allows a litigant to request

19 the nullification of a final judgment of the

20 Constitutional Court. However, such exceptional

21 nullification is not an appeal and does not reopen the

22 debate. This has been explicitly stated by the

23 Constitutional Court in numerous judgments, including

24 judgments cited by Claimants' Legal Expert Ms. Briceño in

25 her Second Report. For example, the court has noted in a

[Page 129]

1 decision cited by Ms. Briceño that a nullification

2 petition "does not mean that there is an appeal against

3 the Constitutional Court's Decision, nor does it become a

4 new opportunity to reopen the debate or examine disputes

5 that have already been concluded." This is Exhibit

6 R-0254.

7 The fact that the Constitutional Court's

8 Decisions are final, not subject to appeal or other

9 recourse, and that the nullification request that led to

10 the 2014 Order does not reopen the matters already decided

11 by the Court was confirmed by Dr. Ibáñez, now a sitting

12 judge of the Constitutional Court, in his two Expert

13 Reports before this Tribunal. And on the screen you will

14 find cites from and quotations from Dr. Ibáñez's Report,

15 which in the interest of time I will not read.

16 Despite what Claimants now tell you, in their

17 proceeding before the Inter-American Commission on Human

18 Rights, they have admitted that the 2011 Judgment was

19 final. But even assuming for the sake of argument that

20 the 2011 Judgment was not final--and here I stress that

21 any serious Colombian lawyer will tell you that it is

22 final--the fact remains that the 2014 Order rejected the

23 nullification petition, which means that the status quo

24 remained the same before and after the entry into force of

25 the TPA. I have made this point several times, but it

[Page 130]

1 bears repeating because it is critical.

2 In addition to not altering the pre-treaty status

3 quo, the 2014 Order is not independently actionable.

4 Mr. President, may I suggest a very brief break,

5 perhaps a four-minute break, Mr. President, if we may?

6 PRESIDENT BEECHEY: You may. Shall we have a

7 break? That's fine.

8 MR. GRANÉ: Please. It will only be a few

9 minutes.

10 PRESIDENT BEECHEY: Yes, of course. Okay.

11 MR. GRANÉ: Thank you very much.

12 PRESIDENT BEECHEY: Yes. Of course.

13 (Pause.)

14 PRESIDENT BEECHEY: Sorry, Mr. Grané. We kept

15 you a moment longer than we thought. You've raised a

16 point we thought we better discuss a bit further.

17 Anyway, over to you now. The floor is yours.

18 MR. GRANÉ: Thank you very much, Mr. President.

19 Thank you for your indulgence.

20 PRESIDENT BEECHEY: Not at all.

21 MR. GRANÉ: I was saying before the break that

22 the 2014 Order did not alter in any way the 2011

23 Constitutional Court Judgment. It refused to nullify that

24 Judgment and, therefore, it stood as it had been issued.

25 In addition to not altering the pre-treaty status

[Page 131]

1 quo, that 2014 Order is not independently actionable. And

2 here, first I will refer to the Tribunal in Spence, that

3 considered whether a post-treaty breach are independently

4 actionable "separable"--and here I'm quoting what the

5 Spence Tribunal said--"separable from the pre-treaty entry

6 into force conduct in which they are deeply rooted." This

7 is in Spence Interim Award Paragraph 246. In the words of

8 that Tribunal, the post-treaty conduct must "constitute an

9 actionable breach in its own right such that the alleged

10 breach can be evaluated on the merits without requiring a

11 finding going to the lawfulness of pre-treaty conduct."

12 This is Spence Interim Award Paragraph 237(b).

13 That Tribunal cautioned that merely identifying a

14 post-treaty act and characterizing that act as the source

15 of liability, as Claimants do in this case, is not

16 sufficient. Instead, the Tribunal explained that "it will

17 be necessary to assess whether the Claim that is alleged

18 can be sufficiently detached from pre-entry into force

19 acts and facts." "Sufficiently detached." The ST-AD and

20 other Tribunals cited by Colombia have conducted a similar

21 analysis. And in its submission, the United States agreed

22 with this legal analysis.

23 Here, Claimants' Claims about the 2014 Order are

24 not independently actionable. To the contrary, the

25 adjudication of Claimants' Claims would require an

[Page 132]

1 evaluation and finding on the lawfulness of pre-treaty

2 conduct. Claimants' own submissions confirm this. As I

3 already demonstrated, Claimants' pleadings are replete

4 with complaints about how the 1998 Regulatory Measures

5 expropriated, allegedly, their investments, about how the

6 financial authorities treated them badly, and about how

7 the 2011 Judgment got it wrong, according to Claimants,

8 when it ratified that conduct. And equally telling is

9 what you will not find in Claimants' submissions.

10 Claimant had listed at least 16 different reasons why the

11 2011 Judgment allegedly violated the TPA, but have not

12 been able to list a single reason why the 2014 Order

13 itself, standing alone, violated the TPA.

14 That means that Claimants are asking you to

15 evaluate the substance of the 2011 Judgment, which will

16 require evaluating the lawfulness of the 2007 Judgment of

17 the Council of State, which will in turn require

18 evaluating the lawfulness of the 1998 Regulatory Measures.

19 Mr. President, Members of the Tribunal, this is

20 not a slippery slope. This is an open invitation, to use

21 the word of Claimant in Paragraph 97 of the Memorial, to

22 evaluate pre-treaty conduct.

23 In conclusion, Claimants' Claims based on the

24 2014 Order are outside the Tribunal's jurisdiction because

25 they are rooted, and deeply so, in pre-treaty conduct.

[Page 133]

1 Now, the Tribunal also lacks jurisdiction ratione

2 temporis because the present dispute arose prior to the

3 entry into the force of the TPA. Again, consistent with

4 the customary international law principle of

5 nonretroactivity, a treaty will not apply retroactively

6 unless the treaty expressly provides otherwise. And the

7 TPA in this case does not expressly provide for its

8 retroactive application. Quite the opposite, as we've

9 seen based on Article 10.1.3.

10 Now, Claimants, despite this, argue that the TPA

11 does apply to disputes that arose prior to its entry into

12 force. They hang that argument on the fact that the TPA

13 does not include a provision expressly excluding

14 pre-treaty disputes. But Claimants are wrong on the law

15 again. Previous Tribunals have noted that, even in the

16 absence of such an express exclusion, treaties do not

17 apply to pre-treaty disputes. For example, the MCI

18 Tribunal held that "the silence of the text of the BIT

19 with respect to its scope in relation to disputes prior to

20 its entry into force does not alter the effects of the

21 principle of nonretroactivity of treaties." This is Legal

22 Authority RL-8, Paragraph 61.

23 Now, confronted with this, Claimants have relied

24 on inapposite case law. For instance, they cite the

25 Chevron Interim Award, but the Treaty at issue in Chevron

[Page 134]

1 contained a unique clause that, as pointed out by the

2 Tribunal in that case, "makes an exception to the

3 principle of nonretroactivity in accordance to Article 28

4 of the Vienna Convention." This is Chevron Interim Award

5 Paragraph 265.

6 Now, in applying the principle of

7 nonretroactivity, one must then define and identify the

8 dispute to determine whether it arose before or after the

9 Treaty. In Mavrommatis Advisory Opinion, the Permanent

10 Court of International Justice articulated the now-widely

11 recognized definition of "a dispute," and according to

12 that definition, a dispute is "a disagreement on a point

13 of law or fact; a conflict of legal views or of interest

14 between two persons." That definition has been used by

15 the ICJ in its judgments and its advisory opinions, and

16 investment Tribunals likewise have adopted that

17 definition. Even Claimants previously acknowledged this

18 to be "the classic definition of a dispute."

19 Unaware of this, Claimants are now trying to

20 portray the 2014 Order as if it were the source of a new

21 dispute. It is not. At best, at best, the 2014 Order is

22 the continuation of a dispute that arose at the latest in

23 July 2000, which is when they filed suit in Colombian

24 courts against those Regulatory Measures in 1998. And

25 recall that the 2014 Order merely refused to nullify the

[Page 135]

1 2011 Constitutional Court Order--I'm sorry, the

2 Constitutional Court Judgment issued by the TPA--I'm

3 sorry, issued before the TPA entered into force.

4 International tribunals including Lucchetti,

5 RLA-0020, have noted that acts or facts that take place

6 after a dispute has arisen may confirm or prolong the same

7 dispute. Such acts or facts, however, do not trigger a

8 new dispute. If it were otherwise, any and every Claimant

9 could fabricate jurisdiction by eliciting a new State

10 measure, pointing to that measure, declare that a new

11 dispute has arisen, and thus, circumvent the temporal

12 limitations under international law.

13 As we have demonstrated, the present dispute

14 arose before the TPA entered into force on 15 May 2012,

15 and the 2014 Order did not give rise to a new dispute,

16 despite what Claimants would have you believe after they

17 were confronted with the limitations ratione temporis

18 under claims.

19 In fact, the dispute arose more than a decade

20 before the entry into force of the TPA. To be precise, as

21 I've said, on 28 July 2000, when Claimants through their

22 holding companies filed suit in Colombia challenging the

23 lawfulness of the 1998 Regulatory Measures, and through

24 that suit, Claimants articulated their opposition to

25 Claimants' regulatory actions.

[Page 136]

1 What has followed since then are a series of

2 judicial Decisions related to the same dispute, indeed,

3 Claimants do not and cannot deny that the 2014 Order is

4 ultimately tethered and anchored to their legal challenge

5 of the 1998 Regulatory Measures.

6 Claimants' written submissions make this clear;

7 even after the 2014 Order, they continued to point to the

8 1998 Regulatory Measures and the 2011 Constitutional Court

9 Judgment as the source of the dispute. In their

10 supplementary petition to the Inter-American Commission of

11 Human Rights dated 20 July 2016--so, after the 2014

12 Order--Claimants stated that the facts that constitute the

13 alleged violation of their rights "took place starting in

14 1998." We find this in R-0119, Page 11.

15 That and other submissions by Claimants are

16 replete with the admission that the dispute arose in 1998

17 and was, to use Claimants' word, "reanimated." That's a

18 word that they use in their filings before the

19 Inter-American Commission on Human Rights.

20 It was reanimated by the 2011 Constitutional

21 Court Judgment, not that it arose. It was reanimated. We

22 have added slides that provide a free translation of some

23 of those submissions by Claimants. Now, in the interest

24 of time, I will not stop to read the examples of the long

25 list of admissions, but in these slides, you will find

[Page 137]

1 some of the references to those submissions which are on

2 the record.

3 Now, we can just scroll through those slides with

4 those admissions.

5 In sum, the dispute arose before the entry into

6 force of the TPA, and is, therefore, outside of the

7 Tribunal's jurisdiction. And you see on the screen many,

8 but certainly not all, of the admissions by Claimants in

9 their submissions to the Inter-American Commission of

10 Human Rights.

11 I will now turn to the third and final reason why

12 this Tribunal--and we say this with respect, of

13 course--lacks jurisdiction ratione temporis.

14 Claimants--and that reason is that Claimants did not

15 comply with the three-year Limitation Period under the

16 TPA, and there are three parts to this objection.

17 First, the TPA limitations period applies to and

18 bars Claimants' Claims.

19 Second, Claimants cannot circumvent that

20 limitations period by invoking Chapter 12 MFN Clause.

21 And, third, even if Claimants could circumvent

22 the conditions of consent under the TPA using the

23 Chapter 12 MFN Clause, which, again, they cannot,

24 Claimants did not comply with the five-year Limitations

25 Period that they invoke from the Switzerland-Colombia BIT.

[Page 138]

1 Let me very quickly try to address those three

2 points. The first issue is the straightforward one.

3 Claimants have submitted their claims under Chapter 12 of

4 the TPA. As my colleague, Ms. Horne, will discuss in

5 greater detail, Chapter 12 expressly incorporates the

6 investor-State arbitration mechanism of Chapter 10, with

7 limitations, which Ms. Horne will address.

8 Chapter 10 sets forth a number of conditions of

9 consent for investor-State arbitration, which apply to

10 Claimants' Claims by virtue of Article 12.1.2(b). And one

11 such condition of consent is the TPA Limitation Period.

12 Let's look at that Limitation Period that I have referred

13 to. And it is Article 10.18.1, which you have on the

14 screen and which, of course, you have read coming into

15 this Hearing.

16 Now, Claimants have submitted their claims on

17 24 January 2018. So, that means, according--or applying

18 the Limitation Period of 10.18.1. That means that if

19 Claimants knew or should have known of the alleged breach

20 and loss before 24 January 2015, that is three years

21 counting back from January 2018, their Claims would be

22 barred under the TPA. So, 24 January 2015 is the cutoff

23 date that results from applying 10.18.1, and taking the

24 date of submission of Claimants' Claims.

25 And as I noted a few minutes ago, Claimant now

[Page 139]

1 argue that their claims arose from the 2014 Order, which

2 was issued precisely on 25 June 2015, which, of course,

3 predates the cutoff date under the TPA limitations period

4 by seven months.

5 PRESIDENT BEECHEY: 2014. You said 2015.

6 MR. GRANÉ: I apologize. Thank you for the

7 correction, Mr. President.

8 24 January 2015.

9 PRESIDENT BEECHEY: 25 January 2014, and

10 24 January 2015.

11 MR. GRANÉ: Yes. Thank you, Mr. President.

12 Now, that alone is reason enough to dismiss this

13 entire case. This is a very straightforward issue that is

14 before the Tribunal based on undisputed facts.

15 So, recognizing that they have not satisfied this

16 condition of consent under the TPA, Claimants' only option

17 is to try to get around the TPA limitations period, and to

18 try to do that, they invoke the Chapter 12 MFN Clause and

19 attempt to import a longer, five-year Limitation Period

20 from the Colombia-Switzerland BIT. But two fundamental

21 problems.

22 First, Claimants cannot rely on the Chapter 12

23 MFN Clause in this way. As a preliminary matter that

24 clause is excluded from the application of the

25 investor-State arbitration mechanism under the TPA, as

[Page 140]

1 confirmed by the United States in its non-disputing party

2 submission. And, again, this will be further explained by

3 my colleague, Ms. Horne.

4 But, in any event, the proper interpretation of

5 the Chapter 12 MFN Clause, in according with the

6 Vienna--in accordance with the Vienna Convention, and as

7 confirmed by the leading case law, is that such clause

8 cannot be used to circumvent conditions of consent under

9 the TPA. The Parties are in agreement that Chapter 12,

10 which you now have on your screen, does not explicitly

11 authorize a Claimant to import dispute resolution

12 provisions from other treaties.

13 In its written submission, Claimants cited

14 multiple Tribunals that have expressly rejected the

15 interpretation of the word "treatment" in an MFN Clause as

16 permitting the importation of the dispute resolution

17 clauses from other treaties, absent express language to

18 that effect.

19 And, indeed, there is a long line of

20 jurisprudence including the majority of recent Decisions

21 on the subject holding that the MFN Clause cannot be used

22 to import conditions of consent, unless the text of the

23 clause "clearly and unambiguously provides for such

24 application." And you find this, for instance, in the

[Page 141]

1 Legal Authority submitted by Claimants, CLA-0093¹ in the

2 Award in that case.

3 That is Berschader, Paragraph 206.

4 The ordinary meaning of the Chapter 12 MFN Clause

5 does not allow, let alone clearly and unambiguously, for

6 the importation of more favorable conditions of consent to

7 arbitration.

8 Now, Claimants argue that the use of the word

9 "treatment" means that the MFN Clause can be used to

10 import conditions of consent, and we heard Claimants'

11 counsel spend some time on the interpretation of

12 "treatment." But despite their surprising denial this

13 afternoon, Claimants do rely for this proposition on

14 Maffezini, as does their Expert, Professor Mistelis--I'm

15 sorry, Mistelis. But Claimants have failed to engage with

16 the critical distinction between Maffezini and its line of

17 cases and the present dispute.

18 Colombia has addressed those distinctions, as I

19 explained why Maffezini and the line of cases its progeny

20 should not apply--cannot apply to this case given the MFN

21 Clause that we have.

22 Most of those cases, Maffezini line of cases,

¹ Here, and where applicable in the remainder of the transcripts, the document number has been corrected to reflect the document to which the speaker was referring.

[Page 142]

1 allowed for the importation of more favorable conditions

2 of consent based on treaty language that is broader than

3 that in Chapter 12 MFN Clause.

4 All of the post-Maffezini line of cases cited by

5 Claimants involve a Claimants' attempt to circumvent an

6 18-month litigation clause, which is different in nature,

7 and must be distinguished from the limitations period that

8 Claimant is attempting to circumvent in this case. And a

9 number of Tribunals have criticized that the Tribunal, of

10 course, is aware the reasoning and effects of the

11 Maffezini Decision and of its progeny, thus, Claimants

12 attempt to distance themselves from Maffezini this

13 afternoon despite what they have said in their written

14 submissions.

15 And, in addition, the Maffezini Tribunal itself

16 notes that does not apply to all treaties. An analysis of

17 the context of Chapter 12, likewise leads to the

18 conclusion that such clause cannot be used to circumvent

19 Colombia's and the United States' condition of consent.

20 And specifically, at Footnote to the MFN Clause

21 contained in Chapter 12, clarifies what the Parties meant

22 by "treatment" in the context of that MFN Clause. That

23 footnote explicitly states, for greater certainty,

24 treatment does not encompass dispute resolution mechanism

25 such as those in Section B of Chapter 10.

[Page 143]

1 Now, recall that the only manner in which

2 Claimants can bring claims under Chapter 12 is by relying

3 on the investor-State dispute mechanism that is in

4 Section B of Chapter 10 and is imported into Chapter 12.

5 But it is imported with the limitations of consent that

6 the Parties expressed in Chapter 12 to the conditions of

7 consent.

8 But even if Claimants could circumvent the

9 conditions of consent under the TPA, using the Chapter 12

10 MFN Clause, which they cannot, we insist, Claimants do not

11 even comply with the five-year Limitation Period in that

12 Colombia-Switzerland BIT that they now invoke.

13 Now, the Tribunal will note and you have this on

14 your screen, that Article 11(5) of the

15 Colombia-Switzerland BIT precludes the submission of a

16 dispute to arbitration if Claimants obtained knowledge, or

17 should have obtained knowledge of the events giving rise

18 to the dispute, more than five years before they submitted

19 their claims to arbitration. The dispute being what will

20 determine the Application, the trigger, and the potential

21 violation of that Limitation Period.

22 Now, recall that Claimants filed their Claims on

23 24 January 2018. That means that, in order to comply with

24 the five-year Limitation Period under the

25 Switzerland-Colombia BIT, Claimants must not have obtained

[Page 144]

1 knowledge of the events giving rise to the dispute before

2 24 January 2013.

3 But as discussed earlier, and applying the

4 established definition of a "dispute," the present dispute

5 arose in July 2000, at the latest. That is when, again--I

6 repeated this, but it bears stressing. That is when

7 Claimants filed suit in Colombian court challenging the

8 1998 regulatory measures. That is some 13 years before

9 the cutoff date under the five-year Limitation Period

10 under the Colombia-Switzerland BIT.

11 The Claimants knew of the events giving rise to

12 their dispute well before the five-year Limitation Period

13 under the Switzerland-Colombia BIT. It is also evident

14 again from Claimants' written submissions in the present

15 arbitration as well as in their submissions to the

16 Inter-American Commission of Human Rights.

17 I have already cited some of Claimants'

18 submissions but could continue giving you examples all day

19 long. Now, time does not allow that but I have cited a

20 few more examples in the slides on your screen, and we

21 have provided a free translation of the text from the

22 original Spanish.

23 Again, time will not allow me to stop and read

24 these submissions, but they are in the record in the

25 documents that that are cited in these slides, which the

[Page 145]

1 Tribunal can consult.

2 Now, given those admissions and the established

3 facts, Claimants cannot seriously deny that the dispute

4 arose before the cutoff date under the

5 Colombia-Switzerland BIT. Their attempt to latch onto the

6 2014 Order and present it as giving rights to a new

7 dispute is desperate and unavailing.

8 As I stated, temporal limitations cannot be

9 circumvented by pointing to the latest development in a

10 series of related acts as other Tribunals have warned.

11 The Tribunals in Corona, EuroGas, and Grand River, and

12 others that we have cited have rejected such attempts by

13 Claimants to evade limitations periods by basing their

14 claims on the most recent alleged transgression in a

15 series of acts.

16 Now, it is evident and has been confirmed by

17 Claimants that this entire case is about Colombia's

18 regulatory conduct in the late 1990s and the lawsuit that

19 followed commencing in July 2000. Again, 13 years before

20 the cutoff date under the Colombia-Switzerland BIT.

21 The conclusion, therefore, is that Claimants have

22 not complied even with the longer Limitation Period that

23 they tried to import using--impermissibly, the MFN Clause.

24 And for the reason that I had summarized and which

25 Colombia expounded in its written submissions, and we

[Page 146]

1 respectfully refer the Tribunal to those submissions, of

2 course. Claimants' case in its entirely should be

3 dismissed for lack of jurisdiction ratione temporis.

4 And unless the Tribunal has any questions,

5 Mr. President, may I invite Ms. Horne to present

6 Colombia's ratione voluntatis but, perhaps,

7 Mr. President--of course, we are in our hands. This may

8 be a good opportunity to take the 45-minute break.

9 PRESIDENT BEECHEY: Yes. I think that would be a

10 good opportunity. Thank you, Mr. Grané.

11 One thing I would ask is this: Subject to

12 sorting out whatever remaining wrinkles there may be to be

13 sorted out, it would be very helpful if the Tribunal might

14 be provided with the presentation that you've been using

15 and, indeed, before that, Claimant was using.

16 MR. GRANÉ: We will do so immediately,

17 Mr. President.

18 PRESIDENT BEECHEY: Thank you very much indeed.

19 All right. We will start again at quarter past the hour,

20 if we might. Thank you very much.

21 MR. GRANÉ: Thank you.

22 (Whereupon, at 1:30 p.m., (EST) the Hearing was

23 adjourned until 2:15 p.m., (EST) the same day.)

24 PRESIDENT BEECHEY: I see the leaders of both

25 teams on the screen.

[Page 147]

1 Is there anybody else we need to wait for, or can

2 we proceed now to invite Ms. Horne to make her

3 presentation?

4 MR. GRANÉ: From Respondent's side we can

5 proceed. Mr. President, I misspoke in my presentation

6 when I said that Ms. Astrida Benita Carrizosa, the mother

7 of Claimants in this case, was born in the United States.

8 She was not born in the United States. I believe she was

9 born in Lativa (phonetic). So, apologies for that mistake

10 on my part.

11 And, lastly, Mr. President, we have re-sent the

12 presentation, so you should have that in your inbox. That

13 is all that we have to say before Ms. Horne takes the

14 floor with the--your permission, Mr. President.

15 PRESIDENT BEECHEY: Thank you. Well, I can

16 confirm that the presentations have arrived, and,

17 Mr. Martínez-Fraga, we'll have a final edition when we get

18 the Claimants' presentation in due course?

19 MR. MARTÍNEZ-FRAGA: Absolutely. It is supposed

20 to be there.

21 PRESIDENT BEECHEY: Okay. That's very good.

22 MR. MARTÍNEZ-FRAGA: Thank you, sir.

23 PRESIDENT BEECHEY: I'll keep looking. Don't

24 worry. All right.

25 MR. MARTÍNEZ-FRAGA: I'll follow up on my end.

[Page 148]

1 PRESIDENT BEECHEY: Okay. Very well. Thank you

2 very much.

3 MR. MARTÍNEZ-FRAGA: Yes, sir.

4 PRESIDENT BEECHEY: Ms. Horne, over to you.

5 MS. HORNE: Thank you very much, Mr. President

6 and Members of the Tribunal. On behalf of all of my

7 colleagues in this time zone, I'd like to thank you for

8 the opportunity to take a lunch break even though it's in

9 your evening. We will endeavor to use our remaining time

10 very efficiently.

11 And I will begin by addressing the subject of

12 this Tribunal's jurisdiction ratione voluntatis. This

13 objection revolves around the fundamental principle of

14 consent. As affirmed by the ICJ a State's consent to the

15 jurisdiction of an international court of tribunal must be

16 "an unequivocal indication of the desire of that State to

17 accept jurisdiction in a voluntary and indisputable

18 manner." That quote is shown on the slide on the next

19 screen.

20 In this case, Claimants have been unable to

21 demonstrate such unequivocal consent. In fact, all of

22 Claimants' Claims fall outside of the jurisdiction ratione

23 voluntatis of this Tribunal. This is so for four reasons.

24 First, the Tribunal does not have jurisdiction

25 over Claimants' fair and equitable treatment Claim because

[Page 149]

1 Chapter 12 of the TPA does not include or incorporate an

2 FET obligation.

3 Second, the Tribunal does not have jurisdiction

4 over Claimants' FET or national treatment Claims because

5 Colombia did not consent to arbitrate such Claims under

6 Chapter 12.

7 Third, Claimants cannot use the MFN Clause to

8 submit their FET or national treatment Claims and, fourth,

9 in any event, none of Claimants' Claims can proceed

10 because Claimants have not satisfied several conditions of

11 consent under the TPA.

12 But before I proceed with these points, I wish to

13 make a brief aside. While our arguments about the

14 application of the TPA are quite straightforward, the

15 Tribunal is aware by now that the TPA is drafted in such a

16 way as to have many cross-references and to denote

17 Articles with numbers like 12.1.2(b). I, therefore, ask

18 the Tribunal's patience as I go through these recitations.

19 I'll begin with the subject of Claimants' FET

20 Claim. Claimants have repeatedly stated that they are

21 financial services investors submitting their Claims under

22 Chapter 12. Claimants have also made clear that they are

23 submitting an FET Claim. Yet there can be no dispute that

24 Chapter 12 does not include an FET obligation.

25 Faced with this reality, Claimants now argue that

[Page 150]

1 they can import an FET obligation from Chapter 10. It is

2 true that Chapter 12 does incorporate certain substantive

3 provisions from Chapter 10. Specifically,

4 Article 12.1.2(a), which is shown on your screen, sets

5 forth a list of provisions that are incorporated from

6 other chapters. The FET obligation of Chapter 10, which

7 is Article 10.5, is not on this list. It is not imported

8 from Chapter 10.

9 Now, earlier today in their Opening Presentation,

10 Claimants asserted that it's okay that there is not an FET

11 obligation in Chapter 12 because they can simply submit an

12 FET Claim using the expropriation clause. This is

13 nonsensical. This Treaty has an FET obligation and an

14 expropriation provision in Chapter 10. Those are

15 different provisions with different obligations.

16 Claimants cannot ignore the fact that Chapter 12

17 does not have an FET obligation. Or, simply decide

18 unilaterally that they can submit an FET claim under an

19 expropriation clause. If they want to submit a claim

20 under the expropriation obligation, they must demonstrate

21 that there has, in fact, been an expropriation.

22 For that reason, Chapter 12 does not include or

23 incorporate an FET obligation. Colombia, therefore,

24 cannot be held liable for such a breach under Chapter 12

25 and Claimants' FET obligation falls outside of the

[Page 151]

1 jurisdiction of this Tribunal.

2 The second part of Colombia's objection concerns

3 both the FET and national treatment Claims. Now, as this

4 relates to the FET Claim, it's an argument in the

5 alternative because I've just described that there is no

6 FET obligation for Claimants to invoke. Claimants are

7 submitting their FET and national treatment Claims under

8 Chapter 12. Chapter 12 does not have an investor-State

9 arbitration mechanism of its own.

10 Instead, Article 12.1.2(b) incorporates the

11 investor-State arbitration provision from Chapter 10 into

12 Chapter 12. Claimants believe that Article 12.1.2(b)

13 gives them license to submit to arbitration any and every

14 kind of claim that they can contrive under Chapter 12.

15 But an interpretation of Article 12.1.2(b) shown on your

16 screen in accordance with customary principles of Treaty

17 interpretation demonstrate that Claimants are wrong.

18 The reality is that Article 12.1.2(b) expressly

19 limits the set of claims that a financial services

20 investor can submit to arbitration.

21 Let's begin with the ordinary meaning of the

22 Treaty's terms. The text of Article 12.1.2(b) states that

23 the investor-State arbitration provisions of Chapter 10

24 are "hereby incorporated into and made a part of this

25 Chapter solely for claims that a Party has breached," the

[Page 152]

1 four listed obligations.

2 The word "solely" circumscribes the types of

3 claims that can be submitted to arbitration. The meaning

4 of this provision is unequivocal. Only those four listed

5 claims can be submitted to arbitration under Chapter 12.

6 A claimant cannot submit to arbitration under Chapter 12,

7 under any other obligations, whether those obligations are

8 contained in Chapter 10 or in Chapter 12.

9 This is shown on your screen. Here, Claimants

10 have purported to submit a variety of Claims, including

11 FET, national treatment, and MFN Claims. But those

12 privileges are not included in Article 12.1.2(b)'s

13 exhaustive list, and there is no consent to arbitrate such

14 Claims.

15 Importantly, the only other State Party to this

16 Bilateral Agreement, the United States, fully agrees with

17 this ordinary meaning interpretation. In its

18 Non-Disputing Party submission, the United States affirmed

19 that "by using the word 'solely' the Parties expressly

20 identified the only obligations found in Chapter 10 that

21 they were willing to arbitrate under Chapter 12." The

22 U.S. continued: "Nor did the Parties consent to arbitrate

23 investor's Claims based on any of the substantive

24 obligations contained in Chapter 12."

25 The ordinary meaning of Article 12.1.2(b) is,

[Page 153]

1 thus, clear.

2 Now, for their part, Claimants avoided

3 interpreting the TPA, instead insisting on interpreting

4 the analogous provision in NAFTA.

5 However, Claimants' interpretation of even that

6 provision is incorrect. Like the TPA, NAFTA has one

7 chapter, Chapter 11, governing investments, and an

8 entirely separate chapter, Chapter 14, governing financial

9 services. NAFTA Article 1401 regulates the scope and

10 coverage of the financial services chapter, just like TPA

11 Article 12.1.

12 And just like TPA Article 12.1.2(b), NAFTA

13 Article 1401(2), which is shown on your screen, serves to

14 incorporate the investor-State arbitration mechanism from

15 NAFTA's investment chapter into the financial services

16 chapter. As you will see from the text on your screen, it

17 incorporates the arbitration mechanism "solely for

18 breaches" of a listed set of Articles.

19 Just as with the TPA, all of the States Parties

20 to NAFTA agree that Article 1401(2) sets forth an

21 exhaustive list of claims that a financial services

22 investor can submit to arbitration.

23 México and Canada had an opportunity to address

24 the issue of interpretation in the Fireman's

25 Fund v. México arbitration. Claimants believe that this

[Page 154]

1 case is inapposite, but the description of this case given

2 by Claimants earlier today is inaccurate. We respectfully

3 refer the Tribunal to the actual Decision on the record as

4 RLA-0112.

5 In that case, México, as respondent, objected

6 that the Claimant could not submit certain claims,

7 including a minimum standard of treatment claim under the

8 financial services chapter of NAFTA. As a part of its

9 preliminary Decision, the Tribunal, therefore, had to

10 determine whether the Claimants were submitting their

11 claims under the financial services chapter or under the

12 investment chapter.

13 In their Witness submissions, both México and

14 Canada agreed that the list of claims in Article 1401(2)

15 that could be submitted to arbitration under the financial

16 services chapter was exhaustive. The Minimum Standard of

17 Treatment and national treatment claims that the Claimant

18 had tried to submit were not on that list.

19 In the present proceeding, the United States has

20 expressed its own agreement with that interpretation,

21 which means that all three NAFTA Parties are in complete

22 agreement about the proper interpretation of

23 Article 1401(2).

24 The Fireman's Fund Tribunal itself also agreed

25 with this ordinary meaning interpretation. It dismissed,

[Page 155]

1 for lack of jurisdiction, the Claimants' major standard

2 treatment and national treatment claims, holding that such

3 claims could not be submitted to arbitration under the

4 financial services chapter.

5 The ordinary meaning of the plain text of the TPA

6 demands the same result in this case. With the plain

7 meaning of Article 12.1.2(b) clear and confirmed by the

8 jurisprudence, I'll turn to the next step of the VCLT

9 analysis. That's the context of Article 12.1.2(b). This

10 includes the surrounding provisions of the Treaty. The

11 chapeau of Article 12.1.2 is relevant in this regard.

12 That Article is shown on your screen, and it

13 clarifies that the provisions of Chapters 10 and 11 apply

14 "only to the extent that such chapters or articles of such

15 chapters are incorporated into this chapter."

16 This is a clear limitation.

17 The context of Article 12.1.2(b) also includes

18 TPA Article 12.18. This provides a dispute settlement

19 mechanism for disputes arising under the financial

20 services chapter. This is the State-to-State dispute

21 settlement mechanism.

22 Now, this part of the context directly refutes

23 one of Claimants' arguments. Claimants argue that the

24 Chapter 12 obligations would be unenforceable if

25 Article 12.1.2(b) were to be read in the way that the

[Page 156]

1 Treaty Parties have indicated. But the Chapter 12

2 obligations are subject to State-to-State dispute

3 settlement and, therefore, are enforceable.

4 Now, this morning, Claimants asked why the Treaty

5 would do this and how this structure could possibly make

6 sense. There's a very simple answer. As I just noted,

7 the Fireman's Fund Tribunal is the only Tribunal to have

8 interpreted the analogous provision of NAFTA. It

9 considered the scope of consent to arbitration, and it

10 also considered that very question of why the NAFTA Treaty

11 Parties had structured the Treaty in this way.

12 It stated: "The regulations concerning financial

13 services were not the same in all three countries, but

14 each of the States Parties was clear, the challenges to

15 such regulations or interpretations of the regulations and

16 the relevant Authorities should not be committed to

17 investor-State arbitration under NAFTA.

18 On the other hand, investment and financial

19 institutions across borders was to be encouraged, and

20 investors were to be protected through the NAFTA from

21 expropriation and measures tantamount to expropriation."

22 So, the NAFTA Parties were faced with a delicate balance.

23 The Fireman's Fund Tribunal continued. "The

24 solution arrived at in the NAFTA was to include a separate

25 Chapter 14 on financial services. The expropriation

[Page 157]

1 provisions of the NAFTA as set out in Chapter 11,

2 including the provisions for investor-State arbitration,

3 were made maybe to claims under Chapter 14. But Claims

4 based on other provisions designed to protect cross-border

5 investors and investments, including provisions for

6 national treatment and Most Favored Nation Treatment, are

7 excluded from the competence of an Arbitral Tribunal in a

8 case involving investment in financial institutions."

9 Chapter 14 contains no counterpart to

10 Article 1105 concerning Minimum Standard of Treatment.

11 In other words, the NAFTA Treaty Parties made a

12 deliberate choice, given the realities on the ground in

13 the three countries, to refer all of the substantive

14 protections of the financial services chapter to

15 State-to-State arbitration only. The TPA Parties then

16 adopted this same structure.

17 Moving now to the next primary means of

18 interpretation, Article 31(3)(a) and (b) of the VCLT

19 dictate that any subsequent agreement or a practice

20 between the Treaty Parties must be taken into account.

21 Here, as I've already indicated, Colombia and the United

22 States are in complete agreement that Article 12.1.2(b)

23 was intended to list the only set of claims that could be

24 submitted to arbitration under Chapter 12. This agreed

25 interpretation is authoritative.

[Page 158]

1 In sum, an interpretation under Article 31 of the

2 VCLT yields a clear and straightforward result.

3 Article 12.1.2(b) identifies the exhaustive set of claims

4 that States have consented to arbitrate. That set of

5 claims does not include FET or national treatment claims,

6 and the Tribunal accordingly does not have jurisdiction

7 over Claimants' FET and national treatment Claims.

8 Now, Claimants have insisted that this Tribunal

9 must resort to supplementary means of interpretation,

10 including the negotiating history.

11 Here, such supplementary means are not necessary.

12 But, in any event, Claimants have not submitted a single

13 qualifying element of the travaux of the TPA or of the

14 NAFTA. As stated in Colombia's written submissions, the

15 travaux of a treaty must reflect the Parties' joint

16 understanding. This stands to basic reason.

17 A party cannot submit as definitive evidence of

18 the interpretation of a treaty its own internal documents

19 and sources, otherwise a State Party could always

20 unilaterally propose a self-serving interpretation. Here,

21 Claimants rely on the personal recollections of Mr. Olin

22 Wethington and the testimony of U.S. officials before U.S.

23 Congress as supplementary means of interpreting NAFTA.

24 Simply put, these are not travaux. The

25 statements of U.S. officials before U.S. Congress cannot

[Page 159]

1 be said to reflect the drafting intent of Colombia, and

2 certainly one man's personal recollections do not have

3 interpretive weight under the VCLT. But, in any event,

4 even if this evidence had any weight, the evidence does

5 not somehow save Claimants' interpretation.

6 With respect to the congressional testimony, we

7 invite the Tribunal to review the documents. Nowhere does

8 a U.S. official say that a financial services investor can

9 submit to arbitration any claim under Chapter 12. The

10 U.S. officials did confirm that, first, financial services

11 investors can submit claims of expropriation to

12 arbitration and, second, that the State's Parties will be

13 able to enforce the other obligations of Chapter 12, using

14 the State-to-State dispute settlement mechanism.

15 In any event, the testimony of Mr. Wethington has

16 also been directly rebutted, including by Colombia, a

17 Treaty Party, and his own former employer, the United

18 States Government.

19 Here are the facts. Although Mr. Wethington

20 purports to declare the official drafting intent of the

21 United States, Mr. Wethington does not speak for the

22 United States. And, in any event, there is no

23 contemporaneous evidence to support Mr. Wethington's

24 sweeping claims about what the negotiators intended.

25 Mr. Wethington's Report, thus, does not reflect

[Page 160]

1 the drafting intentions or understanding of the United

2 States, let alone the drafting intent of all of the

3 Parties to either the NAFTA or the TPA.

4 I will now briefly address Claimants' attempt to

5 circumvent the limitations that we just discussed by

6 invoking the Chapter 12 MFN Clause. Claimants attempt to

7 use the Chapter 12 MFN Clause in two ways. First, they

8 attempt to incorporate into Chapter 12 an FET obligation,

9 and, second, they attempt to use the MFN Clause to create

10 consent to arbitrate their FET and national treatment

11 claims.

12 At the outset, I'll reiterate what I demonstrated

13 earlier. Article 12.1.2(b) does not include MFN claims

14 within its scope of consent, and for that reason Claimants

15 cannot invoke and the Tribunal has no jurisdiction to

16 apply the Chapter 12 MFN Clause. But I will further show

17 that, even if the Tribunal could apply this clause,

18 Claimants' purported uses are not permissible.

19 First, as I explained earlier, there is no FET

20 obligation in Chapter 12. Claimants seek to import an FET

21 obligation from the Colombia-Switzerland BIT, or they did

22 so in their papers. But an MFN Clause cannot be used to

23 import into a Treaty an obligation that does not exist in

24 the underlying Treaty. This is well-established in

25 arbitral case law.

[Page 161]

Claimants also seek to use the Chapter 12 MFN Clause to create consent to arbitrate their FET and national treatment Claims. Unlike the applicable Treaty in the present case, the Colombia-Switzerland BIT that they seek to use, does not limit consent to a certain set of claims. So, Claimants argue that if the TPA does limit consent, they will turn to a treaty that doesn't.

There's an insurmountable obstacle to this argument. An MFN Clause cannot be used to create consent to arbitration where no consent exists in the underlying Treaty. This is consistent with the findings of multiple investment Tribunals who were applying Dispute Resolution Clauses that limited consent to a certain set of claims, and when Claimants tried to expand that list using an MFN Clause, these Tribunals rejected that attempt.

In the interest of time, I will not read all of the quotes, but they are included on the Tribunal's slides for your future reference. This is the Telenor v. Hungary Case, as well as the Austrian Airlines case. I would also refer the Tribunal to the Al1Y v. Czech Republic case.

Allowing the Claimants to use the MFN Clause to create consent to arbitrate their FET and national treatment Claims would subvert the clear intention of the ΤΡΑ State's Parties to limit the scope of consent. For that reason, the attempt to use the MFN Clause in this way should be rejected.

[Page 162]

The fourth and final aspect of Colombia's objection concerns certain conditions of consent. I'll address these only briefly now, again, in the interest of time, but we rely on our written submissions for our complete argument.

As already discussed, Article 12.1.2(b) incorporates from Chapter 10 into Chapter 12 the investor-State arbitration mechanism. This means that the conditions of consent contained in Chapter 12 apply to Claimants' Claims under Chapter 12. If those conditions of consent are not satisfied, a Tribunal will not have jurisdiction. Here, three conditions have not been satisfied.

First, Claimants have not satisfied the Notice of Intent requirement. That is set forth in Article 10.16.2 on your screens.

Earlier today, Claimants asserted that this objection was not justiciable. We're not sure why Colombia's indication of a clear Treaty requirement would somehow not be justiciable. But this is, in fact, a mandatory requirement, as shown by the plain language of Article 10.16.2, which states what a Claimant shall do in order to comply with the TΡΑ.

Here, the TPA State's Parties are in complete

[Page 163]

agreement. You will see a part of the United States' submission excerpted on your screen.

There's no dispute as to the facts. Claimant did not submit a Notice of Intent. They failed to comply with this jurisdictional requirement, and, therefore, their Claims must be dismissed for lack of jurisdiction.

The second condition of consent that Claimants has failed to satisfy is the consultation and negotiation requirement. This is Article 10.15, which is shown on your screen. While Claimants allege that this requirement is not mandatory, a number of Tribunals have held that similar requirements are, including Murphy, Salini, and Enron.

Moreover, the Spanish version of the TPA, which the TPA defines as "equally authentic," uses the word "deben," which means "must."

As to the facts, earlier today Claimants asserted that they did, in fact, offer to consult with Colombia. They referred to a couple of documents that did not have exhibit numbers. The first of those documents is a letter dated the same day as the Request for Arbitration. Needless to say, it's not an offer to consult in advance of submitting the request if it's the letter attaching the request for arbitration itself.

Claimants also pointed to an email after that time from Colombia. We have confirmed, Mr. President,

[Page 164]

that this email is not on the record in this case, and, therefore, should not have been submitted.

But we did want to address this specious accusation that Colombian officials called the offer to negotiate "trash." We respectfully submit that counsel for Claimants should consider carefully the appropriate translation. In Colombia, the word "bodeque" means "draft." You can find this in a Spanish dictionary, which we would be happy to submit.

Ultimately speaking, Claimants did not comply with the obligation to consult or negotiate. The third and final requirement that Claimants failed to satisfy is the waiver requirement. This is in Article 10.18.2(b), which is shown on your screens and requires an investor to waive any right to initiate or continue proceedings with respect to a measure alleged to constitute a breach of the ΤΡΑ.

The United States noted that this is a precondition to the Parties' consent. The two ΤΡΑ Parties also agree as to the nature of this requirement. It requires on the one hand that there be a clear, explicit and written waiver and, on the other hand, a material aspect of the requirement is that Claimants actually comply with that waiver.

Here, they did not submit a written waiver, so

[Page 165]

the first element of the requirement has not been satisfied, and the analysis could end here. But Claimants have also failed to satisfy the material requirement because they are pursuing a proceeding that falls within the scope of the waiver requirement.

This analysis is shown on your screen, referring to the Inter-American Commission proceeding. It's an ongoing proceeding initiated by Claimants before a dispute settlement procedure in which they complain about the same measures that they complain about before this Tribunal.

So, for the four reasons I have discussed, the Tribunal lacks jurisdiction ratione voluntatis over all of Claimants' Claims.

Mr. President, unless the Tribunal has any questions for me at this time, I'll yield the floor to my colleague Mr. Di Rosa.

I believe you're on mute, Mr. President.

PRESIDENT BEECHEY: One day I will master this particular technology.

Professor Ferrari, Mr. Söderlund, any questions.

ARBITRATOR SÖDERLUND: I'm fine. Thank you.

PRESIDENT BEECHEY: Thank you. All right. In that case, thank you very much, indeed, and I gather we hear now from Mr. Di Rosa.

MS. HORNE: That's correct, but to that end,

[Page 166]

Mr. President, may we briefly request a brief five-minute technical break? We are in a conference room that requires us to switch speakers and laptops.

PRESIDENT BEECHEY: Yes, of course. No, that's understood. Yes, we will all stay here, but that's fine.

MS. HORNE: Thank you very much.

PRESIDENT BEECHEY: Thank you.

(Pause.)

PRESIDENT BEECHEY: Good afternoon, Mr. Di Rosa.

MR. DI ROSA: Good evening to you, Mr. President.

PRESIDENT BEECHEY: Are you ready to start?

MR. DI ROSA: I am, Mr. President, but I did want to, before I start, to ask you a timing question.

PRESIDENT BEECHEY: Yes.

MR. DI ROSA: You had indicated that the Tribunal was keen on ending at 8:30 your time, and by our count, that is about 35 minutes from now.

PRESIDENT BEECHEY: Yes.

MR. DI ROSA: We have an hour and one minute according to our tabulation of time left. So, my question to you and to the Tribunal Members is, do you wish for me to address the ratione personae objection today and then the ratione materiae objection tomorrow, or should we push through? They are about half an hour each, and we expect to have more time tomorrow overall.

[Page 167]

PRESIDENT BEECHEY: Mr. Di Rosa, forgive me, I will--I'm going to defer to those who are keeping the clock because we were, as I recollect, about seven minutes behind at one point. We lost a certain amount of time earlier on, which I thought we'd caught up more or less, by truncating the longer break. How much time do you believe you had so far?

MR. DI ROSA: We understand that we have one hour and one minute left, Mr. President.

PRESIDENT BEECHEY: José, can you help us, please?

SECRETARY ARAGÓN CARDIEL: Yes. I'm gathering the numbers. My current count--it might be incorrect--is that the Claimant has been speaking for 1 hour and 31 minutes, which means that--

PRESIDENT BEECHEY: Yeah, so just a shade under an hour left. All right. Well, may I deal with it this way, Mr. Di Rosa? Without wishing to put you under undue pressure, we were--our late stop was 8:45 p.m., which is 50 minutes' time. Is that going to help you?

MR. DI ROSA: 50 minutes. Yes, I can try to do that, Mr. President, if you prefer to push through and finish today. We can certainly do that.

PRESIDENT BEECHEY: I think we would, because we have already got to interpolate the submission of the

[Page 168]

United States tomorrow morning, which we are going to do, without wishing to cut across the time for the Witnesses.

MR. DI ROSA: All right. Thank you, Mr. President. We will start then--

(Discussion off the record.)

MR. DI ROSA: We will start, then, with the ratione personae objection first. And we begin, of course, with the relevant Treaty provision, which is Article 12.20 of the ΤΡΑ. And the relevant passage is bolded on the screen. It says: "A natural person who is a dual citizen shall be deemed to be exclusively a citizen of the State of his or her dominant and effective nationality."

This is in Chapter 12 and Article 10.28 of the ΤΡΑ as an almost identical clause.

Unfortunately, the TPA does not provide any guidance on how to interpret this concept of the "dominant and effective nationality." And, therefore, Article 10.22 becomes relevant, and that's the Article that was quoted today by the Claimants, and it says that the Tribunal shall decide "in accordance with this Agreement and applicable rules of international law."

We agree with the Claimants that the applicable rules of international law are of mandatory application, and we agree that those rules include relevant rules of

[Page 169]

customary international law. We are not sure quite why the Claimants understood Colombia to be disagreeing with those fairly elemental propositions. In fact, our sense is that the Claimants have been contorting way more than they needed to on many of these ratione personae issues, because we actually agree on quite a few points that they strain to prove. I will identify those points later in the presentation.

In any event, there are two observations we wish to make about this clause on the screen.

The first is that the determination does need to be made as of two critical dates, and that's by virtue of the TPA itself as well as the jurisprudence and doctrine. We will come back to this as well.

And secondly, I wish to focus on the word "exclusively." That term means that, ultimately, what the Tribunal must decide based on all the relevant factors is whether, if you have to pick only one, it makes more sense to deem the Claimants to have been exclusively Colombian or exclusively American on the critical dates.

To try to facilitate the Tribunal's task, we have devised a decision tree that we think could be useful heuristically, and, you know, we think it is accurate, but Claimants are obviously welcome to push back on any aspect of it that they disagree with. But we think that there

[Page 170]

are certain critical determinations that need to be made by the Tribunal first.

On the legal standard, what does "dominant and effective" mean? How should that determination be made? In other words, what factors are relevant, what factors are irrelevant? By reference to what dates must this determination be made? This is the critical dates that I referred to. And there are certain factual determinations: What are the critical dates in this particular case? What does each relevant factor suggest about the Claimants' dominant and effective nationality on the critical dates? And then finally, the ultimate determination is: What was the Claimants' dominant and effective nationality on the critical dates?

So, we turn now to this concept of the dominant and effective nationality. There are two words there, "dominant" and "effective." There are two prongs of the standard which, we submit, are separate and conceptually different. "Dominant" refers to which of the two nationalities is preponderant or prevalent at a given time. It's a comparative analysis between the two relevant nationalities. And effectiveness refers to the genuineness or bona fide nature of a particular nationality. It's a self-contained exercise, not a comparative exercise.

[Page 171]

There's disagreement between the Parties on this distinction. The Claimants don't appear to agree that there is a significant distinction, but, you know, they do agree on Slide 114 of today's Opening Presentation that it is a two-prong test, and yet in the same sentence on that slide, they said that the effectiveness analysis "can't be severed," and both of those things can't be true. If there are two prongs, then, by definition, they are separate. That's what prongs are.

Now, why do Claimants do this? It is because they are desperate to talk about effectiveness, even though Colombia concedes that their U.S. nationality is effective. So, there is really nothing to talk about on that prong. And why do they do that? Why such a disproportionate, almost bizarre, emphasis on effectiveness, even though it's a point that is not in dispute? Why do they strain so hard to merge the dominance inquiry into the effectiveness inquiry, to blend the two into what they call a "qualitative analysis"?

The reason for this seems fairly evident. It is because they know that they can prove that their U.S. nationality was effective on the critical dates, but not that it was the dominant nationality.

Now, the case law has emphasized that there are two separate concepts. You have the quote from García

[Page 172]

Armas, which is a fairly recent decision, relatively recent. Same with the Ballantines Decision. Both of these essentially made the distinction that I identified in the previous slide.

And, just to understand what these concepts mean, effectiveness ultimately is the first inquiry that needs to be made by a Tribunal. If you have two nationalities, you have to establish that--first, that they are effective, because if they are not effective then they can't be dominant. So, in effect, it's a two-step process. If you decide that the nationality is effective, then you go on to assess if--you know, if you determine that they are both effective, then you assess which one is dominant. If one of them is not effective, then, by definition, the other one that is effective is the dominant one. So, really, this term should have been effectiveness--"effective and dominant nationality," really, rather than the other way around. But there we are.

Now, part of the reason that there is some confusion sometimes with these concepts and, you know, how they should be interpreted is because many of the factors that are used to assess each of them are similar, and in some cases identical. And, in fact, the case that's considered the seminal dual nationality case, which is the

[Page 173]

ICJ's Nottebohm Decision, was actually not a dual nationality case at all. It was exclusively an effectiveness case. But, even though the Court did not undertake in that case a dominance analysis, it did articulate certain factors that, over time, came to be used for both the effectiveness and the dominance analyses.

So, the Nottebohm Case--next slide, please.

Oh, sorry. Yes. The Nottebohm Case is ultimately the case that permeates all of the international law of nationality. The legal standard that was articulated by the ICJ in that case is the relevant standard that's applied in all cases governed by international law and should be the case as well here.

In that case, while the Court did identify several factors that you see on the first quote on the screen there, it did stress that no single factor is determinative and that all relevant factors have to be considered. In other words, it's a case-by-case, fact-specific inquiry. And following Nottebohm, the jurisprudence on dual nationality was then developed by the various Mixed Claims Commissions, such as the Italy-U.S. Claims Commission that yielded the Mergé Decision and various investment Tribunals.

And of the investment Tribunal decisions, the

[Page 174]

most instructive one in our submission is the Ballantines v. Dominican Republic Decision, for two reasons: First, because it interpreted a substantively identical clause in Article 10.28 of the DR-CAFTA Treaty, and, secondly, because the Ballantines Decision is relatively recent. It is from September of 2019.

In many of the cases that the Claimants dwell on heavily, including in their presentation today--for example, Micula, Olguín v. Paraguay, even the facts in the Nottebohm Case itself--these are not as relevant because they were exclusively effective--effectiveness cases. They were not cases that dealt with the comparative analysis required to determine the dominance prong.

The more relevant cases for the Tribunal's purposes, we suggest, are those that deal directly with dual nationality, which are the Mergé Case that I mentioned, the Iran-U.S. Claims Tribunal Cases, and the Ballantines Decision, primarily.

The Claimants today articulated a number of guiding legal principles that we disagree with, for the most part, not all of them, but given the limitation that we have on time, I'm inclined to just leave that for the closing, so I'll not address--I was planning to just sort of go through them quickly, but we don't think that there is sufficient time to do it now. So, let's turn instead

[Page 175]

to the next slide.

This is another thing that perplexed us quite a bit. We articulate here four factors, sets of factors, the same ones that we had identified in our pleadings. Claimants accused us of abbreviating the relevant standard, that we came up with an arbitrary list of factors that ignores customary international law, and so forth, and we disagree with all that. The relevant standard articulated by the Nottebohm Case is that all relevant factors need to be considered. The ICJ did not articulate or prescribe a single set of factors that must be applied universally in all cases. Rather, they said, "Well, you have to take the totality of the circumstances and assess the relevant factors, the ones that are relevant in that particular case." And that's what we did. We distilled the factors that seem relevant in this particular case.

Some factors considered by other Tribunals clearly are not relevant. For example, in Ballantines and in other cases like the Iran Claims cases, the circumstances of the naturalization are often deemed especially relevant. But that's not a factor here at all, because there is no naturalization. Claimants are U.S. and Colombian nationals by birth. So, you have to apply the factors that are actually relevant. And the

[Page 176]

Claimants, in fact, are the ones that came up with the more arbitrary of the list, because they have--next slide, please--an 11-item list that they essentially just drew from different cases, sort of like a ransom note. But a lot of these factors are actually irrelevant in this particular case. They might be relevant in other cases.

Now, there is a few that we do agree with. You know, the ones on the left-hand column are the ones that overlap, essentially, with ours or that we agree with, but the majority of them are irrelevant in this case.

How or why dual nationality was obtained; as I said, in some cases naturalization is relevant, and in this case it is not. So, it's completely immaterial how or why the dual nationality was obtained. It happened at birth.

Subjective considerations; this is my favorite. That one they didn't get from anywhere. That one they made up entirely. That is not in any case as far as I know.

Education; it could be relevant if it happened recently. They are emphasizing education that happened 40 years ago or 35 years ago. Irrelevant, in our opinion.

Healthcare; certainly irrelevant, because that is just--you know, people go to wherever they can afford to go to get the best healthcare possible. So, all that says

[Page 177]

is really--it speaks more to their socioeconomic status than their dominant nationality.

And then the final two are also, in our view, irrelevant. Absence of Treaty shopping considerations; that's exclusively an effectiveness-related factor. We have conceded there was no Treaty shopping here. Their U.S. nationality is perfectly legitimate. Irrelevant factor.

Treaty policy considerations; this one they also made up. Treaty policy considerations, they said, well, the whole point of this dual nationality clause in this Treaty is because the Parties wanted to incentivize dual nationals to repatriate capitals, and all this stuff. You know, the purpose ultimately of this clause, as the United States confirmed in its non-disputing party submission, is simply to ensure that States don't get sued by their own nationals. That's a long-standing governing basic principle of international law, that States should not be sued in international fora by their own nationals. And that's the whole point of this clause, and that's the whole point of the word "exclusively" that I had emphasized earlier.

Next slide, please.

Now, there are some things that we agree on, and we'll come back to a longer list of those, but one thing

[Page 178]

the Parties do agree on in every aspect is the whole issue of the critical dates. The critical dates are those--the two that appear on the screen: Date of the alleged Treaty breaches, date of submission of the claim to arbitration. That's agreed by the Parties. We have cites here, not only to the Claimants' own briefs, but to the U.S. submission, and it is also consistent with the Treaty clauses which I might have walked you through otherwise, but, you know, it's--essentially, these two critical dates are compelled by the Treaty itself and by jurisprudence and doctrine. So, that's agreed upon by the Parties.

And the Parties also agree--next slide--on the actual critical dates that apply in this particular case, which are June 25, 2014, which is the date of the sole Treaty violation they are alleging at this point, and, secondly, January 24 of 2018, which was the date on which they filed their Arbitral Claim.

So, those are points that we agree on. And, you know, some of these are already touched upon. I'm not going to walk through all of these because I already referred to them, but these are all points--all the points that appear on this screen are points that the Claimants devoted a lot of ink and a lot of effort to rebutting when we weren't even really challenging them at all.

There are additional points of agreement on the

[Page 179]

next slide, and that's--you know, both of the Claimants' nationalities were effective at all the relevant times; the Parties agree on that. Neither nationality was obtained by fraud; agreed on that. We talked about the critical dates, and we agree that, to establish jurisdiction claim, U.S. nationality needs to be the dominant and effective nationality on the two critical dates in 2014 and 2018. And, finally, the Parties agree that all three Claimants have been residing in Colombia since 2007 at the latest, and some of them--for two of the brothers, it is even longer than that.

All right. Next slide, please.

Sorry. Yes. Points of disagreement.

So, these are the key issues on which the Parties disagree--ultimately, probably the key issues in the case for purposes the ratione personae jurisdiction--which are: Are these two concepts separate concepts or prongs or not? Are they combined in some way? What does that really mean, "dominant and effective"? Does the Tribunal need to analyze effectiveness when that issue is not in dispute? How should--what factors should the Tribunal apply? Which past cases are relevant and how should they be interpreted? And which of the Claimants' two nationalities was the dominant and effective one on the critical dates? So, those are the points of disagreement.

[Page 180]

All right. So, we--turning now to the facts of the case, we think that the evidence shows quite clearly that the dominant and effective nationality of the Claimants on the critical dates was their Colombian one, and this has to do with the fact that they have been residing there for 13 years, at least, and in some cases way longer than that. It was--it has been the center--Colombia has been the center of their economic and professional lives for at least those 13 years. Colombia has been the center of their family, social, civic, personal, and political lives as well, and we will just turn quickly to some of these factors in a little more detail.

Next slide.

So, for example, just to focus on this slide--and I won't dwell on the others as much--but permanent and habitual place of residence is a factor that was mentioned. It is always mentioned as the primary factor; right? Everybody says, well, habitual residence is not the only factor--we all agree on that--but it is a critical factor that everybody focuses on first. And in this case, it is overwhelmingly illustrative of the fact that their nationality, their dominant nationality over the last many, many years has been the Colombian one. They have been residing--and this is what I

[Page 181]

mentioned--2007 uninterruptedly, except for vacations and the like, but, you know, they live there and have lived there since 2007 in the case of Alberto, 2004 in the case of Enrique, and 1994 in the case of Mr. Felipe Carrizosa. So, it's a bundle of years straddling the critical dates that they have been residing in Colombia.

Next.

Same thing applies to the economic and professional lives. They say that they moved to Colombia for purposes of attending to their business. We suggest that that's, you know, not really--if anything, it demonstrates what we are proposing, that it's the center of their professional and economic life, which is one of the factors that has been stressed in the jurisprudence. And, you know, same number of years.

You know, obviously, if somebody has been living in the same place for 13, 20, 25 years, by and large, that will be the center of your life in any every respect. That's why residence is always viewed as an important, if not exclusive or determinant, component.

Next slide.

All right. Same concept with the other aspects of their lives. The families of all three of the Claimants have lived in Colombia for years and years. The children live there and were born there. They were all

[Page 182]

born there. All three of the Claimants were born also in Colombia, but, as we say, what happened 50 years ago is less relevant.

Key social and personal activities of Claimants and their families, key civic and political activities, where they voted, how often they voted, around the critical dates, who they made campaign contributions to in Colombia or in the U.S., these are all relevant factors, and we think they all skew in favor of a conclusion that Colombia is the relevant place of dominant nationality in these respects. And, you know, we had a lot of documentary evidence on these issues in our pleadings, so we--you know, we just put on the screen here a few representative ones, but we--you know, we refer the Tribunal to our pleadings.

Next.

The fourth factor that we have centered on is how the Claimants have held themselves out, how they have self-identified around the critical dates. And there are a set of documents relating to this Inter-American proceeding that we have been talking about on and off today. These are documents that they submitted first in 2012. This is the actual petition. They identified themselves with their national identification number from Colombia. They did not mention that they were U.S.

[Page 183]

nationals at all. Then they did it again--next slide--in 2016. Remember, the first critical date is 2014, so these two submissions straddled the first critical date. Here, once again, they say--this time they actually added, you know, "I'm Colombian" in addition to including their national ID number. And then they did it again on the second critical date, which is in 2018. This is around the--this is the same year as the critical date, the second critical date. And, again, they say they are Colombian and so forth.

And this is quite revealing, we think, because they didn't need to identify themselves as Colombian. It's not like they needed to be Colombian to file this claim. The American Convention of Human Rights says any person can file a claim, so any nationality can file a claim, against any state in the Americas, and at a minimum, they could have said that they were dual nationals, Colombian and U.S., in the same way that they said they were dual nationals in this proceeding; right? The fact that they did not around the critical dates suggests very powerfully that they view themselves as Colombian.

All right. I'm trying to decide on the fly here, Mr. President, what I skip, so bear with me.

All right. So, burden of proof. Let's talk a

[Page 184]

bit briefly about the burden of proof. You know, I think that there is an agreement in the jurisprudence and doctrine that the Claimants do bear the burden of establishing the facts that are necessary to establish jurisdiction, and it is important in this regard, in particular in relation to the ratione personae objection, that the Claimants have not provided any documentation at all suggesting that their dominant nationality on the critical dates was the U.S. nationality.

In fact, in this entire case, the only two pieces of documentary evidence that they have presented relating to the nationality issue are their passport and their birth certificate for each of the three Claimants. That's it. Those are the documents they have presented. And those two documents relate exclusively to the effectiveness prong. They don't at all say anything about the dominant prong.

And we have shown you in the pleadings, and to some extent today, some documentary evidence that suggests that they--their dominant nationality is, in fact, Colombian, and many of the key factual assertions in Claimants' testimony on dominant nationality are affirmatively contradicted by the documentary evidence in the record presented by Colombia. Ultimately, they are relying--for the dominance prong of the test, they are

[Page 185]

relying exclusively on their own self-serving testimonial evidence, but that is insufficient to carry their burden of proof.

For these reasons, we submit that there is no jurisdiction ratione personae and that, therefore, the claims must be dismissed.

All right. Turning quickly to the ratione materiae objection.

Can I get a time update, please, in terms of--how much?

SECRETARY ARAGÓN CARDIEL: 32 minutes left.

MR. DI ROSA: I thought I had 45 total, something like that.

PRESIDENT BEECHEY: Yeah, you are at right about 25 minutes to go.

MR. DI ROSA: 25?

PRESIDENT BEECHEY: Max.

MR. DI ROSA: Okay. That should suffice, Mr. President.

Okay. So, turning now to the jurisdiction ratione materiae objection, this is the fourth and final objection.

And, Mr. President, I apologize. I know it is very late in the day and everybody is tired. There is only so much I can do to make ratione materiae objections

[Page 186]

exciting, but here we go.

PRESIDENT BEECHEY: I'll leave you to do your best, Mr. Di Rosa.

MR. DI ROSA: All right.

So, the Tribunal's jurisdiction ratione materiae depends on the existence of a "covered investment." This is required by Articles 12.1 and 10.1.1(b) of the TPA. In other words, Claimants need to point to an investment that actually qualifies as such under the TPA and that is otherwise subject to the TPA's protections.

However, to this day and deep into the case as we are, the Claimants are still struggling to identify with clarity the investment that is relevant for ratione materiae purposes, and their position and theories on this issue have changed several times over the course of the case. We will go into a little more detail on each of the theories, but we will start by briefly identifying them. These are the theories they advance in their various pleadings, and then today they came up with a variation. But, you know, they started off in the Request for Arbitration by saying, as you would expect, "Well, you know, the investment is the shares in Granahorrar." Right? They have come back sort of full-circle to that. But that's not what they said in their Memorial. In their Memorial, they changed their theory, and instead

[Page 187]

said that the investment was the 2007 Council of State Judgment, which I will refer to for convenience as "the 2007 Judgment."

In their Reply, then, they advance yet another theory, a third theory, which was that--and this is a quote--"the investment was transformed into different modes at different times." With respect, we don't know what that means. An investment is a clearly defined asset, not a nebulous, shape-shifting, abstract concept.

Today, if I understood them correctly, Claimants came up with yet another variation, which is that they have what they call the beneficial interest or a right to redress that is derived in some fashion from the shares and the 2007 Judgment. In any event, none of these theories succeeds in establishing a covered investment under the TPA.

So, we are going to explore now each of those theories in a little more detail, starting with what appears to be ultimately the thrust of their position. We are not really sure, but the 2007 Council of State Judgment certainly was defined by them in their Memorial to be the critical, and the only, investment for purposes of the ratione materiae analysis. And this is what they said, and I'm quoting here: "For purposes of pleading and/or proof of ratione materiae, the Council of State's

[Page 188]

November 1, 2007 Judgment represents and constitutes Claimants' investment as alleged and demonstrated in this proceeding."

So, they switched. They went from saying, "Well, the shares are the investment" to "the Judgment is an investment." Why do they do that? We don't know, but probably it is because they realized that, if they insist that the shares in Granahorrar are the relevant investment, they would face fatal ratione temporis and ratione materiae objections, and so they transitioned to this theory. And then, ultimately, this theory fails for three different reasons, which we will address now in turn.

The first reason is that the 2007 Judgment is directly excluded from the scope of the TPA by an explicit provision in the Treaty, which is Footnote 15 of Article 10.28, what we've called the judgment exclusion provision, which explicitly excludes court judgments from the Treaty's definition of "investment." And we will see the actual quote in a moment.

Let's just go to the next one.

So, here's the actual quote. It is Footnote 15, and it says: "The term 'investment' does not include an order or judgment entered in a judicial or administrative action."

[Page 189]

And just in case there is any doubt, Mr. President and Members of the Tribunal, we wish to confirm a couple of aspects of this clause that we just quoted. First of all, Article 12.20 of the TPA explicitly incorporates into Chapter 12 the definition of "investment" in Article 10.28. And since the judgment exclusion provision is located in a footnote within Article 10.28, then there is no question that the footnote applies to Chapter 12 arbitrations as well. And, furthermore, Article 23.1 of the TPA explicitly confirms that footnotes are an integral part of the Treaty--that is that quote on the bottom there--and, therefore, the judgment exclusion provision has to be treated as functionally equivalent to a provision in the main text of the TPA. And the U.S. in its non-disputing party submission also confirmed that Footnote 15 applies in this Arbitration.

So, now let's explore briefly, then, the nature of the 2007 Judgment to see if it fits within this exclusion.

The 2007 Judgment was a ruling issued by the Council of State of Colombia, which is the highest judicial branch Tribunal that adjudicates administrative matters in Colombia. The Judgment was issued in response to an appeal by Claimants through their holding companies

[Page 190]

of an unfavorable ruling in a first instance court in a lawsuit that they had started in Colombia challenging the 1998 Regulatory Measures. That 2007 Judgment was subsequently overturned by yet another judicial body, the Constitutional Court, pursuant to the 2011 Constitutional Court Judgment.

So, the 2007 Judgment is, therefore, unquestionably a judgment entered in a judicial action, which is the language from Footnote 15. And Claimants don't challenge that it's a court judgment, and they really couldn't, for obvious reasons. So, for this reason, the 2007 Judgment falls squarely within the scope of the judgment exclusion provision and outside the definition of "investment" under the TPA, and that is fatal to Claimants' case.

Now, what do Claimants have to say about this? They attempt in their Reply to get around the problem by advancing three arguments, all of which fail.

First, they said that there was certain jurisprudence that permitted them to rely on the 2007 Judgment as a covered investment. This argument fails for the simple reason that no amount of jurisprudence can ever override the plain text of a treaty. So, Mondev, Saipem, and whatever else they cited--they cited to those two again today, but any other Legal Authorities that they

[Page 191]

mention are simply irrelevant. The Treaty says what it says. In addition, the Decisions that the Claimants cited involve treaties that did not contain a clause akin to the judgment exclusion provision in the ΤΡΑ. So, they are also not apposite for that reason.

Claimants' second argument is that the judgment exclusion provision only applies to certain types of judgments or orders, which, according to them, do not include the 2007 Judgment. And specifically what they said is, "Well, the judgment exclusion provision only covers the subset of court decisions that count as"--here's what they said--"investments in their own right." And they cite as an example of this a judgment that is rendered in favor of a different party that is then acquired at a discount by an investor. And that argument suffers from only problem: It is entirely inconsistent with the plain text of the judgment exclusion provision, which does not contain any limitation, exception, or qualification whatsoever. The clause applies to all court judgments. So, there is simply no way to reconcile the Claimants' interpretation with the plain language of the Treaty provision. And the Claimants haven't even attempted to offer a citation in support of their interpretation, because there is none.

Claimants' third argument on the

[Page 192]

judgment exclusion provision is that, since it was the 1998 Regulatory Measures that led to the issuance of the 2007 Judgment in the first place, it was Colombia's own alleged misconduct that resulted in the 2007 Judgment, and that Colombia, therefore, should be estopped from invoking the judgment exclusion provision as a defense.

This argument also fails, for at least three different reasons.

First, it would require that the Tribunal make a ruling on the merits at the jurisdictional stage. In essence, Claimants are asking this Tribunal to assume liability for purposes of finding jurisdiction, but that would be putting the cart before the horse. Under the judgment exclusion provision, the issue of whether the 2007 Judgment is covered by the TPA is an issue of consent and jurisdiction, not an issue of liability.

Second, the Tribunal, in any event, cannot pronounce itself on the lawfulness of the 1998 Regulatory Measures because it lacks jurisdiction ratione temporis to do so, as Mr. Grané Labat explained earlier.

And, third, by its terms, the Judgment Exclusion Provision applies directing to the 2007 Judgment, irrespective of the 1998 Regulatory Measures. The only determination that the Tribunal needs to make on this is whether or not the 2007 Judgment constitutes a

[Page 193]

judgment entered in a judicial or administrative action. That's it.

So, the background to the 2007 Judgment, including the 1998 Regulatory Measures, is irrelevant.

All three of these arguments, therefore, fail, and the bottom line is that Claimants cannot get around the insurmountable bar that is posed to their Claims by the Judgment Exclusion Provision of the TPA. And because all of their claims relate to the same alleged investment, that means that all of their Claims must be dismissed for lack of jurisdiction ratione materiae.

Now, we could stop the analysis there on the Judgment Exclusion Provision, but there's two other reasons why that the Claimants argument on this fail as we have seen. But we do want to close this argument with the quotes that appear on the slide because, ultimately, these are the critical ones for purposes of Tribunal's Decision.

It is really this simple. You have the Statement from the Claimants' Memorial. You have the TPA language, and the claims are, therefore, outside the Tribunal's ratione materiae jurisdiction. You really could dismiss the whole case just based on this one slide.

All right. So, the two additional reasons that it's--the Judgment is not a covered investment that I alluded to, the first of these two additional reasons is

[Page 194]

that the 2007 Judgment had already ceased to exist by the time of the critical dates. Under Articles 12.1 and--the next slide, please.

Under Articles 12.1 and 10.1 of the TPA, and Article 28 of the VCLT, as well as Article 13 of the ILC Draft Articles of State of Responsibility, a State must be able--I'm sorry--a Claimant must be able to demonstrate that its investment existed on two critical dates. The first is the date on which the Treaty entered into force and the second is the date of the challenged measure.

In this case, the two critical dates are--for ratione materiae purposes are 15 May 2012, the date of entry into force, and 25 June 2014, which is the date of what Claimants are now identifying as the sole measure they are challenging under the TPA, which the 2014 Confirmatory Order from the Constitutional Court.

By the way, just due to the nature of the inquiry, the critical dates for ratione materiae purposes are different from the critical dates from ratione personae purposes which were 2014 and 2018. These are 2012 and 2014.

So, the 2007 Judgment ceased to exist in 2011 because it got overturned in 2011 and--by this judgment from the Constitutional Court of 26 May 2011. And, as of that point, it no longer exists to the 2007 Judgment.

[Page 195]

And, by definition, Colombia could not have breached the TPA with respect to an investment that had already ceased to exist by the time that Colombia first became bound by the TPA's obligations, which was later.

So, by the time the Treaty entered into force, the 2007 Judgment no longer existed. It's an investment--to the extent it's an investment, as they claim, it would be a nonexistent investment, and it is an empirical impossibility for a measure to harm a nonexistent investment.

In sum, for this reason, too, the 2000 Judgment cannot constitute a covered investment under the TPΑ.

The third reason the 2007 Judgment cannot be a covered investment is for the simple reason that it does not meet a few of the objective elements of the definition of "investment" in Article 10.28 of the TPA. And if we go to this definition, as you see--and this is unusual because in a lot of--not unusual, but, you know, in most investment treaties, you see definitions that are very broad, such as "investment" means every kind of asset. And, then, they just list illustrative examples.

But this one has a limiting clause or two. It says: "Every asset that has the characteristics of an investment, including such characteristics as the

[Page 196]

commitment of capital, the expectation of gain or profit, or the assumption of risk," right. And the 2007 Judgment does not meet this definition because the main formal requirement here is it has to have the characteristics of an investment, and, as a general matter, court rulings do not have the characteristics of an investment.

But even if you were conceptually inclined to accept the notion that a court ruling could in some circumstances constitute an investment, the 2007 Judgment also does not meet the various characteristics that are specifically identified in this clause. For example, the Judgment in itself did not involve any commitment of capital by the Claimants, nor did they assume any risk with it. They may have had an expectation of gain from it at some point while the Judgment was still in force, but that was no longer the case once the Judgment was reversed in 2011, which was, again, before the two critical dates.

So, in sum, for all these three reasons that I just articulated, the 2007 Judgment cannot possibly be considered in and of itself an investment for which the Claimants can seek redress under the ΤΡΑ. There is, therefore, no ratione materiae jurisdiction, and all of the claims must be dismissed.

[Page 197]

Now, given the fact that the Granahorrar shares still seem relevant in light of the Claimants' amalgam theory and given what they said in their Opening today, we want to show to you that the--you know, the Granahorrar shares also would not constitute a covered investment under the TPA for two different reasons, which are summarized on this screen here at the bottom.

The Claimants no longer had any share interest in Granahorrar by the time of the critical dates, and they acquired that interest, the shareholding interest, in violation of Colombian law.

So, the first of those two reasons, we will go into in a little more depth now, did not cover--cannot constitute a covered investment because the shares had already ceased to exist, and that's because the shares no longer were in existence as of 2006.

In 2006, the Granahorrar as a legal entity was dissolved and its assets were absorbed by another financial institution, BBVA. So, you see the sequence here. In 2005, the BBVA had purchased Granahorrar from Fogafín, the State agency, and became Granahorrar's majority Shareholder. But, then, what happened is Granahorrar merged into BBVA and it ceased to exist formally as a legal entity in 2006, and that's at Exhibit R-0300.

[Page 198]

Since Granahorrar became defunct in 2006 that means its shares ceased to exist at that time as well. That was a full six years before the First Critical Date and eight years before the Second Critical Date. So, because the shares no longer existed by the time of both critical dates, they cannot be a covered investment in this case.

The second reason for which the shareholding interest in Granahorrar is not a covered investment is because the Claimants acquired that interest in violation of Colombian law. And you saw that the Claimants argued a lot about this today. They said: "Well, the TPA doesn't have an explicit conformity requirement, and, therefore, the conformity requirement doesn't apply here."

And, you know, we submit that these days the conformity requirement applies irrespective of whether there's an explicitor clause or not. And there are a number of Tribunals that have found that, including the Phoenix v. Czech Republic Tribunal which said what you see on the screen: "This condition is implicit even when it is not expressly stated in the relevant BIT." And there have been other Decisions that have reached the same conclusion, you know, and that's part of the general trend towards battling corruption. And we would submit that this clause applies in the same way that the

[Page 199]

nonretroactivity clause applies, you know, whether you have it expressly written in the Treaty or not.

Anyway. Now, the Claimants also said today: "Well, you know the only types of--you know, even if there were such a requirement in this case, the jurisprudence only contemplates that serious or fundamental breaches of the domestic law qualify." And there have, in fact, been a number of Tribunals that have identified the foreign investment regime rules of a State as fundamental or critical, and those Tribunals include the Saba Fakes, Phoenix Action, Quiborax, Metal-Tech, and Achmea all support that proposition.

Now, Claimants argue that they are entitled to claim under the TPA because they qualify as foreign investors under the TPA, and they also testified in their Witness Statements that they always expected the TPA to protect their investment in the Granahorrar shares. That means that it must be presumed that the purchase of their interest in the Granahorrar shares was made with foreign capital, and the Claimants have not denied in this Arbitration that they used foreign capital to obtain their interests in Granahorrar.

And they stated in their Witness Statements that they first acquired their shares in Granahorrar by 1988. And during that period of time, there was a Foreign

[Page 200]

Capital Investment Framework in force in Colombia that imposed two approval and registration requirements that are relevant here, and they appear on the screen. In the interest of time, I'm not going to identify them in detail.

And the first of these requirements was eliminated in 1991, but the registration requirement at the Central Bank continued beyond 1991 and, therefore, applied throughout the period of the investment.

In the Reply, Claimants argued: "Well, we were precluded from complying with the foreign capital investment framework due to Law 43," which is a law that they say required dual nationals like them to identify as Colombian while they were in Colombia. But this law was promulgated in 1993, several years after their investment in the Granahorrar, so they can't really invoke that legitimately as an argument.

The Central Bank, then, confirmed in a document that was submitted to us that there had not been any foreign investment in either Granahorrar or the Claimants' shareholdings. And the Claimants have not really produced any evidence to try to rebut any of this. So, I think you--you know, you have to accept that they did not comply with these rules, and if they did not comply with them, then other shares were purchased in violation of Colombian

[Page 201]

1 law and, therefore, don't qualify as a qualifying

2 investment.

3 Now, the third theory and the fourth theory from

4 today, if you want to call it a fourth theory, appears to

5 be some sort of amalgam of the first two theories. They

6 appear to be saying that the Granahorrar shares morphed

7 into the 2007 Judgment, and that the--you know, the

8 investment is some sort of hybrid or combination of the

9 two, and what they described today is a beneficial

10 interest that is somehow embodied in the 2007 Judgment.

11 But this theory also--these theories, if they are more

12 than one, are also clearly insufficient for the simple

13 reason that if neither the 2007 Judgment nor the

14 Granahorrar shares qualify individually as a covered

15 investment under the TPA, then there is no combination or

16 amalgam or transformation or metamorphosis of the two that

17 would ever yield a covered investment.

18 In this context, the whole cannot be greater than

19 the sum of the parts. So, for this reason, these

20 additional theories fail as well.

21 With this we reach the end of the discussion of

22 ratione materiae objections.

23 Mr. President, Members of the Tribunal, we

24 believe we have rendered evident in our pleadings and,

25 again, today that the Claimants have failed to carry their

[Page 202]

1 burden of proof on the key threshold matter in this

2 Arbitration at this point, which is to establish facts

3 that are sufficient to establish the existence of

4 jurisdiction by this Tribunal to hear the Claimants'

5 Claims.

6 The Republic of Colombia, therefore, respectfully

7 requests that the Tribunal dismiss the Claims in their

8 entirety for lack of jurisdiction.

9 This completes our presentation, Mr. President

10 and Members of the Tribunal. We thank you for your

11 patience and would be happy to answer any questions you

12 may have.

13 PRESIDENT BEECHEY: Thank you, Mr. Di Rosa.

14 Do my colleagues have any questions?

15 ARBITRATOR SÖDERLUND: No. Thank you.

16 PRESIDENT BEECHEY: Mr. Ferrari.

17 ARBITRATOR FERRARI: No.

18 PRESIDENT BEECHEY: Okay. Thank you very much

19 indeed.

20 My compliments to the Parties for ensuring that

21 we finished pretty well within the time frames that are

22 allocated to themselves. That's most helpful. I can

23 confirm too that we have the soft copies of the

24 presentations. Thank you for that.

25 On that basis, we'll adjourn for today, and we

[Page 203]

1 will start again at 2:00 p.m. GMT tomorrow to hear from

2 the United States.

3 MR. DI ROSA: Mr. Chairman, I really hate to

4 impose on you further, but I do have one final order, if I

5 may, before we close today relating to the

6 cross-examinations tomorrow.

7 PRESIDENT BEECHEY: Yes.

8 MR. DI ROSA: We reviewed the Procedural Order

9 Number 3.

10 PRESIDENT BEECHEY: Yes.

11 MR. DI ROSA: And even though there was some

12 discussion about this at the first procedural--at the

13 relevant procedural session, the prehearing conference, we

14 still had some doubt because discussion was framed in the

15 context of the direct and redirect examinations and not in

16 the context of the cross-examinations. So, we were told

17 and, you know, we see it in the Procedural Order that we

18 have--what it says is, you know, a maximum of an hour 10

19 for each of the Witness examinations tomorrow.

20 PRESIDENT BEECHEY: Yes.

21 MR. DI ROSA: But, you know, earlier in the

22 discussion there was some indication from you,

23 Mr. Chairman, that the idea was to have some flexibility

24 and some examinations might take a little longer than

25 others.

[Page 204]

1 I guess my question is, because the formal

2 Procedural Order provision says in any event there will be

3 these limits, that means that an hour 10 is, in theory,

4 the, you know, absolute cutoff for each individual

5 cross-examination. What I wanted to ask you is whether,

6 you know, we can adapt a little bit to have, if we want to

7 spend an hour 20 minutes with one witness and only an hour

8 with the other, that we have three hours and 30 minutes to

9 play with, so to speak.

10 PRESIDENT BEECHEY: I will ask Mr. Grané if he

11 has any comments on that. If the Parties agree, then

12 clearly we can allow a certain degree of flexibility.

13 I'm looking at the Order as it stands at the

14 moment, and it provides for the split of time and then it

15 says: "Within those overall time allocations the Parties

16 shall in any event observe the limits set out below in

17 respect of each phase of the examination of any fact

18 witness or expert."

19 So, I suppose the question comes down to this:

20 We are being asked, in effect, whether if, for example,

21 one witness is only 30 minutes in cross-examination, that

22 time be carried over to one of the others. That, I think,

23 is what you're saying, isn't it, Mr. Di Rosa?

24 MR. DI ROSA: It is. And the same would apply to

25 the experts, Mr. Chairman.

[Page 205]

1 PRESIDENT BEECHEY: I follow that.

2 ARBITRATOR FERRARI: I wonder if we can go into

3 the breakout room after we hear Claimants' view on this.

4 PRESIDENT BEECHEY: Exactly. I haven't ruled

5 that out by any means. I just want to hear what the

6 Respondent has to say--I beg your pardon--the Claimants

7 have to say.

8 MR. MARTÍNEZ-FRAGA: Thank you, Mr. President,

9 Members of the Tribunal. Our understanding was that they

10 had a fixed and limited amount of time for each witness,

11 and that they had to play by those rules. You know, if

12 they wanted to spend 10 minutes with a witness or hour

13 with the witness that's their prerogative, but you can't,

14 you know, take credit and move around to the other witness

15 and then spend three hours with the witness. That was not

16 contemplated. That is not our understanding of the rule

17 or the spirit of the discussion at the time the Procedural

18 Order issued.

19 MR. DI ROSA: Mr. Chairman, that is fine by us if

20 they are going to live by the same rules with respect to

21 the direct and the redirect. So, you said there is

22 20 minutes maximum for the direct. There is X amount

23 available for the redirect. They can't, then, use their

24 time sort of fungibly.

25 But there was--you know, when we listened, when

[Page 206]

1 we saw the Transcript of the discussion that was held in

2 that Hearing, there was, you know, some sense that there

3 would be some flexibility given that some examination

4 might take longer than others. That was the discussion

5 that caused the confusion for us. We are happy to abide

6 by the one hour 10 limit if the Claimants will do so as

7 well with respect to their allocations under the

8 provisions that govern direct and redirect examinations.

9 MR. MARTÍNEZ-FRAGA: We never suggested

10 otherwise; so, yes, of course, we will live by it.

11 PRESIDENT BEECHEY: I've got to ask my colleagues

12 whether they still want a word before we come back to you.

13 ARBITRATOR FERRARI: I have to say, I think this

14 is--both Mr. Di Rosa and Mr. Martinez are correct. We

15 did, indeed, talk about some flexibility when we talked

16 about this and I think Mr. Di Rosa is correct, but we did

17 also say some flexibility. So, the idea was really not,

18 at least this is what I think we discussed, to be able to

19 bank minutes and use some minutes. So, if it's one hour

20 and 20 minutes, I cannot imagine that we are actually

21 saying, oh, you can't do that. That is not what we

22 thought, and I think the readings that Mr. Di Rosa refers

23 to is exactly what I thought we had agreed, together with

24 the Parties. But the idea was not to be able to bank

25 minutes to be used later.

[Page 207]

1 PRESIDENT BEECHEY: I think what I've got in

2 mind, Mr. Di Rosa, is if, for example, you've got to an

3 hour and 10 minutes and there's a seam of very useful

4 information coming out, you are clearly not going to go on

5 more than another 10 or 15 maybe but we're not going to

6 cut you off with guillotine. But what we are not going to

7 let you do is have five minutes with one witness and then

8 promptly bang the whole section--

9 MR. DI ROSA: No. No. No.

10 PRESIDENT BEECHEY: In fairness to you, I don't

11 think that's what you are suggesting in any way.

12 MR. DI ROSA: It is hard to calibrate these

13 things sometimes--

14 PRESIDENT BEECHEY: Of course. We are going to

15 be strict, but we are not going to apply guillotines just

16 for the sake of doing it. That's never been the

17 intention. And I think it is clear from what you've heard

18 from those on the other side that they are perfectly

19 prepared to play by the same rules. So, if that's good

20 enough for you, that is going to be quite fine--that's

21 fine by us, I think.

22 MR. DI ROSA: It is good enough for me. Thank

23 you, Mr. President.

24 PRESIDENT BEECHEY: Not at all. All right. Very

25 well.

[Page 208]

1 Any other points of order before I let you all

2 go?

3 Thank you very much indeed. In that case, I will

4 join my colleagues, if I may, for a few moments in the

5 breakout room and we'll bid you good day until tomorrow.

6 Thank you.

7 MR. DI ROSA: Thank you.

8 MR. MARTÍNEZ-FRAGA: Thank you.

9 (Whereupon, at 3:58 p.m., (EST) the Hearing was

10 adjourned until 9:00 a.m. (EST) the following day.)

[Page 209]

CERTIFICATE OF REPORTER

I, Dawn K. Larson, 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

Dawn K. Larson