1.  On December 11, 2015, the International Centre for Settlement of Investment Disputes [“ICSID”] received a request for arbitration [the “RfA”] submitted by Lion Mexico Consolidated L.P. [“Lion” or “Claimant”], a company constituted under the laws of Quebec, Canada, against the United Mexican States [“Mexico” or “Respondent”].

2.  The RfA was made pursuant to Arts. 1116, 1120, and 1122 of the North American Free Trade Agreement [“NAFTA”]¹. It included a request for approval of access to the Additional Facility of the Centre.

3.  On December 23, 2015, the Secretary-General registered the RfA and approved access to the Additional Facility pursuant to Art. 4 of the ICSID Additional Facility Rules [“ICSID AF Rules”].

4.  The Tribunal was officially constituted on July 26, 2016, after all the arbitrators accepted their appointments and the proceedings were deemed to have begun.

5.  At the time of this Award, the Tribunal is composed of three following members:

• Mr. Juan Fernández-Armesto
• Chairman — Spanish national
• Appointed by agreement of the Secretary-General on July 20, 2016.
• Armesto & Asociados
• General Pardiñas, 102
• 28006 Madrid, Spain
• Tel.: +34 91 562 16 25
• E-mail: jfa@jfarmesto.com

• Mr. David J.A. Cairns
• Co-Arbitrator — British/New Zealand national
• Appointed by Claimant on March 10, 2016.
• Int-Arb Arbitrators & Mediators
• Ponzano 6C
• Madrid 28003
• Spain
• Tel.: +34 91 423 7200
• E-mail: d.cairns@arbitration.es

• Prof. Laurence Boisson de Chazournes
• Co-Arbitrator — French/Swiss national
• Appointed by Respondent on February 2, 2018.
• University of Geneva, Faculty of Law
• 40, boulevard du Pont-d’Arve
• 1211 Geneva 4 (Switzerland)
• Tel.: +41 (0) 22 379 85 44
• E-mail: Laurence.BoissonDeChazournes@unige.ch

7.  Claimant is Lion Mexico Consolidated L.P., a partnership incorporated and registered under the laws of the Province of Quebec, Canada. Its main place of business and unified domicile for notifications is the following:

• 1717 McKinney Avenue, Suite 1900
• Dallas, Texas 75202
• United States of America²

8.  Claimant is represented in this arbitration by:

• Onay Payne
• Lion Mexico Consolidated L.P.
• 230 Park Avenue, 12th Floor
• New York, NY 10169
• T. 212.883.2507
• Email: Onay.Payne@clarionpartners.com

• Robert J. Kriss
• Mayer Brown LLP
• 71 S. Wacker Drive
• Chicago, Illinois, 60606
• Tel. +1 312 782 0600
• Email: rkriss@mayerbrown.com

• Dany Khayat
• Alejandro López-Ortiz
• José J. Caicedo
• Mayer Brown
• 20, avenue Hoche
• 75008 Paris — France
• Tel. +33.1.53.53.43.43
• Emails: dkhayat@mayerbrown.com
• alopezortiz@mayerbrown.com
• jcaicedo@mayerbrown.com

9.  Respondent is the United Mexican States, a sovereign State.

10.  The Respondent is represented in this arbitration by the following counsel:

• Samantha Atayde Arellano
• Directora General de Consultoría Jurídica de Comercio Internacional
• Email: samantha.atayde@economia.gob.mx

• Leticia Ramírez Aguilar
• Directora General Adjunta de Consultoría Jurídica de Comercio Internacional “B”
• Email: leticia.ramirez@economia.gob.mx

• Cindy Rayo Zapata
• Directora de Consultoría Jurídica de Comercio Internacional
• Email: cindy.rayo@economia.gob.mx

• Geovanni Hernández Salvador
• Director de Consultoría Jurídica de Comercio Internacional
• Email: geovanni.hernandez@economia.gob.mx

• Secretaría de Economía
• Av. Paseo de la Reforma 296, piso 25, Colonia
• Juárez, Delegación Cuauhtémoc, C.P. 06600
• Ciudad de México, México

• Aristeo López Sánchez
• Embajada de México
• 1911 Pennsylvania Ave NW
• Washington D.C. 20006
• Estados Unidos de América
• Email: alopez@naftamexico.net

• J. Cameron Mowatt
• J. Cameron Mowatt, Law Corporation
• Email: cmowatt@isds-law.com

• Stephan Becker
• Pillsbury Winthrop Shaw Pittman
• Email: stephan.becker@pillsburylaw.com

• Alejandro Barragán
• J. Cameron Mowatt, Law Corporation
• Email: abarragan@isds-law.com

11.  Henceforth, Claimant and Respondent will together be referred to as the “Parties”.

12.  On December 11, 2015, Lion submitted to the ICSID a RfA against Mexico pursuant to Art. 36 of the ICSID Convention and on the basis of the NAFTA, between the United States of America, Canada and the United Mexican States, which entered into force on January 1, 1994. On December 23, 2015, the Secretary-General of ICSID registered the RfA and approved access to the Additional Facility pursuant to Art. 4 of the ICSID AF Rules.

13.  The Tribunal was constituted on July 27, 2016, in accordance with Art. 6(3) of the ICSID AF Rules and was originally composed of Juan Fernández-Armesto a national of Spain, President, appointed by the Secretary-General pursuant to agreement of the Parties; David J.A. Cairns, a national of Great Britain and New Zealand, appointed by the Claimant; and Ricardo Ramírez Hernández, a national of Mexico, appointed by the Respondent. The Tribunal was reconstituted on February 6, 2018, with the appointment of Laurence Boisson de Chazournes, following the resignation of Ricardo Ramírez Hernández.

14.  In the course of the proceeding, the Tribunal issued a Decision on the Respondent’s Preliminary Objection under Art. 45(6) of the ICSID AF Rules, dated December 12, 2016, a Decision on the Non-Disputing Party’s Application, dated May 23, 2017, a Decision on Bifurcation, dated May 29, 2017, and a Decision on Jurisdiction, dated July 30, 2018. The full procedural history of this case is described in these decisions.

15.  The Decision on Jurisdiction forms part of this Award and is appended as Annex A. In the Decision on Jurisdiction, the Tribunal dismissed Respondent’s jurisdictional objection and declared that³:

• —  the Mortgages qualify as an investment, and

• —  the Notes do not qualify as an investment.

16.  The procedural details of this proceeding following the Decision on Jurisdiction are summarized below.

17.  In accordance with section 17.1 of Procedural Order No. 1 [“PO 1”], Mexico submitted a document production schedule. Claimant filed its response and final version of the document production schedule containing both Parties’ arguments, agreements and disagreements and requests the Tribunal to decide on the production of documents.

18.  On September 3, 2018, the Tribunal issued Procedural Order No. 6 deciding on Mexico’s request for production of documents.

19.  On September 5, 2018, the updated procedural calendar (Annex A to PO 1) was transmitted to the Parties.

20.  On October 2, 2018, following the Parties’ document production exchanges, the Respondent informed the Tribunal that, in light of the confidential nature of some of the documents, the Claimant requested a Confidentiality Order for the protection of confidential information. The Parties agreed on the content of such order, which they attached with their communication for the Tribunal’s approval and issuance.

21.  On October 11, 2018, the Tribunal issued Procedural Order No. 7 embodying the Parties’ agreement with regards to the treatment of confidential documents.

22.  On October 26, 2018, following an agreed extension, Mexico submitted its Counter-Memorial on the Merits, attaching 33 factual exhibits⁴, 60 legal authorities⁵, one witness statement (Raúl Calva Balderrama), three legal expert reports, prepared by the law firm Sánchez Devanny, Dr. Raúl Plasencia Villanueva and Dr. José Ovalle Favela, and a valuation expert report, prepared by CBRE.

23.  On November 7, 2018, as agreed by the Parties, the Tribunal issued an amended procedural calendar (Annex A to PO 1).

24.  On November 12, 2018, the Claimant submitted a document production request in accordance with section 17.1 of PO 1. On December 13, 2018, Mexico filed its response and final version of the document production schedule containing both Parties’ arguments, agreements and disagreements and requests for the Tribunal to decide on the production of documents.

25.  On January 3, 2019, the Tribunal issued Procedural Order No. 8 deciding on the Claimant’s requests for production of documents. On January 8, 2019, the Claimant submitted a request for the Tribunal to reconsider one of the document requests which was ruled to be overbroad. On January 29, 2019, after receiving comments from Mexico, the Tribunal rejected the Claimant’s request for reconsideration.

26.  On February 7, 2019, as agreed by the Parties, the Tribunal issued an amended procedural calendar (Annex A to PO 1).

27.  On February 21, 2019, the Claimant filed its Reply on the Merits together with 40 factual exhibits⁶ and 218 legal authorities,⁷ a second witness statement of Ms. Onay Payne, a fourth legal expert report by Mr. Rodrigo Zamora (which attached 20 legal authorities) and the expert valuation report and rebuttal report of Mr. Richard Marchitelli of Cushman Wakefield.

28.  On May 28, 2019, the United States of America wrote to the Tribunal requesting permission to file a submission on questions of treaty interpretation under NAFTA Art. 1128.

29.  On June 3, 2019, following an agreed extension, the Respondent filed its Rejoinder on the Merits together with 9 factual exhibits⁸ and 21 legal authorities,⁹ a second expert report of Dr. José Ovalle Favela, and a second valuation expert report prepared by CBRE.

30.  On June 5, 2019, the ICSID Secretariat transmitted to the Parties a draft Procedural Order No. 9 [“PO 9”] concerning the organization of the hearing and inviting the Parties to confer and agree on the items addressed therein. The Parties were also informed that a pre-hearing conference would take place on June 24, 2019.

31.  On June 11, 2019, the Tribunal informed the United States that it had no objection to the proposal made on May 28, 2019 and therefore their submission should be filed by June 21, 2019.

32.  On June 14, 2019, following an agreed extension, each Party submitted the preliminary list of witnesses and experts for cross-examination at the hearing.

33.  On June 18, 2019, the Parties submitted a joint draft of PO 9 indicating the items on which they agreed and their respective positions regarding the items on which they did not agree. On June 21, 2019, the Tribunal provided the Parties the corresponding agenda of the items to be discussed in the pre-hearing conference.

34.  Also, on June 21, 2019, the United States of America and the Government of Canada each file a written submission as a non-disputing State Party pursuant to Art. 1128 of NAFTA.

35.  On June 24, 2019, the Tribunal held a pre-hearing organizational meeting with the Parties by teleconference.

36.  On June 26, 2019, the Tribunal issued PO 9 concerning the organization of the hearing.

37.  On July 4, 2019, the Claimant informed the Tribunal that it did not wish to cross-examine Dr. Raúl Plascencia (Respondent’s legal expert) and Mr. Raúl Calva (Respondent’s witness). The Tribunal invited Mexico to comment on Claimant’s communication and on July 11, 2019, Mexico informed the Tribunal that it did not have any comments with respect to Claimant’s communication of July 4, 2019. Mexico further stated that it did not wish to cross examine Mr. José Arechederra Tovar (Claimant’s witness) and requested that Mr. Diego Gómez Haro and Mr. Alfonso López Lajud from the law firm Sánchez Devanny be examined by video conference.

38.  On July 15, 2019, Claimant responded to the Tribunal’s invitation regarding the examination of Mr. Gómez Haro and Mr. López Lajud by videoconference and a possibility of amending the timetable for the hearing. Claimant also requested leave to introduce a new document on record.

39.  On July 17, 2019, the Tribunal transmitted to the Parties a modified schedule from Procedural Order No. 9, with regard to interrogation of the witnesses and experts. The Tribunal also informed the Parties that it would decide on Claimant’s request to introduce a new document to the record at the beginning of the hearing, after hearing Respondent’s position on the matter¹⁰.

40.  A hearing on the merits was held in Washington, D.C. from July 22, 2019 to July 24, 2019 [the “Hearing”]. The following persons were present at the Hearing:

41.  During the Hearing, the following witnesses and experts were examined:

• On behalf of the Claimant:

  • Ms. Onay Payne

  • Mr. James C. Hendricks

  • Mr. Rodrigo Zamora

  • Mr. Richard Marchitelli (for Cushman Wakefield)

• On behalf of the Respondent:

  • Mr. José Ovalle Favela

  • Mr. Alfredo Rosas (for CBRE)

42.  On August 1, 2019, the Tribunal invited the Parties to i) agree on a schedule for the next procedural steps; ii) submit electronic copies of the exhibits they agreed to introduce during the hearing; and iii) to confer and agree about the introduction of the two Supreme Court decisions that were addressed in Mr. Zamora’s expert presentation. The Tribunal also posed questions to the Parties to be addressed in their post-hearing briefs.

43.  On August 6, 2019, Mexico confirmed that the electronic versions of the exhibits¹¹ submitted during the Hearing had been uploaded to the Box folder created for this case.

44.  On August 7, 2019, the Parties informed the Tribunal on their agreement for the dates for their post-hearing briefs and statement of costs, their disagreement on the filing of replies on costs and on the introduction of the two Supreme Court decisions.

45.  On August 9, 2019, the Tribunal confirmed the Parties agreed scheduled for the filing of post-hearing briefs and statement of costs, informed them that a second round on costs was not necessary and admitted into the record the decisions of the Mexican Supreme Court and of the Tribunal Colegiado.

46.  On August 12, 2019, the Claimant confirmed that electronic versions of the exhibits¹² submitted during the hearing and the Supreme Court decisions had been uploaded to the Box folder created for this case.

47.  The Parties filed simultaneous Post-Hearing Briefs¹³ on October 1, 2019.

48.  The Parties filed simultaneous Statement of Costs with the corresponding supporting invoices on October 22, 2019.

49.  On November 6, 2019, the Tribunal invited the Respondent to provide answer on the President of the Tribunal’s proposal made during the hearing to render the Award in English, following by a subsequent Spanish translation.

50.  On November 11, 2019, Mexico informed the Tribunal that it wished for the Award to be issued simultaneously in English and Spanish in accordance with section 12.11 of PO 1.

51.  On May 14, 2020, the Centre informed the Parties that during Mr. Francisco’s Grob’s paternity leave, Ms. Catherine Kettlewell, ICSID Legal Counsel, would serve as Secretary of the Tribunal.

52.  On September 25, 2020, Mr. Francisco Grob returned from paternity leave.

53.  On December 11, 2020, Mr. Luis Fernando Rodríguez ceased to serve as the Assistant to the Tribunal and the Tribunal proposed that Mr. Adam Jankowski serve as the new Assistant to the Tribunal. On January 7, 2021 the Parties confirmed the appointment of Mr. Adam Jankowski as the Assistant to the Tribunal.

54.  The proceeding was closed on July 19, 2021.

58.  Mr. Hendricks, the managing director at Clarion during the period from 2006 through 2015, confirmed in his Witness Statement that Sr. Cárdenas enjoyed the reputation of a “trusted business partner of respected developers¹⁷”. However, the preliminary inquiries did not extend to Cárdenas’s father-in-law, a Sr. Garsin, a person with a “big banking relationship at Bansi Bank¹⁸” and apparently a powerful figure in the State of Jalisco, who also became involved in the project.

59.  The Nayarit Project included an ocean-front residential and resort development in Bahía de Banderas, State of Nayarit¹⁹. The development plan called for a mixed-use high-end resort to be anchored by a Ritz Carlton hotel, 1,500 luxury residential units, extensive amenity offerings, and two ocean-front golf courses, to be developed on 855 hectares (2,100 acres) with 2.8 miles of ocean frontage²⁰.

60.  The Guadalajara Project²¹ consisted of two high-end mixed-use skyscrapers, to be built on approximately 15,000 m² (3.74 acre) in the city of Guadalajara, State of Jalisco²².

61.  Sr. Cárdenas’s plans for the development of the Nayarit and the Guadalajara Projects were preliminary and incomplete at the time he requested capital from Lion to acquire land and begin limited infrastructure development²³. Lion was willing to provide capital for the development of these projects subject to certain requirements, accepted by Sr. Cárdenas, including the following:

• —  The granting of mortgages to Lion over the land acquired by Sr. Cárdenas and on the subsequent improvements made on that land²⁴; and

• —  The issuance of promissory notes as unconditional commitments to repay the money owed to Lion, with certain procedural privileges under Mexican law²⁵.

66.  On the same day, Inmobiliaria Bains issued the first promissory note in favor of Lion for US $15,000,000, plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of default, an interest rate of 25% [“First Note”].

67.  The original maturity date of the First Note was August 28, 2008. The First Note was substituted four times, resulting in a final maturity date as of September 30, 2009²⁸.

68.  The First Note (as would the other two) was issued under Mexican law, drafted both in English and Spanish (with the Spanish version governing) and submitted to the exclusive and irrevocable jurisdiction of the courts of Mexico City.

69.  About one year after the signing of the Credit Agreement, on April 2, 2008, Inmobiliaria Bains granted in favor of Lion the “Nayarit Mortgage” over the Nayarit Project property, located in the Municipality of Bahía de Banderas²⁹.

70.  The Nayarit Mortgage was drafted in Spanish and subject to the laws of the State of Nayarit³⁰. It was recorded at the Office of the Registro Público de la Propiedad y de Comercio (Public Registry) [“Registro Público”] of Bucerías, Nayarit, on May 19, 2008³¹.

71.  The Nayarit Mortgage in its final form would secure not just the First, but all three Loans, including both principal and interest.

75.  The day after the signing of the Credit Agreement, on June 14, 2007 C&C Capital issued the second note [“Second Note”] in favor of Lion for US$12,450,000 plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of default, an interest rate of 25%³⁴.

76.  The original maturity date of the Second Note was September 14, 2007. The Second Note was substituted seven times, leading to a final maturity date of September 30, 2009³⁵.

77.  The “Guadalajara Mortgage 1” secured the Second Loan, including both capital and interest. It was granted on June 13, 2007, the date of execution of the Credit Agreement, by Bansi S.A., as trustee, as per the instruction of C&C Capital, as founder and beneficiary of the trust, in favor of Lion, over one of the properties pertaining to the Guadalajara Project³⁶.

78.  The Guadalajara Mortgage 1 was subject to the laws of the State of Jalisco and was recorded at that Registro Público about five months later, on November 23, 2007.

82.  C&C Capital issued the Third Note [“Third Note”] on September 26, 2007, the date of execution of the Credit Agreement, in favor of Lion for US $5,355,479 plus ordinary interest at a rate of 18% per year, capitalized every three months, and in the event of a default, a default interest rate of 25%. Inmobiliaria Bains signed as joint and several obligor³⁹.

83.  The original maturity date of the Third Note was December 25, 2007. The Third Note was substituted six times, resulting in a final maturity as of September 30, 2009⁴⁰.

84.  The “Guadalajara Mortgage 2” secured the Third Loan, including both capital and interest. It was granted on the day of execution of the Credit Agreement, September 26, 2007, by Bansi S.A., as trustee, as per the instruction of C&C Capital, as founder and beneficiary of the trust, in favor of Lion, over one of the properties pertaining to the Guadalajara Project⁴¹.

85.  The Guadalajara Mortgage 2 was subject to the law of Jalisco and was recorded at the Registro Público of that State on December 6, 2007.

86.  None of the initial deadlines for the repayment of any of the three Loans were met. Sr. Cárdenas requested and obtained a series of time extensions: from March 2008 through July 2009 Lion signed maturity date extensions on the First Loan four times⁴², on the Second Loan seven times⁴³, and on the Third Loan six times⁴⁴.

87.  The last payment date on the three transactions was, ultimately, September 30, 2009, and the debtors failed to satisfy the outstanding amounts by that date. All three Loans were declared in default and interest at the default rate began to accrue on October 1, 2009.

88.  Lion sent its first invoice to Sr. Cárdenas for the outstanding principal and interest payments due on April 16, 2010⁴⁵. The amounts due on that invoice, calculated and dated as of March 31, 2010, totaled US $26,618,972 for the Nayarit Project and US $29,649,835 for the Guadalajara Project.

89.  Subsequent invoices were sent on July 14, 2010⁴⁶; October 11, 2010⁴⁷; February 14, 2011⁴⁸; April 12, 2011⁴⁹, and July 29, 2011⁵⁰. The amounts due on the latest invoices sent, calculated and dated as of June 30, 2011, were US $36,041,328.45 for the Nayarit Project and US $40,065,210.38 for the Guadalajara Project⁵¹.

90.  According to Lion, no payments were ever made.

91.  Lion initiated negotiations and held meetings with Sr. Cárdenas, trying to find an amicable solution to the breach and to avoid initiating formal foreclosure proceedings⁵². Between September and December 2011 Lion and a representative of Cárdenas discussed the restructuring of the debt according to a term sheet. Such proposal never contemplated the cancellation of the Mortgages, nor the possibility that Lion become a shareholder in Cárdenas’s companies⁵³. A restructuring term sheet was eventually signed by Sr. Cárdenas in October 2011 on behalf of the borrowers under the three Loan Agreements [the “Debtors”], but was not accepted by Lion, as it did not adhere to all the requirements advocated by Lion in the negotiations⁵⁴.

92.  The discussions continued until February 2012, without Lion and Sr. Cárdenas reaching an agreement⁵⁵. On February 17, 2012 Lion took a first step towards the enforcement of the Mortgages: it served the Debtors with a formal request demanding payment of the amounts owed plus interest, under penalty of initiating foreclosure actions⁵⁶.

96.  As a first step, the Debtors approached their local Juez de lo Mercantil in Jalisco and requested judicial enforcement of a settlement contract, presented only in the form of a photocopy, titled “Términos para pago de los contratos de crédito” [the “Términos”] and allegedly executed four months before, on November 14, 2011, between Lion and the Debtors⁶⁰.

97.  The Debtors’ prayer for relief in the Cancellation Lawsuit reads as follows:

“PRESTACIONES

1. A)  Por la DECLARACION JUDICIAL que se haga por parte de su Señoría en el sentido de que la demandada "LION MEXICO CONSOLIDATED, L.P." está obligada al CUMPLIMIENTO CABAL de todas las obligaciones que asumió y que dimanan a su cargo del documento base de la acción que las partes denominamos "TERMINOS PARA PAGO DE LOS CONTRATOS DE CREDITO"” [Emphasis added]

98.  The Debtors were thus seeking a judicial order granting specific enforcement of the obligations purportedly assumed by Lion in the Términos: under what seemed to be the terms of this agreement, Lion had accepted the cancellation of all pending debts against the Debtors, the cancellation of the Mortgages securing such debt in the Registro Público, and the return of the Notes to the Debtors, and in exchange the Debtors had undertaken to issue and to deliver to Lion a participation in Sr. Cárdenas’s companies⁶¹.

99.  The Debtors now alleged that Lion had defaulted on the obligations assumed in the Términos and requested the Juez de lo Mercantil to order specific performance, resulting in the cancellation of the Mortgages in the Registro Público.

100.  The Términos included two further important elements of legal engineering:

101.  First, the Términos purported to contain a clause awarding jurisdiction to the Courts of Jalisco. While all the Promissory Notes attributed jurisdiction to the Courts of Mexico City, far away from Sr. Cárdenas’s main place of business, the Términos granted jurisdiction to the Courts of Jalisco⁶²:

1. “8.  Jurisdicción y Competencia Para la interpretación, cumplimiento y ejecución del presente convenio […] las partes se someten […] a los Tribunales del Primer Partido Judicial del Estado de Jalisco, renunciando a cualquier otro fuero o jurisdicción que por razón de convenio previo o domicilio actual o futuro pudiese corresponderles”.

102.  Second, the Términos included an address for service of process in Jalisco and the name of a process agent. While the Loans provided 3141 Hood Street, Suite 700 Dallas, Texas 75219⁶³ as Lion’s address, with a copy to an address in Mexico at Paseo de los Tamarindos 400-B, Piso 8, Bosque de las Lomas, 05120 Mexico, D.F.⁶⁴, oddly the Términos identified a Jalisco lawyer⁶⁵ and an address in Jalisco⁶⁶:

1. “7.  Domicilio para recibir notificaciones y autorizados [Lion] señala como domicilio para recibir cualquier tipo de comunicación relativa a la presente propuesta y notificaciones el de la finca marcada con el número 95 Despacho 7 de la calle Tomás V. Gómez, Colonia Ladrón de Guevara, en el municipio de Guadalajara, Jalisco y como autorizados para recibirlas y acusar recibo de las mismas a los Licenciados Emilio González de Castilla del Valle y Jose Isaac López Medina”.

103.  The Tribunal is convinced that the Términos are in fact a forgery [and will refer to the document frequently as the “Forged Settlement Agreement” or “Forged Agreement”]. In reaching this conclusion, the Tribunal finds the following evidence compelling:

• —  The Forged Agreement purports to have been signed by Lion’s legal representative in Mexico, Mr. James Christian Hendricks⁶⁷; Mr. Hendricks appeared as a witness in this procedure, and gave sworn evidence that he never signed the document and that the signature appended to the document (shown below) is false⁶⁸;

  

  • View full-sized figure

• —  Lic. González de Castilla, the other lawyer allegedly designated by Lion as a person authorized to receive notifications in the Términos, and a well-known and highly respected professional, has declared in the presence of a Public Notary that: (i) he was not authorized by Lion or by any other company to receive any notification in Guadalajara; (ii) he did not know the said address nor the other person allegedly authorized; and (iii) he had no professional dealings in Guadalajara⁶⁹;

• —  Since the very moment that Lion obtained knowledge of the existence of the Forged Agreement in mid-December 2012⁷⁰, it has consistently averred that the document is a forgery; Lion has repeated the averment in this procedure⁷¹;

• —  Lion has repeatedly tried to obtain a declaration from the Mexican civil Courts, confirming the forgery of the Términos⁷²; although the Mexican civil Courts have never rendered a judgement confirming the existence of forgery, Claimant says that such refusal is improper and tainted by denial of justice;

• —  Upon gaining knowledge of the Términos, Lion initiated criminal actions against Sr. Cárdenas⁷³, some of which were ongoing at the time of the filing of Post-Hearing Briefs⁷⁴.

• —  The Forged Agreement purports to formalize a settlement, in which Lion agrees to cancel the Loans, the Notes and the Mortgages in exchange for a participation in Sr. Cárdenas’s companies; there is no contemporary evidence proving that in the negotiations between Lion and Sr. Cárdenas such solution was ever discussed; to the contrary, the evidentiary record shows that Lion’s intention during the negotiation was to obtain repayment of the Loans, and if the negotiation failed, to foreclose on the Mortgages⁷⁵;

• —  It is unlikely that Lion, a well advised Canadian company, which had insisted that in its previous agreements with Sr. Cárdenas and his companies jurisdiction should lie with the Courts of Mexico City, would accept that the Términos, the settlement agreement finalizing the relationship, be subject to the jurisdiction of the Courts of Jalisco; it is even more unlikely that Lion additionally would have consented to designate an obscure lawyer in Jalisco, related to Cárdenas, and with whom Lion had never had relations, as its process agent, authorized to receive all types of notifications;

• —  There is a final argument: confronted with Claimant’s averment in the present arbitration that the Forged Settlement indeed is a forgery, Mexico has failed to dispute this statement⁷⁶.

104.  Two weeks after the filing of the Cancellation Lawsuit, on April 3, 2012 the actuario (a court officer of the Juez de lo Mercantil) attempted a first service of process [the “emplazamiento”] at the address identified in clause 7 of the Forged Settlement Agreement. The service attempt was done on Lic. José Isaac López Medina⁷⁷, one of the two lawyers identified in the Forged Agreement⁷⁸, who apparently had his office at that address.

105.  Confronted by the actuario, Lic. López Medina formally declared that no legal representative of Lion was present in his office in order to receive the emplazamiento. Upon receipt of this representation, the actuario withdrew, announcing that he would return the next day.

106.  At the second visit, which occurred next day, the actuario decided to make the emplazamiento against Lion through a notificación por cédula delivered to the person who was at the address, Lic. López Medina⁷⁹.

107.  Lic. López Medina accepted the emplazamiento and received a copy of the judicial file (“autos”).

108.  Being unaware that a Court procedure against it was pending before the Juez de lo Mercantil of Jalisco, Lion inevitably failed to appear within the statutory time-limit.

109.  The consequence of this failure was that six weeks thereafter, on May 22, 2012, Lion was declared en rebeldía by the Juez de lo Mercantil through notification via boletín judicial⁸⁰ (a judicial bulletin)⁸¹.

110.  Two weeks after the declaration en rebeldía, on June 6, 2012 the Debtors submitted their evidence before the Juez de lo Mercantil, including the Mortgage deeds and Minutes of the General Shareholders Meeting of C&C Capital. All the evidence marshalled by the Debtors was admitted six days later, on June 12, 2012⁸².

112.  A few days thereafter, on August 8, 2012, and at the request of the Debtors, the Juez de lo Mercantil, declared that the Cancellation Judgement “causa estado por ministerio de la ley”, i.e. that it has become res iudicata, there being no possibility of submitting a recurso de apelación. The reason given by the Judge for his decision precluding any further appeal was that the amount claimed in the procedure was less than MEX 500,000 (approximately USD 25,000)⁸⁴.

113.  The decision is difficult to understand, because the principal amount of the Loans settled and Mortgages terminated amounted to tens of millions of dollars. Be that as it may, the decision was highly relevant, because it deprived Lion of any possibility of launching an ordinary appeal against the Cancellation Judgement.

114.  In a subsequent procedural decision, the Juez de lo Mercantil gave Lion a peremptory term of three days to voluntarily comply with the Cancellation Judgement⁸⁵. Lion, who was still unaware of the Cancellation Proceeding, failed to comply and on August 30, 2012 the Juez de lo Mercantil ordered the Registro Público of Jalisco to cancel the Guadalajara Mortgages⁸⁶ and that of Nayarit to do the same with the Nayarit Mortgage⁸⁷.

115.  The Registro Público of Jalisco did so on September 7, 2012⁸⁸. The cancellation of the Nayarit Mortgage was recorded on October 19, 2012⁸⁹. Upon these registrations, all three Mortgages became extinct for all legal purposes.

123.  On the same day when the Cancellation Judgment was issued, someone impersonating Mr. Arechederra went to a Notary in Jalisco to obtain a copy of the power of attorney granted to the real Mr. Arechederra⁹².

[Two years later this Notary Public would be arrested on charges of fraud and forgery of documents, subsequently fined and suspended as a Notary Public and eventually permanently disbarred by the State of Jalisco⁹³]

124.  The plan was not yet fully completed. Sr. Cárdenas still required a document confirming the impostor’s identity as Sr. Arechederra. On July 6, 2012, Sr. Cárdenas summoned the real Sr. Arechederra to a meeting in Jalisco (the city where the Juez de lo Mercantil is located)⁹⁴. Sr. Arechederra left his driver’s license at the security control of the building where the meeting took place⁹⁵.

125.  On the same day, July 6, 2012, an impostor using the same driver’s license⁹⁶ to identify himself as Sr. Arechederra, filed with the Juez de lo Mercantil a request for a certified copy of the entire case file⁹⁷, on behalf of Lion, exhibiting the power of attorney obtained from the Notary⁹⁸.

126.  With the copy of the case file, on August 7, 2012 an Amparo against the Cancellation Judgment, purportedly signed by Sr. Arechederra on behalf of Lion, was submitted at the Jalisco Courts [the “False Amparo”]⁹⁹.

127.  The Tribunal is convinced that Sr. Arechederra never actually signed the False Amparo on behalf of Lion. In coming to this conclusion, the Tribunal finds the following evidence compelling:

• —  Sr. Arechederra corroborated by his sworn testimony at the Hearing that he never carried out any of the above actions¹⁰⁰;

• —  Sr. Arechederra’s stamp signature under the False Request for Copies contains a typographical mistake (Arrechedera instead of Arechederra)¹⁰¹ — it is unlikely that the real Sr. Arechederra would be using a stamp signature containing not one but two typos in his name;

  

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• —  Mr. Arechederra has submitted a voucher from the airport¹⁰² confirming that it would have been physically impossible for him to file the request for the certified copy, obtain it, sign its receipt, and make it to the airport within an hour¹⁰³;

• —  The False Amparo designated as domicile for notifications to Lion “los estrados del Juzgado que en turno conozca de la presente demanda¹⁰⁴”, i.e, the notice board of the competent Court which would judge the False Amparo; and not the address of Lion’s lawyers, as was the case in the Loans¹⁰⁵ when an address in Mexico was given for Lion;

• —  Lastly, Mexico has not denied that the False Amparo was filed by someone else than the real Sr. Arechederra.

128.  The False Amparo was (on purpose) filed with a procedural deficiency: the person submitting the request failed to attach sufficient copies as required under Mexican procedural law¹⁰⁶. The Juez in charge of the Amparo notified Lion of this mistake (through the estrados) granting Lion three days to remedy the deficiency¹⁰⁷.

[The possibility of amending this procedural deficiency is noteworthy, as it contrasts with the treatment given to the real Lion, when it filed the proper Amparo: it was never granted an opportunity to cure an alleged defect in the power of attorney of the person signing an ampliación de demanda.]

129.  The very purpose of the False Amparo was to be filed and then to be abandoned. Consequently, no copies were ever delivered, and the procedural deficiency was never corrected. Consequently, on August 17, 2012, the Juez dismissed the False Amparo¹⁰⁸ and on September 6, 2012 declared this decision to be final and not subject to appeal¹⁰⁹.

130.  The effects came to haunt Lion when it eventually filed the proper Amparo.

133.  The attempts to notify the Juicio Hipotecario to the various Debtors commenced on April 26, 2012, but it would take several years until all the mortgagors could be properly served (emplazados)¹¹³: Lion requested the Juez de lo Civil to serve Inmobiliaria Bains 13 times, providing nine different addresses in both Jalisco and Nayarit; the courts of Jalisco and Nayarit — acting at the request of the Juez de lo Civil — were unable to notify the company¹¹⁴ and this situation prevented the Juicio Hipotecario from progressing for more than three years¹¹⁵.

134.  While Lion was trying to notify the Juicio Hipotecario to the Debtors, it requested and obtained an order from the Juez de lo Civil in México D.F., instructing the Registro Público in Bucerías to make a preventive annotation in the books setting forth the existence of a foreclosure procedure [the “Anotación Preventiva”]. The Registrar did so on May 3, 2012 and added that this Anotación Preventiva would guarantee the “inmovilidad registral” of the real estate, preventing any future annotation which could disrupt the proper development of the Juicio Hipotecario¹¹⁶:

“[L]o anterior para efectos de que dicha inscripción sirva como inmovilidad registral con la finalidad de que no se pueda verificarse (sic) en la finca hipotecada ningún embargo, toma de posesión, diligencia precautoria o cualquier otra que entorpezca el curso del juicio”.

135.  The Anotación Preventiva was made on May 3, 2012, a month and a half before the Cancellation Judgment (dated June 27, 2012), and in theory prevented any future annotation which could disrupt the Juicio Hipotecario.

136.  Notwithstanding this fact, upon rendering the Cancellation Judgement, the Juez de lo Mercantil of Jalisco sent (through a local Court) an oficio to the Registro Público de Bucerías, requesting cancellation of the Mortgage (“solicito a Usted, cancele la hipoteca”)¹¹⁷ The Registrar, disregarding the existence of the previous Anotación Preventiva, registered the cancellation of the Mortgage in the Registro Público on October 16, 2012, the security thus becoming null and void¹¹⁸:

137.  Since Lion had chosen only to enforce the Nayarit Mortgage, but not the Guadalajara Mortgage, no Anotación Preventiva was ever issued in relation to the Guadalajara Mortgages, and the security was cancelled, upon an oficio of the Juez de lo Mercantil of Jalisco of August 30, 2012¹¹⁹.

142.  On December 18, 2012 Lion filed an Amparo indirecto lawsuit ¹²³ [“Real Amparo”, also “Amparo claim” and “Amparo lawsuit” (as opposed to the previous False Amparo)] before the Juez de Distrito en Materia Civil in Jalisco [“Juez de Distrito”].

143.  The claim was brought against the Juez de lo Mercantil, against his Secretary and against the officers responsible for the Registros Públicos of Nayarit and Bucerías¹²⁴. The Debtors were designated in the Amparo claim as terceros perjudicados (aggrieved third parties)¹²⁵.

144.  The actos reclamados included, among others, the lack of proper notification of Lion in the Cancellation Lawsuit:

“La falta de emplazamiento al quejoso y todas y cada una de las actuaciones y resoluciones relativas al juicio Ordinario Mercantil radicado ante el Juzgado Mercantil del Primer Partido Judicial del Estado de Jalisco”¹²⁶.

146.  Upon receiving this information, on January 28, 2013 Lion filed an ampliación de la demanda (extension request) of the Amparo lawsuit, explaining that the service made by the Juez de lo Mercantil was based on a forged document and should thus be deemed inexistent ¹²⁸:

“La falta de emplazamiento legal a la hoy quejosa [i.e. Lion] […] debido a que el supuesto emplazamiento […] se hizo en un domicilio que no es de la hoy quejosa […]. Amén de que el supuesto domicilio donde de practicó dicho emplazamiento, fue señalado en un documento que no fue suscrito por mi mandante ni por persona alguna con facultades, ya que la firma que se advierte en el mismo es completamente falsa por no proceder del puño y letra a quien se atribuye.” [Emphasis added]

147.  Lion’s forgery claim was accompanied by, inter alia¹²⁹:

• —  a graphological expert report to prove that the signature in the Forged Agreement did not belong to Mr. Hendricks, and

• —  emails between a broker retained by Lion and Sr. Cárdenas to demonstrate that, after the Forged Agreement was supposedly signed in November 2011, Lion and Cárdenas were still holding discussions on the terms of the repayment of the Loans.

148.  By proveído (procedural decision) of January 30, 2013 [the “Dismissal Proveído”] the Secretario del Juzgado de Distrito [i.e. the clerk of the Juez de Distrito] in Jalisco dismissed the ampliación of the Amparo submitted by Lion, arguing that¹³⁰

“dichos actos ya fueron precisados desde el escrito inicial de demanda”.

149.  Frustrated by this postponement, Lion brought, on February 6, 2013, an “incidente de falsedad de documento” before the Juez de Distrito, claiming again that the Forged Agreement was the result of fraud¹³¹.

150.  On April 10, 2013, the Juez de Distrito stated that he would decide in due course on the admissibility of the proposed graphological expertise on the authenticity of the Forged Settlement Agreement¹³². And on April 19, 2013, the Juez de Distrito once again decided to postpone his decision on the admissibility of the evidence, because of a queja proceeding which was subsequently initiated and which will be dealt with in the next section¹³³.

155.  Once the queja had been resolved, the Juez de Distrito resumed his work, and in accordance with the decision of the Tribunal de Queja resolved that all evidence linked to the forgery claim should be dismissed (both the evidence already admitted and the evidence still pending admission)¹³⁹.

156.  Thereafter the Juez de Distrito rendered a specific ruling on Lion’s separate motion (“incidente de falsedad de documento”). The judge dismissed it on the grounds that the allegedly false document (the Forged Settlement Agreement) was not related to the subject-matter of the Amparo Proceeding¹⁴⁰.