Quinn Emanuel represents a group of 38 individuals and entities in an international arbitration under the North American Free Trade Agreement (NAFTA). The investors’ claims arise from various measures taken by the Mexican government, including the cancellation of valid permits to operate casinos in Mexico, culminating in the closure of the U.S. investors’ casino business in Mexico. The arbitration is administered by the International Center for the Settlement of Investment Disputes (ICSID), with a legal seat of arbitration in Toronto, Canada. Mexico raised a number of jurisdictional objections and requested that the Tribunal dismiss the entire case or, alternatively, substantially reduce the damages the Claimants were seeking.
On July 19, 2019, Quinn Emanuel achieved a complete jurisdictional victory against the government of Mexico. The Tribunal, consisting of Dr. Gaëtan Verhoosel (president), Prof. Gary Born (Claimants’ nominee) and Prof. Raúl Emilio Vinuesa (Respondent’s nominee) issued a partial award rejecting each of Mexico’s jurisdictional objections under the Treaty and upheld the Tribunal’s jurisdiction, allowing the Claimants to proceed with their claims and to potentially recover the full measure of the damages (over $150 million) that Mexico caused the Claimants. In a nod to the full scope of the victory, the tribunal also took the highly unusual step of awarding Claimants over $1.4 million in attorneys’ fees and costs.
The Claimants owned and operated 5 successful casinos in Mexico until 2014, when Mexico unlawfully shut down their operations. At the time the casinos were shuttered, the Claimants were in the process of opening two additional casinos, one in Cabo and one in Cancun. In 2014, shortly after Mexico shut down the casinos, the Claimants retained another law firm to pursue an international arbitration. That law firm filed a Notice of Intent on the Claimants’ behalf and tried to broker negotiations with the government of Mexico, to no avail.
In 2016, the Claimants chose to retain Quinn Emanuel. The Quinn Emanuel team worked carefully and closely to counter Mexico’s jurisdictional arguments, which included: (1) that the Claimants had not properly engaged Mexico’s consent under Article 1121 of the NAFTA; (2) that the Claimants’ Notice of Intent did not comply with Article 1119 of the Treaty; and (3) that the Claimants could not prove that they had the requisite ownership and control over the local Mexican companies to pursue a claim on their behalf. On the Article 1121 consent issue, the Tribunal found that the Request for Arbitration’s clear language whereby the Claimants “accepted Mexico’s offer to arbitrate” showed that the Claimants did in fact consent to arbitration. On the Article 1119 Notice of Intent issue, a majority of the Tribunal held that the Notice of Intent’s omission of some of the Claimants was not a jurisdictional matter, but an admissibility matter which afforded the Tribunal discretion to decide whether to admit the Additional Claimants’ claims. In reaching this conclusion, the Tribunal squarely rejected the proposition that Mexico’s consent to NAFTA arbitration under Article 1122 was conditional on satisfaction of Article 1119’s Notice of Intent requirement. On the standing issue, a majority of the Tribunal found that the Claimants owned and/or controlled all of the Mexican entities (with the exception of one minor company) and that they had standing to bring claims on behalf of all of the companies.
This is a significant victory for Quinn Emanuel and will allow the Claimants to proceed with their substantive claims against Mexico and to potentially recover the full measure of the damages. The case is B-Mex, LLC et al. v. United Mexican States, ICSID Case No. ARB(AF)/16/3. Quinn Emanuel works with Julio Gutiérrez of Rios Ferrer, Guillen-Llarena, Treviño y Rivera, SC as co-counsel in Mexico.