Reproduced from www.worldbank.org/icsid with permission of ICSID.
1. As will be analyzed in this Counter Memorial, the present case lacks merit.
2. The matter before this Tribunal, and the manner in which it is presented by the Claimant affects the integrity of the arbitration mechanism provided in Chapter XI of the North American Free Trade Agreement (NAFTA). In general terms, the Claimant seeks that the Arbitral Tribunal become an appellate court or replace a Mexican authority specialized in environmental impact to evaluate de novo a previous resolution, based on mere suppositions that lack factual support and on a legal strategy devised ex post. Indeed, the Claimant claims that the the denial of its requet for an environal authorization constitutes a breach of various NAFTA provisions. However, the main support of its claim is based on [...]
3. The Claimant also accompanies its Memorial with 9 witness statements and 12 expert reports, with which it seeks to misrepresent the facts that actually happened regarding the Don Diego project, and to divert attention from the actual facts.
4. What actually happened is that the Mexican environmental authority analyzed, heard and resolved an environmental impact application and determined that the project was not environmentally sustainable under the applicable law. ExO exercised its right to challenge that decision and the environmental authority fully complied the determination of the local court.
Notwithstanding, the Claimant insists that it is right, even though neither the facts nor the law support it. It is enough to consider the challenge the Claimant submitted to national courts -in parallel to this arbitration- to confirm that the Claimant intends that the Tribunal become an instance of appeal or environmental authorization.
5. Indeed, what the Claimant ultimately requests is that Tribunal condemn the Mexican State to pay a multi-million -and merely speculative- amount for having exercised its sovereign right to protect the environment from the uncontroversial risk that arises from a sea floor dredging mining pproject. Although the Claimant does not agree with the legitimate exercise of the right to regulate, that does not mean that it has a right to appeal beforeto this Tribunal and pretend that it conduct an analysis de novo of the scientific and technical matters that only correspond to the specialized Mexican authority -the Dirección General de Impacto y Riesgo Ambiental of SEMARNAT-.
6. As addressed in this Counter Memorial, Mexico decided to protect several turtle species that have officially and internationally been declared endangered, instead of promoting the sea floor dredging -an internationally controversial activity-. That regulatory decision was sustained scientific and technically.
7. Precisely, the evidence submitted with this Counter Memorial shows that the Claimant is a purely a speculative company that profits from the promotion and sale of shares derived from its only experience and main economic activity, which is the marine treasure hunting.
8. The Claimant submitted a claim for a grossly inflated amount of USD$2.364.700.000.00 - based on mere speculation. That claimed amount contrasts with the uncontroversial fact that the Don Diego project was at a stage that could be considered as "Little more than an initial exploration project".
9. The contemporary evidence on the environmental assessment proceedings is clear: The Claimant's project was not environmentally sustainable, nor feasible, and therefore was not authorized. It is uncontroversial, and the Claimant does not dispute it, that these proceedings were transparent and that ExO, as well as a plurality of parties (authorities, international agencies, non- governmental entities, communities' residents, among others) actively participated and in accordance with law.
10. Although the Claimant clearly intends to ask this Tribunal to rule on the feasibility of its dredging pproject, that is no the Tribunal's role. The Respondent does not consider it appropriate - or pertinent- that within an investor-State arbitration, technical-scientific issues that have already been submitted before the national regulatory body are reevaluated. Undoubtedly, this investment arbitration is not the ideal forum to evaluate the technical characteristics of Don Diego, and to determine if it was an environmentally feasible project.
11. On the contrary, the Tribunal analysis should focus on determining whether it was reasonable for the DGIRA to deny the environmental authorization of a pproject that sought to uninterruptedly dredge the seafloor of the Gulf of Ulloa for 50 years, a place that constitutes a natural treasure and of utmost importance for Mexico and the world. The answer of such question is simple for the Tribunal, having in consideration the following non-disputed facts:
- The Claimant does not have any proved experience in underwater mining;
- The dredging of a seafloor is an activity that invariably produces an environmental impact due to its nature;
- The Gulf of Ulloa, the place where the dredging was sought, is a unique area in the world, due to its natural wealth, part of the migratory routes of whales and for being the home of a great population of marine turtles, included the turtle caretta caretta;
- Mexico has the sovereign right to protect and regulate its environment, choosing the adequate level of protection that considers appropriate for the specific activity of dredging that involves underwater mining; and
- There is no investor, nor investment, in Mexico, much less in the world, that can be compared with the mining activity and the place where the Claimant wished to carry out the dredging of the seafloor.
12. Due to the simplicity of these facts, which implies having to dismiss the claim, the Claimant has had to resort to [...] have, at the least, severe credibility problems. Indeed, as a matter of fact, such witness statements do not coincide with reality and rather contradict it. For example, it is implausible that [...].
on the other hand, [...]. A statement of this nature fails to take into consideration what is established in the applicable legislation, which contradicts the statements of said witnesses and constitutes an irrefutable fact for the Tribunal.
13. The statements expressed by the Claimant, based on mere sayings of its two [...] requires support from robust and irrefutable evidence, which is not provided by the Claimant. In addition, [...]. Furthermore, the fact that the Claimant itself is hiding information regarding the economic arrangements it entered with unknown consultants that depend of the outcome of this arbitration, reveals the frivolity with which the Claimant has acted in submitting this claim.
14. Based on the above, it is clear that the Claimant lacks factual elements to support its case.
Therefore, the Respondent requests the Tribunal to provide due deference to the decisions that the regulatory body (DGIRA) issued on the Don Diego project, and dismiss the Claimant's claim. The above, without prejudice to requesting, at the appropriate procedural time, security for the expenses and costs of this arbitration, since the contract entered between the Claimant and the company that is financing this arbitration makes no provision for that matter.
720. Pursuant to the foregoing, this Tribunal is respectfully requested to dismiss Claimant's claim in its entire part, as well as the corresponding determination of the payment of costs in favor of the Defendant in accordance with the request for costs referred to supra.
23 de febrero de 2021
El Director General de Consultoría Jurídica de Comercio Internacional
Orlando Pérez Gárate