Summary

Source: icsid.worldbank.org

AWARD

TABLE OF CONTENTS

INTRODUCTION AND PARTIES
PROCEDURAL HISTORY
Registration, Tribunal Constitution and First Session
The Written Phase
The Oral Phase
Post-Hearing Phase
FACTUAL BACKGROUND
Silver Bull
Sierra Mojada and Mineros Norteños
The Project
The royalties dispute with Mineros Norteños
The February 2016 demonstration
South32
September 2019, start of the continuing blockade
The criminal complaint
The camp empties
Late September and early October 2019
Force Majeure Notice
Mid-October to end 2019
Congressman Borrego
The blockade, the royalties dispute, and the Public Prosecutor's investigation: mid-2020 - mid-2021
Further negotiations
South32 pulls out
2023 - 2024
Where was the blockade and was it illegal?
The Valdez litigation
PARTIES' REQUESTS FOR RELIEF
Claimant
Respondent
JURISDICTION
Applicable Law
Jurisdictional Objections
Whether the claim under NAFTA Art. 1110 (Expropriation) can be submitted to arbitration under Annex 14-C of the USMCA
a. Respondent's Position
b. Claimant's Position
Whether the claim under NAFTA Art. 1105 (Minimum Standard of Treatment) is time-barred
a. Respondent's Position
b. Claimant's Position
Whether the Tribunal has Jurisdiction Ratione Voluntatis and Ratione Temporis over the Claim under NAFTA Art. 1105
a. Respondent's Position
b. Claimant's Position
Whether the Tribunal has Jurisdiction Ratione Temporis and Ratione Voluntatis over the Claims under NAFTA Articles 1102 (National Treatment) and 1103 (Most-Favoured-Nation Treatment)
a. Respondent's Position
b. Claimant's Position
Whether the Tribunal has Jurisdiction Ratione Materiae
a. Respondent's Position
b. Claimant's Position
TRIBUNAL'S ANALYSIS
General introduction to jurisdiction
The meaning and effect of Annex 14-C
Termination of NAFTA
The USMCA: Article 14
The issue raised by Silver Bull's claims
The procedural objection
Interpretation of treaties
a. TC Energy Award
b. Textual analysis
c. The terms of Annex 14C in their context
d. Continuing breach
e. Article 31: conclusion
f. Article 32: supplementary means of interpretation
g. Subsequent State practice
Conclusion on jurisdiction
Consequences of Annex 14-C decision and time-bar
Introduction
Further preliminary points
Interpretation of Articles 1116(2) and 1117(2) of NAFTA
a. The Article 1105 claims: Silver Bull's pleaded case on the time-bar
b. Silver Bull's evidence as to the timing of its loss or damage
The Article 1105 claims: are they sustainable and, if so, are they wholly or partly time-barred?
The claims under Articles 1102 and 1103: the procedural objection
The claims under Articles 1102 and 1103: are they sustainable, and if so are they wholly or partly time-barred?
A further quantum hearing?
Do Silver Bull's claims relate to investments protected by Section A?
Conclusion
COSTS
Claimant's Cost Submissions
Respondent's Cost Submissions
TRIBUNAL'S DECISION ON COSTS
AWARD

INTRODUCTION AND PARTIES

1. This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 (the "ICSID Convention") and under Annex 14-C ("Annex 14-C") of the US-Mexico-Canada Agreement (the "USMCA"), which entered into force on 1 July 2020, and the North American Free Trade Agreement ("NAFTA"), which entered into force on 1 January 1994 and was terminated on 30 June 2020.

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FACTUAL BACKGROUND

47. Silver Bull's allegations of breach by Mexico of Articles 1102, 1103, 1105 and 1110 of NAFTA all arise from what it describes as the "Continuing Blockade" of its Project in that country by members of a local mining co-operative. This Continuing Blockade began in September 2019 and was still in place at the time this case was heard, although it is Silver Bull's contention that it lost its investment in the Project at the end of August 2022, when its principal partner in the Project pulled out.

48. Silver Bull claims that the Mexican authorities "failed to take meaningful action to resolve" the blockade,8 doing nothing to bring it to an end or to sanction the perpetrators. It also alleges that Mexico is responsible for instigating the blockade because the acts of a Federal Deputy who allegedly instigated and supported the Continuing Blockade are attributable to Mexico.

49. Thus, according to Silver Bull, "Mexico enabled an unlawful blockade to persist for years, culminating in the total loss of the Claimant's investment".9

50. This section of the Award is concerned, on the basis of the witness and documentary evidence placed before the Tribunal, to establish the facts relevant to Silver Bull's allegations of treaty breach. It is not concerned with the evidence relating to the quantum of any loss.

51. Silver Bull in its Reply invites the Tribunal to draw adverse inferences from Mexico's failure to produce certain documents, or classes of documents, which it was ordered to produce.10 This is not something that has proved to be necessary. The Tribunal has been able to form a reasonably clear picture of what occurred from the material before it without the need to draw inferences, adverse or otherwise, from the absence of certain documentary material.

52. Mexico, for its part, says that the evidence of Silver Bull's witnesses should be approached with caution as "their credibility is compromised by obvious financial interests".11 Mexico points out that all Silver Bull's witnesses except Mr. Melnyk (who received compensation of USD 900 per day), stand to receive a proportion of any damages received by Silver Bull. However, the Tribunal did not form the impression that these witnesses were consciously trying to mislead it, although like many witnesses, it was apparent that they tended to see, and to recollect, events from their side's perspective.

53. Mexico also says that certain evidence was obtained illegally, by Mr. López secretly recording conversations with, in particular Mr. Fraire, and that such evidence should be accorded no weight.12 However, this issue is not one on which the Tribunal has to form a view, as it has only relied on information confirmed by Mr. Fraire during the course of his oral evidence.

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AWARD

511. For the reasons set forth above, the Tribunal decides as follows:

(1) In respect of Article 1110, the Tribunal has no jurisdiction over Silver Bull's claim, and it must be dismissed.

(2) In respect of Article 1105, Silver Bull's claims that Mexico breached its obligations are time-barred, insofar as they seek to base liability on Mexico's conduct prior to 28 June 2020; they are outside the Tribunal's jurisdiction insofar as they seek to base liability on Mexico's conduct after 30 June 2020; and they are all unsupported by a sustainable claim that Silver Bull has incurred loss or damage which was caused between 28 June and 30 June 2020. Accordingly, they must be dismissed.

(3) In respect of Articles 1102 and 1103, Silver Bull's claims that Mexico breached its obligations are time-barred, insofar as they seek to base liability on Mexico's conduct prior to 28 June 2020; they are outside the Tribunal's jurisdiction insofar as they seek to base liability on Mexico's conduct after 30 June 2020; and they are unsupported by a sustainable claim that Silver Bull has incurred loss or damage was caused between 28 June and 30 June 2020. Accordingly, they must be dismissed.

(4) Orders the Claimant to bear 60% of the costs of the arbitration, and 60% of Respondent's own legal fees and expenses, which after setting-off of the costs of the arbitration already paid by the Claimant, results in the Claimant being ordered to pay the Respondent USD 997,700.11 corresponding to Respondent's own legal fees and expenses together with simple interest thereon (or on the outstanding balance thereof) at the U.S. Prime Rate from the date of this Award until payment.

(5) Rejects all other claims and defenses.

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Footnotes omitted