Reproduced from www.worldbank.org/icsid with permission of ICSID.
1. In accordance with the Tribunal's Procedural Order No. 7 of 11 July 2022 and communication of 27 July 2022,1 Claimant Legacy Vulcan, LLC ("Legacy Vulcan") hereby submits its memorial in support of its ancillary claim against the United Mexican States ("Mexico" or "Respondent") for breach of the North American Free Trade Agreement ("NAFTA").
2. This memorial is supported by (i) the third witness statement of ... (ii) the second witness statement of. ... (iii) the third expert report on environmental law issues by. .. (iv) the third expert report on valuation by Darrell Chodorow and Fabricio Núñez of The Brattle Group; (v) new factual exhibits numbered C-0200 to C-0278; and (vi) one new legal authority numbered CL-0201.
3. Legacy Vulcan's ancillary claim arises from Mexico's wrongful shutdown of CALICA's remaining quarrying and export operations on the order of Mexico's President Andrés Manuel López Obrador following a politically-motivated campaign of public attacks against Legacy Vulcan and CALICA. As Legacy Vulcan demonstrated in the first phase of this arbitration, Mexico has deployed the full powers of the State to interfere with Legacy Vulcan's integrated project to quarry limestone and produce aggregates for export to the United States (the "Project").
Mexico previously foreclosed production in two of the Project's three quarrying lots -- La Adelita and El Corchalito -- through a series of wrongful measures in violation of Mexico's obligations under NAFTA. It has now done the same in La Rosita, frustrating the Project's purpose.
4. On 2 May 2022, President López Obrador announced that he had ordered the immediate shutdown of La Rosita, Legacy Vulcan's only remaining operating lot and the site of its processing plant. The President's order was promptly carried out by Mexico's federal environmental enforcement agency, the Procuraduría Federal de Protección al Ambiente ("PROFEPA"), whose inspectors cordoned off CALICA's facilities the very same day together with more than thirty heavily-armed Mexican marines in a menacing show of military force. In an effort to cloak the President's arbitrary order with a semblance of legality, on 2-5 May 2022, PROFEPA conducted two simultaneous sham inspections of CALICA's facilities. On 5 May 2022, PROFEPA fully implemented the President's directive by formally shutting down CALICA's operations in La Rosita under the pretext that CALICA lacked environmental permits.
5. As Legacy Vulcan explains in Part II, the shutdown of La Rosita followed a months-long campaign of public harassment spearheaded by President López Obrador. He declared in his Mañaneras (morning press briefings) that he disfavors an American company "taking Mexican soil to build roads in the United States" and favors the development of a "tourism zone" in CALICA's lots and port. He falsely and repeatedly accused Legacy Vulcan and CALICA of "environmental destruction" in an effort to deflect environmental opposition to his Mayan Train project and strong-arm Legacy Vulcan into discontinuing this arbitration and accepting his preferred tourism makeover of the Project. He also dismissed Legacy Vulcan's arbitration claims and suggested that this proceeding is biased because it is the product of policies sponsored by "neoliberal governments." Following the President's public attacks and shutdown order, Mexico's customs agency also suspended the customs permit that CALICA had received as a matter of course for decades to export aggregates to the United States and threatened to revoke it based on PROFEPA's bogus, pretextual "findings" of environmental violations.
6. Mexico's accusations are false. Legacy Vulcan has openly extracted and quarried aggregates from La Rosita for over three decades under valid and long-standing government permits and in compliance with environmental laws. Indeed, PROFEPA itself certified CALICA's environmental compliance through a 2012 inspection of CALICA and six Clean Industry Certificates for outstanding environmental performance, most recently in 2016.
7. As explained in Part III, this Tribunal has jurisdiction to resolve Legacy Vulcan's ancillary claim under the Convention on Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Convention") and NAFTA. As also explained in Part III, Mexico's further interference with Legacy Vulcan's investment and escalation of the dispute constitute a breach of Mexico's obligations under NAFTA, including its obligation to accord investments of U.S. investors fair and equitable treatment. Mexico's shutdown of Legacy Vulcan's remaining operations in La Rosita and suspension of Legacy Vulcan's ability to export aggregates from Punta Venado were arbitrary and contrary to CALICA's due-process rights. Mexico's actions have also frustrated Legacy Vulcan's and CALICA's legitimate expectations that they would be able to operate and benefit from the Project for as long as economically feasible. These expectations were based on specific representations made by Mexican officials in the 1986 Investment Agreement and the various endorsements, permits, and authorizations issued to CALICA over three decades.
8. Finally, as explained in Part IV, Mexico's wrongful shutdown of Legacy Vulcan's remaining operations in La Rosita and indefinite suspension, and potential revocation, of CALICA's customs permit have caused additional losses to Legacy Vulcan. Based upon well-established principles of international law, Legacy Vulcan is entitled to full reparation for the losses Mexico's wrongful measures have caused, which have been calculated by Darrell Chodorow and Fabricio Núñez of The Brattle Group in the amount of
9. For the reasons set forth below, Legacy Vulcan and CALICA respectfully request that the Tribunal uphold this ancillary claim, declare Mexico in breach of NAFTA, and award Legacy Vulcan in compensation for that claim plus post-Award interest and costs.
V. REQUEST FOR RELIEF
185. For the foregoing reasons, Legacy Vulcan respectfully requests that the Tribunal render an Award in its favor:
a. Upholding Legacy Vulcan's ancillary claim;
b. Declaring that Mexico has breached NAFTA and applicable principles of
international law by failing to accord Legacy Vulcan's investments, including CALICA, fair and equitable treatment in violation of Article 1105; c. Determining that this breach has caused damages to Legacy Vulcan; d. Ordering Mexico to pay to Legacy Vulcan compensation, in accordance with NAFTA and customary international law, in an amount sufficient to provide full reparation to Legacy Vulcan for the damages incurred as a result of the wrongful conduct at issue regarding this ancillary claim, including:
i. Compensation for damages arising out of Mexico's wrongful measures in the amount of
ii. Compensation of to account for the double taxation that
would result on a portion of this Award;
iii. Pre-Award compound interest at a rate reflecting the cost of short-term borrowing by the Government of Mexico from the date of the breach to the date of the Award, and post-Award compound interest also reflecting the cost of short-term borrowing by the Government of Mexico from the date of the Award until actual and full payment by Mexico, even if the Award is converted into a judgment of a court of a State party to the ICSID Convention;
e. Ordering Mexico to pay all costs and expenses of this arbitration proceeding
including this ancillary claim), including the fees and expenses of the Tribunal and the cost of legal representation, plus interest thereon; and
f. Such other or additional relief as may be appropriate under the applicable law or that may otherwise be just and proper.449