Summary

Source: icsid.worldbank.org

Request for Arbitration

1 May

TABLE OF CONTENTS

I. INTRODUCTION
II. THE PARTIES

A. CLAIMANT
B. RESPONDENT

III. STATEMENT OF FACTS
A. THE DEVELOPMENT OF THE L1BRE SYSTEM
B. MEXICO CITY AWARDS THE CONCESSION TO LUSAD
C. THE CONCESSION AGREEMENT
D. THE CONCESSION'S IMPLEMENTATION AND MEXICO CITY'S ASSURANCES TO LUSAD
E. MEXICO'S UNLAWFUL ACTIONS AGAINST LUSAD

IV. JURISDICTION
A. THE JURISDICTIONAL REQUIREMENTS OF NAFTA ARE MET
1. ES Holdings is an Investor and has made a protected Investment
2. Mexico and ES Holdings have consented to submit this dispute to arbitration, and ES Holdings hereby submits its waiver under Article 1121
3. More than six months have elapsed since the events that give rise to the dispute and more than three months have elapsed since the Notice of Intent
4. The three-year statute of limitations has not elapsed
B. THE JURISDICTIONAL REQUIREMENTS OF THE ICSID CONVENTION ARE MET
1. There is a legal dispute arising out of ES Holdings' investment
2. The legal dispute involves a Contracting State and a National of another Contracting State
3. The parties have consented to submit the dispute to the Centre
4. ES Holdings has complied with other procedural requirements

V. MEXICO BREACHED ITS OBLIGATIONS UNDER THE TREATY
A. MEXICO CITY'S ACTIONS CAN BE ATTRIBUTED TO MEXICO UNDER THE TREATY AND INTERNATIONAL LAW
B. MEXICO EXPROPRIATED ES HOLDINGS' INVESTMENT WITHOUT COMPENSATION
C. MEXICO DID NOT AFFORD ES HOLDINGS FAIR AND EQUITABLE TREATMENT NOR FULL PROTECTION AND SECURITY
D. MEXICO DISCRIMINATED AGAINST ES HOLDINGS

VI. ES HOLDINGS' DAMAGES

VII. PROCEDURAL MATTERS
A. NUMBER OF ARBITRATORS AND METHOD OF APPOINTMENT
B. PLACE OF THE ARBITRATION
C. LANGUAGE OF THE ARBITRATION

VIII. RESERVATION OF RIGHTS
IX. REQUEST FOR RELIEF

1. Espíritu Santo Holdings, LP ("ES Holdings" or "Claimant"), serves this Request for Arbitration (the "Request") against the United Mexican States ("Mexico" or "Respondent,"

and collectively with ES Holdings, the "Parties"), pursuant to Articles 1116, 1119, and 1120 of the North American Free Trade Agreement between Mexico, Canada, and the United States of America, signed by Mexico on 17 December 1992 and entered into force on 1 January 1994 (the "Treaty" or "NAFTA") and Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention").

I. INTRODUCTION

2. This dispute arises from Mexico's unilateral, arbitrary, and politically motivated measures that deprived ES Holdings of its rights under, and the value and benefit of a multi-billion dollar concession granted to its subsidiary, Servicios Digitales Lusad, S. de R.L. de C.V. ("Lusad"), by the Mexico City Secretariat of Mobility (Secretaría de Movilidad in Spanish, hereinafter "Semovi") on 17 June 2016 (the "Concession"). Based on political interests and promises made by the mayor of Mexico City during her electoral campaign, Mexico obstructed Lusad's performance under the Concession, indefinitely suspended Lusad's rights, and eventually terminated the Concession. Ultimately, Mexico displaced Lusad, misappropriated Lusad's technology, and offered the same services that Lusad had the exclusive right to provide under the Concession.

3. The Concession granted Lusad the exclusive right to install its proprietary digital taximeters and other technology in all 138,000 taxis operating within Mexico City, develop a mobile application allowing users to, among other functions, remotely request a taxi, and charge fees for these services. The Concession was awarded for a period of ten years and was renewable for two additional ten-year periods.

4. The Concession's prospects were so promising that, in October 2018, a leading multinational investment bank and financial services company (Goldman Sachs) conservatively valued the Concession, and therefore Lusad's business, in excess of two billion dollars over the initial five years of the Concession.

5. Just two years after awarding the Concession, however, Mexico initiated without notice or any valid justification a series of unlawful, arbitrary, and discriminatory measures culminating in the expropriation of ES Holdings' investment in Mexico. These measures were politically motivated, as expressly admitted by Mexico City's newly elected government, violated Mexico's Treaty obligations, and ultimately obliterated ES Holdings' investment in Mexico.

6. Semovi suspended the Concession based on political reasons in May 2018, claiming that this measure was necessary to avoid the Concession being politically used during the municipal elections taking place in July 2018. During the electoral campaign, Ms. Claudia Sheinbaum ("Ms. Sheinbaum"), a candidate to become mayor of Mexico City, openly campaigned that she was in favor of permanently revoking the Concession. Ms. Sheinbaum was ultimately elected mayor, causing a change of government. As a result, the newly appointed Secretary of Semovi (a member of Mayor Sheinbaum's political party), publicly stated that the Concession would be revoked based on the "right" of the current administration to implement its own public policies.

7. Several months later, in October 2018, consistent with Mayor Sheinbaum's promises during her political campaign, the new government of Mexico City announced the permanent suspension of the Concession.

8. Less than a year later, in September 2019, the Mexico City government announced that it had launched a mobile application, called "Mi Taxi," that included most of the technologies and services that were to be offered exclusively by Lusad under the Concession.

9. Ultimately, through wrongful and politically motivated actions, Mexico terminated the Concession, displaced Lusad, misappropriated Lusad's technology, and offered the same services through a State instrumentality. Mexico deprived ES Holdings and its subsidiary of its rights under the Concession and under international law and, as a result, ES Holdings' investment was completely destroyed and rendered worthless.

10. Mexico's conduct is in breach of the provisions of the Treaty prohibiting expropriation without just, effective, and prompt compensation, as well as the provisions requiring Mexico to afford fair and equitable treatment, full protection and security, and treatment no less favorable than that afforded to its own nationals or to other foreign investors. These Treaty breaches caused direct and substantial harm to Claimant and its subsidiaries.

11. Pursuant to well-settled principles of international law, Claimant seeks full reparation for the losses resulting from Mexico's violations of the Treaty and international law in the form of monetary compensation sufficient to remediate the consequences of Mexico's wrongful acts.

...

IX. REQUEST FOR RELIEF

88. On the basis of the foregoing, without limitation and fully reserving its right to supplement this Request, ES Holdings respectfully requests that the Tribunal:

(i) DECLARE that Mexico breached Articles 1102, 1103, 1105, and 1110 of the Treaty;

(ii) ORDER Mexico to compensate ES Holdings for their losses resulting from Mexico's breaches of the Treaty and international law, in an amount to be determined at a later stage in these proceedings; such compensation to be paid without delay, be effectively realizable and be freely transferable, and bear (pre and post award) interest at a compound rate sufficient fully to compensate ES Holdings for the loss of the use of this capital as from the date of Mexico's breaches of the Treaty;

(iii) DECLARE that: (i) the award of damages and interest in (ii) be made net of all Mexico's taxes; and (ii) Mexico may not deduct taxes in respect of the payment of the award of damages and interest in (ii);

(iv) AWARD such other relief as the Tribunal considers appropriate; and

(v) ORDER Mexico to pay all of the costs and expenses of these arbitration proceedings, including the fees and expenses of the Tribunal, the fees and expenses of the institution which is selected to provide appointing and administrative services and assistance to this arbitration, the fees and expenses relating to ES Holdings' legal representation, and the fees and expenses of any expert appointed by ES Holdings or the Tribunal, plus interest.