* This document was reproduced and reformatted from the text appearing at the ICSID website (visited January 9, 2001)<http://www.worldbank.org/icsid>.

1 The text of Article 1121, paragraph 1 specifies that “A disputing investor may submit a claim under Article 1116 to arbitration only if: (a)the investor consents to arbitration in accordance with the procedures set out in this Agreement; and (b)the investor… waives[s]… [its] right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article 1116,except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party.”

2 The general rule of interpretation in the Vienna Convention on the Law of Treaties is now universally accepted as general international law. It is the rule of interpretation that must be applied by this Tribunal to the provisions of the NAFTA treaty: “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.” The Vienna Convention on the Law of Treaties, Article 31 (“General Rule of Interpretation“), paragraph 1.

3 “Without derogating from the waiver required by NAFTA Article 1121, Claimants here set forth their understanding that the above waiver does not apply to any dispute settlement proceedings involving allegations that Respondent has violated duties imposed by sources of law other than Chapter Eleven of NAFTA, including the municipal law of Mexico.” (Italics added.).

4 Award § 5, p. 6.

5 Letter of November 13,1998 to ICSID.

6 In the language of the Ethyl decision, cited in footnote 48 below.

7 “Mexican” and “Mexico” are to be understood for these purposes as meaning the United States of Mexico, including its agencies, instrumentalities, subordinate entities and components, such as Banobras, the Municipality of Acapulco, the State of Guerrero, and so forth.

8 This is not the onus probandi but the onus proponendi.

9 This is supported by the language of the ICSID arbitral decision on jurisdiction (No. 2) of 14 April 1988 in Southern Pacific Properties (Middle East) Limited [SPP(ME)] v. Arab Republic of Egypt (Case No. ARB/84/3) submitted to the Tribunal by Mexico in the present case. (“Materials in Support of Respondent's Oral Submission,” Tab 1.) The Tribunal in that case stated that: ”… jurisdictional instruments are to be interpreted neither restrictively nor expansively, but rather objectively and in good faith, and jurisdiction will be found to exist if -— but only if — the force of the arguments militating in favor of it is preponderant.” (3 ICSID REPORTS at 131, 144, para. 63 (italics added).)

10 Ibid.

11 Quoting the Ethyl decision cited in footnote 48 below.

12 Fisheries Jurisdiction case (Spain v. Canada), Jurisdiction of the Court, Judgment of 4 December 1998,1.C.J. Reports 1998, p. 432; para. 65.

13 “Canada … stresses the very wide meaning of the word ‘measure'. It takes the view that this is a ‘generic term', which is used in international conventions to encompass statutes, regulations and administrative action.” Ibid.

14 The ELSI case decided by a Chamber of the International Court in 1989 is illustrative of this point. (Elettronica Sicula S.p.A. (United States v. Italy), Decision of 20 July 1989, 1989 I.C.J. Reports, p. 15.) In that case the factual background included a variety of governmental “measures” undertaken at the local, municipal, state and national level. In addition, the relationship of one “measure“ to another formed a central part of the case; a major question presented was whether the United States was bound to prove the existence of a connection between those measures so as to establish a conspiracy, on the one hand, or a pattern of actions sufficient to constitute a nationalization or expropriation, on the other. The pleadings in that case clearly demonstrate that one single act or measure cannot an expropriation make, unless that act or measure is itself the promulgation of a law accomplishing the deed. An act of expropriation may be a single act of a State, but the single act of a State is not necessarily an act of expropriation. Unfortunately for present purposes, the Chamber did not have to resolve this issue, as it had determined that the financial condition of the Elettronica Sicula company had been the primary cause of its failure. Id., p. 71, para. 19.

15 Article 1102 requires “national treatment” for investors of another Party; neither the Banobras lawsuits nor the Acapulco arbitration would appear to have asserted a claim for denial of “national treatment.” Article 1103 requires “most-favored-nation treatment” for investors of another Party; neither the Banobras lawsuits nor the Acapulco arbitration would appear to have asserted a claim for denial of “most-favored-nation treatment.” Article 1104 requires a Party to accord to investors and investments of investors of another Party the better of the treatment required by Articles 1102 and 1103 — not a cause of action alleged in either the Banobras lawsuits or the Acapulco arbitration.

16 Articles 1106 through 1109 do not appear to be germane to the issues in the present case. Article 1106 relates to “performance requirements,” which appear to be irrelevant to the claims made in the present arbitration. Article 1107 contains a proscription concerning requirements for composition of “senior management and boards of directors” that is likewise inapplicable. Article 1108 relates to “reservations and exceptions.” Article 1109 concerns the freedom to make transfers, which does not appear to be at issue in the present case.

17 It provides that: “1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (“expropriation”) except: (a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and Article 1105(1); and (d) on payment of compensation in accordance with paragraphs 2 through 6.” Article 1105(1) as referred to in subparagraph l(c) of course states that: “Each Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.”

18 Claimant's Memorial described the three domestic proceedings commenced by Acaverde in Mexico, and stated that “[i]n neither the lawsuits against Banobras nor in the domestic arbitration against Acapulco did Acaverde allege any violations of NAFTA or international law, and specifically it did not assert any legal theories based on ‘expropriation’ or violations of the minimum standard of treatment required under international law.” Claimant's Memorial further described the claims as follows: “The two lawsuits against Banobras were filed in Mexico City district court on January 27,1997 and July 31,1998 and were based on Banobras’ breach of the Line of Credit Agreement. The first suit was for the 1996 unpaid invoices and the second suit was for the 1997 invoices.” (Id., p.6, para. 4.14.) At the date of the Memorial (September 29, 1999) Claimant stated that: “Only an amparo proceeding remains pending with respect to the first suit against Banobras, and the trial court dismissed the second suit based on an argument submitted by Acapulco. Acapulco appeared at the request of the court and argued that Acaverde's claims related to unpaid invoices should be settled under the arbitration clause in the Concession.“

19 Claimant's Memorial of September 29, 1999 (p.2, para. 4) set forth “at least two violations of NAFTA Chapter Eleven, Section A“ — specified as breaches of NAFTA Article 1110 and 1105. It characterized them as follows: “By revoking Waste Management's concession without compensation, Mexico effectively expropriated the fair market value of Waste Management's investment.” (Article 1110 claim; id., p. 2, para. 1.4.) “Mexico's arbitrary refusal to perform its obligations under the Concession and its affirmative acts to thwart it violate recognized rules of international law, especially those related to long-term economic development.” (Article 1105 claim; id., p.2, para. 1.5.).

20 Memorial, p. 46, para. 5.22. (Italics added.)

21 Azinian et al. v. United Mexican States, Case No. ARB(AF)/97/2, award dispatched on November 1, 1999 (typescript), p. 27, para. 97 (italics in original).

22 Azinian, p.23, para. 83 (italics in original).

23 Id., p.25, para. 87 (italics added).

24 Counter-Memorial, p.25, para. 113 (italics added).

25 The French text of Article 1121. l(b) is: “… renoncent à leur droit d'engager ou de poursuivre, devant un tribunal judiciaire ou administratif aux termes de la lé gislation d'une Partie ou d'une autre procédure de règlement des différends,des procédures se rapportant à la mesure de la Partie contestante présumée constituer un manquement visé à I'article 1116.” (Italics added.) A “procédure se rapportant à la mesure de la Partie contestante” is a procedure that addresses or relates to that measure directly; it is not merely “en relation avec” that measure. The Spanish text is: “… renuncia a su derecho a iniciar o continuar cualquier procedimiento ante un tribunal administrative o judicial conforme al derecho de cualquiera de las Partes u otros procedimientos de solución de controversias respecto a la medidapresuntamente violatoria de las disposiciones a las que se reflere el Artículo 1116.” (Italics added.) A “procedimientorespecto a la medida” is, again, a procedure that addresses or relates to that measure directly, and is not merely “en relation con” that measure.

26 Award, §§ 24-29, pp. 16-19.

27 Award, § 27, p. 19 (italics added).

28 Award, § 29, p. 20. Likewise: “El hecho … de que el objeto de los procedimientos íniciados en contra de Banobras y Acapulco se refiriera a una de las medidas presuntamente violatorias de las disposiciones del TLCAN es prueba suficiente, a tenor de lo dispuesto por el propio artículo 1121 del TLCAN, para encuadrarlo dentro las conductas que prohibe la renuncia a la que se refiere este artículo.” Award, § 27, p. 19 (italics added). However, as seen above, what Article 1121 refers to is not just that the “objeto de los procedimientos … se refiriera a una de las medidas presuntamente violatorias de las disposiciones del TLCAN,” but that the proceedings themselves (not just their object) be “with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article 1116.” What is required is more than a mere reference: it is a direct relationship to the NAFTA measure.

29 For example, it is only necessary to consult the document submitted by Mexico at the hearing on January 31^st, which has not been disputed by Claimant, in order to see this. (“Materials in Support of Respondent's Oral Submission” at Tabs 2 “Legal Proceedings Chronology” and 3 “Extracts from the Pleadings of WMI and Acaverde in Different Fora“). In particular, the last document, “Extracts from the Pleadings of WMI and Acaverde in Different Fora,” demonstrates clearly and succinctly how the Mexican proceedings were not the same as the present NAFTA arbitration. In a rough calculation in United States dollars, and excluding all costs, it is easy to see that the amounts actually claimed by Acaverde in Mexico were ± U.S. $28,339,343 and that the amounts claimed in the present NAFTA arbitration are $36,630,000 — a difference of some U.S. $8,290,657, or approximately 23%.

30 “A consent and waiver required by this Article shall be in writing, shall be delivered to the disputing Party and shall be included in the submission of a claim to arbitration.“

31 Award, § 24, p. 16. Thus, the Award states:” este Tribunal deberá comprobar que Waste Management ha presentado la renuncia de acuerdo con las formalidades previstas en el TLCAN y que ha respetado los términos de la misma a través del acto material de desistir o no iniciar procedimientos paralelos ante otros tribunales.” (Award, § 20, p. 14.) The Award reasons that: “Se hace necesaria pues una valoración del comportamiento del sujeto que renuncia así como de la responsabilidad que deberá asumir si se produce una divergencia entre lo manifestado y el comportamiento efectivamente realizado ya que él y solo él responde de la eficacia de tal declaratión en virtud del llamado principio de la autorresponsabilidad.” (Award, § 24, p. 16). And the majority continues, to find that: “A tenor de lo hasta ahora expuesto, es claro que la renuncia exigida en virtud del artículo 1121 del TLCAN requiere una manifestación de voluntad por parte de quien la emite en cuanto a la renuncia a iniciar o continuar cualesquiera procedimientos ante otros foros respecto a la medida presuntamente violatoria de las disposiciones a las que se refiere el TLCAN.” (Ibid.) Its conclusion follows: ” Asimismo, esta dejación de derechos debió hacerse efectiva a partir de la fecha de la presentatción de la renuncia, esto es, el 29 de septiembre de 1998. La referida declaratión de voluntad también exige un determinado comportamiento de la declarants, Waste Management, exteriorizador del compromiso adquirido en virtud de la citada renuncia.” (Ibid., italics added.)

32 Annex 1120.1 in its French version reads as follows: “En ce qui concerne la soumission d'une plainte à l'arbitrage: (a) un investisseur d'une autre Partie ne pourra alléguer que le Mexiqué à manqud a une obligation au termes (i) de la section A ou du paragraphe 1503(2) (Entreprises d'État), ou (ii) de I'alinéa 1502(3)a) (Monopoles et entreprises d'État), lorsque le monopole a agi de façon incompatible avec les obligations de la Partie aux termes de la section A, dans le cadre d'un arbitrage aux termes de la présente section et d'une procédure soumise à un tribunal judiciaire ou administratif mexicain … .” There is no substantive difference in this text from the meaning to be given to the English version. In its Spanish version, Annex 1120.1 reads as follows: “Respecto al sometimiento de la reclamación al arbitraje: (a) un inversionista de otra Parte no podrá alegar que México ha violado una obligatión establecida en: (i) la Sección A o en el Artículo 1503(2), “Empresas del Estado“; o (ii) el Artículo 1502(3)(a), “Monopolios y empresas del Estado”, cuando el monopolio ha actuado de manera incompatible con las obligaciones de la Parte de conformidad con la Sección A, tanto en un procedimiento arbitral conforme a esta sección, como en procedimientos ante un tribunal judicial o administrativo mexicano ….“ There is no substantive difference in this text from the meaning to be given to the English version.

33 “Submission of the Government of Canada” dated December 17,1999, para. 5.

34 For example, in the present situation since both Banobras litigations — as they did — went against Claimant, would they not be dispositive of the issue of liability pro tanto on the guarantee for payment of the unpaid invoices?

35 The record before the Tribunal is unfortunately bare of useful evidence of travaux préparatoires of NAFTA in this regard.

36 See footnote 21 supra.

37 Azinian, p. 27, para. 97 (italics in original).

38 Id., pp. 27-30, paras. 98-105 et seq.

39 Submission of the Government of Canada, para. 5.

40 Canadian submission, para. 5.

41 This was done unequivocally in its oral written submission to this Tribunal and less directly in its written pleadings; see Claimant's Memorial of September 29,1999; pp. 36-37, paras. 4.16 and 4.17. At the hearing of January 31,2000, Claimant was explicit in stating that it would thenceforth not pursue any local remedies in Mexico.

42 The foregoing discussion must again be premised on the understanding that the only truly conflicting local remedies would, in fact, be local remedies sought “with respect to” the same measure complained of as the actual NAFTA breach.

43 See Award, § 24, p. 16, last paragraph.

44 The former is established (or not) at the outset of the proceedings, and the tribunal for these purposes exercises the “compétence de la compétence” in order to make this determination. The latter can only be determined if the tribunal has jurisdiction to determine it –not the compétence de la compétence relating to jurisdictional matters, but genuine jurisdiction to adjudicate the case.

45 If the Claimant's case is inadmissible, the Tribunal has jurisdiction to hear it, but should decline it on grounds relating to the case itself –not relating to the role or powers of the Tribunal. An example of this might be where a claimant's nationality is questionable or double, but where the Tribunal otherwise has jurisdiction. Another example might be if the claim is time-barred or where there is a similar substantive defect on the face of the complaint which does not, however, invalidate or depreciate the Tribunal's jurisdiction as such.

46 Article 79 of the Rules of the International Court of Justice contemplates instances where a jurisdictional (or admissibility) objection may not “possess, in the circumstances of the case, an exclusively preliminary character,” and should therefore be considered together with the merits of the case.

47 For this purpose, see the recent decision of the International Court of Justice in the Land and Maritime Boundary between Cameroon and Nigeria, Preliminary Objections, Judgment of 11 June 1998, I.C.J. Reports 1998, p. 275; and also South West Africa, Second Phase, Judgment, I.C.J. Reports 1966, p. 6 at p. 19, para. 7.

48 Ethyl Corporation v. The Government of Canada (Award on Jurisdiction), June 24, 1998; 38 I.L.M. 1999 at 708. In that case the issue presented was whether jurisdiction should fail because the written waivers by Claimants “were provided only with the Statement of Claim … and not with the Notice of Arbitration … which according to Article 1137(l)(c), is when the ‘claim [was] submitted to arbitration’ under Section B. The sufficiency of the consent and waivers thus provided is not otherwise questioned.” Id. at p. 729, para. 89. (See also case note by Alan C. Swan in 94 Am. J. Int’l L. (January 2000) 159, at p. 162.)

49 The Tribunal continued, to say: “Article 1121(3), instead of saying ‘shall be included in the submission of a claim to arbitration’ — in itself a broadly encompassing concept — could have said ‘shall be included with the Notice of Arbitration’ if the drastically preclusive effect for which Canada argues truly was intended. The Tribunal therefore concludes that jurisdiction here is not absent due to Claimant's having provided the consent and waivers necessary under Article 1121 with its Statement of Claim rather than with its Notice of Arbitration.” (Italics added.)

50 See id. at 730, para. 92: ”…the Tribunal deems it appropriate that claimant be responsible for the costs of the jurisdictional proceedings insofar as they have related to the issues arising in connection with Article 1121. No reason appears why the consent and waivers were not furnished with the Notice of Arbitration, which would have been the better practice. Had they been, a certain part of these proceedings would have been obviated.” (Italics added.) (See also para. 3 of the dispositif. para. 96.3, ibid.)

51 In Ethyl the proceedings had been instituted under the UNCITRAL Arbitration Rules, not the ICSID Additional Facility Rules. See ibid., para. 59: “The sole basis of jurisdiction under NAFTA Chapter 11 in an arbitration under the UNCITRAL Arbitration Rules is the consent of the Parties. Unlike ICSID and its Additional Facility Rules, there exist under the UNCITRAL Rules no other jurisdictional criteria ….” The Tribunal found that it “is clear that Ethyl has consented to this arbitration by the very act of commencing it” (ibid.), and that “[t]he fundamental jurisdictional issue … therefore, is whether Canada has consented to this arbitration. It has two aspects, as the jurisdictional proceedings have underscored. One is of scope: Is Ethyl's claim within the types of claims that Canada has consent in Chapter 11 to arbitrate? The other aspect is that of conditions to consent: To what extent, if any, is Canada's consent to arbitration in Chapter 11 conditioned absolutely on the fulfillment of specified procedural requirements at a given time?” (Ibid., para. 60.) (In a footnote, the Tribunal drew attention to the discussion of ICSID's objective criteria in Vacuum Salt Products Limited v. The Government of the Republic of Ghana, ICSID Case No. ARB/92/1 (Award of 16 Feb. 1994), reprinted in 9 ICSID Rev. — F.I.L.J. 72 (1994).)

52 Id., p. 724, para. 58.

53 See discussion above, in paragraphs 37-39 and 47-48.

54 See Article 31, para. 2(b) of the Vienna Convention on the Law of Treaties: “(2) The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preambles and annexes: … (b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.“ (Italics added.)

55 As discussed above, to this extent it may also be inferred that Mexico has tacitly conceded that the Article 1121 waiver would not apply to those disputes.

56 See the language quoted supra in paragraph 20.