hello good morning everybody and welcome to this habitation exit arbitration SL 25125 fly resources uh mws and price

management against Theos as um we know each other by by by now that to the extent that this is

going to be recorded probably a presentation here is in order on on the part of the tribunal this is Manuel

Conte I'm a Spanish National and together with me we have on my on my right France stman he is both Swiss and

Peruvian and Spanish speaking as well and then on my left and he was appointed by the Clemens and Miss Al who is a

French national and he was appointed responding unfortunately he's not Spanish speaking and that's why we have

been interacting within ourselves always in English and or in French or in French occasionally in French and for that

reason I beg Mexico's Indulgence but because I will be speaking mostly in Spanish in English except in on a few

occasions um before I give you the floor for in case you have questions for housekeeping purposes first of all the

tribunal hasn't heard from from Mr Kang so we take it that he will not be um coming to this hearing neither in person

nor through through video conferencing uh I will later on ask the Mexican representation to confirm that they

haven't uh got either any any any message or writing from mran then uh as we told you last

Friday to to make life easier for stenographers who have a very hard time in in these hearings will will break

every say 90 minutes you will signal Analisa Analisa who is the real boss here she will let

us know when we should um we should stop uh for housekeeping purposes uh you know that tomorrow will be well the starting

times different occasions is will be different and Wednesday we will start as early as 8:00 a.m. but for the time

being today we we are F so I don't have any any other messages uh for housekeeping but I don't know whether

other claimants or respondent want to take the floor and and and introduce any issues before I give the floor to the

representatives from the US Department of State Mr mimer or Mr Darman we need to submit some redaction

requests uh for the latest exhibits that were introduced um today I think is the the deadline we're happy to do it today

but we just wanted to give everybody time to prepare for this hearing so would you like us to do that

today a redution request concerning what sorry uh concerning name uh addresses account

numbers all those invoices that were introduced they have some it shouldn't be disputed the issues that need to be

redacted from it for privacy purposes okay and then sorig preso thank you Mr President U if uh the

uh clment require it's additional time to um submit the reductions of uh its uh evidence today is a deadline um respond

is flexible today is a fle is a complicated day however if uh uh it needs more time the claim does uh and

it's reasonable that's fine more what are they supposed to to introduce today uh other than what they already did

see if I understand uh the response from claims corre correctly today is the deadline to submit um reductions uh of

uh the last piece of evidence that was submitted if I recall on 20 November this in connection with the

confidentiality procedural order uh either U uh bo two or three today is a deadline that's my understanding and we

wouldn't have any issue to Grant an extension to the claim it if they need so nether of my colleagues want to say

something which they don't seem to um then we start our um meeting today we substantive part of our meeting today

with um a presentation by the United States and um sorry sorry I failed to say um to the extent that this is been

recorded I have introduced the members of the tribunal I will ask um each each member of of the the parties to present

briefly their their delegations uh before we start the proceedings Mr mimer good morning I am

Andrew mimer to my left is Andy durman and then going down to my right we have Javin Porter Cole Brown dorf we're all

at the law firm of Holland and KN then we have Mr Jim Finley then we have Mr Luis keran then we have

experts Mr Rodrigo Zamora and expert Mr Danielle and miss and then

for and from Mexico Mr mfo thank you very much uh Mr uh president here we have Rafael araga to my right my name is

Alan from filia Ros I am the general director of uh the general Consulting um of

uh then we have Mr uh Stefan Becker and then uh after that we have Laura Mahia Rafael Rodriguez

Maldonado we also have Jorge escalona Oscar Rosado Gary Shaw and Rodrigo lusto will be here

today and uh today Jorge asali is also with us I have two comments uh Mr President that

I would like to make Mexico's Representatives uh are going to speak uh in English in

90% uh of uh uh the uh time rather we're going to speak uh Spanish 90% of the time but if uh uh in Spanish you said

I'm sorry you said English but you meant Spanish right yes yes yes I meant 90% of the time we are going going to um speak

Spanish 90% and some of my colleagues we will uh speak they will speak um English we're going to talk as slowly and calmly

as possible for the benefit of the interpreters also um and we were wondering um if uh the uh

secretary has the electronic he bundle as well as the other party we we have a the latest USB okay

and so to finish with housekeeping I think anaisa has the final message to to us um just a couple of points we all we

know it's quite hot in here we've already requested them to fix that and they are doing that um the second point

is especially uh people that are not using the interpretation if you're speaking in one language and the other

person is answering in the other language if there could be a pause between um answer and question that

would be great so that the interpreters have time to switch the channels that's it okay wonderful so we

can now proceed with our agenda and then we invite they already here Mr David biger and Mrs Maria moo um

representative of the vi Department of State to to make a presentation on their on their um presentation amus brief

concerning the treaties um I I need to emphasize that the tribunal is grateful for Department to to make this

submission we have read it not not only the submission but also the responses from the two parties and we are eager to

hear you right now it seems there there okay thank you Mr President and members

of the Tribunal for the opportunity to present the views of the United States my name is Mary Muno and I'm an

attorney adviser at the US Department of State Office of the legal adviser pursuant to article 1128 of the

NAFTA article 14 D7 paragraph 2 of the usmca I will make a brief submission addressing questions of treaty

interpretation arising out of the claimants and respondent submissions dated September

22nd 2023 I will address three topics first the way to be given to the views of the

NAFTA and usmca parties in interpreting the terms of the agreements second the methodology for determining

rules of customary international law that fall within the minimum standard of treatment under NAFTA article

1105 and usmca article 14.6 and third I will discuss the issues of consent and

waiver as is always the case with our non-disputing party submissions the United States does not take a position

here on how the inter interpretations offered apply to the facts of this case and no inference should be drawn from

the absence of comment on any issue I will Begin by discussing the weight accorded to the views of the US

on matters addressed in a non-disputing party submission State parties are well placed

to explain the meaning of their treaties including in proceedings before investor State tribunals like this one the United

States consist recently includes non-disputing party Provisions in its investment agreements including the

NAFTA and the usmca to reinforce the importance of these submissions in the interpretation of the provisions of

these agreements and we routinely make such submissions article 31 of the Vienna

convention on the law of treaties recognizes the important role that state parties play in the interpretation of

agreements although the United States is not a party to the Vienna convention we consider that article 31 reflects

customary international law on treaty interpretation article 31 paragraph 3 states that in interpreting a treaty

quote there shall be taken into account together with the context a any subsequent agreement between the parties

regarding the interpretation of the treaty or application of its provisions and B any subsequent practice in the

application of the treaty which establishes the agreement of the parties regarding its interpretation end

quote article 31 is framing mandatory terms it is clear that subsequent agreements between the parties and

subsequent practice of the parties shall be taken into account thus where the submissions by

the three NAFTA and usmca parties demonstrate that they agree on the proper interpretation of a given

provision the tribunal must in accordance with ar article 31 paragraph 3A take this subsequent agreement into

account the nefta and the US MCA parties concordant interpretations may also constitute subsequent practice under

article 31 paragraph 3B the international law commission has commented that subsequent practice may

include quote statements in the course of a legal dispute end quote accordingly where the na the usmca

party submissions in an arbitration evidence a common understanding of a given provision this constitute

subsequent practice which establishes an agreement of the parties that must be taken into account by the tribunal under

article 31 paragraph 3B investment tribunals have agreed that non-disputing party submissions by the

nefta parties in arbitrations under chapter 11 may serve to form subsequent practice specifically I would point you

to paragraph 185 of the Mobile versus Canada decision on jurisdiction and

admissibility dated July 13th 2018 as well as pars 103 104

and8 to 160 of that decision for context I also refer you to paragraphs 188 to 189 of the awarded jurisdiction

in Canadian Cattleman for fair trade dated January 28th 2008 to sum up this point whether the

tribunal considers that the interpretations presented by the three NAFTA and usmca parties are subsequent

agreement under article 31 paragraph 3A subsequent practice under article 31 paragraph 3B or both the outcome is the

same the tribunal must take the nefta and the usmca party's common understanding of the provisions of their

treaties into account I will now discuss the customer international law minimum standard of

treatment specifically I will address the methodology for determining rules of customer international law that fall

within the minimum standard of treatment NAFTA article 1105 entitled minimum standard of treatment provides

in paragraph one that the NAFTA parties shall Accord to Investments of investors of another party quote treatment in

accordance with international law including fair and Equitable treatment and full protection and security end

quote as explained in our written submission the NAFTA Free Trade Commission or FTC issued an

interpretation on July 31st of 2001 reaffirming that paragraph one of article 1105 quote prescribes the

customary international law minimum standard of treatment to be afforded to Investments of investors of another

party end quote the FTC clarified that the concepts of fair and Equitable treatment and full protection and

security do not require treatment quote in addition to or beyond that which is required by the customary international

law minimum standard of treatment of aliance and quote this interpretation is binding on the tribunal pursuant to

paragraph 2 of NAFTA article 1131 likewise pair of one of usmca article

14.6 requires each party to quote Accord to covered Investments treatment in accordance with customary international

law including fair and Equitable treatment and full protection and security end

quote paragraph 2 provides that quote for greater certainty paragraph one prescribes the customer international

law minimum standard of treatment of aliens as the standard of treatment to be afforded to covered Investments end

quote the phrase for greater C certainty indicates that the treaty parties understood the language of par one to

have the meaning set forth in paragraph two even if paragraph two were not present according to the same provision

the concepts of fair and Equitable treatment and full protection and sec security do not require treatment in

addition to or beyond that which is required by that standard and do not create additional substantive

rights the ftc's interpretation confirms that NAFTA parties Express intent to establish the customary international

law minimum standard of treatment as the applicable standard in aftera article 1105 similarly usmca article

14.6 EST lishes the usmca parties Express intent to prescribe the customary international law minimum

standard of treatment as the applicable standard in that article as the United States has

explained and has set forth in the ilc draft conclusions on identification of customary international

law to identify a rule of customary international law it is a quote in the dispensible requirement

that both a general practice and acceptance of such practi as law opinion juries be ascertained end

quote this Two element approach is the proper methodology for determin for determining whether a customary

international law rule covered by NAFTA article 1105 and usmca article 14.6 has

crystallized claimants have argued in their response to the US non-disputing party submission in this case that quote

the United States views the role of arital tribunals in developing customer international law as persuasive

Authority end quote this is an overstatement of the US position as the United States has

explained the decisions of arbitral tribunals do not themselves establish rules of customary international

law arbitral decision s regarding customer international law should only be treated as persuasive to the extent

that they include an examination of State practice and opinion jurist that itself can be relied upon to identify a

rule of customary international law as Incorporated in NAFTA article 1105 paragraph 1 and usmca article

14.6 paragraph 1 an arbitral award that purports to address the customary international law

standard for fet but lacks an examination of State practice and opinion juries should not be relied upon

by the tribunal climens also alleg that by executing investment treaties quote

States necessarily agree to have arbitral tribunals play a role in defining the Contours of customer

International law including to determine what constitutes the minimum standard of treatment afforded to Investments by

Foreign investors and quote this is inaccurate as the United States

explained in its written submission while the nefta and usmca parties consented to allow investor state

tribunals to decide issues in dispute in accordance with the agreements and applicable rules of international law

they did not consent to delegate to arbitral tribunals the authority to develop the content of customary

international law which must be determined solely through a thorough examination of State practice and opin

juries as a final point on a on NAA article 1105 paragraph 1 and usmca article

14.6 paragraph 1 the United States clarifies that incorrect Court decisions may only violate the F standard if they

constitute a denial of Justice the obligation to provide fair and Equitable treatment under NAFTA

article 1105 paragraph 1 and usmca article 14.6 paragraph 1 includes the obligation

not to deny Justice in criminal civil or administrative adjudicatory proceedings specifically a denial of

Justice exists where there is for example an obstruction of access to courts failure to provide those

guarantees which are generally considered indispensable to the proper administration of justice or a

manifestly unjust judgment the threshold required for judicial measures to rise to the level

of a denial of Justice in customary international law is high as a matter of customary

international law international tribunals must defer to domestic courts interpreting matters of domestic law

unless there is a denial of Justice turning now to consent and waiver because the parties have

conditioned their consent upon the waver requirements under NAFTA article 11:21 a valid and effective waiver is a

precondition to the party's consent to arbitrate claims and to a tribunal jurisdiction under usmca Annex 14

c a claimant's failure to file an effective waiver before The Constitution of the tribunal would result in the

dismissal of the arbitration unless the respondent state agrees otherwise because the tribunal would have been

constituted without the consent of the respondent state as contemplated in AA article 1122

paragraph 1 in such circumstance when the tribunal assesses its jurisdiction upon

Constitution it would invariably have to conclude that it lacks jurisdiction AB an

issue finally I would just emphasize that the United States stands by the interpretation set forth in its written

submission although did not address all of those issues today with that final observation I will

close my remarks I thank the Tribunal for the opportunity to present the views of the

United States on these important interpretive issues thank

you many many thanks Mr muino for coming here today and for making this this uh presentation um I think you are not

expected to take any any any questions uh even though maybe parties will address your your remarks in their

opening presentations but um uh so we really thank you your presence here and Mr big as well and again I emphasize

that the tribunal is grateful for this uh contribution from the from your office and from the US Department okay

thank you so then we we seem to be slightly ahead of a schedule so I we now give the

opportunity to Mr mimer to to make the opening presentation for clim for the claimants

good good morning good morning good morning we may run a little bit longer

than the allocated two hours I just wanted to give everyone some advanced notice on that we're going to try our

best to keep it within the time frame so I appreciate the United States for ending

early we have an overview of how this presentation is going to go I'm going to talk to you for a couple of sections

starting with how Mexico encouraged the claimants to invest in Mexi in in Mexico going to switch over to Javin

Porter and then Cole Brown dorf and if there's time for some concluding remarks we'll have them but I wanted to start

with how I met Jim Finley and Luis Kernan I first met them in 2020 3 years ago almost around this

time they came to me they told me about how they had entered into three contracts with PMX the national Oil

Company of Mexico um these contracts required them to purchase workover rigs drilling rigs

all for the effort of helping PMX exploit the state's hydrocarbons on behalf of the

state they told me that they had a vision of putting down their roots in Mexico and one day building a productive

business this was a long-term project for them

unfortunately their Investments didn't turn out as planned two of the contracts ended up in

lawsuits and when they came and saw me those lawsuits were still sitting before Mexican Courts for over 5 years

unadjudicated the last contract the 821 contract was the most concerning PMX had initiated an

administrative recision Its Right granted to it by the government of

Mexico to effectively end its obligations under the contract and this is a big contract $418 million over four

years that PMX had agreed to do what they told me for anyone who's done this what they told me shocked my

conscience PMX had issued a work order after oh 300 days 100 days I forget the exact number we'll go through it we'll

go through it in a minute after not issuing work suddenly a work order

appears pemex insisted that that work order be performed knowing that our clients couldn't do

it despite the clear language of the contract pimex then proceeded to utilize its government Authority and

and conduct an administr administrative recision of the contract they were stuck in

court they needed help and didn't know what to do they had lost hope that pimex had

any desire to treat them fairly they had lost hope in the Mexican court system that their claims could get adjudicated

or that they would be heard this is why investment treaties exist

what happened to Jim and Louise cannot be the normal if this behavior is

condoned it will be repeated investment treaties are supposed to protect against it and

that's why we're here so let's start with how Mexico invited claimant investment into

Mexico Mexico owns its own hydrocarbons PMX was created by Mexico to exploit its hydrocarbons it's the national Oil

Company of Mexico as I said Mexico is dependent upon hydrocarbons for its revenues a third of its Federal revenues

come from oil unfortunately if you don't continue to find new oil your production declines

and that's going to have a problem for your National coffers that's with the situation Mexico

was confronted around 200 four its production had peaked and it needed to reverse the

trend and so what did it look to it looked to a giant field called chantek or atg as you might see in the

papers this discovery was made back in 1926 production began in 1952 and it's a huge field

make no make no doubt about it there's an estimated 136 billion barrels of oil the problem with chantek is that

it's complex in its geology and has low permeability which means the hydrocarbons don't flow as easily as one

might want and what pemex's officials told us in a video that you have exhibit c35 this project once it the price of

oil hits 75 to 80 is not economic so how were Jim and Lise involved in

this Luise was working for PMX building pipelines he was in communication with PMX officials they told them about this

new project that pimex wanted to conduct to help develop the jaanta effect field they

asked Louise do you know anyone from the United States because we're right above

Mexico and we were experiencing a significant boom called the Shale boom in in the United States do you know

anyone who can help us out through his contacts Luis new Jim there's Mr

Finley getting to know Jim I can tell you he's the real deal he started a company he has over 40

years of experience in the oil and gas sector and he's been able to utilize the Technologies

and the techniques that has helped revolutionize the oil business in the United

States this is the kind of person and company that PMX needed to develop chantek PMX went on a road show it was

promoting investment into Mexico and these are three of the individuals that were first involved

if you ask Jim and Louise they'll tell you um they were promised PEX PMX would honor its

commitments the old times were over it would pay timely and there is one quote that they vividly remember PMX pays PMX

pays these aren't the only individuals there's other players a gentleman named alelo lozoya

he would become pemex's CEO after Mr Suarez Kel He would be appointed by Mexico's

new president in December 2013 alongside him was his for lack of better words right-hand man a gentleman named freyan

Gracia let me talk to you a little bit about the introduction into how you're going to do business in

chantek through these contracts it's important to note that PMX is governed by law it's not like a

normal company relevant here is the 2008 pimex law before pimex could enter into any of

the three contracts with us PMX had to get approval from the national government of

a budget it seeks the bud it submits its request to the to the National Authority

it gets approved and it enters into the contract in other words Mexico's government exerts a

certain level of control over pimex restraining its ability to spend money because of this function all three

of our contracts guaranteed our clients the resources have been provided to care carry out the work under this

contract one of the first five Clauses of each contract assuring our

clients there would be money to request for the work and pay for the work there's a number in the 803

contract is $48 million Mexico's Congress approved a budget for this PMX would not have agreed to this

contract otherwise similarly in the 804 contract there's a number $55

million Mexico's Congress approved a budget for $55 million for this contract PMX would not have agreed

otherwise finally it's a much larger number in the 821 contract $418

million Mexico's Congress approved $418 million for PMX to enter into the 821 contract it would not have signed this

contract otherwise let me tell you why this is important these numbers our business I

do oil and gas work our business requires a lot of investment upfront it's Capital intensive

upfront what we were required to do we were required to invest with everything you can imagine set up a business get

down to Mexico and be ready to perform that required us to supply equipment materials import

them into Mexico transport them to job sites we had to build roads we had to build Bridges and get access to each of

these sites where Mexico wanted us to conduct the work in addition we were also required

to spend a lot of capital training employees this is not an insignificant project and I put this picture here just

to put it in context we're not talking of driving a drilling rig across the border from the

United States into Mexico all of the equipment you see we were required to provide

in order to perform that work and it had to be sitting in Mexico waiting to perform when pimex

asked for that work over time we started in February 2013 with

what was called the 803 contract we submitted a bid we qualified and we

won not long after after starting to the work under the 803 contract PMX offered us another

contract called the 804 contract that was outside the typical Tinder process

finally in February actually before February 2014 we submitted a bid in late 2013 for the 821 contract I'll show you

a quote in a few minutes we were encouraged to do it Mexico wanted our investment they

needed our help we qualified and won that bid that would become the 821 contract and as I

told you it's a 4-year contract valued at $418 million so let's talk about how Mexico

treated the claimants and their Investments I have several slides and you can peruse them I'm going to give

you for the sake of time I'm going to give you a summary of the first few from February 2012 until around

January 2016 a 4-year period of time we entered into three contracts

effectively entered into them over two-year period Mexico encouraged us to invest

further our investments in Mexico and actually stay in Mexico when issues arose and as I promised

here's a note that Mr Gracia again the number two at pmex at the time told Mr

Finley we understand there may be issues of payment but please stick around invest more we'll make it

right the slides will show you and as well as in our briefing the claimants made every effort possible to obtain the

benefits under their contracts they wanted to make them work you don't invest money

otherwise unfortunately pmex frustrated the process they stopped asking for

work some point they said they didn't have to ask for work they sought extensions to the performance term they

sought changes to payment terms at one point went from 20 days to 6 months you're running a

payroll depending upon revenue and your counterparty the state tells you I can't pay you within 20 days I have to pay you

in 6 months you can imagine the effects PMX demanded discounts two of the contracts they

ended performance in a process called a finito you've read a lot about a finito it's effectively they agreed to stop

asking for work we agreed to stop expecting payment for you not asking for work for the last contract the

821 PMX asked for work stopped asking for work asked for work again and that lasted over the course of less than two

years despite having stopped asking for work in January 26

suddenly in November we reive a mysterious work order which is you are probably

intimately familiar with the work order by now so how can I explain Pim X's

Behavior pretty easily I don't think Mexico denies it this is a graph taken from Jim

Finley's first witness statement I edited it to put a red box around the relevant time

period you can see the three green dots are when our contracts were entered into very consistent with what pemex's CEO or

PMX exploration of production otherwise known as pep p what he advised in a video that you

have if oil is above 80 times are good and we can perform this we can do these contracts but once it falls below tough

times ahead and that's exactly what happened in the Red Dot is when pmex stopped performing alog

together by April 2016 we wanted to get pemex's attention keep in

mind we have a payroll we have equipment waiting to work expecting to work you try to get pemex's attention were here

they file a lawsuit the intention was to get PMX to start performing again under the

contract at the time and I cannot emphasize it enough they had not issued a work order for over5 days overall

through the term of this contract 300 days of not asking for work this is a graph to show

you and we'll talk about it in a few minutes we filed the lawsuit in April 2016 the work order shows up November

2016 210 days later here's the burn rate or what we were

spending a month on to keep the employees and equipment on standby $200,000 a month

approximately we're forced to lay off employees reload relocate equipment within

Mexico remove our representative from pemex's office we had employees embedded within pemex's offices to help

coordinate this work PMX knew all about it this is not a hidden

secret yet in November 2016 Here Comes work order 28 2016 to drill the kaapa Chaka 1240

well we pointed out at the outset of this arbitration pimex had told us repeatedly and I think I read in the

briefing from Mexico it's maybe not in dispute PMX didn't have the budget it had run out of

money to date I've yet to see where the money to pay for this work order was we pointed out that it didn't have a

drilling permit in the rejoinder and I'll address it in a few slides we now have somewhat of an explanation of a

drilling permit although when you scratch slightly on the surface you re you it

exposes that's not a valid excuse either this drilling was to begin on December 17th and I'm going to explain to you why

that date is important but what I want you to take away from this is who signed this work

order a gentleman named David Perez and Luis Gomez Luis Gomez was our contract manager for the 821

contract he's not here he's the one that told Luis keran this work order was

fake we've seen no rebuttal evidence to the contrary so again I told you to keep

December 17 in mind what Mexico still hasn't addressed included with this work

order was what's called a movement of drilling equipment and it's the chart at the

bottom it lists two drilling rigs we've asked no one has told

us who owns eq2 not us similarly I don't know who owns PMX

404 not us these questions remain open I would assume if I believe this work order were

valid I would have addressed these issues but if you read fine in the fine print and it's hard you'll have to maybe

pull up the exhibit this work for this this movement of drilling rig shows it was to be

between December 15 and December 29 over a 14-day period that doesn't match the work order

that we were given the devil is in the details I took this graphic about the

equipment from the last version of this movement of drilling equipment that we had everyone knew our rig was called the

PMX 805 not eq2 and here's that movement of

equipment the last one we could find in our chart in our files excuse me I edited this and put a black box

around four Wells corresponding to Weatherford another person performing

another company performing work for PMX at the time these four Wells include the kaapa

Chaka 1240 we raised the issue it has yet to be

addressed what's noteworthy though these four Wells were part of a program not just the

1240 the 1480 the 122 and the

1680 and why do I bring these to your attention when PMX decided to apply for a drilling permit to drill this well

guess would it apply to drill a will a well permit four or apply for a well permit four all

four of those Wells there's no other conclusion to reach but that these were assigned to

Weatherford not to us there's a lot of people who could explain all of

this there's a whole list I just took the ones that I could find on the work order

documents none of them are here so why did pimex do this Luis Kian told

you um he told you in his first witness statement he had met with the senior official at pimex in Mexico

City that senior official told him exactly what Luis Gomez had told him about about this work order

to it was fake they wanted an excuse to try to get rid of this contract it was a liability

to them they needed to make it look legitimate but with this senior official

he increased the amount I guess the he upped the ante is the expression I'm looking for he told Louise actually it

wasn't just to resend the contract we want to go after your $ 41.8 million Bond turns out as we've shown you

everything this gentleman Rodrigo Hernandez told Luis keran was true to date there are still efforts to

go after the $ 41.8 million Bond so what else does the evidence show us

Pac started looking for other grounds to administratively resend this contract PX Mexico has argued something

about it's called a pakma pacma obligation this is effectively 2% of your

invoices goes to support Community Affairs think of playgrounds dining areas Public Works

what's important about this slide suddenly shortly a month after we file

our lawsuit to get pemex's attention the pakma area begins sending notices to Luis Gomez the contract manager the 821

contract about these pakma obligations these were obligations that had been assigned in January

2015 let's recall during this period of time asking for work not asking for work

asking for work not asking for work bleeding us of cash yet here we are PMX not ex not

thinking it has to be obligated on the contract and pay us ask for work and pay us but yet it expects money from us in

return why didn't we hear about it before we have in evidence now Lis Gomez apparently starts writing notices to

Finley in December 2016 why is that date important that's after the work order what I noticed about this

particular document the reason why I have this graphic notice who didn't

sign everyone I have seen in every document is very careful to either initial or sign something with their

name on it this document which has been submitted to you as proof of notice someone

signature is missing Luis Gomez's boss you'll find that in others that's why I choose the words

carefully when I say he began writing notices I don't know if he sent those notices into March

Mr Gomez was asking pacma to gather evidence why do I have this graphic up you all ordered Mexico to disclose

documents this document references a February 9 memo apparently Luis Gomez had written

to the pacma area on February 9 I have not located that document this document is also referenced in the

antecedentes part of the memo and everyone within pemex is very careful to create a record of every communication

related to a topic one the February 9 memo is in the antecedente section but there's yet

another document I haven't seen from the documents that we have our ability to determine when Mr Loston now

first appeared is a May 8th 2017 memo in this

memo he says we have a lawsuit pending with Finley

proceed with the administrative recision because we have to impute breaches on the

contractor we've repeatedly asked and Mexico was ordered to disclose the memo that was attached to

this may8 memo as you can read it's dated May 3rd 2017 the annex box is checked ad hunto

which means attached is written in the text where is that memo that memo discusses and I'm using

air quotes among other things what other things was pemex

thinking about in June 2017 what we have right before the administrative recision

again based on in the work order 28 2016 pimex applied for the drilling permit this was important to important

enough that you ordered disclosure of documents related to it like we saw earlier that includes the

weather for Wells as I like to call them PMX submitted information required by article 27 why do I point that out

that was the excuse we heard in the rejoiner that we did not provide something called a detailed program

therefore PMX couldn't obtain a drilling permit we should have received the information that pmex submitted to the

cnh which is the authority to issue drilling permits they didn't need that

information from us we don't do that they had every technical information available to them to drill this

well so why do I bring this up I have the timeline here about how long it takes to obtain a drilling

permit in the rejoiner you read we were obligated to submit a detailed program 8 days before

drilling according to the application and the receipt of the drilling permit to actually drill the the

well it took two months how was that going to work by the end of July

2017 PMX notices its administrative recision and I point this out and apologize that it's in Spanish but I

think it's important to read the actual language they base it on two Clauses 15.1 B and 15.1 s of our

contract now if I didn't mention before I want to make sure we understand an administrative recision is a special

power that pimex has because it's part of the Mexican Government it effectively allows pimex to

adjudicate and render Justice if you will under a contract

question why didn't pimex look at Clause 15.1 R it comes right before 15.1

S I would note if you look at this document luis's Luis Gomez's name appears once again he

initialed it and again this isn't giving him more detail of this document it's exhibit

c104 I Clause 15.1 is important we've talked about it we've

received uh we've received argument about how it's supposed to be interpreted my question is how can you

ignore it it's pretty clear it says PMX cannot invoke this special

power that it is given unless and until there are 15 unfulfilled work orders I can tell you I wondered why why this

process occurred it's an unusual system why 15 you got to look

closely at the contract I encourage you to read it I've given you the provision and

actually when ultimately a unilateral finito the ending of the performance under the contract PMX recognizes this

provision it was aware of this provision this provision is effectively it contemplates the contractor not

fulfilling a work order and what does it do it says if you don't fulfill the work

order we will penalize you $17,500 for each day that you don't perform

work not not uncoincidentally after 15 days of not performing the work order

we will consider the work order unfulfilled and we can issue a new one so there was a process under this

contract we're going to penalize you for delayed performance under a work order if you don't perform

it if you accumulate 15 of those as PMX we've had enough and we can invoke the special right of administrative recision

if you do the math 17,500 * 15 * 15 roughly equivalent to about 1% of the

contract amount pmex was required to behave better not just by

law our contract specifically says it you had a they had a duty of good faith to cooperate not intentionally mislead

and to perform the contract for the mutual benefit of us and them yet they blew P pass article

6.6.1 and article 15.1 R worse Clause 15 gives a secure

right to the extent their argument holds any water that they can terminate based on

one unfulfilled work order which defies the language of the contract they had to give us an

opportunity to cure I've seen the it says may not shall couple that with your obligation of good

faith under article three that may turns into a sh shortly after PMX obtains its drilling

permit for the coapa Chaka 1240 ministrative Le resends the contract in

September we go to court administrative Court special court that deals with things done in an administrative manner

to challenge pemex's recision of this contract and I put in September pimex agreed to suspend the elaboration of

finito for the 821 contract for a reason we'll get to that in a second what did pmax tell this

administrative Court it told this court that it had two justifications for resending this

contract one not performing work order 28 2016 and two this pacma

obligation for the work order it said hey Court we have the right to do this under 15.1

B what didn't it tell the court PMX did not tell the court yes but there's a clause 15.1 r that is

relevant and important to this and I told you why I put about the agreed suspension to the finito

process in May 2018 despite having this suspension process and despite us being in

court PMX apparently had a meeting at its offices in Mexico City to plan a claim against the 41.8 million dama

bond from my review of the documents this is the next time Mr Low's name appears now remember he testified to you

and we made it twice made it a point he had no involvement in anything related to the administrative recision

of this contract ra until he was promoted to his current position in 2020 yet here he is

again copied to a communication about the administrative recision we look forward to hearing from

him about this meeting that he attended I say he attended a highlight of the language and it's someone who fits his

job title at the time now I'm glad you raised Mr kon's lack of

appearance because now we're at the interesting part the administrative Court would rule

on October oober 4 2018 we know this in hindsight but at the

time we didn't Luis keran met Mr Lo now at a restaurant called La

auna in Mexico City it was arranged Mr keran testified

he recalls in his translation he'll he'll share with you the Spanish when he

testifies your companies are done is the effective translation into English now when you hear a story like

Louis's and you read a witness statement like Mr lenow as a lawyer I have a

responsibility to verify the facts so I arranged a phone call a teams meeting with Mr Rob

Kon I wasn't trying to get him to concede anything I was trying to understand the facts of what

happened was a long you view it there's two takeaways I want you to get from that team's

call Mr kosan Knows Mr Loa now again Mr losen now's first witness statement gave me an entirely different

impression the second Mr koson knows he was recorded that video starts at a very

awkward position we had had we had exchanged pleasantries and I can't hit the record

button until I have permission I have ethical obligations not long after that

call I get an email from Mr koson we had discussed during the call I asked watch it how do you communicate

with Rodrigo lusta now what's that messages mostly can you find them and you you'll see him

fumbling around he can't find them but let me look and I'll get back to you I I get an email I found some messages his

words not mine I found some messages from those days suddenly my mobile phone starts

ringing I was trying to invite Mr Kion to another teams meeting in respon sorry in response to his

email I wanted to have a proper conversation with Mr Kion I wanted it recorded Mr koan

called and left me this message well gra having a

technical would now be a good time to pause so we can get the technical deficiency

good we'll pause for a while until we sort this out he's got to

check was it work a 10 minute break so

Roberto e Roberto I did just I

requested R confirm to meet us e

e e e

e e e

e e e e

right e e

e e okay we are all set again so Mr mimer Sor president

Mr chairman on behalf of the delegation of Mexico we feel we must make a clarification we don't want to be

disruptive with respect to the claimant and claimant's time at certain moments it's not clear to us whether the

attorney for the claimant is offering testimony or is recalling the facts but thus

far there's no witness statement at the record of this case that includes a witness statement by Mr Mel shimer so we

consider the situation a bit irregular and we will delve further into depth on this point when it comes to offering our

uh rebuttal but that is something that strikes us but uh what do you mean when when you

say that he he's delivering a testimony rather than making a summary of an opening a statement

as far as we know Mr chairman there is no record of this recollection of facts being presented by Mr mimer regarding

the conversations and the details of those conversations with Mr Roberto kosan and particularly what has happened

around the days that he's been discussing it's something that strikes us we want to draw your attention to it

comment and I ask M Mr mimer to continue with again I received an email from Mr kosan that said he had found some

messages from those days again he's referring to the WhatsApp messages that he told me he was going to be looking

for when we had our Microsoft teams meeting suddenly my mobile phone starts ringing I can tell it's from

Mexico I don't want to answer I'm trying to do the the team another teams meeting but I

got the voicemail Roberto I did find some messages I requested i r confirmed to

meet as atuna during those days I did find that and he also found that we had a conversation with his b with about a

possible settlement uh with him and with the authorities of the Court there was a

conversation to that effect and uh his boss was the one who was negotiating that Alonso

what so if you can discuss that tell me when by moments after leaving this voicemail

my office line starts to ring and you're confronted with the situation of you have the fish on the hook do you want to

let it go I picked up again you you all we've seen this we

we have raised this to you before but it's helpful to remind you what transpired Mr koson told me and if he

were here he'd have to admit it he found WhatsApp messages he gave me the date of the

meeting at La aset Tuna I did not have September 26 2018 before this conversation during that call he

mentioned again Mr watti g a TI Rojo he mentioned Mr watti Rojo again Mr lcon now's boss at the

time apparently there was conver there were conversations about a settlement with the court same thing as the

voicemail that he left on my mobile line now during the call he also told me that

he met with the judge we've come to learn that apparently it's okay to meet with the

judge of Mexico he Mr kosan met with the judge with a gentleman called Juan Jose

poada who is Juan Jose poata Juan Jose poata would become our lawyer he would challenge the

administrative recision that would arrive a few days later Juan Jose poata would then

terminate his representation of us would you like to know why he was appointed to the board of

PMX it did not take long for Mr Roberto kose on to change his tune I tried I sent him follow-up emails

you've seen it it's in evidence he called Lise

Kian Luis didn't pick up sent Luis text messages you have that as well and you have luis's testimony of what was

said apparently Mr koson had been in contact with Mr Lenell that day

Mr lcow was not happy that Mr kosan talked to me

understandably within what two months by March 22nd he's sending you all a notice disclaiming everything completely

disavowing everything despite a 1-hour recorded call on Microsoft teams well everything that or what Mr lenow

told Mr keran at L tuna turned out to be true not long after that meeting the administrative Court issued its

decision it noted everything that it accepted everything that PMX told it they had the right to administrativ

resend the contract based on Clause 15.1 B and 15.1 s the court it says failed to consider

that might be generous Clause 15.1 R now you will hear from Mr Ms Kaz that Court had a

duty that Court was supposed to look at the allegations presented to us even if not precisely

made examine the contract and make sure the government Authority was exercising its unique role

to conduct an administrative recision properly this court did review that contract I've given you the page numbers

where I could find all the different Provisions that it cited yet

somehow this court did not C Clause 15.1 R which is the Clause immediately

before one of the bases that pemex used to administratively resend the contract we tried to challenge the

administrative Court's decision again that was Mr poata who now sits on pemex's board

while we were doing that the litigation over the 803 contract finito and just to jump you back to my timeline the 803

contract and the 804 contract the parties had agreed to enter into a finito with us reserving our rights to

make claims for amounts that we believed were owed when we filed our aaro challenge

which is as best as I understand it a collateral Al attack on the Judgment those finito litigations too

remained unresolved by March 2020 the supreme court of justice dismissed our appeal

for the aaru challenge I and I put this there's a remark that was made

that we did consider it feudal we dismissed in order to pursue this exit arbitration we had to to dismiss

everything that we were aware of that was outstanding we sent notices to every

Court you can't deny it for some unknown reason it takes the Mexican Supreme Court over a year to

notify you when it decides not to take a case or reject your case I had no idea that it had already decided against

us or declined our appeal when we submitted this arbitration so in March 2020 we initiate this this

exit arbitration again I I tell you when you're presented with facts like the ones we

have it it gives you that feeling that something this isn't the way a host government is supposed to treat an

investor we discontinued the proceedings you all were constituted by October there was

a a back and forth about how to interpret the provisions of the usmca and its interplay with

NAFTA by November despite this arbitration being ongoing in November pimex advises us

that it was proceeding with the finito or the and I using air quotes settlement of the 821

contract there's a interesting story about that but we're short on time pimex issues or it's dated I say issues IT

issues a unilateral F finito on November 10 I write to Mexico's Council guys we're in the middle of an

arbitration let's let let you all do your job and move forward once this is all

resolved move forward you can read you can read the response for self um we went through and

tried to get an interim interim award we understand that maybe not the time we had our first session the day of our

first session when we first met guess what we received a claim on the $4 41.8 million

Dam Bond so despite knowing this arbitration was ongoing about what had happened

about the 821 contract PMX continues its Quest after issuing the

finito pmex officials start to appear at our former attorney's offices again this is in Prior briefing

demanding that she accept it we took a picture I was aware of it we've I've tried it's like I'm the

lawyer tell me about these things nevertheless they went back and taped the documents to her

door it's a couple observations of this November 10

finito I told you before about Clause 6.6.1 of the 821 contract guess what pemac cites in its

Vito that Clause now it emphasizes the wrong part it enjoys the part that says a

penalty is going to be applied for 15 days but then it ignores the second half of the

sentence that if that happens the work order is considered unfulfilled and you're going to issue a new

one despite this in the finito PMX demands that we're supposed to pay it in addition to administratively

resending the contract we also owed them $262,000 for the delayed performance Mr Porter will talk about it

later but it's worth noting I don't have it here but when you read that finito look at Clause 12 I believe it's

Clause 12 or 8 my ran numerals made may be it clearly says the 821 contract will

close once all amounts paid under this vinito are made yet we've received voluminous

pages of argument about how contracts die at certain points in Time in Mexico another Vision that strikes me

from the finito again relevant to your analysis Mexico in addition to claiming

the $262,500 for the delayed 15 days of performance of work order 28

2016 it says we owe it a penalty of $ 41.8 million that's the dam bond this is no ordinary Bond as we've

seen in the briefing this is security or an asset that Mexico has

now I told you about the November 10 the finito and I question it's a curious document and

it's very curious what transpired I received the timeline from Mexico

and read it they tell us on November 10 pmax unilaterally form formalizes the

termination of contract a21 citing r43 which is what we just saw the provisions but on November

19 It's Curious language it then says although we had the authority to unilaterally terminate the

contract we're going to publish notice and they want to publish notices that if you don't attend we're then going to

carry out a finito unilaterally so you either did or you didn't on November

10 Saw another November 22nd again we're going to notify you put it and curious why why are we publishing this in the