GAMI INVESTMENTS, INC. - NAFTAClaims

with questions like in some cases whether there's a general exception
that applies to coverage. They also often deal with the question of
whether this chapter takes precedence over other chapters in the event of
an inconsistency or whether the other chapters should take precedence.
But I don't think there is any example of any of these provisions where
the intent is in a positive statement of coverage such as 1101(1) that
this chapter applies to measures relating to investments or investors.
That is used as a weeding-out tool, to take measures out of the scope of
the chapter that otherwise might infringe the chapter.
The Tribunal also, in Methanex, also said that their decision
that "relating to" must be given some sort of legally significant meaning
or must require some legally significant relationship beyond effect,
advanced the object and purpose. It's hard for me to see where that
comes. The object and purpose of the agreement, as we've discussed, is
to encourage the free flow of investment by protecting investment. And
there is nothing that we see in the object and purpose that is about sort
of minimizing the responsibility of states for their violations by
excluding measures.
The Tribunal also in Methanex said that the fact that awards
are supposed to be enforceable under the New York Convention was a
supporting point for them, and that the 1101(1) had to be given a
rigorous or restrictive interpretation in order to make awards
enforceable under the New York Convention. But that's surely wrong. I
don't know whether this was pointed out, but Article 1101, well, the
NAFTA Chapter 11 as a whole is very similar to bilateral investment
treaties as all of you gentlemen know extremely well. It is built like
the typical BIT in most ways, except that it's got a different feature in
having an 1101; there is no Article 1101 in other bilateral investment
treaties of the United States or Mexico. There may be similar provisions
to that in NAFTA clone free trade agreements that they do that include an
investment chapter, but the bilateral investment treaties don't have an
1101, and so far as we're aware, the lack of an 1101 has never interfered
with enforcement of awards in terms of the New York Convention.
And last of all, and I don't know to what extent this was
even before the Methanex Tribunal, there's a tremendous amount of context
that we have gone into and which doesn't support that interpretation.
But let me revert to the point that even if you took--I don't know if you
really have to deal with the Methanex award or not, because Mexico would
be wrong even if you assumed that the Methanex Tribunal were right.
Nothing in the Methanex Tribunal says "relating to" means "referring to."
The Methanex Tribunal, quite properly, rejected the dictionary approach
to interpreting the provisions of the NAFTA. The Methanex Tribunal also
specifically rejected interpreting "relating to foreign investors" as
requiring that the measure be, quote, "primarily directed at the foreign
investors."
But Mexico certainly seems to go at least that far and beyond
in what it would require for a measure to be within the scope of Chapter
11. And I would refer you--and I think Mexico repeated it this morning-to
paragraph 12 of the second Mexican Jurisdictional Submission. What
they said--I have in front of me, by no coincidence--is that regulations
governing the sugar sector only apply to mills and sugar cane growers,
they do not even apply to GAM as a holding company, so if GAM were
wholly-owned by an American company, it would have no, be Mexico's
lights, the sugar regulations that have so deteriorated the conduct of
the sugar regulations, that has so reduced the value of the enterprise
and of GAMI's shares. That would be outside the scope of Chapter 11,
untouchable. I guess it would be within the scope of Chapter 11, since