United Mexican States v Karpa 2003 CanLII 34011 - Arbitration Place

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- 8 -senior official that would disclose how Mexico was treating other taxpayers but withoutdisclosing specific details relating to the individual taxpayer that would place the official inviolation of the fiscal law.[36] The Tribunal welcomed this agreement. The Tribunal had earlier ruled that it reservedthe right to draw adverse inferences if a party did not comply with one of its directions toproduce evidence.[37] In summary, the Intervener argues that the approach adopted by the majority wasinconsistent with the agreement of the parties and the rules governing arbitration as it forces aparty to disclose information notwithstanding Article 2105 or risk losing the arbitration.[38] And further, by drawing an adverse inference from Mexico’s refusal to produce thetaxpayer’s documents at issue, the Tribunal failed to take into account Article 2105 and therebyexceeded the scope of the submission to arbitration in breach of Article 34(2)(a)(ii) of the ModelLaw.2003 CanLII 34011 (ON SC)POSITION OF THE RESPONDENT FELDMAN[39] The Respondent here submits to the court that there is no basis upon which this court canset aside the award and the application should be dismissed.[40] Feldman supports that position on a number of grounds.1. That members of International Trade Tribunals are drawn from a roster ofinternational trade experts and their decisions should be accorded a highlevel of deference by reviewing courts.2. That that deference to the arbitral award is particularly appropriate whereas here, the applicant challenges a finding of fact. Moreover, given thelimited ground for review under Article 34 of the Model Law, this courtshould decline any invitation to re-weigh the evidence or visit findings offact made by the Tribunal.3. That a review in this case by the court is further limited by the terms ofArticle 34 of the Model Law.4. That the highest degree of deference should be shown to the Tribunal’sfindings because of the full privative clause that applies in the presentcase.5. That the Tribunal never imposed an obligation on Mexico to releaseinformation covered by the NAFTA Article 2105 and it was raised onlyafter the decision of the Tribunal had been issued.
- 9 -[41] I recognize these as the main grounds upon which the Respondent Feldman submits theapplication should be dismissed.CONCLUSIONS[42] Let me deal first with the Intervener’s position. Mexico did not raise Article 2105 of theNAFTA before the Tribunal. There is no ruling by the Tribunal in respect of Article 2105 of theNAFTA nor is there any evidence or argument with respect to the article that took place beforethe Tribunal. There is nothing upon which this court could make a reasoned ruling as to howArticle 2105 should be interpreted in relation to Article 69 of the FCC.[43] In my opinion, this court only has jurisdiction to set aside an award upon proof of certaincircumstances set out in Article 34 of the Model Law, and this court considers it improper toraise the Article 2105 argument on this review.2003 CanLII 34011 (ON SC)[44] No requests were made by the Tribunal for confidential information under Section 69 ofthe FCC. No requests or submissions were made in respect of the application of Article 2105 ofthe NAFTA during the hearing, and neither the majority award nor the dissent mention Article2105. What was sought before the Tribunal was an accommodation to provide information as towhom rebates were given and who was undergoing an audit.[45] In the view of this court, Mexico could have provided the information as to how manycorporations were getting rebates – whether they were domestic or foreign corporations and howmuch the rebates were - whether there were ongoing audits and if so how many - withoutbreaching Section 69 or without divulging the names of the taxpayer. Mexico could also haveindicated to the Tribunal if consent had been sought from the taxpayers in order to allow Mexicoto divulge the information.[46] The majority award found as an inescapable fact that the Respondent Feldman wasdenied certain rebates while domestic trading companies in like circumstances were givenrebates.[47] This court is of the opinion that the Tribunal did not exceed the scope of the submissionto arbitration.[48] The request of the Attorney General to have this court interpret and apply Article 2105 inaccord with the principles set out in its submissions, is therefore denied.[49] Now turning to the submissions of the Respondent Feldman.[50] The Tribunal was appointed pursuant to the provisions of Chapter Eleven of the NAFTA.The Tribunal found that the Applicant Mexico discriminated against Feldman, an investor of theUnited States, contrary to Article 1102 of the NAFTA, and Mexico is challenging the award ofthe majority of the Tribunal.
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United Mexican States v Karpa 2003 CanLII 34011 - Arbitration Place

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