The dispute arose from Lion Mexico Consolidated's loans to Mexican real estate projects owned by businessman Héctor Cárdenas Curiel. When Cárdenas's companies defaulted and Lion tried to recover through Mexican courts, arbitrators found that Cárdenas orchestrated 'complex judicial fraud' including forged settlement agreements to block Lion's recovery efforts. The arbitral tribunal concluded Mexico violated NAFTA's Article 1105 fair and equitable treatment protections by failing to provide Lion adequate judicial recourse.
Writing for a three-judge panel, Circuit Judge Nina Pillard said the arbitrators acted within their authority by interpreting NAFTA Article 1105(1) to protect investors regarding their qualifying investments. 'Starting with the text of Article 1105(1) and giving meaning to that text in accord with binding and persuasive authorities interpreting it, the Tribunal's analysis is, through and through, [an] interpretation[] of the parties' agreement,' Pillard wrote. The court emphasized that under Supreme Court precedent, arbitral awards must be upheld if arbitrators 'even arguably' interpreted the contract terms, regardless of whether courts agree with the interpretation.
Mexico had petitioned the D.C. federal district court to vacate the September 2021 arbitration award, arguing the tribunal exceeded its powers under the Federal Arbitration Act and acted in manifest disregard of treaty interpretation law. The district court denied Mexico's petition and confirmed the award, finding the arbitrators properly interpreted NAFTA provisions. Separately, Cárdenas sought to intervene in the district court proceedings but was denied, which the appeals court also upheld on Monday.
The decision reinforces federal courts' highly deferential review of international arbitration awards under investment treaties. While NAFTA was superseded by the U.S.-Mexico-Canada Agreement in 2020, the ruling provides guidance for future investor-state arbitrations and confirms that arbitrators have broad latitude to interpret treaty protections for foreign investments. The award represents one of the larger monetary judgments against Mexico under NAFTA's investor protection provisions.