Court File and Parties

Court File No.: CV-24-00727764-00CL Date: 2025-10-08 Superior Court of Justice – Ontario (Commercial List)

In the Matter of an Application Under the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5, Article 34 of the UNCITRAL Model Law on International Commercial Arbitration, as provided in Schedule 2 of the International Commercial Arbitration Act, 2017, and Rule 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194

Re: The United Mexican States Applicant

And: Gordon G. Burr; Erin J. Burr; John Conley; Neil Ayervais; Deana Anthone; Douglas Black; Howard Burns; Mark Burr; David Figueiredo; Louis Fohn; Deborah Lombardi; P. Scott Lowery; Thomas Malley; Ralph Pittman; Daniel Rudden; Marjorie "Peg" Rudden; Robert E. Swadon; Randall Taylor; James H. Watson Jr.; B-MEX, LLC; B‑MEX II, LLC; Oaxaca Investments, LLC; Palmas South, LLC; B‑Cabo, LLC; Colorado Cancun, LLC; Santa Fe Mexico Investments, LLC; Caddis Capital, LLC; Diamond Financial Group, Inc.; J. Paul Consulting; Las KDL, LLC; Mathis Family Partners, LTD.; Palmas Holdings, Inc.; Trude Fund II, LLC; Trude Fund III, LLC; Victory Fund, LLC

Respondents

Before: W.D. Black J.

Counsel: Daniel Hohnstein, Stephanie Desjardins and Hugh Jones, for the Applicant John Terry, Emily Sherkey and Natasha Williams, for the Respondents

Heard: September 18, 2025

Endorsement

Overview

[1] The United Mexican States ("Mexico"), seek(s) to set aside the international arbitral award dated June 21, 2024, and bearing ICSID Case No. ARB(AF)/16/3 (the "Award"), rendered by an arbitral tribunal (the "Tribunal"), constituted under Chapter 11 of the North American Free Trade Agreement ("NAFTA") in an arbitration between Gordon G. Burr and others (collectively, the "Respondents"), and Mexico.

[2] The Award found Mexico liable to pay damages to the Respondents in the aggregate amount of U.S. $80,867,17 (the "Damages").

[3] Mexico alleges that by denying its request for production of certain documents, labelled by Mexico in this motion as "key documents," the Tribunal denied Mexico a full and fair opportunity to present its defense, thereby "placing Mexico at a profound disadvantage in relation to these important issues."

[4] Mexico maintains that the Tribunal went further, denying due process to Mexico by allegedly failing to take into account evidence and arguments submitted by Mexico, that were "crucially relevant to the analysis of fair and equitable treatment ("FET")" under NAFTA Article 1105, thus denying Mexico its right to be heard and its ability to make its case on an issue central to the outcome of the dispute.

[5] Mexico asserts that these alleged breaches by the Tribunal of procedural fairness and natural justice should compel this court to set aside the Award pursuant to Articles 34(2)(a)(ii) and (iv) of the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law"), which is Schedule 2 to the International Commercial Arbitration Act, 2017, S.O. 2017, c.2, Sched. 5 (the "ICAA").

[6] In response, the Respondents (all of whom are represented by counsel shown at the outset of this endorsement, except for Mr. Randall Taylor, who is self-represented and who did not attend nor file materials on this application, such that reference to the "Respondents" throughout this endorsement refers to all respondents other than Mr. Taylor) point out as an initial matter that the arbitration and resulting Award spanned the last nine years.

[7] The Respondents emphasize that the arbitration was bifurcated, that in the first phase Mexico unsuccessfully challenged the jurisdiction of the Tribunal to hear the dispute, that it also lost its application to set aside that decision, and then lost an appeal therefrom.

[8] The Respondents note that in the arbitral proceedings, which then ensued, there was a "complex and lengthy discovery phase." This document production phase featured many disputes, led to the Tribunal appointing a privilege expert, and yielded many resulting procedural orders. The parties, between them, made over 150 individual document requests. In the merits phase, which then proceeded, the Tribunal received over 1500 pages of legal submissions and heard the evidence of over 20 fact and expert witnesses during a nine-day hearing. The Tribunal then deliberated for two years before a majority found Mexico liable for breaching the NAFTA and ordered it to pay the Damages.

[9] The Respondents say that owing to Mexico's unhappiness with the outcome and at having to pay the substantial Damages, Mexico seeks to elevate and characterize as procedural unfairness aspects of the arbitration procedures that were comprehensive, thorough and fair, and which Mexico did not identify during the process as carrying the importance that Mexico now alleges.

[10] Mexico's denial of natural justice argument, the Respondents say, is based on the Tribunal's denial of three of Mexico's 47 document requests and on a lack of reference in the Award to what the Respondents call "a fleeting argument that occupied just three paragraphs of Mexico's written submission."

[11] The Respondents say that there is in fact "no basis here for the Court to exercise its limited jurisdiction to set aside an international arbitral award."

Relevant Background Facts

[12] The Respondents are 37 U.S. nationals, both individuals and corporate entities. Through five Mexican companies known as the "Juegos Companies" and another Mexican company, Exciting Games, S. d R.L.de C.V. ("E-Games"), which companies held licenses in Mexico, the Respondents operated a casino business there.

A. The Monterrey Resolution

[13] Starting in 2005, the Respondents constructed and operated (until 2014), five casinos (the "Casinos"), initially with "games of skill" machines pursuant to joint venture agreements with a Mexican company, JEV Monterrey. JEV Monterrey was permitted to operate "games of skill" machines (but not "games of chance" machines), pursuant to a resolution (the "Monterrey Resolution"), from SEGOB, the governmental agency in charge of the gaming industry in Mexico.

[14] I note that in its argument, Mexico contends that the Respondents' initial investment with JEV Monterrey was illegal, alleging that the Respondents did not have the required permits. The Respondents point out that this issue was extensively litigated before the Tribunal, and that in that regard the Tribunal heard expert evidence from Mexican gaming experts.

[15] The Respondents also point out that the Tribunal expressly rejected this argument, noting the Respondents' "unrefuted" evidence that SEGOB made no such findings following contemporaneous inspection of the Casinos, and that "SEGOB itself expressly recorded in the 2012 Permit that the [Respondents'] casinos had at all times been operated in compliance with applicable law."

B. E-Games and E-Mex

[16] In November of 2008, with a view to expanding its Casino offerings from simply games of skill to games of chance, E-Games entered into an operating agreement with Entreternimiento de Mexico ("E-Mex"), which held a valid gambling permit. Although this relationship quickly deteriorated, the Respondents requested and obtained a resolution from SEGOB confirming E‑Games' "acquired right" to operate the Casinos under E-Mex's gambling permit (the "2009 Permit").

[17] On November 16, 2012, in circumstances in which E-Mex faced the prospect of imminent bankruptcy and a resulting revocation of its gaming permit, SEGOB granted an independent gambling permit to E-Games (the "2012 Permit"), (after revoking E-Mex's permit).

[18] Mexico observes that E-Mex challenged both the 2009 and 2012 Permits in Mexican courts, resulting in a series of court proceedings and administrative measures culminating, Mexico asserts, in SEGOB's revocation of the 2012 Permit in August of 2013, and SEGOB's enforcement actions in February of 2014 to close the Casinos.

C. SEGOB's Enforcement Actions in February 2014

[19] The Respondents contend that SEGOB's enforcement actions in February of 2014, taking place just two months after having granted the Respondents a "25-year permit clad with comprehensive assurances about its legality and the continuity of their business" reflected an "extraordinary change of heart" on Mexico's part following the election of a new government. The Respondents say that Mexico "arbitrarily revoked the Respondents' permit, illegally closed the Casinos in military-style raids and destroyed the Respondents' substantial investment in Mexico."

[20] These events gave rise to the arbitration.

Certain Noteworthy Findings of the Tribunal

[21] The Tribunal found, in the Award, that the "extraordinary change of heart" was in fact the result of the change of political leadership at the head of SEGOB resulting from the newly elected government.

[22] The Tribunal criticized SEGOB's revocation of the 2012 Permit. It found that the revocation was contrary to the express terms of the 2012 Permit, which SEGOB itself had crafted just months earlier, forcefully militating, at that time, against revocation.

[23] E-Games challenged the revocation and in fact obtained an injunction in the Mexican court prohibiting SEGOB from interfering in the operation of the Casinos while the balance of the court challenge was pending. There were further court decisions as to whether the 2012 Permit was issued "as a consequence of the 2009 Permit". E-Games sought leave to appeal from the Mexican Supreme Court relative to those further court decisions and filed applications with SEGOB for fresh permits. The Respondents note, as did the Tribunal, that it was while E-Games' leave application was pending, and contrary to the injunction that E-Games had obtained, that SEGOB, accompanied by a large number of armed law enforcement personnel, raided the Casinos and forcefully closed them for lack of a permit.

[24] In August of 2014, after E-Games' leave application was dismissed, SEGOB denied E‑Games' fresh permit application.

[25] In the Award, the Tribunal considered SEGOB's grounds for denying the fresh permit application, and concluded that they were "pretextual," showed that "SEGOB was determined to deny E-Games any opportunity to continue trading" and that "the Tribunal struggles to see a plausible narrative where SEGOB's decision to deny the fresh permit applications was not the product of the same disposition that drove much of its decisions following the change of political leadership in January 2013."

[26] The Respondents commenced their Chapter 11 NAFTA claim in June of 2016.

The Composition of the Tribunal

[27] In their materials before me, the Respondents included biographical details concerning the members of the Tribunal. There is no doubt that the credentials and capabilities of each member, the level of experience and expertise of each member, and the panel's collective expertise, was impeccable.

The Documentary Production Phase of the Arbitration

[28] As noted, the proceeding was bifurcated. The jurisdictional challenge that proceeded first was dismissed by a majority of the panel on July 19, 2019. After Mexico's unsuccessful attempts to set aside that jurisdictional decision, the arbitration hearing on the merits, including the pre‑hearing productions exercise, began.

[29] The Tribunal made certain procedural orders to govern the documentary production phase.

[30] Its Procedural Order No. 1 referenced guidance from the IBA Rules on the Taking of Evidence in International Arbitration (2010) (the "IBA Rules").

[31] The parties agree that the IBA Rules, and the standards therein for documentary productions in international arbitrations, contemplate a more restrictive scope than that set out, for example, in the Rules of Civil Procedure. Under the IBA Rules, the requesting party must describe, with "sufficient detail," a "narrow and specific requested category of documents that are reasonably believed to exist" and a statement as to how the documents requested are "relevant to the case and material to its outcome."

[32] Consistent with what the parties again agree is the prevailing approach in international arbitration, the respective parties' documentary production requests were handled by way a "Redfern Schedule," being a single document which sets out, for each side:

(a) The requesting party's document requests;

(b) The other party's agreement to produce or objection(s) to the requests; and,

(c) The requesting party's reply to any objections.

[33] Once the Redfern Schedule was completed, again in keeping with the usual approach, it was submitted by the parties to the Tribunal, which then ruled. Based on the IBA Rules, as submitted by the Respondents without particular opposition from Mexico, the Tribunal has broad discretion with respect to the documentary production requests, and "may deny production for a variety of reasons, including that the documents sought are not sufficiently relevant to the case or material to its outcome, are unreasonably burdensome to produce, or due to considerations of procedural economy, proportionality, fairness or equality of the parties that the Tribunal determines to be compelling."

[34] Again, consistent with the usual practice in international arbitration (the parties again agree), the procedural calendar provided for (and accordingly the process entailed):

(a) One round of legal submissions and evidence (the Respondents' Memorial followed by Mexico's Counter-Memorial);

(b) The document production process; and,

(c) Then a second round of submissions and evidence (the Respondents' Reply followed by Mexico's Rejoinder).

[35] The Tribunal in this case denied Mexico's request for document production to be made before the first round of submissions. The Tribunal expressed the concern that this proposed approach by Mexico would risk the production process being insufficiently "narrow, targeted, relevant and material," and found that having document productions after the first round would ensure "equal treatment", in that each party would submit one brief without the benefit of document production, such that no party would be prejudiced.

[36] The parties agree that, largely owing to positions and actions taken by Mr. Taylor, the documentary production process in this arbitration became lengthy and complex. Mr. Taylor insisted that he should be allowed to produce numerous documents to Mexico over which the Respondents claimed a privilege or asserted confidentiality. It was in this context that the Tribunal engaged a "privilege expert" to assess the Respondents' privilege claims, and, following a protracted process, upheld the majority of those claims.

[37] On March 26, 2021, the Tribunal issued its "Procedural Order No. 10, containing its rulings on the various disputed document requests. Of the over 150 document production requests that the parties made between them, the Respondents made 77 document requests from Mexico, in response to which, in over half of these requests, Mexico maintained that it had no responsive documents.

[38] On the other side, Mexico made 47 document requests from the Respondents, of which the Tribunal granted, in whole or in part, 26 of the disputed items.

[39] The Respondents emphasize that Mr. Taylor and the Respondents produced thousands of documents. Mexico (primarily SEGOB) produced far fewer documents, asserting that its document retention practices were such that many documents had not been preserved. This led the Respondents to express concerns to the Tribunal and ask that the Tribunal draw an adverse inference (which the Tribunals declined to do but said that it found "the evidence regarding SEGOB's stated working practice and document retention policy [was] surprising").

The Merits Phase

[40] The merits phase of the arbitration involved a significant volume of evidence, and was lengthy, comprising voluminous submissions over the course of many months, and multiple hearing days.

[41] As the Respondents note, again with no contrary suggestion by Mexico, between 2020 and 2022, the parties exchanged four rounds of legal submissions totaling over 1500 pages, plus post‑hearing briefs (of about 100 pages for each side). The hearing on the merits took place in Washington D.C. from July 5 to 14, 2022. Seventeen fact witnesses and seven expert witnesses testified.

The Award

[42] The Award was issued almost two years later, on June 21, 2024. The majority of the Tribunal held that Mexico had breached the NAFTA, and ordered Mexico to pay the Damages. It is noteworthy that, while given the finding of the breach and the Damages ordered of over $80 million it is evident that the Respondents were the more successful parties, there was in fact mixed success for the parties on all issues, including liability, causation, and quantum of damages.

[43] On the liability front, for example, the Tribunal rejected the Respondents' argument that Mexico had committed a denial of natural justice. The majority of the Tribunal did find (with Mexico's appointee dissenting) that Mexico had breached Article 1105 of the NAFTA, requiring FET towards the Respondents and their investments.

[44] On the issue of the FET breach, the analysis within the Award covered 20 pages. The finding on the FET issues was that, within two months after granting an assurances-clad permit, SEGOB rejected that same permit, undermining the Respondents' business entirely, "for no discernable reason other than a change of political leadership." The Tribunal found that SEGOB had ample opportunity and ability to preserve the Respondents' operations but that the new government had instead opted to terminate the business without identifying a public or regulatory concern. The Tribunal concluded that this mistreatment of the Respondents was "grossly unfair" and "arbitrary."

Mexico's Arguments

[45] I turn now to Mexico's arguments that it was denied a full and fair opportunity to present its case by virtue of not being granted its requests for certain documents. I note first, in the context of Mexico's argument that the Respondents' operations from 2005-2008 were unlawful based on the allegation that they operated games of chance (whereas the Monterrey Resolution permitted only games of skill), that Mexico sought two document requests on this issue; one of which was granted and the other denied.

[46] The Tribunal denied Mexico's request for "Documents, such as invoices identifying the make and model of the gaming equipment used in the [Casinos] while operating under the Monterrey Resolution" and "[o]peration manuals of said equipment."

[47] In response to this request from Mexico, the Respondents argued that Mexico had failed to establish relevance and materiality because it produced no evidence substantiating its speculation that the Respondents operated the Casinos illegally and could not use the document production phase as a "fishing expedition" to prove unsubstantiated claims.

[48] In this regard, the Award clearly reflects that the Tribunal placed particular emphasis on the fact that SEGOB had conducted ongoing on-site inspections of the gaming machines to ensure that they complied with the scope of the Monterrey Resolution, and that Mexico, of which SEGOB was an agency, would already have possession of the results of SEGOB's on-site verifications. The Tribunal specifically held, in denying this request, that "relevance and materiality" were "not established."

[49] The Respondents point out that, following the document production phase, the parties provided further submissions and evidence on this issue in their Reply and Rejoinder, their opening submissions, and their post-hearing briefs.

[50] Mexico made two further arguments before the Tribunal on this issue, in the context of the damages claim.

[51] The first argument was that the alleged illegality broke the chain of causation, because "Mexico would have detected these illegalities sooner or later, which would have given rise to sanctions such as the loss of their permit."

[52] The Tribunal rejected this argument, saying that, under international law "conjecture about events that might or might not have occurred in the counterfactual scenario cannot break the chain of causation." The Tribunal also held that there was no conclusive evidence to support Mexico's contention, relying on the unrefuted evidence that SEGOB made no such findings following its contemporaneous inspections of the Casinos and its conclusion, confirmed in the 2012 Permit, that the Casinos had at all times been operated lawfully.

[53] Mexico's second argument was that the Respondents had contributed to their own losses by starting their casino business without a permit. Again the Tribunal rejected this argument, repeating its earlier finding that there was no conclusive evidence supporting this allegation, and found that in fact the Respondents' losses were caused by Mexico's revocation of the 2012 Permit, by Mexico's closure of the Casinos, and by its refusal to grant fresh permits, and not by any conduct of the Respondents under the Monterrey Resolution.

[54] Mexico's other main argument before the Tribunal, asserted in Mexico's Counter‑Memorial, was to invoke the "clean hands" doctrine, alleging gross mismanagement and illegality in the operation of the Casinos.

[55] Specifically, while presenting no witnesses or documents of its own in support of these allegations, Mexico relied on the "candidacy statement" of Mr. Taylor at a time when he was seeking election to the Board of Managers for certain of the respondents in 2020, many years after Mexico had seized and closed the Casinos.

[56] Mr. Taylor, in turn, relied in his candidacy statement on transcripts of audio recordings involving some of the respondents, acknowledging that he could not "verify the accuracy of the allegations" and that they would need to be investigated.

[57] Accordingly, Mexico's allegations in support of its clean hands' arguments relied on hearsay evidence from Mr. Taylor, in a different context years later, who in turn relied on hearsay evidence that he acknowledged could not be verified and would have to be investigated.

[58] In connection with the Arbitration, in its Redfern Schedule Mexico sought 10 document requests related to this issue from each of the Respondents and from Mr. Taylor, specifically claiming that it was not able to "address the veracity of Mr. Taylor's assertions without fulsome disclosure" from the Respondents. Mr. Taylor agreed to produce the documents in his possession. The Respondents objected to the requests, contending that this claim was nothing more than speculation based on unverified allegations in Mr. Taylor's statement, and that Mexico had not provided a good faith factual basis to support the allegations, and was again embarked on a "fishing expedition" relative to this purported defence.

[59] The Tribunal in fact granted three of these 10 disputed requests, in instances where they met the standard of "narrow, targeted, relevant and material," in relation to certain internal communications and documents relative to specific correspondence and management meetings at which these allegations were purportedly raised. It denied the balance of these requests.

The Respondents' Position

[60] The Respondents summarize two of the denials, challenged by Mexico, as follows:

(a) The Tribunal denied Mexico's lengthy request No. 30, with no time limitation, for communications or internal documents addressing a wide range of topics, such as "embezzlement", improper payments, "improper removal of money from the casino vaults," the "failure to properly report and/or account for money" in records, etc. The Respondents objected, claiming that this was an impermissible fishing expedition and would be unreasonably burdensome under the IBA Rules. The Tribunal agreed, denying this request as "unreasonably burdensome."

(b) The Tribunal denied Mexico's request No. 33 for "[a]ll books, records, ledger, chits or other accounting records for each casino and for all of the Mexican Enterprises." The Respondents objected to such a broad request, noting Mexico had been provided with the relevant financial statements spanning almost the entire period of the Casinos' operations. The Tribunal denied the request as "overly broad."

[61] The Respondents point out that following document production, they filed their Reply, which was the first opportunity they had to address these particular allegations. The Respondents note that they "provided testimony from eight witnesses who confirmed that Mr. Taylor's allegations were false. The witnesses explained how the allegations in Mr. Taylor's candidacy statement, and in the extracts of the audio recordings he relied upon, arose for the first time more than a year after the Casinos were closed when the Respondents were deciding whether to move forward with a NAFTA case." The witnesses uniformly stated, the Respondents say, "that the allegations arose from fraudulent information created by two individuals who were attempting to take over the Casinos themselves." These individuals, according to the witnesses presented by the Respondents, "created and used the fraudulent information to sow division amongst the Managers of the Boards of certain Respondents and to sabotage the NAFTA claim." The Reply also asserted and explained that Mr. Taylor had improper personal motivations to advance these baseless assertions.

[62] In this regard, the Respondents also note that Mexico could have responded to this Reply, could have asked the Tribunal to reconsider its decision on document requests, and/or could have sought leave to submit new document requests if it could justify such a request. The Respondents point out that Mexico did not do so.

[63] Mexico also had the opportunity to respond to the Respondents' evidence in Mexico's Rejoinder, but did not do so, choosing not to "engage with or otherwise rebut this evidence."

[64] In addition, Mexico had the opportunity to cross-examine the Respondents' witnesses at the arbitration hearing, and both parties made extensive submissions about this issue in their respective post-hearing briefs.

[65] As the Respondents point out, "The Tribunal ultimately rejected it, finding it to be one of the 'sensational' narratives put forward in this case and that Mr. Taylor's evidence regarding these allegations was not helpful and 'took up considerable hearing time [and] ultimately proved inconsequential to the outcome."

Mexico's Judicial Review Argument

[66] Mexico's last significant argument on this application is that it was denied an opportunity to be heard, relying in this argument on the fact that the Tribunal in the Award did not make express reference to one of its brief arguments.

[67] Specifically, one of the issues in the arbitration was whether SEGOB's denial of the Respondents' application for fresh permits in 2014 violated the FET standard.

[68] The Respondents point out that Mexico spent two paragraphs in its 1006-paragraph Counter-Memorial on this issue, arguing that the Respondents were barred from challenging SEGOB's denial because they did not first challenge that decision by way of a judicial review proceeding in the Mexican courts.

[69] In their Reply, and again in argument before me, the Respondents' explained that "exhaustion of local remedies" is not a requirement or prerequisite for an FET claim, citing in support for that proposition, for example, Ascom Group S.A., Anatole Stati, Gabriel Stati and Terra Raf Trans Trading Ltd. v. Republic of Kazakhstan (I) SCC Case No. 116/2010, Award, 19 December, 2013.

[70] In its Rejoinder, Mexico's primary response was to say that the denial of the permit applications was proper as the Respondents' permit applications were deficient. The Respondents note that Mexico "only addressed the issue of the Respondents' failure to pursue a judicial review challenge in a single paragraph of its 930-paragraph Rejoinder and a single sentence of its opening submissions." In addition, the Respondents say, "Mexico addressed SEGOB's denial of fresh permit applications in its post-hearing brief, but did not mention the "failure to pursue a judicial review" argument.

[71] As emphasized by the Respondents, the Tribunal had to digest and consider over 1500 pages of legal submissions, testimony, and argument from a nine-day hearing, and thousands of exhibits. In the circumstances, the Tribunal specifically informed the parties that "while it had reviewed all of the parties' extensive submissions, it was not going to reproduce lengthy summaries of them." In other words, the Respondents say, the Tribunal was not going to repeat every argument "but would "incorporate them in their entirety by reference into this Section of the Final Award."

[72] The Respondents also emphasize that the Tribunal's FET analysis is over 20 pages long and "provides a detailed analysis of why Mexico breached the FET standard by revoking the 2012 Permit." They note that the "Tribunal found that SEGOB had multiple opportunities to preserve the Respondents' business but chose to instead terminate it."

[73] The Respondents point, as representative context, to one of these opportunities, being SEGOB's denial of E-Games' fresh permit applications. They agree that the Tribunal did not expressly reference this argument which, the Respondents underline, occupied only three paragraphs of Mexico's written submissions. The Tribunal did, however, provide a detailed analysis of why it concluded that the permit denial was pretextual and politically motivated.

[74] As discussed, Mexico says the Award should be set aside because Mexico was denied a fair opportunity to present its case, and specifically that the unfairness arose as a result of: (a) the Tribunal's decision to deny production of certain documents; and (b) the Tribunal's failure to address Mexico's argument concerning the availability (and need to resort to) a judicial review remedy.

Discussion of Law and Arguments

[75] In terms of the standard to be met to set aside an international arbitral award under the Model Law for procedural unfairness, the onus on an applicant is high. The Court of Appeal for Ontario has said that intervention: "will be warranted only when the Tribunal's conduct is so serious that it cannot be condoned." The court elaborated that the standard is whether a Tribunal's impugned decision, or actions in reaching that decision "offend our most basic notions of morality and justice," thereby constituting a breach of procedural fairness.

[76] It is also critical to understand that a court has no ability to set aside an award on the basis that in the court's view the tribunal wrongly decided a fact or a point of law, and that the court's function is not to entertain a re-argument of the merits of a decision. The Respondents point, on this proposition, to a submission that Mexico made in another case (Vento Motorcycles v. United Mexican States), in which Mexico, in responding to a procedural fairness argument, urged that courts should set aside international arbitral awards "only sparingly and/or in extraordinary cases."

[77] In my view, this is a self-evidently sensible guiding imperative. As this case exemplifies, awards in international arbitrations are typically the product of years of work, exhaustive arguments, vast expenditures of time, money and other resources by the parties, witnesses and the tribunal, and are usually decided, as here, by panels whose members possess impeccable qualifications to determine the issues before them.

[78] A court should not lightly interfere in the results of such an extensive exercise and should only do so on the basis of extreme departures from basic tenets of procedural fairness.

[79] The departure Mexico alleges in this case, arising from the Tribunal's denial of Mexico's request for production of allegedly "key documents," is that this in turn deprived Mexico of the ability to present its contention that the Respondents engaged in illegal conduct, thus rendering Mexico unable to make its intended argument relying on the "clean hands" doctrine, and unable to secure its entitlement to protection under the NAFTA.

[80] The Respondents fairly note that the question of whether or not to order production of documents is an inherently discretionary determination and emphasize that Mexico has cited no cases in which a decision about documentary disclosure has been the basis to set aside an award.

[81] On the other hand, this argument has been rejected in various cases.

[82] In ENMAX v. TransAlta, for example, the Court of Appeal for Alberta specifically rejected an argument that the arbitrator's decision on document disclosure gave rise to procedural unfairness. The court confirmed that the parties were entitled to "a fair hearing, not a perfect hearing," and that the court's focus must be on "the overall fairness of the proceedings….not individual rulings." The court stressed that intervention is not warranted where "procedural rulings do not lead to a fundamentally flawed process."

[83] As such, the question for me is not whether the Tribunal was right or wrong in its discretionary determination about documentary disclosure (which could potentially be addressed on appeal) but instead whether the Tribunal's decision not to order production of the documents at issue unfairly precluded Mexico's ability to present its case fully and fairly.

[84] In my view there is considerable evidence that, far from flawed to the point of unfairness, the process and proceedings of the Tribunal were comprehensive and provided ample opportunity and scope for the parties to fully present their cases.

[85] Starting from the undoubted proposition that, under the Tribunal's Production Order #1 and under the IBA Rules document requests were to be "narrow, targeted and material," I note that the discovery phase was nonetheless lengthy, with extensive opportunities for each side to make their full pitches with respect to documents they sought. Whether or not I agree with the Tribunal's individual decisions on documentary requests (and frankly, based on this record, I am inclined to think that the Tribunal's decisions were reasonable), I can see no basis to find that Mexico was denied an opportunity to be heard.

[86] I find that the Tribunal in fact exercised its discretion in denying some documentary requests and granting others, and appropriately cited issues of relevance, materiality, and proportionality in making those determinations. Specifically, within the categories of which Mexico complains, it granted many of Mexico's requests – 26 of 47 overall – and one of two relative to the Monterrey Resolution issue. It seems to me that Mexico, in attempting to elevate quite typical and reasonable documentary determinations by the Tribunal to the level of unconscionable procedural unfairness, is selectively "cherry-picking" aspects of the evidence, showcasing those aspects in isolation, ignoring the context and the process, and presenting a revisionist history of what were in fact routine and largely inconsequential documentary orders.

[87] There is nothing in that process that rises anywhere near the level of offending basic notions of morality and justice.

[88] As to the Tribunal's specific conclusion that there was a lack of "conclusive evidence" to support Mexico's claims about the allegedly illegal operation of the Casinos, again the context and contents of the full decision is instructive. That is, the Tribunal found that, with its own agency SEGOB having contemporaneously inspected and confirmed the legality of the Casinos operations for many years, it was not open, or at least not persuasive, for Mexico to challenge that legality after the fact. Moreover, as the Respondents argued for purposes of the Redfern Schedule, the documents related to and arising from those SEGOB inspections would be in Mexico's possession.

[89] The Tribunal's decision on Mexico's "clean hands" argument is similarly properly understood on the basis of the full evidentiary record, and the obviously extensive consideration of, and reservations about, the reliability of the double hearsay evidence from Mr. Taylor, particularly in the face of affirmative evidence from many witnesses attesting to the suspicious and untrustworthy origins of that evidence. Again, there is no suggestion that the Tribunal disregarded Mexico's position capriciously; it made its decision, right or wrong, based on a fulsome consideration of the evidence and the parties' positions.

[90] With respect to Mexico's contention that the Tribunal failed to consider its evidence and arguments with respect to the availability of a judicial review proceeding in the Mexican courts, and that the Respondents were barred from challenging SEGOB's refusal to issue new permits because E-Games did not exercise its available right to pursue a judicial review of that decision, it is important to recall that Mexico advanced this submission in a total of three paragraphs of its written submissions before the Tribunal, and in one sentence of its opening submissions.

[91] Whereas Mexico now asserts that this argument was of central importance and "crucially relevant," its approach to that argument at the time essentially belies that assertion. Moreover, given the Tribunal's advise to the parties that, having regard to the size and scope of the parties' submissions the Tribunal would not attempt to address each and every detailed argument, there is no compelling basis from which to conclude that the Tribunal did not simply reject this argument, which, again, was made more or less in passing.

[92] Nor is there merit to Mexico's argument before me that the Tribunal's failure to address each argument individually, including Mexico's judicial review argument, constitutes a "failure to provide reasons."

[93] In Consolidated Contractors, 2017 ONCA 939, the Court of Appeal for Ontario said that "[t]here is nothing in the Model Law that requires the Tribunal to give reasons."

[94] Indeed, it is well-established since the advent of the Model Law that a tribunal need not in its award explicitly reference each and every argument made by the parties and that a failure to do so is, at worst, begets a criticism of the tribunal's reasoning, which is not a ground under the Model Law to set aside an award (see Consolidated Contractors, 2016 ONSC 7171, paras. 49-52, aff'd 2017 ONCA 939, para 62).

[95] To similar effect, in a UK case on which Mexico relies, RAV Bahamas Ltd. and another v. Therapy Beach Club Incorporated (Bahamas), [2021]UKPC 8, the UK Privy Council distinguished between "issues" and "arguments" and said that a "failure by a tribunal to set out each step by which they reach its conclusion or deal with each point made by a party is not a failure to deal with an issue that was put to it."

[96] Moreover, as the Respondents point out, the issue for which Mexico now maintains that a judicial review proceeding in Mexico was mandatory was the issue as to whether SEGOB's denial of a fresh permit application violated the FET standard. As noted, the Tribunal found against Mexico on that issue, providing 20 pages of detailed reasons. The lack of explicit reference to the judicial review argument in this context, particularly in circumstances in which Mexico's own reference to the argument was brief and transient, does not demonstrate that the Tribunal did not consider it.

[97] The decision of Penny J. in this court in Consolidated Contractors is particularly apt. His Honour rejected the same argument that Mexico makes before me, finding that a tribunal is not obliged to reference every argument, and that it can be reasonably inferred from the award ruling against the party that the tribunal did not accept the party's argument. Again, this proposition was upheld by the Court of Appeal for Ontario.

[98] Justice Penny's decision in Consolidated Contractors also confirms that, even if the court were to find a breach of procedural fairness, which Penny J. did not find in that case and I do not find in the case before me, the court must nonetheless be satisfied, in order to set aside an award, that there were "circumstances of 'real unfairness and real practical injustice'" flowing from that procedural unfairness. As Penny J. put it:

"It would be inconsistent with the intention of the legislature and the current jurisprudential trend in favour of maintaining arbitral awards to treat every breach of applicable procedure, however minor or inconsequential, as requiring the court to refuse to set aside an award if so requested. It is necessary to balance the nature of the breach in the context of the arbitral process, determine whether the breaches are of such a nature as to undermine the integrity of the process and assess the extent to which the breach had any bearing on the award itself."

[99] Again, I find that Mexico's argument is well short of the mark.

[100] This was an arbitration extending over nine years, with a lengthy discovery phase resulting in the production of a multitude of documents, featuring four rounds of written submissions, thousands of exhibits, nine days of hearing with extensive witness testimony, including expert testimony and resulting in a detailed Award after two years of deliberation.

[101] I do not accept that there was anything unfair about this process, let alone anything of the fundamental nature that would be required in order to justify a setting aside.

Conclusion: Mexico's Application is Dismissed

[102] In the result, I dismiss Mexico's application.

Costs

[103] The Respondents are entitled to their costs. It does not appear that either party uploaded costs outlines to Case Center, and of course I am unaware if there have been any offers to settle that might impact on the costs analysis.

[104] As such, I direct the Respondents to deliver and to file with the court within two weeks of the release of this decision a costs outline to be accompanied by written submissions not to exceed four pages in length.

[105] Mexico is to respond within 10 further days. It is to provide written submissions, also not to exceed four pages in length, and it may also provide, at its option, its costs outline (noting that a failure to do so may lead to adverse inferences).

W.D. Black J.

Date: October 8, 2025