Abraham Abadi Tawil, Alejandra Pérez Mina, Alejandro Finkler Kudler, Alejandra Rojas Velasco, Alonso de Garay Gutiérrez, Antonio Cosio Ariño, Antonio del Valle Perochena, Arantzazu del Valle Diharce, Arturo Grinberg Kreimerman, BBVA Bancomer Servicios, S.

At a glance

Parties

Antonio del Valle Ruiz and 53 other Mexican investors (individuals, funds, trusts and companies, eight of them dual Mexican-Spanish nationals) v. the Kingdom of Spain

Case no.

PCA Case No. 2019-17

Forum and rules

UNCITRAL Arbitration Rules 2013, administered by the PCA; seat The Hague, the Netherlands. A parallel ICSID arbitration was consolidated into this one by a joinder agreement.

Treaty

Mexico–Spain BIT of 10 October 2006

Tribunal

Prof. Gabrielle Kaufmann-Kohler (President), Prof. William W. Park, Mr. Alexis Mourre

Sector

Banking (resolution of Banco Popular Español)

Outcome

Jurisdiction upheld for most claimants (13 March 2023). All claims dismissed on the merits: no breach of national treatment, fair and equitable treatment or the expropriation clause.

Amount

Claimed: EUR 492 million, grossed up to EUR 647.1 million, plus interest. Awarded: nothing. The claimants must pay Spain EUR 717,339.93 in arbitration costs and EUR 7,213,136.44 (60%) of its legal fees and expenses, each with interest at 3-month EURIBOR compounded annually.

The dispute

The claimants are Mexican shareholders and subordinated bondholders of Banco Popular Español. On 7 June 2017 the Single Resolution Board (SRB) put the bank into resolution, wrote down its shares and sold it to Banco Santander for EUR 1. The claimants did not challenge the EU resolution decision itself. They argued that Spain caused and then mishandled the resolution, through withdrawals of public deposits, harmful public statements and failures to speak, its failure to ban short sales, the Bank of Spain's refusal of further Emergency Liquidity Assistance (ELA), and the FROB's conduct of the sale. They claimed breaches of national treatment (Art. III), fair and equitable treatment (Art. IV) and the expropriation clause (Art. V) of the Mexico–Spain BIT. Spain raised objections based on the treaty's waiver and fork-in-the-road clauses (pointing to the claimants' parallel action before the CJEU, Case T-510/17), the attribution of EU acts, the existence of an investment, ratione temporis, dual nationality and clean hands. On the merits Spain argued that the bank failed because of its own liquidity crisis and that the resolution was a lawful act of EU authorities.

Key holdings

1. The claimants' waiver complied with Article X(5) of the BIT. The treaty does not require its wording to be copied, and the differences in the Notice of Arbitration waiver and side letters (including a missing "any proceedings") had no effect on the waiver's substance or scope. ¶¶ 254–257
2. The Tribunal upheld jurisdiction over most claimants. It declined jurisdiction over claims by Alejandra, Georgina, Isabel and María Rojas Velasco; over deposit withdrawals not made in the exercise of sovereign powers; and over 2015–2016 public deposit withdrawals made before the claimants invested. The resolution itself was an act of the EU authorities and falls outside the Tribunal's jurisdiction. ¶ 670; ¶ 800(a)–(d)
3. No breach of fair and equitable treatment over ELA. A bank has no right to ELA. All of the Bank of Spain's pre-approvals depended on sufficient collateral being pledged. Banco Popular pledged collateral for only EUR 3.8 billion, which it received. The process ended once the bank's own board found on 6 June 2017 that it was failing or likely to fail. ¶¶ 614, 635–659
4. No breach of fair and equitable treatment in the sale to Santander. The SRB chose the sale-of-business tool on its own. Limiting the approach to five Spanish banks matched the result of the earlier private sale process. The EUR 1 minimum price reflected Deloitte's negative valuation of EUR 2 billion, and the urgency and confidentiality were justified. The Tribunal refused the claimants' requests for adverse inferences, finding Spain's reasons for not producing ECB and SRB documents satisfactory. ¶¶ 677–687, 700–709
5. Spain's acts were not arbitrary, grossly unfair, discriminatory or lacking in transparency. The result would be the same under the broader fair and equitable treatment standard the claimants sought through the MFN clause, including the claim based on legitimate expectations. ¶¶ 710–718
6. No breach of national treatment. The closest comparators were Spanish shareholders of Banco Popular, who were treated in the same way. Catalunya Banc and BMN were restructured under the regulatory framework in force before the BRRD and in different circumstances. The different treatment of Liberbank (a short-selling ban) was justified. ¶¶ 737–744
7. No expropriation. Legitimate acts cannot, without more, add up to a creeping expropriation. The ECB and SRB, not Spain, declared the bank failing and resolved it, and the resolution was a valid exercise of police powers for which no compensation is due. ¶¶ 758–766
8. On costs, Spain prevailed. The claimants bear all arbitration costs and, instead of 70%, 60% of Spain's legal costs, because Spain added to costs unnecessarily: it sought termination over a one-minute late filing and made repeated requests about Mr Ruiz Sacristán's succession. ¶¶ 793–795, 800(f)–(g)

Procedural history

1. 4 August 2017Some of the claimants file an action before the CJEU against the SRB and the European Commission (Case T-510/17).
2. 22 January 2018Notice of dispute under Article IX of the BIT.
3. 23 August 2018Eight dual nationals file an UNCITRAL Notice of Arbitration. Other claimants file a parallel ICSID Request for Arbitration.
4. 9 April 2019Joinder Agreement consolidates the ICSID and UNCITRAL arbitrations into one UNCITRAL arbitration.
5. 3 June 2019The PCA Secretary-General dismisses Spain's challenge to Prof. Park.
6. 28 November 2019Procedural Order No. 3 grants the European Commission leave to file an amicus submission, which it files on 12 March 2020.
7. 17–26 May and 27–28 August 2021Virtual hearings on jurisdiction, merits and quantum.
8. 27 February 2023Proceedings closed.
9. 13 March 2023Final Award, issued in English and Spanish: all claims dismissed and costs awarded to Spain.

Tribunal, counsel and experts

Decided by

• Gabrielle Kaufmann-Kohler President — appointed by the parties jointly
• William W. Park Co-arbitrator — appointed by the claimant (challenge rejected)
• Alexis Mourre Co-arbitrator — appointed by the respondent

For the claimant

King & Spalding LLP

For the respondent

Abogacía General del Estado

Experts

Manuel A. Abdala (claimant) · Michael Seelhof (claimant) · Miguel de la Mano (claimant) · Itay Goldstein (claimant) · Rubén Manso Olivar (claimant) · José Jiménez-Blanco (claimant) · Rosa M. Lastra (respondent) · Garrett Rush (respondent) · Kiran Sequeira (respondent) · Francesco Papadia (respondent) · Ignacio Tirado (respondent) · Antonio Sainz de Vicuña (respondent) · Íñigo Ortiz de Urbina (respondent) · Antonio Rivela Rodríguez (respondent) · Ricardo Queralt Sánchez de las Matas (respondent) · Carlos Diéguez (respondent) · Javier Morera (respondent) · Luis Alaix (respondent)

Run a conflict check on these names →

Keywords

• Banco Popular
• Banco Santander
• bank resolution
• Single Resolution Board
• Emergency Liquidity Assistance
• FROB
• Mexico–Spain BIT
• waiver clause
• fork-in-the-road
• dual nationality
• fair and equitable treatment
• national treatment
• creeping expropriation
• police powers
• adverse inferences
• BRRD
• EU law
• amicus curiae

Summary generated with AI from the published documents — refer to the award for the authoritative text.