Compañía de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., GCC Latinoamérica, S.A. de C.V.

At a glance

Parties

Compañía de Inversiones Mercantiles S.A. (CIMSA) (Bolivia) v. Grupo Cementos de Chihuahua, S.A.B. de C.V. and GCC Latinoamérica, S.A. de C.V. (Mexico)

Case no.

U.S. Court of Appeals, Tenth Circuit, No. 19-1151; D. Colo. Civil Action No. 1:15-CV-02120-JLK

Court

U.S. District Court for the District of Colorado (Senior Judge John L. Kane); U.S. Court of Appeals for the Tenth Circuit (Circuit Judges Briscoe, Ebel and Lucero; opinion by Briscoe)

Underlying award(s)

IACAC (CIAC) arbitration seated in La Paz, Bolivia: Partial Final Award on Liability (13 September 2013) and Final Award on Damages (10 April 2015)

Treaty

New York Convention (Articles V(1)(e) and VI), implemented by 9 U.S.C. § 201 et seq.; arbitration clause 29 of the 2005 Shareholder Agreement

Sector

Cement; shareholder agreement; right of first refusal

Outcome

The District Court confirmed the award on 25 March 2019 and the Tenth Circuit affirmed on 17 August 2020, upholding both personal jurisdiction and confirmation.

Amount

Judgment for USD 36,139,223 (about USD 34.1 million in damages plus fees and costs), with annual interest at 6% from 10 April 2015 to judgment, post-judgment interest at the federal rate, and CIMSA's costs of the action.

The dispute

CIMSA, a Bolivian company, controlled SOBOCE, Bolivia's largest cement company. On 22 September 2005 GCC Latinoamérica, a wholly owned subsidiary of the Mexican company GCC, acquired 47% of SOBOCE. The parties signed a shareholder agreement governed by Bolivian law, which gave each side a right of first refusal and provided for IACAC arbitration administered in Bolivia. GCC negotiated a sale of its shares to CIMSA, but in August 2011 it sold them to a Peruvian company. An arbitral tribunal in La Paz found that GCC had breached the right of first refusal and the duty of good faith, and later awarded damages. GCC then sought annulment of both awards in Bolivian courts. CIMSA petitioned to confirm the awards in Colorado. GCC objected to personal jurisdiction and to service. It also argued under Article V(1)(e) of the New York Convention that the Merits Award had been set aside in Bolivia and that the Damages Award was not yet binding while its annulment action was pending. In the alternative, it asked for a stay under Article VI.

Key holdings

1. The Merits Award has not been set aside by a competent Bolivian authority. The Plurinational Constitutional Tribunal (PCT) issued its Revocation Order of 16 March 2016, which rejected GCC's amparo against the Eighth Judge and reinstated her denial of annulment. That order removed the legal basis for the Ninth Judge's annulment decision of 18 January 2016. The later PCT procedural and clarification orders could not revive the Ninth Judge's decision, and the PCT President's decree had no legal authority. District Court, pp. 15–19
2. The Damages Award is binding under the New York Convention, even though an annulment action is pending in Bolivia. The arbitration had concluded and no further arbitral recourse was available. Clause 29.2 of the 2005 Agreement and Article 29.2 of the IACAC Rules made awards final and binding. Whether the award could be enforced in Bolivia does not decide whether it is binding under the Convention. District Court, pp. 20–25
3. Stay refused under Article VI, applying the Europcar factors. The Bolivian proceedings had no clear end. GCC had brought them to set the award aside and had prolonged them by suspect tactics, including an ex parte Mexican anti-arbitration injunction. CIMSA had collected nothing for years. District Court, pp. 25–33
4. Personal jurisdiction upheld on appeal. GCC forfeited its objections to aggregating its nationwide contacts under Rule 4(k)(2). The Tenth Circuit adopted the majority rule: a defendant who wants to avoid the Rule must name a state where the suit could proceed. For the 'arising out of' requirement, the relevant contacts are those connected with the underlying contract claim, not only the arbitration. GCC's meetings in Miami and Houston satisfied a proximate-cause test, and GCC did not show a compelling case that jurisdiction was unreasonable. Tenth Circuit, pp. 16–38
5. Alternative service on GCC's U.S. counsel under Rule 4(f)(3) was proper. The Mexican central authority had failed to serve GCC. Mexico's objections to Article 10 of the Hague Service Convention do not prohibit this method of service. Tenth Circuit, pp. 38–44
6. Confirmation affirmed. On the Bolivian proceedings, CIMSA's reading is 'more defensible' than GCC's, so the Merits Award has not been set aside or suspended. An award becomes binding when no further recourse to another arbitral tribunal is available. A pending court challenge at the seat does not create a defense to confirmation; Article VI addresses that situation through adjournment. Tenth Circuit, pp. 44–54

Procedural history

1. November 2011CIMSA files a notice of arbitration under the IACAC rules in Bolivia. The proceedings are split into a merits phase and a damages phase.
2. 13 September 2013The Partial Final Award on Liability finds GCC liable.
3. 10 April 2015The Final Award on Damages awards USD 36,139,223 plus 6% interest. GCC's request for interpretation and correction is rejected in June 2015.
4. 31 August 2015The Eighth Judge in La Paz denies annulment of the Merits Award. A Guarantee Court revokes that decision on 28 October 2015. The Ninth Judge annuls the Merits Award on 18 January 2016.
5. September 2015CIMSA petitions the District of Colorado to confirm the award.
6. 9 October 2015The Twelfth Judge annuls the Damages Award. The PCT vacates that annulment on 16 December 2016 and sends the case back to her; the remand is still pending.
7. 16 March 2016PCT Revocation Order No. 0337/2016 rejects GCC's amparo against the Eighth Judge. Later PCT orders and a decree of the PCT President suggest the Ninth Judge's decision 'subsists'.
8. 25 March 2019The District Court confirms the award and enters judgment for USD 36,139,223 plus interest.
9. 17 August 2020The Tenth Circuit affirms the rulings on personal jurisdiction and on confirmation.

Tribunal, counsel and experts

Decided by

• John L. Kane Judge, U.S. District Court for the District of Colorado

For the claimant

Curtis, Mallet-Prevost, Colt & Mosle LLP · Fox Rothschild LLP

For the respondent

Quinn Emanuel Urquhart & Sullivan, LLP

Experts

Jorge Asbun (claimant)

Run a conflict check on these names →

Keywords

• New York Convention
• Article V(1)(e)
• award set aside
• binding award
• Article VI stay
• Europcar factors
• enforcement
• SOBOCE
• cement
• right of first refusal
• Bolivia
• amparo
• Plurinational Constitutional Tribunal
• IACAC
• personal jurisdiction
• Rule 4(k)(2)
• Hague Service Convention
• alternative service on counsel

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