FILED: NEW YORK COUNTY CLERK 10/20/ :34 PM INDEX NO /2016 NYSCEF DOC. NO. 75 RECEIVED NYSCEF: 10/20/2016

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x In the Matter of the Arbitration Between : : MEXVALO, S. DE R.L. DE C.V., : : Petitioner, : : against : : DESARROLLADORA FARALLON S. DE R.L. DE C.V., : : Respondent. : x Index No /2016 Hon. Charles E. Ramos, J.S.C. Mot. Sequence No. 1 REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF PETITION TO CONFIRM ARBITRAL AWARD AND IN OPPOSITION TO RESPONDENT S CROSS-MOTION TO VACATE AWARD KATTEN MUCHIN ROSENMAN LLP 575 Madison Avenue New York, New York (212) Attorneys for Petitioner Mexvalo, S. de R.L. de C.V. Of Counsel: Michael I. Verde Philip A. Nemecek Tenley Mochizuki 1 of 27

2 TABLE OF CONTENTS Page PRELIMINARY STATEMENT...1 STATEMENT OF FACTS...3 I. The Arbitration: Pre-Hearing Events...3 II. The Arbitration: Post-Hearing Events...4 ARGUMENT...7 I. Farallon s Cross-Motion and Opposition Fail to State Any Reason Not to Confirm the Award...7 II. Farallon s Cross-Motion Is Barred By Collateral Estoppel...9 III. Even If the Cross-Motion Were Not Barred by Collateral Estoppel, Farallon Fails to Prove the Alleged Bribery or Explain Why the Unanimous Award Can or Should be Vacated...11 A. The Affidavits Submitted by Mexvalo Refute Any Attempted Bribery B. There Is No Evidence of the President s Impartiality C. Removal of the President Would Have Made No Difference IV. Farallon s Disagreement with the Tribunal s Finding that Mexvalo Met Its Burden of Establishing Its Damages by a Preponderance of the Evidence Provides No Basis to Vacate the Award...15 V. Farallon s Materially False Statements Warrant the Imposition of Sanctions Under New York Law...19 CONCLUSION...22 i 2 of 27

3 TABLE OF AUTHORITIES Page(s) Federal Cases Chartier v. Marlin Mgmt., LLC, 202 F.3d 89 (2d Cir. 2000)...9, 11 Chauffeur s Training School, Inc. v. Spellings, 478 F.3d 117 (2d Cir. 2007)...9 Corporacion Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex Exploracion y Produccion, -- F.3d. --, 2016 WL (2d Cir. Aug. 2, 2016)...8, 9, 16 Desarrolladora Farallon S. de R.L. de C.V. v. Cargill, Inc., 2016 WL (S.D.N.Y. Apr. 29, 2016)...21 Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310 (2d Cir. 1998)...8 Telenor Mobile Comm ns AS v. Storm LLC, 584 F.3d 396 (2d Cir. 2009)...8 United States v. Utah Const. & Min. Co., 384 U.S. 394 (1966)...9 Yusuf Ahmed Alghanim & Sons v. Toys R Us, Inc., 126 F.3d 15 (2d Cir. 1997)...8 State Cases American Ins. Co. v. Messinger, 43 N.Y.2d 184 (1977)...9 Gordon v. Marrone, 202 A.D.2d 104 (2d Dep t 1994), lv. denied, 84 N.Y.2d 813 (1995)...22 Ingham ex rel. Cobalt Asset Mgmt., L.P. v. Thompson, 113 A.D.3d 534 (1st Dep t 2014)...8 Kaygreen Realty Co., LLC v. IG Second Generation Partners, L.P., 78 A.D.3d 1008 (2d Dep t 2010)...22 Peckerman v. D&D Assocs., 165 A.D.2d 289 (1st Dep t 1991)...17 ii 3 of 27

4 Rogovin v. Rogovin, 27 A.D.3d 233 (1st Dep t 2006)...20 Federal Statutes 9 U.S.C U.S.C Rules 22 NYCRR (a) NYCRR (c)...19, 21 CPLR CPLR , 16, 17 Other Authorities American Lawyer, Firms Ranked by Profits per Partner...13 iii 4 of 27

5 Petitioner Mexvalo, S. de R.L. de C.V. ( Mexvalo ) respectfully submits this reply memorandum of law (the Reply ) (a) in further support of its Petition (the Petition ) 1 to confirm the Final Award dated August 15, 2016 (the Award ) 2 and issued in the arbitration (the Arbitration ) between Mexvalo and respondent Desarolladora Farallon S. de R.L. de C.V. ( Farallon ) under the International Chamber of Commerce (the ICC ) Rules of Arbitration (the ICC Rules ) [NYSCEF Doc. Nos. 1-7], and (b) in opposition to Farallon s cross-motion to vacate the Award (the Cross-Motion ) [NYSCEF Doc. Nos ]. For the reasons explained below, Mexvalo also seeks the imposition of sanctions against Farallon and its counsel for their irresponsible conduct in basing the Cross-Motion on materially false statements. PRELIMINARY STATEMENT 3 Three months after the conclusion of the two-week hearing in the Arbitration, the President of the arbitral tribunal in this matter sent the parties an asking whether they would object to him working on a potential assignment for his firm that involved a Mexvalo affiliate but had nothing to do with the subject of the Arbitration. Farallon seized upon this as an opportunity to flip over the chessboard of an arbitration that had gone badly for it and force a do-over. With no other evidence whatsoever, Farallon claimed that the President s was smoking-gun proof that Mexvalo was trying to bribe him suggesting that the President somehow felt the need to obtain Farallon s consent before accepting a bribe from its opponent. More important than the muddled logic of Farallon s claim is the fact that it first sought relief from the ICC s Court of Arbitration (the ICC Court ), which oversees the conduct of ICC 1 Citations herein to the Petition refer to NYSCEF Doc. No Citations herein to the Award refer to NYSCEF Doc. No Capitalized terms not otherwise defined herein shall have the meanings set forth in the Petition. 5 of 27

6 arbitrations. Farallon made three separate submissions to the ICC Court totaling 147 pages that presented the same fantastic claims and arguments presented here, all of which the ICC Court summarily rejected on the merits. This alone should be sufficient to deny Farallon s Cross- Motion on collateral estoppel grounds. Even now, Farallon refuses to address the evidence submitted by Mexvalo, the President and even the co-arbitrators disproving Farallon s bribery story, and can only fall back on the conspiracy theorist s stock defense: everyone is lying but us. While Farallon s argument that Mexvalo presented inadequate proof of damages is not nearly as unhinged, it still fails as a matter of law. The issue of whether Mexvalo had to submit invoices for legal and consulting fees to support its testimonial evidence of damages was extensively argued throughout the Arbitration. The ICC Rules give broad discretion to the arbitral tribunal to determine what constitutes sufficient proof, and disagreement with the tribunal s decision on this point does not constitute a basis to vacate the Award. Finally, Mexvalo asks the Court to impose sanctions on Farallon and its counsel for their conduct in this action. In each of the related actions Farallon initiated in the United States District Court for the Southern District of New York and in this Court, Farallon falsely accused Mexvalo, its manager, and its counsel of fraud, and in each case those allegations were dismissed as baseless. In each case Farallon delayed and prolonged the proceedings by making meritless arguments, seeking rehearing of those arguments and then appealing their dismissal. While fanatical litigation may itself not be sanctionable, Farallon s tactics now include the repetition of personal attacks on the integrity of two general counsels of high-profile companies and a wellregarded arbitrator that have already been rejected by the ICC Court and disproven by subsequently submitted evidence. Farallon is publicly damaging the reputations of these people 2 6 of 27

7 with knowingly false allegations just to delay enforcement of an adverse Award. This reprehensible conduct merits sanctions. STATEMENT OF FACTS Mexvalo respectfully refers to the Petition and the Award for a complete statement of facts, but summarizes below the facts relevant to its reply in further support of its petition to confirm the Award and in opposition to the Cross-Motion. I. The Arbitration: Pre-Hearing Events In April 2015, Mexvalo filed its request for arbitration against Farallon for breaches of the CP Project Trust Governance Agreement (the TGA ), which addresses the ownership and operation of a luxury hotel known as The Resort at Pedregal (the Resort ). (Petition 16; Award 40.) In this initial request, Mexvalo specifically identified legal and related costs and fees expended to regain access to information and re-establish control over the Resort as part of the relief it sought in the Arbitration. (Award 166.) Farallon filed its answer and counterclaims in June (Petition 17; Award 40.) Mexvalo nominated Ms. Cecelia Fanelli of Steptoe & Johnson, LLP as its partyappointed arbitrator, and Farallon nominated the Hon. Bernard J. Fried (Ret.) as its partyappointed arbitrator. (Award 3-4.) Ms. Fanelli and Judge Fried jointly nominated Dr. Tai- Heng Cheng (the President ) as President of the arbitral tribunal. (Id. 6.) The ICC Court confirmed the appointment of all three arbitrators (the Tribunal ). (Id. 3-6.) The parties attended a preliminary conference on October 6, 2015 and agreed not to exchange documents given the numerous parallel litigations concerning the Resort. (Award 33, 166.) The Terms of Reference were finalized later that month. (Award 35.) Pursuant to the schedule agreed to by the parties, the parties simultaneously exchanged fact and expert 3 7 of 27

8 witness statements on January 22, (Petition 19; Award 47.) Mexvalo submitted a statement from Matthew Bogart, the Sole Manager of Mexvalo and General Counsel and Chief Compliance Officer of CarVal Investors, LLC ( CarVal ). (Affirmation of Paul M. Tarr in Opposition to Confirmation of Arbitral Award and in Support of Cross Motion for Vacatur of Award (the Tarr Aff. ) Ex. D.) Mr. Bogart s statement included an Appendix A, which listed the categories of damages that Mexvalo sought in the arbitration. (Id.) The vast majority of these damages consisted of the legal and consulting fees that had been incurred in response to certain actions taken by Farallon. (Id.) Mr. Bogart stated that he had not provided the invoices supporting the damages outlined Appendix A to avoid waiving privilege, but offered, at the Tribunal s request, to submit the invoices for in camera inspection. (Id. 71; Award 167.) The hearing took place from March 7-18, (Petition 20; Award 64.) During cross-examination of Mr. Bogart and at other points during the hearing, counsel for Farallon conceded that they were not challenging the reasonableness of the legal and consulting fees that were the basis of Mexvalo s damages listed in Appendix A to Mr. Bogart s statement, and that Farallon had no need to see details or full bills. (Reply Affirmation of Michael I. Verde (the Verde Aff. ) Ex. 2, 314:25 315:4; 310:10-14; 312:21-23.) During closing statements, counsel for Mexvalo submitted a revised Appendix A to Mr. Bogart s statement, which corrected a clerical error, and again offered to submit the underlying invoices and records to the Tribunal for in camera inspection, but did not make a formal application to do so. (Award ) II. The Arbitration: Post-Hearing Events On April 19, 2016, the Tribunal inquired whether Mexvalo still wished to apply to submit invoices and other records supporting its damages. (Award 66.) Mexvalo submitted its application and Farallon filed its opposition, which included a new allegation that Mexvalo had 4 8 of 27

9 committed a fraud on the Tribunal. (Id. 66, 68-71; Tarr Aff. Ex. J.) The Tribunal permitted additional briefing on this new issue, which was fully submitted on June 3, 2016 and ultimately denied. (Award 71.) The Tribunal subsequently held several rounds of deliberations and reached consensus on the merits by June 9, (Id. 72; Verde Aff. Ex. 7.) On June 16, 2016, the President disclosed to the parties that CarVal had approached a partner in another office of his law firm, Quinn Emanuel Urquhart & Sullivan, LLP ( Quinn Emanuel ), for a possible engagement on an unrelated matter in Asia, and that partner had approached the President for his assistance on that matter. (Award 74; Tarr Aff. Ex. F.) The President requested the parties comments, and Mexvalo deferred to Farallon, which refused to provide comments until June 23, 2016, when it applied to the ICC Court to disqualify the President. (Award 74, 76; Tarr Aff. Ex. K.) On the same day, the Tribunal declined to receive invoices and further evidence from Mexvalo but accepted the revised version of Appendix A to Mr. Bogart s statement, which had been submitted both during the hearing at closing statements and through the application described above. (Id. 75.) The ICC Court subsequently provided the President, the co-arbitrators, and Mexvalo the opportunity to respond, all of whom submitted their views. (Award 76; Verde Aff. Exs. 3-5.) The President clarified the circumstances of CarVal s approach to Quinn Emanuel, and specifically noted that (i) Mr. Bogart was not involved in the process; (ii) the President had spoken to no one other than another partner of his firm about the possible engagement, and had neither received nor reviewed any documents concerning the possible engagement; and (iii) Quinn Emanuel never reached an agreement on the possible engagement and thus currently did not represent CarVal in the unrelated matter. (Verde Aff. Ex. 3.) The President also noted the absence of any facts supporting an attempted bribery: not only were the individuals at CarVal 5 9 of 27

10 involved in the possible engagement unaware of the President s role in the Arbitration, but the President specifically disclosed the possible engagement to the parties. (Id.) Such conduct was inconsistent with an attempted bribe, which is typically made in secret. (Id.) Ms. Fanelli and Judge Fried affirmed that the President had at all times conducted himself with scrupulous impartiality. (Verde Aff. Ex. 4.) Mexvalo submitted as part of its response affidavits from Mr. Bogart and from Holly S.A. Eng, the North American General Counsel of Global Law for Cargill, Incorporated ( Cargill ), both of whom refuted the factual basis for Farallon s bribery allegations. (Verde Aff. Ex. 6; Tarr Aff. Ex. G.) In particular, both Mr. Bogart and Ms. Eng corroborated the President s statements that (i) Mr. Bogart was not involved in the possible engagement of Quinn Emanuel (Verde Aff. Ex ; Tarr Aff. Ex. G 3, 8-9); (ii) the President had no interaction with anyone from CarVal or Cargill outside of the Arbitration (Verde Aff. Ex. 6 6; Tarr Aff. Ex. G 7); and (iii) Quinn Emanuel ultimately did not represent CarVal. (Verde Aff. Ex. 6 10; Tarr Aff. Ex. G 10.) Mr. Bogart and Ms. Eng also explained why Mr. Bogart was unaware of the possible engagement and why Ms. Eng was unaware of the President s involvement in the Arbitration. (Verde Aff. Ex ; Tarr Aff. Ex. G 3-9.) Farallon submitted an unsolicited reply, which prompted the ICC Court to request additional comments from all parties except Farallon. (Award 76.) Although the President declined to submit further comments, the co-arbitrators and Mexvalo submitted their additional comments. (Award 76.) Ms. Fanelli and Judge Fried noted Farallon s admission that it had no issue with [the President s] comportment during the Hearing, and has no reason to doubt his professionalism, and that the Tribunal had reached a final consensus on the merits prior to the President s disclosure. (Verde Aff. Ex. 7.) Mexvalo pointed out some of the many ways in 6 10 of 27

11 which Farallon s allegations were logically inconsistent, not credible, and potentially dangerous precedent. (Id. Ex. 8.) Despite explicit instructions from the ICC Court to refrain from further submissions, Farallon lodged another unsolicited reply. (Award 76.) On July 28, 2016, the ICC Court accepted Farallon s application to disqualify the President and rejected it on its merits. (Award 78; Tarr Aff. Ex. Q.) The day after, the Tribunal declared the proceedings closed, and the Award was issued on August 15, (Award 79; Petition 22.) Mexvalo filed its Petition to confirm the Award on September 2, 2016, with an original return date of October 18, [NYSCEF Doc. Nos. 1, 4.] Farallon filed its opposition and Cross-Motion on October 5, [NYSCEF Doc. Nos ] By stipulation, the parties agreed to adjourn the return date for Mexvalo s Petition to confirm to October 27, 2016 to coincide with the return date for Farallon s Cross-Motion. [NYSCEF Doc. No. 60.] ARGUMENT I. Farallon s Cross-Motion and Opposition Fail to State Any Reason Not to Confirm the Award Farallon s Cross-Motion fails to set forth or distinguish between the applicable standards for confirmation of an arbitral award under the Panama Convention or CPLR 7511(b), despite this being the necessary and logical starting point for its challenge. Where a party petitions a court under the Inter-American Convention on International Commercial Arbitration (the Panama Convention ) 4 made enforceable through Chapter 3 of the Federal Arbitration Act (the FAA ) to confirm an international arbitration award, the court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention. 9 U.S.C. 302, For the Court s convenience, a true and correct copy of the Panama Convention is attached to the Verde Aff. as Ex of 27

12 (emphasis added). The party opposing confirmation has the burden of proving that one or more of the statutory grounds have been met. Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 313 (2d Cir. 1998). This is a heavy burden, as the showing to avoid summary confirmance is high. Telenor Mobile Comm ns AS v. Storm LLC, 584 F.3d 396, 405 (2d Cir. 2009) (internal quotation marks and citation omitted). And even if the court finds that one of the grounds is satisfied, it may still choose to refuse recognition of the award. Corporacion Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex Exploracion y Produccion, -- F.3d. --, 2016 WL , at *8 (2d Cir. Aug. 2, 2016) ( a district court must enforce an arbitral award rendered abroad unless a litigant satisfies one of the seven enumerated defenses; if one of the defenses is established, the district court may choose to refuse recognition of the award ) (emphasis in original). Given this framework, the Panama Convention has a clear proenforcement bias. Yusuf Ahmed Alghanim & Sons v. Toys R Us, Inc., 126 F.3d 15, 20 (2d Cir. 1997). CPLR 7510 echoes the Panama Convention s presumption of confirmation: The court shall confirm an [arbitral] award upon application of a party unless the award is vacated or modified upon a ground specified in section CPLR 7510 (emphasis added). The grounds are few and strictly construed. Ingham ex rel. Cobalt Asset Mgmt., L.P. v. Thompson, 113 A.D.3d 534, 534 (1st Dep t 2014) ( CPLR 7511 provides the exclusive grounds for vacatur of an arbitration award ). Farallon appears to cross-move to vacate the Award only under Article V(1)(b), (c), and (d) 5 of the Panama Convention (Memorandum of Law in Opposition to Confirmation of Award 5 Although Mexvalo agrees that there is no substantive difference between the Panama Convention and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 8 12 of 27

13 and in Support of Vacatur of Award ( Farallon Br. ) at 17-18, 23) and CPLR 7511(b)(1)(i) (id. at 18). Because Farallon has the burden of proof, and any reference to additional grounds in a prospective reply would be improper insofar as the failure to raise them in the moving brief waives those claims, Mexvalo addresses only those bases cited by Farallon. As discussed below, Farallon fails to prove that any of its claimed grounds have been met. II. Farallon s Cross-Motion Is Barred By Collateral Estoppel In New York, collateral estoppel applies if (1) the issue in question was actually and necessarily decided in a prior proceeding, and (2) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the first proceeding. Chartier v. Marlin Mgmt., LLC, 202 F.3d 89, 94 (2d Cir. 2000) (citations omitted). The doctrine clearly applies to judicial proceedings and awards in arbitration, American Ins. Co. v. Messinger, 43 N.Y.2d 184, (1977), and also to decisions by an administrative body like the ICC Court. Chauffeur s Training School, Inc. v. Spellings, 478 F.3d 117, 132 (2d Cir. 2007) (citing United States v. Utah Const. & Min. Co., 384 U.S. 394, 422 (1966)). The key factors in the administrative context are whether the administrative body acted in a judicial capacity and resolved disputed issues of fact properly before it. Id. Because the ICC Court acted in just this capacity in deciding Farallon s prior application to disqualify the President, Farallon s Cross- Motion is barred by collateral estoppel. The ICC Court is the only body authorized to administer arbitrations under the [ICC] Rules, including the scrutiny and approval of awards (Verde Aff. Ex. 9, Art. 1(2), 33.) The function of the ICC Court is to ensure the application of the [ICC Rules], and it has all the ( New York Convention ), Pemex, 2016 WL , at *8, because Mexvalo s Petition is properly brought under the Panama Convention, that is the text discussed herein of 27

14 necessary powers for that purpose. (Id., Ex. 10, Art. 1(1). Thus, the ICC Court occupies an unusual position: it does not itself resolve the ultimate merits of a particular dispute which power is delegated to the individual arbitrator(s) in a particular matter but it can and does, pursuant to the procedures set out in the ICC Rules, decide discrete substantive issues throughout an arbitral proceeding, such as the appointment or replacement of arbitrators. (Id. Ex. 9, Art. 6(4), 13.) The ICC Court decides these issues either by a Plenary Session, requiring a majority vote of at least six members of the Court, or by a designated Committee, which requires a unanimous decision of at least three members of the Court. (Id. Ex. 10, Ar. 4; Ex. 11, Art. 4.) Farallon itself acknowledged that the ICC Court was the correct authority to decide this issue when it ignored the President s requesting comment and instead directly petitioned the ICC Court for his removal under Article 14 of the ICC Rules. (Id. Ex. 9, Art. 14; Tarr Aff. Ex. K at 6.) Consistent with the provisions of Article 14, the President, co-arbitrators, and Mexvalo were given the opportunity to comment on the challenge. (Verde Aff. Ex. 9, Art. 14(3); Ex. 4-6.) Significantly, Farallon s unsolicited submissions elicited two rounds of comments on the issue of the President s impartiality, and Farallon even filed the equivalent of a sur-reply before the ICC Court. (Award 76). The ICC Court, after considering the many submissions from all parties and arbitrators, explicitly rejected the challenge on the merits. (Tarr Aff. Ex. Q.) The circumstances of Farallon s prior application to remove the President require that the ICC Court s decision be given preclusive effect. Not only are the parties identical in the Arbitration and in this action, but Farallon asserted the exact same claims of purported bribery before the ICC Court. (Tarr Aff. Ex. K at 1-7; Farallon Br. at 1-9, ) As described above, Farallon s compulsive need to have the last word and the ICC Court s indulgence in permitting of 27

15 unsolicited submissions guaranteed that Farallon had a full and fair opportunity to present its claims. (Award 76.) The ICC Court s decision on the challenge, which required reviewing the numerous factual submissions by the parties and co-arbitrators (Verde Aff. Exs. 4-8; Ex. 9, Art. 14(3)), is the definition of an act in a judicial capacity that resolves disputed issues of fact. Chartier, 202 F.3d at 94 (citations omitted). III. Even If the Cross-Motion Were Not Barred by Collateral Estoppel, Farallon Fails to Prove the Alleged Bribery or Explain Why the Unanimous Award Can or Should be Vacated A. The Affidavits Submitted by Mexvalo Refute Any Attempted Bribery Even if this Court were not bound by the ICC Court s decision on Farallon s application to disqualify the President, Farallon s purported evidence of bribery consists primarily of speculative assertions of facts and opinion that contradictory statements are not credible. The totality of the evidence demonstrates beyond question that no Cargill entity attempted to bribe the President. The President s submission and the affidavits of Mr. Bogart and Ms. Eng provide a consistent and credible explanation of the circumstances that led to the President s disclosure: On or about June 11, 2016, the CarVal Board of Directors asked Ms. Eng to recommend counsel for a matter involving the Board. (Tarr Aff. Ex. G 5.) After screening several attorneys at different firms, Ms. Eng ultimately recommended John Quinn of Quinn Emanuel. (Id.) On June 13, 2016, Ms. Eng contacted Mr. Quinn to discuss a possible engagement for the matter concerning the CarVal Board, and Mr. Quinn suggested that the President might assist given his knowledge of Singapore and its law. (Verde Aff. Ex. 3 at 1-2; Tarr Aff. Ex. F; Tarr Aff. Ex. G 7.) Ms. Eng was unaware that the President was involved in the Arbitration. (Verde Aff. Ex. 3 at 2; Tarr Aff. Ex. G 3, 7.) Mr of 27

16 Bogart was neither aware of nor involved in the approach to Mr. Quinn. (Verde Aff. Ex. 6 9; Tarr Aff. Ex. G 3, 8-9; Verde Aff. Ex. 3 at 2.) On June 16, 2016, the President disclosed the possible engagement for the CarVal Board and his potential role in the representation. (Tarr Aff. Ex. F; Verde Aff. Ex. 3 at 1-2.) This was the first time that Mr. Bogart heard about the possibility of CarVal retaining Quinn Emanuel for a matter in Asia. (Verde Aff. Ex. 6 7; Tarr Aff. Ex. G 8.) As the President and Mexvalo pointed out, those who accept bribes typically do not announce to others that they have been bribed. (Verde Aff. Ex. 3 at 2; Ex. 5 at 2.) On June 20, 2016, Ms. Eng informed Mr. Bogart that, on her recommendation, CarVal s Board planned to retain Quinn Emanuel for a corporate governance issue. (Verde Aff. Ex. 6 8; Tarr Aff. Ex. G 8.) This was the first time Ms. Eng became aware that a partner in Quinn Emanuel was the President of an arbitration panel reviewing a dispute that involved CarVal. (Tarr Aff. Ex. G 8, 10.) Mr. Bogart and Ms. Eng realized that the subject of the President s June 16 disclosure was the matter for which Ms. Eng without Mr. Bogart s knowledge or involvement had approached Quinn Emanuel. (Id. 8; Verde Aff. Ex ) On June 23, 2016, Farallon objected to the President s disclosure and applied to the ICC Court to disqualify him. (Tarr Aff. Ex. K.) During the week of June 20, 2016, CarVal s Board decided not to move forward with the Quinn Emanuel engagement and thus Quinn Emanuel did not represent CarVal in the matter. (Tarr Aff. Ex. G 10; Verde Aff. Ex. 6 10; Ex. 3 at 2.) of 27

17 Although these explanations are sufficient for this Court to conclude the absence of any nefarious conduct, Mexvalo has submitted with its Reply a new affidavit from Mr. Bogart to rebut some of Farallon s wilder speculation with facts: While it is true Mr. Bogart usually chooses outside counsel for all CarVal matters, this particular matter involved the termination of CarVal s President and Chief Investment Officer ( CarVal s President ) to whom Mr. Bogart directly reported. (Affidavit of Matthew R. Bogart dated October 13, 2016 (the Bogart Affidavit ) 4-5, 8.) The Board did not ask Mr. Bogart to recommend counsel in this particular instance because it did not want to put him in the awkward position of having to report to an individual the Board was planning to terminate. (Id. 5.) It was for that reason that the Board instead asked Ms. Eng, who was in-house counsel to CarVal s parent company Cargill, to make the recommendation. (Id. 6). In their affidavits to the ICC Court, Ms. Eng and Mr. Bogart generically described the potential assignment as a corporate governance matter because at the time their affidavits were submitted the termination of CarVal s President had not yet been made public. (Id. 4, 9.) Because Ms. Eng believed that CarVal s President was likely to litigate his termination which he in fact did Ms. Eng sought a nationally recognized litigator like John Quinn. 6 (Id. 10.) 6 Farallon s claim that Mr. Quinn and the President were blinded by greed at the prospect of business from CarVal is insulting and ignores economic realities. (Farallon Br. at ) Quinn Emanuel has the second highest profits per partner of any law firm in the country and its success does not depend on any particular new client. The American Lawyer, Firms Ranked by Profits per Partner, available at of 27

18 These facts expose Farallon s shrill accusations to be nothing but wishful thinking. B. There Is No Evidence of the President s Impartiality Farallon s argument that the President s impartiality and independence was compromised fails as well. First, in raising the original challenge, Farallon admitted that it had no issue with the President s conduct during the Hearing. (Verde Aff. Ex. 7.) Second, the co-arbitrators, Judge Fried (formerly of this Court) and Cecilia Fanelli of Steptoe & Johnson, had the most extensive interaction with the President and confirmed his professionalism and impartiality before, during, and after the Hearing. (Id.; Verde Aff. Ex. 4.) Judge Fried Farallon s party appointed arbitrator and Ms. Fanelli went out of their way to note that the Tribunal reached a consensus on the merits of the Award before Farallon s challenge, suggesting that this entire incident could not possibly have had an effect on the President s decision. (Verde Aff. Ex. 7.) There is no contest between the credibility of the report of Judge Fried and Ms. Fanelli and the fact-free conspiracy theories of Farallon s Cross-Motion. C. Removal of the President Would Have Made No Difference Even if this Court were not bound by the ICC Court s ruling on Farallon s challenge and could reach a different decision, it would make no difference as to the validity of the Award, which was unanimous. Because the Tribunal reached a consensus on the merits before Farallon s application, (id.; Award 72), there is no reason to suspect the Award was the product of revenge or other improper motive. Moreover, Farallon does not argue that Judge Fried and Ms. Fanelli were impartial or otherwise infected by the allegations concerning the President, and did not apply to remove either of them. Thus, even if the President had been removed, the Profits-Per-Partner. For the Court s convenience, this article is attached as Ex. 12 to the Verde Aff of 27

19 decision reflected in the Award would still stand whether or not he had been replaced under the ICC Rules. Article 15 of the ICC Rules addresses replacement of arbitrators. (Verde Aff. Ex. 9, Art. 15.) Under Article 15(5), if an arbitrator is removed after the proceedings are closed, the ICC Court may decide that the remaining arbitrators shall continue the arbitration. (Id., Art. 15(5).) That is current posture of the Arbitration, and to the extent Farallon asks for an after-the-fact removal of the President, that is the procedure the ICC Court would apply. Article 15(4) provides that the ICC Court has discretion to decide whether or not to follow the original nominating process to replace a removed arbitrator before the proceedings are closed. (Id., Art. 15(4).) If replaced, the reconstituted tribunal decides if and to what extent any prior proceedings need be repeated. (Id.) It is worth noting that the ICC Rules provide no mechanism contrary to Farallon s demand in its Cross-Motion to order a new hearing or a do-over with a completely new arbitral tribunal. (Farallon Br. at 2.) At best, had Farallon succeeded in removing the President, the ICC Court might have ordered him to be replaced, and then the reconstituted tribunal might have decided to repeat some of the prior proceedings. (Verde Aff. Ex. 9, Art. 15.) Even if this replacement arbitrator were somehow persuaded to rule in favor of Farallon, he or she would have still been outvoted by Judge Fried and Ms. Fanelli, who granted all of Mexvalo s claims and denied all of Farallon s claims without exception. IV. Farallon s Disagreement with the Tribunal s Finding that Mexvalo Met Its Burden of Establishing Its Damages by a Preponderance of the Evidence Provides No Basis to Vacate the Award In a short argument appended to the end of its brief, Farallon argues that [e]ven if CarVal and Mexvalo had not attempted to bribe [the President], the Award should still be vacated due to Mexvalo s alleged failure to prove its damages with any competent evidence of 27

20 and because the Tribunal improperly denied Farallon its due process right to be heard regarding damages. (Farallon Br. at 23.) These arguments do not withstand scrutiny. In citing to paragraph 86 of the Award (under governing Mexican law, the Party that makes a claim has the burden of proving facts necessary to prevail on the claim by a preponderance of evidence, and a Party seeking damages must establish through evidence the quantum of losses with reasonable certainty and specificity ), Farallon acknowledged that the Tribunal identified the proper burden of proof. (Farallon Br. at 24.) However, Farallon refuses to concede that the Tribunal held Mexvalo to its burden. Recognizing that [e]ach party was free to present its case as it best saw fit (Award 170), and noting that Mexvalo could have produced redacted versions of its legal invoices in support of its claim but chose not to do so, the Tribunal stated that it was confined to decide[] the quantum of costs and fees sought based on only the evidence before it, which is principally Mr. Bogart s testimony and Revised Appendix A (id ), carefully examined the evidence and concluded that Mexvalo had met its evidentiary burden: the task before the Tribunal is not to speculate as to what documents that are not on the record would have revealed about the accuracy of Mexvalo s quantum claims, but to decide based on the record that is before the Tribunal whether Mexvalo s quantum claims are supported by a preponderance of evidence. The Tribunal finds that they are. Revised Appendix A (with the Tribunal s arithmetic correction of the total amount as $6,114,810), as well as Mr. Bogart s answers about Mexvalo s quantum claimed in response to lengthy questioning from Farallon and members of the Tribunal on cross-examination and recross examination are ultimately, in the Tribunal s view, sufficient to discharge Mexvalo s burden of establishing its quantum with reasonable certainty and specificity. (Award 180.) In any event, the alleged inadequacy of evidence does not provide grounds to vacate an arbitral award, under either the Panama Convention or CPLR Pemex, 2016 WL , of 27

21 at *8; Peckerman v. D&D Assocs., 165 A.D.2d 289, 296 (1st Dep t 1991) ( CPLR 7511 fails to mention inadequacy of the evidence as a ground for vacating the award, no doubt for the good reason that assessment of the evidence presented at an arbitration proceeding is the arbitrator s function rather than that of the court ). 7 As the Tribunal noted in the Award, Farallon had notice since Mexvalo s Initial Statement of Claim that it sought, among other relief, attorneys fees and costs. (Award 166.) The Tribunal was well within the broad discretion granted by the ICC Rules to decide whether the chart in Revised Appendix A to Mr. Bogart s statement coupled with his live testimony in response to Farallon s cross-examination was sufficient proof of the fees and costs listed without a laborious review of the thousands of pages of invoices that supported them. The need for such a review was further diminished by Farallon s counsel s repeated statements, made on the first day of the hearing, conceding that Farallon would not be challenging the reasonableness of the bills. (Verde Aff. Ex. 2, 315:2-4.) 8 Farallon s disengagement from reality is revisited in its sweeping assertion that [n]o reasonable factfinder could have found that Mexvalo established any damages on its evidence presented. (Farallon Br. at 24.) In fact, three experienced fact finders, including Farallon s own party-appointed arbitrator, Judge Fried, unanimously found in a carefully reasoned, 95-page 7 Farallon cites Peckerman for the fabricated proposition that [a]n arbitration award should be vacated where the argument that the evidence was insufficient demonstrates that there is no proof whatever to justify the award so as to render it entirely irrational. Farallon Br. at 23. In fact, the Peckerman Court flatly rejected the respondent s argument that the evidence was insufficient to support the award, holding that inadequacy of the evidence was not valid grounds to vacate an award. Peckerman, 165 A.D.2d at Farallon s counsel represented to the Tribunal, inter alia, that I don t need to see full bills (Verde Aff. Ex. 2, 312:21-23), The reasonableness of the bills, that is not my primary concern (id., 313:22-23), and that these do not seem like extraordinarily high bills given all the litigation. So I m not so much challenging the reasonableness of the bills. (Id., 314:25 315:4.) of 27

22 Final Award that Mexvalo had met its burden to establish its damages by a preponderance of the evidence. (Award 180.) After raising the argument that the Tribunal improperly denied Farallon its due process right to be heard regarding damages, in violation of Article V(1)(b) of the New York Convention (Farallon Br. at 23), Farallon curiously makes no further mention of due process. This is just as well, because it is virtually impossible to reconcile the 33-page brief on damages that Farallon submitted to the Tribunal on May 17, 2016 (Tarr Aff. Ex. J), which the Tribunal received and considered (Award 70, 169), with the claim that Farallon was denied the right to be heard on the issue. Finally, in asserting that the Award should be vacated because Mexvalo failed to prove it actually paid the legal fees which it was awarded, Farallon overlooks the Tribunal s careful reasoning. Examining the provisions of the Guarantee, the Tribunal specifically found that, with respect to amounts sought by Mexvalo for legal fees incurred by Cargill SOFOM, it is immaterial whether or not Mexvalo has paid Cargill SOFOM under the Guarantee, or whether Cargill SOFOM has even made a claim for indemnification from Mexvalo, because Mexvalo s liability to Cargill SOFOM was unconditional and does not require a demand for payment. (Award 206.) Turning to the TGA, the Tribunal held that Mexvalo is entitled to recoup from Farallon any liability that Mexvalo has towards Cargill SOFOM. (Id. 211.) As with all of its other arguments on the issue of damages, Farallon s assertion that Mexvalo failed to present any sufficient evidence that it had an obligation to pay the fees it claimed as damages (Farallon Br. at 24) is exposed as false by the Tribunal s carefully reasoned Award of 27

23 V. Farallon s Materially False Statements Warrant the Imposition of Sanctions Under New York Law Part 130 of Title 22 of the Rules of the Chief Administrator of the Courts ( 22 NYCRR ) provides, in pertinent part, that [t]he court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court... costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney s fees, resulting from frivolous conduct as defined in this Part. 22 NYCRR (a). In addition to awarding reimbursement of costs, the court may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part. Id. Frivolous conduct is defined to include, among other things, an action undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another, and the assertion of material factual statements that are false. 22 NYCRR (c)(2)-(3). In determining whether the conduct undertaken was frivolous, the court shall consider, among other issues (1) the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and (2) whether or not the conduct was continued when its lack of legal or factual basis was apparent, or should have been apparent, or was brought to the attention of counsel or the party. 22 NYCRR (c). Farallon first raised accusations of bribery in a 15-page letter to the ICC, dated June 23, 2016, that was based solely on improbable extrapolations from the President s June 16, (Tarr Aff. Ex. K.) Although its accusations were false and reckless, Farallon was at least careful enough to include language of disclaimer e.g., characterizing the President s as disclosing facts overwhelmingly suggesting that Claimant s chief lawyer and sole manager has attempted to bribe the [President] by awarding legal work to his law firm. (Id. Ex. K at 1.) (emphasis added). This approach failed: after inviting and considering extensive submissions of 27

24 from both parties, from the President and from the two party-appointed arbitrators, the ICC Court issued its decision in a letter dated July 28, 2016, rejecting Farallon s challenge on the merits. (Id., Ex. Q at 2.) Farallon s cross-motion makes a single, inaccurate reference to the ICC s July 28, 2016 decision, stating that the ICC rejected Farallon s application to disqualify [the President] in one sentence, without discussion or explanation. (Farallon Br. at 16.) In fact, in its July 28, 2016 decision, the ICC Court having considered the same facts and the same arguments Farallon has repackaged and submitted to this Court rejected Farallon s position on the merits. (Tarr Aff. Ex. Q at 2.) This misrepresentation alone warrants an award to Mexvalo of its reasonable costs and attorneys fees in opposing Farallon s cross-motion. See Rogovin v. Rogovin, 27 A.D.3d 233, 234 (1st Dep t 2006) (awarding costs and attorneys fees against counsel for failing to disclose material fact during hearing and making an affirmative misrepresentation to the contrary in a filing). The award of costs and attorney s fees to Mexvalo and the imposition of sanctions against Farallon and its counsel are particularly warranted by Farallon s repeated assertions that Mexvalo, though its parent CarVal, engaged in attempted bribery. Farallon has no new facts to bolster those which it previously characterized as suggesting an attempted bribe facts that ICC Court found inadequate to support Farallon s accusations. (Tarr Aff. Ex. Q at 2.) Abandoning any prior semblance of restraint, Farallon now not only overtly accuses Mr. Bogart and CarVal of attempted bribery, but also accuses Mr. Bogart and Ms. Eng of perjury, arguing that the statement in Mr. Bogart s sworn affidavit that he was not involved in CarVal s June 2016 discussions to hire Quinn Emanuel strains credulity, and that his statements to this effect and the assertion in Ms. Eng s sworn affidavit that Mr. Bogart had no knowledge or input into of 27

25 this recommendation were not credible testimony. (Farallon Br. at 20.) Of course, the unexplained reasons cited by Farallon as grounds for vacating the Award are explained at length and Farallon s conspiracy theory simultaneously exposed as fiction in the accompanying Bogart Affidavit. Farallon s baseless accusations in public court filings herein that Mr. Bogart and CarVal engaged in attempted bribery and that Mr. Bogart and Ms. Eng had perjured themselves are material factual statements that are false that were asserted to harass or maliciously injure another, which by definition is sanctionable frivolous conduct. 22 NYCRR (c)(2)-(3). But Farallon s objective in making its Cross-Motion, as it has been in commencing multiple meritless litigations against Mexvalo and various Cargill affiliates, is not to expose the truth, but rather to defer the resolution of the dispute over the Resort by prolonging this litigation. Critically, Farallon s unsupported accusations herein are consistent with its pattern of accusing key individuals affiliated with Mexvalo of fraud and misconduct based on false or incomplete factual allegations. In both a related federal court action 9 and a related state court action, 10 Farallon sought to delay and reverse dismissals of its claims by alleging that employees of CarVal, specifically including Mr. Bogart, had committed a fraud on the court by providing testimony in the Arbitration inconsistent with positions they had earlier presented in those two cases. Both the federal and the state courts summarily dismissed Farallon s allegations and denied its motions to reopen or reconsider its claims. See, e.g., Desarrolladora Farallon S. de R.L. de C.V. v. Cargill, Inc., 2016 WL , at *4 (S.D.N.Y. Apr. 29, 2016) (finding that 9 Desarrolladora Farallon S. de R.L. de C.V. v. Cargill, Inc. et al., Case No. 15-cv SAS (S.D.N.Y.) (Scheindlin, J.). 10 Desarrolladora Farallon S. de R.L. de C.V. v. Cargill Soluciones Empresariales S.A. de C.V., SOFOM, E.N.R., et al., Index No /2015 (Sup. Ct. N.Y. County) (Kornreich, J.) of 27

26 Farallon had present[ed] no evidence of fraud, misrepresentation, or misconduct on the part of defendants ). When Farallon made similar allegations of fraud and false testimony in the Arbitration (Award 71), the Tribunal not only rejected them (id ), but specifically noted that this Tribunal is not the only adjudicator to have concluded that the testimony of Mr. Bogart did not perpetrate a fraud or constitute misconduct. Id Moreover, just as Farallon requested extensive discovery in the challenge it submitted to the ICC Court, so it requests through its cross-motion discovery to prove its specious bribery allegations. (Tarr Aff. Ex. K at 14; Farallon Br. at 9, 25.) This Court should not countenance these objectionable delay tactics couched as personal attacks. Making colorable claims may constitute frivolous conduct if the primary purpose is to delay or prolong the resolution of the litigation, or to harass or maliciously injure the other party. Kaygreen Realty Co., LLC v. IG Second Generation Partners, L.P., 78 A.D.3d 1008, 1009 (2d Dep t 2010). Enforcement of the sanctions rule is essential to deter conduct that wastes judicial resources and inhibits the proper administration of the court system. Gordon v. Marrone, 202 A.D.2d 104, 111 (2d Dep t 1994), lv. denied, 84 N.Y.2d 813 (1995). Here, Farallon s misconduct in recycling baseless accusations that were previously rejected on the merits has produced a deplorable waste of time and expense, both for Mexvalo and its counsel and for this Court, and warrants the awards of costs and attorneys fees and the imposition of sanctions. CONCLUSION For the foregoing reasons, and for the reasons stated in its initial Petition, Mexvalo respectfully requests that this Court enter an Order confirming the Award and denying Farallon s Cross-Motion to vacate the Award, awarding Mexvalo its costs and attorneys fees as a sanction of 27

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