TV Azteca creditors begin proceedings in response to Mexican court disagreement

In August of last year, Cyrus Capital Partners and Contrarian Capital Management initiated an international legal process against the Mexican State under the Treaty between Mexico, the United States and Canada (T-MEC), for the non-payment of bonds of 400 million dollars with maturity in 2024 that TV Azteca obtained in 2017, from both funds.

Both funds claim that the country has not treated their investment “fairly” because TV Azteca has obtained favorable court decisions to avoid paying bonuses and, therefore, they have taken the case to an international arbitration court.

So far, the Mexican government is represented by the General Directorate of Legal Consulting for International Trade (DGCJCI), which is part of the Ministry of Economy. This General Directorate explained to Expansión, via transparency, that until September 18 of this year, its defense has involved an expenditure of 150,000 dollars derived from “administration expenses and the amount paid within the case before the International Center for Settlement of Investment Disputes (ICSID)”, an institution of the World Bank where international controversies are concentrated, mainly between investors and States.

The Mexican representation must also pay the fees of Zachary Douglas, who acts as arbitrator in the international dispute. International arbitrators play a crucial role in resolving disputes between States and investors, acting as judges and not as lawyers for the parties involved.

An expert in international arbitration who spoke on condition of anonymity said the amount the Mexican state is spending is normal, since ICSID requires an advance of at least $50,000 to guarantee the fees and travel expenses of the arbitration tribunal, which is made up of two arbitrators and a president of the international dispute tribunal.

For example, Douglas, known for his balanced approach that could favor the State, has extensive experience, having previously participated in 44 international arbitrations, so his fees are high, two arbitration specialists previously told this newspaper.

Experts estimate that the cost of such litigation could vary between 8 and 10 million dollars and that it could take between three and five years to resolve the dispute. So far, the dispute between the two funds and the Mexican State has lasted just over a year.

“From now until the resolution of the dispute is issued, the costs will increase. The arbitrators will issue invoices for their fees (according to a schedule) and the payments will be divided between both parties, that is, between the investment funds and the Mexican State, without prejudice to the winner being able to claim reimbursement from the losing party,” said the expert in international arbitration.

Expansion He contacted TV Azteca to find out its opinion on the arbitration process, but had not received a response by the time this edition went to press.

Mexico wants to win the case

Last June, the Mexican defense requested that the trial be dismissed and, if applicable, reimburse the expenses that the process has entailed for the country, according to the documents consulted by Expansión. The Mexican legal team argued ambiguities in the origin of the investments of Cyrus Capital Partners and Contrarian Capital Management, leaving the capital out of the protection of the T-MEC.

The investment funds have sent a response to the Mexican State’s argument, but it has not been made public yet.