Compañía De Inversiones Mercantiles S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V.

Decision Date10 January 2023
Docket Number21-1196, No. 21-1324
Citation58 F.4th 429
Parties COMPAÑÍA DE INVERSIONES MERCANTILES S.A., Petitioner - Appellee, v. GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC Latinoamerica, S.A. de C.V., Respondents - Appellants. Compañía de Inversiones Mercantiles S.A., Petitioner - Appellee, v. Grupo Cementos de Chihuahua S.A.B. de C.V.; GCC Latinoamerica, S.A. de C.V., Respondents - Appellants.
CourtU.S. Court of Appeals — Tenth Circuit

David M. Cooper, Quinn Emanuel Urquhart & Sullivan, LLP, New York, New York (Alex H. Loomis, Quinn Emanuel Urquhart & Sullivan, LLP, Boston, Massachusetts; Juan P. Morillo, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, D. C.; David G. Palmer, Greenberg Traurig LLP, Denver, Colorado; and Daniel Pulecio-Boek, Greenberg Traurig, LLP, Washington, D. C., with him on the briefs) for RespondentsAppellants.

Eliot Lauer (Gabriel Hertzberg, Juan O. Perla, Sylvi Sareva with him on the briefs) Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, New York for PetitionerAppellee.

Before HOLMES, Chief Judge, MATHESON, and ROSSMAN, Circuit Judges.

MATHESON, Circuit Judge.

A Bolivian arbitration tribunal awarded $36 million in damages to Compañía de Inversiones Mercantiles S.A. ("CIMSA") against Grupo Cementos de Chihuahua S.A.B. de C.V. ("GCC"). GCC fought the award in the Bolivian courts, losing before a chamber of Bolivia's highest constitutional court in 2016.1 In 2019, CIMSA obtained an order from the U.S. District Court for the District of Colorado confirming the award. In 2020, GCC convinced a different chamber of Bolivia's highest constitutional court to invalidate its prior decision, and a Bolivian trial judge subsequently annulled the award. GCC then moved the U.S. district court to vacate the confirmation order. The district court (1) denied GCC's motion and (2) ordered GCC to turn over assets located in Mexico to satisfy the award. GCC brought separate appeals from these two rulings. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in both appeals.

A. Shareholder Agreement to Arbitration – 2005-20152
1. The Parties’ Shareholder Agreement – 2005

In 2005, GCC, a set of related Mexican companies, sought to acquire an interest in Bolivia's largest cement company, Sociedad Boliviana de Cemento, S.A. ("SOBOCE"). Compañía I , 970 F.3d at 1276-77. At that time, CIMSA, a Bolivian company, was SOBOCE's controlling shareholder. GCC offered CIMSA approximately $59 million to purchase a 47 percent interest in SOBOCE. Id. at 1276-77. CIMSA accepted, and on September 22, 2005, the parties entered into a shareholder agreement as SOBOCE's two principal shareholders (the "Shareholder Agreement"). Id. at 1277.

The Shareholder Agreement allowed each party to sell its shares in SOBOCE to a third party after a period of five years, so long as the selling party gave notice to the other party and provided it an opportunity to purchase the shares on the same or better terms within 30 days. Id.

Under the Shareholder Agreement, (1) the parties would submit any disputes regarding a breach to international arbitration for final resolution and (2) the rules and regulations of the Inter-American Commercial Arbitration Commission ("IACAC") would govern. See 21-1196, Suppl. App. at 2. The "national chapter of the [IACAC] in Bolivia" would conduct the arbitration, three arbitrators would preside, and Bolivian law would apply. Id. ; Compañía I , 970 F.3d at 1278, 1291. The parties agreed that "[a]ny awards or orders issued by the Arbitration Court shall be final and of mandatory compliance" and "expressly waive[d] all actions for annulment, objection, or appeal against the award." 21-1196, Suppl. App. at 2.

2. The Parties’ Commercial Dispute – 2009-2011

In 2009, GCC informed CIMSA that it intended to sell its SOBOCE shares after the five-year holding period. Compañía I , 970 F.3d at 1277. Between 2009 and 2011, the parties attempted to reach a deal for CIMSA to purchase those shares, but they failed to reach an agreement. Id.

In July 2011, GCC notified CIMSA that a Peruvian company had tendered a firm offer to buy GCC's SOBOCE shares. Id. CIMSA reiterated its desire to purchase the shares. This time GCC said it would accept CIMSA's proposed payment terms. Id. In August 2011, GCC sent CIMSA a draft purchase agreement. Id.

But "[r]ight before the transaction was set to close, GCC demanded an increase in the number of SOBOCE shares CIMSA would place in trust, from 4% to 27%, allegedly to ensure CIMSA's compliance with a longer payment schedule." Id. In response, "CIMSA attempted to exercise its right of first refusal under the terms ... that had been negotiated by the parties." Id. GCC said CIMSA's attempt to exercise that right was invalid and sold its SOBOCE shares to the Peruvian company. Id.

3. Arbitration – 2011-2015

In November 2011, CIMSA invoked the Shareholder Agreement's arbitration clause and initiated arbitration proceedings, claiming that GCC violated the Shareholder Agreement by failing to honor the right of first refusal. Id. at 1278. A three-member tribunal (the "Arbitral Tribunal") presided over the arbitration in Bolivia. Id. The parties agreed to bifurcate the proceedings into a merits phase and a damages phase. Id.

In September 2013, the Arbitral Tribunal issued a merits ruling, holding that GCC breached the right of first refusal in the Shareholder Agreement (the "Merits Award"). Id. In April 2015, the Arbitral Tribunal awarded CIMSA approximately $34 million in damages and $2 million in fees and costs, with interest accruing at 6 percent annually on those amounts (the "Damages Award"). Id. at 1280.

B. Court Proceedings – 2015-2021

Post-arbitration court proceedings primarily occurred in Bolivia and the United States, often simultaneously.3 GCC attempted to annul the Merits and Damages Awards in Bolivia and block their enforcement in Mexico, while CIMSA sought to confirm the arbitral award in the United States. To facilitate an understanding of the background facts and proceedings underlying these appeals, we first provide background on Bolivian courts and legal procedures. We then summarize the proceedings in Bolivia and the United States.

1. Bolivian Courts and Procedures
a. Bolivian courts

The Bolivian judiciary has multiple court levels, including trial courts and a Supreme Court. Mauricio Ipiña Nagel, Update: The Bolivian Legal System , N.Y.U. Hauser Glob. L. Program, GlobaLex, Bolivian judges for the Civil and Commercial Court are trial judges, and each judge is assigned a distinguishing number—e.g., the "Twelfth Judge." See Compañía I , 970 F.3d at 1275 ; 21-1196, App., Vol. II at 369.

When a party asserts a constitutional violation, a court is randomly assigned to review it and is referred to as a "Guarantee Court." Compañía I , 970 F.3d at 1278 ; 21-1196, App., Vol. II at 370; 21-1196, App., Vol. IV at 804 n.4. The Plurinational Constitutional Tribunal (the "PCT")—independent from the other Bolivian courts—reviews Guarantee Court decisions. Nagel, supra . The PCT is the highest constitutional court. Id. ; Compañía I , 970 F.3d at 1278. It ultimately decides constitutional matters and is comprised of four distinct groups of judges, known as chambers. See 21-1196, App., Vol. IV at 879 n.2; 21-1196, App., Vol. V at 1201 n.1.

b. Bolivian procedures

In Bolivia, a litigant may initiate an amparo , "an extraordinary remedy that must be based on an alleged violation of rights protected by the Bolivian Constitution." Compañía I , 970 F.3d at 1278 ; see 21-1196, App., Vol. II at 370.4 A Bolivian court is then randomly assigned to review the amparo as a Guarantee Court. 21-1196, App., Vol. II at 370; 21-1196, App., Vol. IV at 804. After a Guarantee Court decides an amparo , that decision is sent to the PCT for review. See Allan R. Brewer-Carías, Constitutional Protection of Human Rights in Latin America 108-09, 404 (2009).

Under Bolivian law, a Guarantee Court's decisions regarding amparos "shall be complied with immediately." 21-1196, App., Vol. IV at 779; see also 21-1196, App., Vol. II at 374. A party can seek immediate compliance with an amparo decision by filing a queja por incumplimiento ("queja ") with the Guarantee Court that issued that decision. See 21-1196, Vol. IV at 779. A queja "is a special mechanism used to compel compliance by officials with existing amparo decisions." Id. at 813-14. Bolivian law allows "Guarantee Courts and the PCT to adopt necessary measures to ensure compliance with amparo decisions." Id. at 779.

2. Bolivian Court Proceedings: GCC's Challenges to the Merits and Damages Awards – 2015-2017

GCC sought to annul the Merits and Damages Awards in two separate proceedings. This appeal mainly concerns GCC's challenge to the Damages Award. We briefly describe the Merits Award proceedings before detailing the Damages Award proceedings.

a. Merits Award proceedings

After the Arbitral Tribunal decided for CIMSA on the merits, GCC filed a request in a Bolivian court to annul that award. Compañía I , 970 F.3d at 1278. That request was assigned to the Eighth Judge for the Civil and Commercial Court of the Judicial District of La Paz (the "Eighth Judge"), a trial judge. Id. In August 2015, the Eighth Judge denied GCC's annulment request. Id. Under Bolivian law, GCC could not directly appeal a denial of annulment, but it could initiate an amparo . Id. GCC did so, asserting that the Eighth Judge violated its due process rights and the right to a defense. Id. at 1297 ; 21-1196, App., Vol. II at 370, 412. "GCC's amparo was assigned to ... a Guarantee Court, which in October 2015 granted GCC's requested relief, annulled the Eighth Judge[’s] [d]ecision, and remanded the matter to the Eighth Judge for a new decision." Compañía I , 970 F.3d at 1278 (quotations omitted). In March 2016, the PCT reversed the Guarantee Court, "concluding that the Eighth Judge had not violated GCC's constitutional rights." Id. at 1279 ; see id. at 1297. We...

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