## Facts

- The Loewen Group, Inc. (TLGI), a Canadian funeral-services company, and Raymond L. Loewen, a Canadian national and TLGI’s CEO, brought claims against the United States under NAFTA Chapter Eleven in an ICSID Additional Facility arbitration (Case No. ARB(AF)/98/3).
- The dispute arose from Mississippi state-court litigation filed by Jeremiah O’Keefe and related entities against Loewen (including its U.S. subsidiary, Loewen Group International, Inc.) concerning contracts and an asset exchange involving funeral homes and an insurance company.
- A Mississippi jury returned a verdict of about $500 million against Loewen, including large punitive damages and emotional-distress damages.
- Claimants alleged that the trial was unfair because the court permitted opposing counsel to make repeated appeals to anti-foreign sentiment and other improper themes (including references to nationality, race, and class) and failed to cure them through instructions and rulings.
- Mississippi law generally required an appeal bond of 125% of the judgment; Claimants maintained that the bond requirement, as applied, made meaningful appeal impossible when the Mississippi Supreme Court refused to reduce the bond.
- Facing imminent execution against assets, Loewen settled the case for $175 million rather than completing appellate review through the U.S. courts.
- After the settlement, TLGI entered bankruptcy proceedings and underwent a reorganization that altered ownership and control; the United States later argued that these changes destroyed the required nationality difference between a NAFTA investor-claimant and the respondent state.
- The United States raised objections to the tribunal’s competence and jurisdiction. The tribunal addressed certain objections earlier and later considered an additional objection tied to the post-dispute corporate reorganization and assignment of NAFTA claims.
- On 26 June 2003, the tribunal issued an Award dismissing all claims, relying on a jurisdictional ruling tied to nationality and, in the alternative, reasons on the merits.

## Issues

1. Whether the tribunal had jurisdiction under NAFTA Chapter Eleven after TLGI’s post-dispute reorganization and related claim arrangements, given NAFTA’s requirement that the investor be of a different Party than the respondent.
2. Whether the Mississippi trial, verdict, and related procedures (including the appeal bond requirement) breached NAFTA Article 1105 by amounting to a denial of justice under customary international law.
3. Whether the alleged nationality-based prejudice in the Mississippi proceedings constituted discrimination contrary to NAFTA Article 1102 (national treatment).
4. Whether the verdict, bond requirement, and resulting settlement amounted to an expropriation or measure tantamount to expropriation under NAFTA Article 1110.
5. Whether Loewen’s settlement and failure to pursue available appellate and other review meant that any denial-of-justice claim was not ripe or not proven.

## Decision

- The tribunal dismissed the claims for lack of jurisdiction, holding that the case ultimately turned on NAFTA’s requirement of diversity of nationality and that the post-dispute reorganization and assignment arrangements meant the claimant no longer qualified as a NAFTA investor distinct from the United States.
- In the alternative, the tribunal stated that it would dismiss on the merits because Claimants did not show that Loewen lacked reasonably available and adequate remedies under U.S. municipal law for the trial-level problems alleged.
- The tribunal treated denial of justice as requiring a final, unremedied failure of the domestic courts; it was not satisfied that Loewen had pursued the corrective process far enough (including available appellate avenues) or shown that further review was clearly unavailable or inadequate.
- The tribunal considered the settlement significant, reasoning that a voluntary settlement (even if made under financial pressure) complicated proof that the injury remained attributable to an unremedied judicial wrong as required for an international claim.
- Because it found no established denial of justice and dismissed the case on jurisdictional grounds in any event, the tribunal rejected Claimants’ NAFTA Article 1102 and 1110 claims as not made out on the record.

## Legal Principles

- NAFTA Chapter Eleven jurisdiction depends on the claimant qualifying as an “investor of another Party”; where post-dispute restructuring or claim arrangements remove the required nationality difference between claimant and respondent, the tribunal may lack competence to proceed.
- Denial of justice under NAFTA Article 1105 (customary international law minimum standard) generally requires a showing that the domestic courts, taken as a whole, failed to provide a reasonably available and adequate remedy for the complained-of conduct.
- International responsibility for judicial acts typically requires finality: a claimant must ordinarily pursue available appeals and other corrective procedures, or show that doing so would be clearly futile or unavailable.
- Even very serious trial errors, excessive damages, or improper advocacy do not by themselves establish a breach of the international minimum standard without proof that the domestic legal order failed to correct the wrong.
- Settlement of domestic litigation may affect causation and the status of the claimant as a victim, especially where the settlement ends the domestic process before final appellate review.
- Claims of discriminatory treatment (NAFTA Article 1102) and expropriation (NAFTA Article 1110) in a court-proceedings setting commonly depend on proving internationally wrongful judicial conduct (such as denial of justice) rather than showing harsh outcomes alone.

## Conclusion

In *Loewen Grp., Inc. & Loewen v. United States*, an ICSID Additional Facility tribunal dismissed NAFTA Chapter Eleven claims arising from a Mississippi jury verdict and appeal-bond dispute, ruling that post-dispute corporate reorganization and related claim arrangements defeated NAFTA’s nationality requirement and, alternatively, that Claimants had not proven a denial of justice because they did not establish that reasonably available and adequate U.S. remedies were unavailable or ineffective before settling and ending the domestic process.


Loewen Grp., Inc. & Loewen v. United States, ICSID Case No. ARB(AF)/98/3, Award (June 26, 2003)