On 30 July 2026, the arbitral tribunal in Cyrus Capital Partners, L.P. and Contrarian Capital Management, LLC v. United Mexican States rendered its Award in ICSID Case No. ARB/23/33, concluding that it lacked jurisdiction over the claims brought against Mexico under Chapter 11 of the North American Free Trade Agreement (“NAFTA”) and Annex 14-C of Chapter 14 of the United States-Mexico-Canada Agreement (“USMCA”), which replaced the NAFTA following its termination.[1]
The Tribunal was composed of Lord Collins of Mapesbury as President, David J.A. Cairns and Zachary Douglas KC, and the Award was dispatched to the Parties on 30 July 2026.[2]
The dispute arose from debt securities (the “Notes”) issued by Mexican television company TV Azteca, S.A.B. de C.V. (“TV Azteca”) and, more specifically, from a September 2022 injunction issued by a Mexican court that allegedly prevented enforcement of the Notes and relieved TV Azteca from continuing to make payments on them.[3]
Cyrus Capital Partners (“Cyrus”) and Contrarian Capital Management (“Contrarian”), together the “Claimants”, which acted as investment managers within fund structures that included the holders of the Notes, alleged that the Mexican courts’ treatment of their interests amounted to a denial of justice and breached the minimum standard of treatment under NAFTA Article 1105.[4]
The Tribunal did not reach those substantive allegations, however, because it upheld two preliminary objections: first, that Cyrus and Contrarian were not themselves qualifying “investors” under NAFTA Articles 1116 and 1139, and second, that they did not possess a “legacy investment” within the meaning of Annex 14-C of the USMCA.[5]
The Award is significant for investment managers and investment structures involving offshore funds because it draws a sharp distinction between managing an investment and owning or controlling it for treaty purposes.[6]
It also provides an important interpretation of Annex 14-C of the USMCA, holding that an investment does not qualify as a legacy investment merely because the underlying asset was created while NAFTA was in force if the relevant investor only acquired it after NAFTA’s termination.[7]
Facts
In August 2017, TV Azteca issued USD 400 million in 8.250% Senior Notes pursuant to an indenture, with the Notes scheduled to mature on 9 August 2024.[8] The Notes went into default in February 2021 and were accelerated by the trustee on 3 May 2022.[9]
Cyrus itself did not hold the Notes, but acted as investment manager for Cyrus Opportunities Master Fund II, Ltd. (“Opps II Master”), a Cayman Islands company that was one of the relevant Noteholders.[10]
Opps II Master acquired Notes with an aggregate principal amount of approximately USD 24.477 million through purchases made between late 2021 and November 2022, including purchases made after the September 2022 measure challenged in the arbitration.[11]
Contrarian similarly acted through an investment structure in which Sandpiper Limited, a Cayman Islands company wholly owned by Contrarian Funds, L.L.C., was the registered owner of the relevant Notes.[12]
Sandpiper acquired Notes with an aggregate principal amount of approximately USD 24.238 million from Contrarian Emerging Markets, L.P. on 13 March 2023, after the Notes had defaulted and been accelerated and after the alleged wrongful act had occurred.[13]
The measure at the centre of the treaty claim was an injunction granted by a Mexican court on 27 September 2022 without a hearing or prior opportunity for the defendants to oppose the application, which allegedly relieved TV Azteca from continuing payments and prevented enforcement proceedings concerning the Notes in Mexico.[14]
Cyrus and Contrarian maintained that, notwithstanding the fact that Cayman Islands entities were the registered Noteholders, their investment-management arrangements gave them control over those entities and the Notes and therefore entitled them to pursue claims as U.S. investors under NAFTA.[15]
The Claimants filed their Request for Arbitration on 30 June 2023, one day before the expiry of the three-year period during which Annex 14-C preserved consent to arbitrate qualifying NAFTA legacy-investment claims.[16]
Issues
Mexico raised a series of jurisdictional objections concerning, among other matters, the 90-day notice period under NAFTA Article 1119, the Claimants’ status as investors, the existence of a legacy investment under Annex 14-C, the timing of the alleged Article 1105 breach, Article 25 of the ICSID Convention, ratione temporis jurisdiction, NAFTA’s waiver requirement and Contrarian’s standing, as well as a separate admissibility objection.[17]
The Tribunal ultimately needed to decide only two of those objections: whether Cyrus and Contrarian qualified as investors that had made, owned or controlled an investment under NAFTA Articles 1116 and 1139, and whether the Notes constituted legacy investments protected by Annex 14-C of the USMCA.[18]
The first issue therefore turned substantially on whether the Claimants’ extensive contractual powers as investment managers amounted to “control” of the Notes for treaty purposes.[19]
The second turned on whether Notes issued by TV Azteca in 2017 could qualify as legacy investments even though the entities through which the Claimants asserted their interests acquired the Notes only after NAFTA ceased to be in force.[20]
Holding
The Tribunal held that Cyrus and Contrarian were not qualifying investors for purposes of NAFTA Articles 1116 and 1139 because they had not themselves made the relevant investment and did not own or control the Notes within the meaning of Article 1139.[21]
The Tribunal separately held that the Claimants did not possess a “legacy investment” for purposes of Annex 14-C, because the relevant investment had to have been established or acquired by the claimant investor while NAFTA was in force, whereas the Claimants relied on the Notes’ original issuance by TV Azteca in 2017.[22]
Because either conclusion was sufficient to defeat jurisdiction, the Tribunal declined to express any opinion on Mexico’s remaining jurisdictional and admissibility objections.[23]
Reasoning
1. Investment Management Was Not Equivalent to Treaty “Control”
The Claimants argued that their investment-management agreements gave them broad authority over the Noteholders and their assets, including authority to make investment decisions, manage the Notes and exercise rights associated with the securities.[24]
Mexico responded that the Cayman Islands funds, rather than Cyrus and Contrarian, owned the Notes and bore the corresponding economic interests, while the Claimants acted essentially as investment managers or agents.[25]
After reviewing prior decisions including S.D. Myers, Inc. v. Government of Canada, International Thunderbird Gaming Corporation v. United Mexican States, B-Mex, LLC v. United Mexican States and Gramercy Funds Management LLC v. Peru, the Tribunal concluded that “control” under NAFTA Articles 1121 and 1139 was inextricably linked with ownership rather than mere management authority.[26]
That distinction was decisive because Cyrus and Contrarian were not shareholders, co-owners or Noteholders but investment managers of corporate vehicles that ultimately included Cayman Islands companies holding the Notes.[27]
The Tribunal acknowledged that the Claimants possessed broad contractual powers to purchase and sell investments and to exercise rights associated with them, but viewed those powers as consistent with the ordinary functions of an investment manager.[28]
Crucially, the investment-management arrangements delegated powers to the Claimants without transferring the underlying ownership-level control, which remained with the relevant shareholders and corporate organs.[29]
The Tribunal therefore found that the Claimants had no direct or indirect proprietary interest in the Notes themselves and could not claim the losses represented by amounts payable on securities legally held by separate entities.[30]
The Claimants also relied on the economic interests of ultimate owners and general partners within their wider fund structures, including concepts of beneficial ownership under U.S. law.[31]
The Tribunal rejected that approach, reasoning that it effectively disregarded the separate legal personalities deliberately used within the investment structures and that economic interests belonging to ultimate owners could not simply be attributed to the Claimants as investment managers.[32]
This distinction also affected the character of the alleged loss because the sums due on the Notes were owed to the Noteholders rather than to Cyrus or Contrarian, while the Claimants had not framed their claim as one for lost investment-management fees.[33]
Nor could Article 1117 cure the problem, since that provision concerns claims made on behalf of an enterprise of another NAFTA Party, whereas the relevant Noteholders were Cayman Islands companies and the Claimants had not brought an Article 1117 claim.[34]
The result was therefore that extensive delegated management powers did not establish the ownership or control required by the particular NAFTA provisions on the facts and corporate structures before the Tribunal.[35]
2. A Legacy Investment Had to Be Established or Acquired by the Investor While NAFTA Was in Force
Annex 14-C defines a “legacy investment” as an investment of an investor of another Party that was established or acquired during the relevant period while NAFTA was in force and remained in existence when the USMCA entered into force.[36]
The Claimants argued that the temporal requirement was satisfied because TV Azteca had issued, and therefore “established”, the Notes in August 2017 while NAFTA was still in force.[37]
Mexico, by contrast, argued that the words “established or acquired” referred to the manner in which the protected investor itself came to hold the investment, meaning that an investment acquired only after NAFTA’s termination could not obtain residual protection merely because the asset had existed previously.[38]
The Tribunal accepted Mexico’s interpretation and considered that Annex 14-C simply distinguishes between an investor that itself “establishes” an investment and an investor that “acquires” an existing investment.[39]
For the Tribunal, the textual requirement that the relevant asset be an “investment of an investor of another Party [to the treaty]” meant that TV Azteca’s issuance of the Notes in 2017 could not constitute establishment of the investment by Cyrus or Contrarian.[40]
The separate requirement that the investment be “in existence” when the USMCA entered into force did not resolve the issue, as the Tribunal considered that language compatible with either interpretation.[41]
The Tribunal also referred to Westmoreland Coal Company v. Canada (III), although it recognised that the issue in that case was different because Westmoreland concerned an investor that had disposed of its investment before the USMCA entered into force.[42]
The Tribunal’s interpretation was further reinforced by the United States’ non-disputing Party submission and statements at the hearing that Annex 14-C required the claimant investor itself to have established or acquired the investment while NAFTA remained in force.[43]
The Tribunal consequently held that the Claimants did not possess a legacy investment and upheld Mexico’s third jurisdictional objection.[44]
3. Several NAFTA-USMCA Questions Remain Undecided
An important limitation of the Award is that the Tribunal expressly declined to decide whether the purchase of distressed debt securities in the international market qualified as an “investment” for treaty purposes.[45]
The Tribunal likewise did not decide Mexico’s objection that NAFTA Article 1105 could not be breached by conduct occurring after NAFTA’s termination, an issue that has featured in other disputes arising from the transition between NAFTA and the USMCA.[46]
It also left unresolved Mexico’s objections concerning the 90-day notice period, Article 25 of the ICSID Convention, acquisition of some Notes after the alleged denial of justice, compliance with the NAFTA waiver requirement, Contrarian’s standing and admissibility.[47]
The Award should therefore be read principally as a decision on investor identity and control and on the temporal definition of a legacy investment, rather than as a comprehensive interpretation of all jurisdictional questions arising under Annex 14-C.[48]
Costs
Having determined that it lacked jurisdiction, the Tribunal applied the principle that the unsuccessful party should bear the successful party’s costs and found no reason to depart from it in the circumstances.[49]
The total costs of the arbitration amounted to USD 457,803.09, and the Tribunal ordered the Claimants to reimburse Mexico USD 301,519.69 in respect of arbitration costs, as the difference between the total costs of the arbitration and the amounts advanced by the Claimants, and USD 462,050.89 for Mexico’s legal fees and expenses.[50] Those amounts were ordered to bear simple interest from the dates due until payment at the 30-day SOFR rate plus 2%.[51]
Conclusion
The Cyrus Capital Partners v. Mexico Award illustrates that, in complex fund structures, the entity exercising day-to-day investment authority is not necessarily the entity that owns or controls the investment for purposes of investment-treaty jurisdiction.[52]
Broad contractual powers to select investments, exercise securities rights and direct investment strategy may constitute management authority without transferring the ownership-level control required by the applicable treaty.[53]
The Award also demonstrates the jurisdictional importance of respecting the separate legal personalities within investment-fund structures, since economic interests belonging to ultimate owners cannot automatically be attributed to an investment manager further down or alongside the corporate chain.[54]
With respect to the NAFTA-USMCA transition, the Tribunal adopted a claimant-specific interpretation of Annex 14-C: it is insufficient that an underlying asset happened to exist while NAFTA was in force, because the investment must have been established or acquired by the protected investor during the relevant period.[55]
At the same time, the Award leaves several broader questions concerning NAFTA legacy claims unanswered, including whether Annex 14-C permits claims based on post-termination breaches of NAFTA obligations and how distressed debt should be treated as an investment under NAFTA and the ICSID Convention.[56]
[1] Cyrus Capital Partners, L.P. and Contrarian Capital Management, LLC v. United Mexican States, ICSID Case No. ARB/23/33, Award, 30 July 2026, paras. 1, 163, 264.
[2] Id., p. 1 of the PDF.
[3] Id., paras. 173-180.
[4] Id., para. 239.
[5] Id., para. 163.
[6] Id., paras. 221-230.
[7] Id., paras. 242-252.
[8] Id., para. 173.
[9] Id., para. 174.
[10] Id., paras. 186-187.
[11] Id., para. 191.
[12] Id., paras. 203-205.
[13] Id., para. 206.
[14] Id., para. 179.
[15] Id., paras. 81-87, 165.
[16] Id., para. 237.
[17] Id., s. IV.
[18] Id., para. 163.
[19] Id., paras. 212-230.
[20] Id., paras. 240-246.
[21] Id., paras. 221-235.
[22] Id., paras. 242-252.
[23] Id., para. 163.
[24] Id., paras. 82-87, 212-213.
[25] Id., paras. 75-80.
[26] Id., paras. 215-221.
[27] Id., paras. 223-224.
[28] Id., paras. 225-228.
[29] Id., para. 229.
[30] Id., para. 230.
[31] Id., paras. 231-233.
[32] Id., para. 234.
[33] Id., para. 235.
[34] Ibid.
[35] Id., paras. 221-235.
[36] Id., para. 236.
[37] Id., paras. 95-100, 243.
[38] Id., paras. 88-94, 244.
[39] Id., para. 245.
[40] Id., para. 246.
[41] Id., paras. 246-250.
[42] Id., paras. 248-250.
[43] Id., para. 251.
[44] Id., para. 252.
[45] Id., paras. 182, 235, fn. 220.
[46] Id., paras. 101-119, 241(6).
[47] Id., para. 163.
[48] Id., paras. 163, 221-252.
[49] Id., para. 260.
[50] Id., paras. 261-264.
[51] Id., paras. 263-264.
[52] Id., paras. 221-234.
[53] Id., paras. 223-230.
[54] Id., paras. 231-235.
[55] Id., paras. 242-252.
[56] Id., paras. 101-128.
