I. INTRODUCTION AND SUMMARY OF ARGUMENTS

1. In its Memorial on the Merits dated 26 June 2009, the Railroad Development Corporation (hereinafter “RDC” or “Claimant”) asserts that the Republic of Guatemala (“Guatemala”) has violated three provisions of the Dominican Republic‐Central America‐United States Free Trade Agreement (“Treaty” or “CAFTA”): (a) the expropriation provisions in Article 10.7; (b) the minimum standard of treatment provision in Article 10.5, including the obligations to accord fair and equitable treatment and full protection and security; and (c) the national treatment provision in Article 10.3. The facts demonstrate, however, that Guatemala has not violated any of the CAFTA provisions invoked by Claimant. Claimant’s claims, therefore, should be dismissed in their entirety.

2. Claimant builds its case on a story of deceit and corruption that does not withstand the slightest scrutiny. Its principal allegation is that the Government of Guatemala conspired with what it calls a local “sugar oligarch” to take away its usufruct rights. In particular, Claimant alleges that administration of President Oscar Berger declared lesivo its equipment usufruct contract in order to expropriate its railway business and hand it over to a Mr. Ramon Campollo. There is no question that Claimant spins an interesting tale, the problem with its story is that it is pure fiction , based on speculation and irresponsible and defamatory allegations involving Mr. Campollo and the son of President Berger. It also is not based on any hard evidence and simply is not true.

3. What does the hard evidence show? It shows that Claimant promised to rehabilitate Guatemala’s entire railway system and deliver a modernized state‐of‐the‐art railway, but did not deliver. It ran its investment through Ferrovías de Guatemala (“FVG”), but had losses every year since its inception. This is because it did not invest the funds necessary to give the railway project a fair opportunity to succeed. It rehabilitated the first phase, and very poorly at that, but this phase could not turn a profit.