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International Centre for Settlement of Investment Disputes (ICSID) (Additional Facility): Metalclad Corp. v. United Mexican States

Published online by Cambridge University Press:  27 February 2017

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Extract

This dispute arises out of the activities of the Claimant, Metalclad Corporation(hereinafter “Metalclad“), in the Mexican Municipality of Guadalcazar (hereinafter “Guadalcazar“),located in the Mexican State of San Luis Potosi (hereinafter “SLP“).Metalclad alleges that Respondent, the United Mexican States (hereinafter “Mexico“), through its local governments of SLP and Guadalcazar, interfered with its development and operation of a hazardous waste landfill. Metalclad claims that this interference is a violation of the Chapter Eleven investment provisions of the North American Free Trade Agreement (hereinafter “NAFTA“). In particular, Metalclad alleges violations of (i) NAFTA, Article 1105, which required each Party to NAFTA to “ accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security“ and (ii) NAFTA, Article 1110, which provides that “no Party to NAFTA may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ('expropriation’), except: (a) for a public purpose; (b) on a non-discriminatory basis;(c) in accordance with due process of law and Article 1105(1); and (d) on payment of compensation in accordance with paragraphs 2 through 6”.Mexico denies these allegations.

Type
Judicial and Similar Proceedings
Information
International Legal Materials , Volume 40 , Issue 1 , January 2001 , pp. 36 - 54
Copyright
Copyright ©American Society of International Law 2001

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References

* This document was reproduced and reformatted from the text provided in hard copy by Professor Jack J. Coe, Jr. of the Pepperdine University School of Law.

1 Under NAFTA, Article 1120(l)(b), a disputing investor may submit its claim to arbitration under the Additional Facility Rules of ICSID provided that either the disputing Party whose measure is alleged to be a breach referred to in Article 1117 (in this case, Mexico) or the Party of the investor (in this case, the United States of America), but not both, is a party to the ICSID Convention. The United States of America is a party to the ICSID Convention; Mexico is not. Hence that Additional Facility Rules of ICSID appropriately govern the administration of these proceedings.

2 At the first session of the Tribunal, of July 15, 1997, the Parties agreed that the President of the Tribunal should have the power to determine procedural matters.

3 SEDUE is the predecessor organization to Semarnap.

4 The question of turning to NAFTA before exhausting local remedies was examined by the parties. However, Mexico does not insist that local remedies must be exhausted. Mexico's position is correct in light of NAFTA Article 1121(2)(b) which provides that a disputing investor may submit a claim under NAFTA Article 1117 if both the investor and the enterprise waive their rights to initiate or continue before any administrative tribunal or court under the law of any Party any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in NAFTA Article 1117.