Mexico Must Pay Compensation After Possible Permit Terminations
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Mexico Must Pay Compensation After Possible Permit Terminations

Photo by:   Luis Vidal
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Fernando Mares By Fernando Mares | Journalist & Industry Analyst - Fri, 04/29/2022 - 16:31

A week after Congress approved the reform of the Mining Law, the International Chamber of Commerce (ICC) warned that if Mexico revokes an already granted concession, it must pay compensation to investors in accordance which international treaties the country has signed.


The Commission on Trade and Investment Policies and the Investment Arbitration Committee of ICC stated that articles 9.2 and 10.7 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) forbids participants to modify their legal framework to restrict activities or sectors that were not reserved in the annexes I and II.


“Mexico has not reserved the exploration and exploitation of lithium as a state activity. Other provisions of the treaty and the Agreement on Promotion and Reciprocal Protection of Investments (APPRIS), currently in effect, could have been violated,” said the ICC.  


“It is a worrying signal that the Mining Law reform does not consider exceptions to this declaration of public interest and does not mention what will to happen with the existing concessions. …If granted concessions are revoked, the Mexican government must pay compensation fees according to CPTPP and other signed international treaties,” the organization added. 


Similarly, the Canadian Chamber of Commerce declared that the reform violates the USMCA agreement, as well as those of the WTO. According to the chamber, the Mexican government did not make a reservation regarding lithium exploitation during the negotiation of the agreement. The creation of a state-owned lithium company therefore violates the USMCA. 


Within Mexico, PAN Deputy Felipe Macías said that the reform could be fought in courts because it generated uncertainty for investment. Macías added that since the Constitution regulates private and public participation in the exploitation of mineral resources, the reform should not be able to exceed these provisions. 


A week after the Mining Law reform was approved, President López Obrador announced that Mexico will participate in a meeting with Bolivia, Argentina and Chile to exchange experiences and strategies regarding lithium exploitation. 

Photo by:   Luis Vidal

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