Mexican Government Gets Ready for International ArbitrationBy Paloma Duran | Thu, 10/07/2021 - 09:37
The Mexican government has requested bids to hire legal advisors for the international arbitration processes of 2 cases in which the country is the defendant and another 10 cases that could be filed against Mexico. In addition, experts believe that the new electricity reform, if passed, could generate more lawsuits against the country.
The Mexican government announced that it is seeking legal advice for the arbitration imposed by First Majestic Silver, which has been accused of owing US$544 million in taxes. In addition, the country is also seeking advice for the cases of US oil companies Finley Resources, MWS Management and Prize Permanent Holdings, which accused the country of violating USMCA protections.
The government said that the winner of the tender could also provide guidance on 10 notifications of intent published by Mexico's General Directorate of Legal Advice for International Trade (DGCJCI), but only if they become international arbitration processes.
The ten companies that could initiate arbitration processes against Mexico are AMERRA Capital Managemen, Doups Holdings, Sepadeve International, Gonzalo Mora Velarde, Primero Mining Corp, Dal-Tile International and Dal Tile Corporation, Jinlong Dongli Minera Internaciona, Tralje International Finance, CMSA B.V. and Contecon Manzanillo and Coeur Mining. However, authorities said they will only require guidance in case a solution cannot be reached with them first.
The Ministry of Economy said that it will receive offers until Oct. 14 and that the contract is expected to start on January 1, 2022. Mexican authorities said they expect to win these cases as they did in September 2020 against the French company Eutelsat SA, which requested the country to pay US$120 million for not complying with the obligations stipulated in the Agreement for the Promotion and Reciprocal Protection of Investments (APPRI) Mexico-France.
After an in-depth analysis, the arbitral tribunal confirmed that Mexico did not violate the agreement, for which the claim was rejected. Likewise, French investors were ordered to pay Mexico the expenses generated by its legal defense. “This was the third award favorable to Mexico during the administration of President López Obrador in investor-State arbitrations. We will continue working so that there is a good relationship between countries but it has to be fair,” said Economy Minister Tatiana Clouthier.
Apart from these legal processes, experts believe that the electricity initiative recently sent to congress could generate more international arbitration proceedings against Mexico because it would violate the provisions of the USMCA and the Comprehensive and Progressive Treaty of Trans-Pacific Partnership (TIPAT). “The new reform undoubtedly contains clauses of indirect expropriation that consists of a violation of the rights to privacy. This is a violation of the principles of any free trade agreement whose spirit is the reasonable expectation of profitability of all foreign investors,” said Miriam Grunstein, Senior Partner at Brilliant Energy Consulting.