Mexico Investment Protections

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1. INTERNATIONAL LAW INVESTMENT PROTECTION FRAMEWORK

Mexico is not a party to the ICSID Convention. Therefore, it only participates in ICSID proceedings under the Additional Facility Arbitration Rules.

Mexico has executed important agreements on the promotion and reciprocal protection of investments with the following countries: Argentina[1], Australia[2], Austria[3], Belarus[4], China[5], Cuba[6], the Czech Republic[7], Denmark[8], the Economic Union of Belgium and Luxembourg[9], Finland[10], France[11], Germany[12], Greece[13], Iceland[14], India[15], Italy[16], the Netherlands[17], Panama[18], Portugal[19], Slovakia[20], South Korea[21], Spain[22], Sweden[23], Switzerland[24], Trinidad and Tobago[25], the United Kingdom[26], and Uruguay[27].

Mexico has executed the following eleven FTAs and one economic association agreement: North American Free Trade Agreement, between Canada, Mexico, and the United States (NAFTA)[28]; FTA between Colombia, Mexico, and Venezuela (TLC G3)[29] (Venezuela has withdrawn from this agreement); FTA between Costa Rica and Mexico[30]; FTA between Bolivia and Mexico[31]; FTA between Mexico and Nicaragua[32]; FTA between Chile and Mexico[33]; FTA between the European Union and Mexico[34]; FTA between Israel and Mexico[35]; FTA between El Salvador, Guatemala, Honduras, and Mexico (Northern Triangle – CA3)[36]; FTA between Iceland, Liechtenstein, Mexico, Norway, and Switzerland[37]; FTA between Mexico and Uruguay[38]; Agreement to Strengthen the Economic Association between Mexico and Japan[39].

In Mexico, implementing legislation is not required for international agreements and treaties to enter into force. Pursuant to Mexico’s Constitution,[40] international treaties signed by the president, ratified by the Senate, and published in the Official Federal Gazette are considered part of the country’s domestic law. The Constitution is the supreme instrument in the country’s legal hierarchy, followed by international treaties, which, as determined by the National Supreme Court of Justice, rank above federal and local laws.[41]

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2. DISPUTE RESOLUTION

With NAFTA, Mexico took an important step toward adopting a special dispute resolution system for investment. By agreeing to participate in alternative dispute resolution mechanisms – in addition to federal and local courts – Mexico adopted a pro-international law position and indicated its interest in making dispute resolution processes more transparent. Previously, when resolved by national courts, investment disputes were susceptible to greater state interference and also to arbitrary judicial decisions. Beginning with NAFTA, Mexico has shown exemplary conduct in this area. As a result of stipulations regarding investment dispute resolution mechanisms, Mexico has been subject to various arbitral proceedings pursuant to ICSID Additional Facility, and Mexico has complied with all final awards.

NAFTA has served as the model investment treaty and the majority of Mexico’s subsequently signed investment treaties have adopted specific sections that provide for alternative dispute resolution mechanisms, such as arbitration for investment matters. Specifically, NAFTA established Chapter XI to regulate dispute resolution. Articles 1115–20 establish a dispute resolution mechanism that includes an impartial tribunal that seeks to ensure equal treatment in relation to investors of the parties according to the principle of international reciprocity. Before initiating proceedings, disputing parties must attempt to settle disputes through consultation or negotiation.

This dispute resolution procedure may be governed by: (i) the ICSID Convention between States and Nationals of Other States, provided that both the disputing party and the party of the investor are party to the Convention; (ii) the ICSID Convention Additional Facility Rules, when one of the parties, but not both, is party to the ICSID Convention; (iii) the United Nations Commission on Trade Law (UNCITRAL) Arbitration Rules.

Mexico has not signed the ICSID Convention and, therefore, can only submit disputes under the ICSID Additional Facility Rules or before the International Court of Arbitration of the International Chamber of Commerce (ICC). The ICC International Court of Arbitration may also be designated to administer disputes in which a state party is involved (e.g., concession contracts or others involving parastatal entities) since its arbitration rules do not limit the nature of the business of the parties, their nationality, or their private or public nature.[42]

[1] Official Federal Gazette (28 Aug. 1998).

[2] Official Federal Gazette (12 June 2007). Protocol.

[3] Official Federal Gazette (23 Mar. 2001). Protocol.

[4] Official Federal Gazette (27 Aug. 2009).

[5] Official Federal Gazette (5 Jun. 2009).

[6] Official Federal Gazette (3 May 2002). Protocol.

[7] Official Federal Gazette (25 Mar. 2004). Protocol.

[8] Official Federal Gazette (30 Nov. 2000).

[9] Official Federal Gazette (19 Mar. 2003).

[10] Official Federal Gazette (30 Nov. 2000).

[11] Official Federal Gazette (30 Nov. 2000).

[12] Official Federal Gazette (20 Mar. 2001). Protocol

[13] Official Federal Gazette (11 Oct. 2002). Protocol.

[14] Official Federal Gazette (6 June 2006). Protocol.

[15] Official Federal Gazette (5 Mar. 2008). Annex to Art.12.

[16] Official Federal Gazette (17 Jan. 2003).

[17] Official Federal Gazette (10 July 2000). Protocol.

[18] Official Federal Gazette (19 Dec. 2006). Annex to Arts. 10.2, 12.2, 13.1, 13.2, 16.

[19] Official Federal Gazette (8 Jan. 2001). Protocol.

[20] Official Federal Gazette (3 Apr. 2009).

[21] Official Federal Gazette (9 Aug. 2002). Protocol.

[22] Official Federal Gazette (19 Mar. 1997).

[23] Official Federal Gazette (27 July 2001). Protocol.

[24] Official Federal Gazette (20 Aug. 1998). Protocol.

[25] Official Federal Gazette (12 Sept. 2007). Annex to Art. 12.2.

[26] Official Federal Gazette (25 July 2007). Annex to Art. 11.

[27] Official Federal Gazette (9 Aug. 2002). Protocol.

[28] Official Federal Gazette (1 Jan. 1994). Additional information on this treaty is available at www.economia.gob.mx/?P=5200_5205_1 (accessed 4 July 2010).

[29] Official Federal Gazette (9 Jan. 1995).

[30] Official Federal Gazette (10 Jan. 1995).

[31] Official Federal Gazette (11 Jan. 1995).

[32] Official Federal Gazette (1 July 1998).

[33] Official Federal Gazette (28 July 1999).

[34] Official Federal Gazette (26 June 2000).

[35] Official Federal Gazette (28 June 2000).

[36] Official Federal Gazette (14 Feb. 2001).

[37] Official Federal Gazette (29 June 2001).

[38] Official Federal Gazette (14 July 2004).

[39] Official Federal Gazette (31 Mar. 2005).

[40] Constitution of the United Mexican States, Art. 133.

[41] Judicial Weekly of the Federation, National Supreme Court of Justice, Ninth Period, Thesis P.IX/2007 (Apr. 2007).

[42] VON WOBESER, Alexandra. “La Conveniencia de la Adhesión de México al Convenio Sobre Arreglo de Diferencias Relativas a Inversiones entre Estados y Nacionales de otros Estados” [The Convenience of Mexico’s Accession to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States: Thesis Escuela Libre de Derecho]. 55 México (2009).