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

Abstract

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.