While it’s uncertain whether changes in Mexico’s legal environment under López Obrador directly caused a spike in international investment arbitration, a trend is emerging with nearly twenty pending cases under ICSID rules and the ICSID Additional Facility.
In 2023 alone, eleven cases were filed, primarily in the oil, gas, and mining sectors. Most of these cases involve NAFTA and the USMCA as the applicable rules for foreign investment protection.
Other treaties allegedly violated include the Mexico-Spain BIT in the Fotowatio Renewable Ventures case (ICSID Case No. ARB/24/5), the Mexico-UK BIT in the Bacanora Lithium Limited case (ICSID Case No. ARB/24/21), and the Mexico-China BIT.
Notably, Canadian foreign investors can choose between the USMCA, NAFTA (depending on when the violation occurred), and the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). This is exemplified by the Caisse de dépôt case (ICSID Case No. ARB/23/53), where a Québec company filed an investment claim against Mexico under the CPTPP rather than the USMCA.
Recent changes in Mexican legislation concerning mining activities, national waters, ecological balance, environmental protection, and waste management point to this trend. Some changes aimed at revoking concessions where potential violations occurred, raising alarms in the industry, especially among foreign investors.
Another upcoming change affects the energy sector. Pemex (oil) and CFE (electricity), previously considered State Productive Enterprises with operational autonomy, will lose their independence under new laws, giving the state control over both entities. This could trigger changes in the energy sector, potentially impacting foreign direct investment.
Mexico appears to be following a similar path to Spain and Italy, where changes in energy sector legislation led to numerous investment arbitration claims years ago.
Changes in national laws have significant implications for the treaties Mexico has signed to protect foreign direct investment. This trend is likely to intensify as further legislative changes are implemented.
