Mexico gets favorable ruling in Vulcan trade accord violation case — but it’s far from over

The International Centre for Settlement of Investment Disputes (ICSID) — an limb of the World Bank — issued a mixed ruling successful the arbitration process initiated against Mexico by U.S.-based Vulcan Materials Company.

In what is being framed arsenic a favorable ruling for Mexico, the ICSID dismissed astir each of the company’s claims, but for 1 measurement related to the expropriation of a spot operated by a Vulcan subsidiary.

Vulcan had already filed a trade-related ailment against Mexico when, during the López Obrador administration, its subsidiary’s enactment country was designated a quality reserve. The quality is lone present being resolved. (Cuartoscuro)

In that regard, the ICSID ruled that Mexico violated the North American Free Trade Agreement, which was inactive successful effect erstwhile the ailment was filed successful 2018, by shutting down quarrying operations managed by Calica, a Vulcan subsidiary. 

Although Vulcan sought US $1.53 cardinal successful damages positive involvement and costs, the tribunal awarded the institution lone negligible monetary damages.

The last determination remains confidential until officially released. Vulcan said it volition sermon the ruling during its Q2 net telephone connected Wednesday.

Mexico’s Economy Ministry (SE) said the authorities is “carefully analyzing the ICSID determination to find what ineligible actions are available.”

The authorities had been negotiating with Vulcan to permanently extremity limestone extraction successful what is present a protected earthy country successful the authorities of Quintana Roo. Earlier this month, President Claudia Sheinbaum said immoderate statement would necessitate the institution to relocate operations to an environmentally viable tract and money biology remediation of the affected zone.

In a statement, the SE said that Mexico “reaffirms its committedness to overseas concern that brings innovation, bully wages and biology protection, arsenic good arsenic to respecting the rules and procedures contained successful planetary treaties arsenic a cardinal constituent to supply the ineligible certainty that makes economical improvement possible.”

Vulcan, a shaper of ready-mixed factual and asphalt, filed the ailment with the tribunal successful 2018, accusing Mexico of violating NAFTA by repudiating an statement to unlock a information of Vulcan’s aggregates reserves and arbitrarily shutting down its quarrying operations successful the authorities of Quintana Roo.

Mexican biology authorities closed parts of Calica’s limestone operations successful Quintana Roo successful 2018. The authorities canceled deepwater larboard entree and shipping privileges adjacent though Vulcan’s concession implicit the spot is valid until 2037.

Operations were wholly shuttered successful May 2022 (the authorities claimed underwater limestone extraction was causing biology damage) and Navy unit seized the company’s larboard successful March 2023. 

In September 2024, the authorities designated 53,000 hectares betwixt Playa del Carmen and Tulum, encompassing the larboard and limestone operations, a protected earthy area.

With reports from El Economista, Reforma, Aristegui Noticias and Mexico Business News