The Bureau of National Affairs, Inc
MEXICO CITY--Mexico's Economy Ministry has paid just over $16 million to the Metalclad Corp. to comply with a ruling by a North American Free Trade Agreement arbitration panel, which found that Mexico had effectively expropriated the company's hazardous waste containment facility in the country, government and company officials said Oct. 26. The payment marks the end of a dispute in which Mexico challenged in the Canadian courts the NAFTA arbitration panel's August 2000 ruling in favor of Metalclad, a waste management company based in Newport Beach, Calif.
The arbitration panel had ruled unanimously Aug. 30, 2000, that the decision of the Mexican municipality of Guadalcazar, in the state of San Luis Potosi, to deny the company a permit to operate a toxic waste dump, and the municipality's subsequent decision to declare the site part of an ecological reserve represented an expropriation of Metalclad's investment, in violation of NAFTA provisions.
The panel awarded Metalclad $16.7 million in compensation for its costs in seeking to build the facility, significantly less than the company's original claim of $90 million in damages, which included a request for compensation for the value of lost profits and future business.
Metalclad filed the original notice of its claim Oct. 4, 1996. It was the first case brought to arbitration under Chapter 11 of NAFTA.
The Economy Ministry said that, in accord with an agreement reached with Metalclad, the company transferred the deed where the hazardous waste containment site is located to the Mexican government.
Mexico had challenged the arbitration panel's August 2000 ruling in the British Columbia Supreme Court, charging that the panel had overstepped its jurisdiction in ruling against Mexico, but in May the British Columbia Supreme Court substantially upheld the NAFTA panel's finding in favor of Metalclad.
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