Driven by the demand for data, the information & communication sector (particularly the telecommunications sub-sector) has experienced sustained growth and remains attractive for foreign direct investment. The great number of investment treaty arbitrations in telecommunications reflect rising cross-border investments and host States’ involvement in infrastructures, such as 5G networks, data centers, mobile towers, and subsea cables. According to Jus Mundi database, there are over 600 investment arbitration case documents in the information and communication sector; more than half are under the telecommunications sub-sector. Concluded cases with final awards decided in favor of States are twice as many as those in favor of investors. Nowadays, especially with the impact of the pandemic, we are surrounded by remote connection and home media consumption. The current situation indicates that the focus and investment in telecommunications will remain high.
This month, Jus Mundi continues the special edition of the Arbitration Team of the Month featuring a government legal team. With Mexico’s recent victory in Eutelsat v. Mexico, we are delighted to present Mexico’s government counsel, the Dirección General de Consultoría de Comercio Internacional.
Recent victory cases analysis: Eutelsat v. Mexico
In an award dated September 15, 2021, an ICSID tribunal has dismissed a more than US$120 million claim against Mexico brought by Eutelsat, a French satellite operating giant, over the State’s reservation requirement of satellite capacity.
- In 2014, Eutelsat acquired local company Satmex, operator of three satellites providing telecommunications, with US$831 million.
- Mexico required Satmex to reserve a certain amount of satellite capacity for the government’s signal transmission. Eutelsat alleged that the Mexican requirement was discriminatory and violated fair and equitable treatment, most favored nation treatment, full protection and security of the BIT.
- In 2017, Eutelsat brought its claim against Mexico under the France – Mexico BIT (1998). The case was heard under the ICSID Arbitration Additional Facility Rules 2006 as Mexico did not ratify the ICSID Convention until 2018.
- Alfredo Bullard González President
- Guido Santiago Tawil Appointed by the investor
- Marcelo G. Kohen Appointed by the State
- Francisco Orrego Vicuña Appointed by the investor (replaced)
The tribunal rejected Eutelsat’s claims on the merits and awarded Mexico a portion of its legal costs.
Track record highlights
According to a Mexican press release, this is the third arbitration award rendered in favor of the State with the current administration.
In July 2020, Mexico defeated a US$3 billion NAFTA claim brought by a US motorcycle manufacturer, Vento, over customs duty imposed on its motorcycles assembled in the US and exported to Mexico. The tribunal found that the joint venture established by contract between Vento and a Mexican company, MotorBike, qualified as an investment. On the merits, the tribunal found there was no breach of the national treatment and of the most-favored-nation treatment standards, as the strategic business structure of the joint venture was not comparable with its competitors.
In December 2021, a Canadian court rejected Vento’s attempt to introduce new evidence in the set-aside proceedings. The judge believed new evidence could have been presented during the arbitration proceedings.
In June 2020, Mexico defeated a US$472 million NAFTA claim brought by a US national over his investment in Mexico’s telecommunications sector. The tribunal dismissed Nelson’s expropriation argument because there was no right that could have been expropriated as the agreement had not been signed when the claim was introduced. The tribunal also found the threshold for breaching the fair and equitable treatment standard to be particularly high and concluded that there had been no denial of justice in the Mexican court proceedings.
Table of investor-State arbitration cases involving Mexico (recent victories/pending cases)*
Please click here to see all types of cases involving Mexico available on Jus Mundi.
We selected a few recent victories and ongoing cases of Mexico in the table below.
(Note*: This table is not exhaustive.)
Congratulations to the team again, and Jus Mundi wishes them good luck for the future!