The Metalclad Toxic waste Site and NAFTA Chapter 11 Investments
Provisions Fernando Bejarano G [email protected]
(52)595-95-47744 Slide 2 Summary Metalclad case was the first
lawsuit by a foreign company vs Mexico Govt under NAFTA Chap 11
Metalclad challenge the denial of a municipal construction permit
to reopen a toxic dump, and the creation of a State Protected
Natural Area as a unfear treatment and a measure that expropriate
indirectly his investment NAFTA tribunal ruled in favor of
Metalclad, Mexico asked for a revision by SC Canada. Metalclad
obtained $16 million US from Mexico Negative consequences because
Chapter 11 is a model for protection foreign investment in the Free
Trade of Americas Initiative Slide 3 Coterin San Luis Potos Mexican
enterprise, involved in business of mercury recycling, and toxic
landfill. After public pressure a Coterins toxic landfill was
closed in Mexquitic with 70,000 hz waste, at end 1989 Short later
acquired La Pedrera in Guadalcazar municipality, SLP in 1990 and
lied to the community Slide 4 Deposit of 20,000 tons of haz waste,
under a provisional permit to operate a transfer station Slide 5
Community opposition to Coterin Opposition from communities and
municipal authorities that demand state and federal intervention of
authorities but no real answer. Direct action from local people,
blockading the landfill and keeping trucks with toxic drums, until
environmental authorities closed the dump, in October 1991 after a
inspection National Human Rights Commission Recomndtn The 20,000
toxic waste remain on site buried. Nevertheless, Coterin obtain
federal/ state permits to operate the toxic landfill, only need
municipal permit Slide 6 Slide 7 Metalclad-Coterin Oct 1993,
Metalclad acquired Coterin, despite warnings from SLP state
authorities of the inadequate of the site Metalclad planned to
expand the toxic dump to storage 30 thousand tons of haz wast in
the next 25 years Offered profits of 12.5 million US dls in the
first year Good location of the site near a future expanded road
connected to North and Center of Mexico and with two of three legal
requirements to open a toxic landfill, knowing that only would need
the municipal construction permit Former Enviro State official,
received a commission for La Pedrera sale, acelerated the obtention
of federal permits. Later became director of Metalclad consulting
company and his wife a stakeholder of Metalclad holding company.
Slide 8 Construction of new cells without the municipal permit
Slide 9 Metalclad pressure Attempt to bribe local opposition
leaders Try to influence municipal politics Organize PR media
campaigns Attempt to bribe Governor SLP Pressure from stakeholders,
Senators to Mexico Ambassador and President. Pressure from USA
Ambassador in Mexico to Trade Dept. SLP Governor and Fed Aut..
Slide 10 The opposition to the toxic dump Local communities and
Ejidos from the municipality Independence of political parties
Local opposition linked with Pro San Luis Ecologico that called
Greenpeace Mexico intervention, that brings national/intnal
attention. Slide 11 Masive mobilization obtains Enviro Audit Info
Citizen Technical Comittee conclude that Environmental Audit was
preliminar, contradictory and will need more on site studies. Slide
12 The Federal Agreement and dispute with Metalclad Agreement
Metalclad-Profepa-INE to reopen toxic landfill Public opposition
from Governor SLP Legal disputes from municipality Lawsuits from
ENGOs to federal authorities Metalclad initiate NAFTA dispute
process under chapter 11 Creation of a State Natural Protection
Area in Guadalcazar Slide 13 Guadalcazar is located in the most
important center of concentration of cacti species in the Grand
Chihuahua Desert Region Registered 18 endemic endangered cacti
species Is a habitat in transition, also includes black bear, puma,
venado cola blanca Slide 14 Slide 15 Metalclad Chapter 11 lawsuit
The denial of the municipal construction and later, the creation of
the State Natural Reserve Area was argue as Violation art 1105
unfear and discriminatory treatment Each party shall accord to
investments of investors of another Party treatment in accordance
with international law, including fair and equitable treatment and
full protection and security. Violation art.110: tantaoumont to
expropriation invest. No Party may directly or indirectly
nationalize or expropriate an investment of an investor of another
Party in its territory or take measure tantamount to
nationalizationn or expropriation of such and investment... Slide
16 Arbitration,Appelation and final negotiation ICSID-NAFTA
Tribunal accept Metalclad complaints and order Mexico to pay more
16 million dls and acumulative interests to Metalclad Mexico
appealed the tribunal decission to the Supreme Court of British
Columbia, (SCBC) The SCBC, threw out two of the three
complaints,but mantain that state natural reserve areas was Nafta
violation Mexico Govermt negotiated with Metalclad, and paid $16
million dls and liberate him for any liability for the remediation
of the toxic dump. In 2003 still the place has 20,000 hz tons
buried on site and a dispute with SLP state about who has to paid
the clean up. Slide 17 Problems with the arbitration process under
NAFTA Chapter 11 Corporations are treated as international actor
and the process is consider like a private commercial dispute No
Public Hearings during the arbitration process. Municipal and State
can not participate directly but trough Federal Govt No transparent
and democratic process No environmental or health issues are
sufficient considered in the arbitration process The perversion of
the Polluter-Pay Priciple: polutter did not pay, but was paid.
Slide 18 Conclusions The Chapter 11 is used as a political pressure
to intimidate municipal and state governments Recommendation:
Chapter 11 has to be reviewed to preserve democracy and
sovereignity of municipal and state governments. NAFTA chapter 11
is not a good model for future foeign protection investments for
other free trade agreements in the Americas.
