Legacy Vulcan and Calizas Industriales del Carmen (Calica) v. United Mexican States

Case summary

At a glance

Parties: Legacy Vulcan, LLC (United States), with its Mexican enterprise Calizas Industriales del Carmen, S.A. de C.V. (CALICA), v. United Mexican States
Case no.: ICSID Case No. ARB/19/1
Forum and rules: ICSID Convention; ICSID Arbitration Rules of 10 April 2006 as modified by Section B of NAFTA Chapter Eleven; place of proceeding Washington, D.C.
Treaty: NAFTA Chapter Eleven
Tribunal: Prof. Albert Jan van den Berg (President), Prof. Sergio Puig, Prof. Guido Santiago Tawil
Sector: Limestone quarrying and export; port operations
Outcome: Pending in the published documents. These are procedural orders only. The most important is PO 7 (11 July 2022), which recommended non-aggravation measures and, by majority, admitted an ancillary claim over the La Rosita shutdown. Prof. Puig dissented on the ancillary claim.
Amount: Claimed: US$1,569 million including interest as of 30 April 2020 (Memorial, as quoted in PO 3). The claim includes US$17.8 million in port fees. No amount awarded in the published documents.

The dispute

Legacy Vulcan, a US investor, owns CALICA. CALICA quarries limestone near Playa del Carmen, Quintana Roo, for export to the United States. It uses three lots (La Rosita, El Corchalito and La Adelita), a port terminal at Punta Venado and a fleet of vessels. Under NAFTA Chapter Eleven, the original claims concern three measures. First, Mexico allegedly repudiated the 2014 Agreements to amend the local environmental programme (POEL), which allegedly prevented quarrying at La Adelita. Second, PROFEPA's 2018 shutdown of El Corchalito followed an inspection that the claimant calls arbitrary and retaliatory. Third, Mexico failed to reimburse port fees that the claimant says were collected illegally. In May 2022 PROFEPA imposed a total temporary closure on La Rosita, after public remarks by President López Obrador. The claimant then sought provisional measures and leave to add an ancillary claim. Mexico argued that NAFTA's procedural requirements bar a new claim, that the La Rosita measure is unrelated to the original claims, and that PROFEPA acted lawfully. Mexico later raised a counterclaim.

Key holdings

NAFTA Article 1134 does not exclude Article 47 of the ICSID Convention or ICSID Rule 39. They apply together, and Article 1134 limits them only in that the Tribunal may not order attachment or enjoin the measure alleged to be a breach. PO 7 ¶¶ 52–54
The Tribunal recommended that Mexico take no action that might further aggravate or extend the dispute, including further public attacks. The President's press remarks on the arbitration and the damages claimed jeopardised the integrity of the process and amounted to prosecuting the dispute in the media. Relief was refused for the other grounds: the alleged disregard of a domestic court order, the possible criminal proceedings, the port concession and the customs permit. PO 7 ¶¶ 77–98, 160(a)
By majority, the claimant may present an ancillary claim over the shutdown of La Rosita. NAFTA Articles 1119–1121 do not displace Article 46 of the ICSID Convention or ICSID Rule 40. The notice, waiting-period and waiver requirements are covered by compliance for the original claim. La Rosita is part of the same quarrying operation and so of the same subject-matter of the dispute. PO 7 ¶¶ 116–119, 133–154, 160(b)
Prof. Puig dissented on the ancillary claim. In his view it is outside Mexico's consent under NAFTA, because the procedural prerequisites of Chapter 11 were not met. It also does not arise directly out of the subject-matter of the dispute: it concerns a different and later measure affecting a separate investment, with its own damages claim. Dissenting Opinion ¶¶ 1–12
The Tribunal deferred any decision on a counterclaim by Mexico until Mexico files a reasoned application for leave, and reserved costs. PO 7 ¶¶ 158–160(c)–(d)
The Tribunal admitted the 30 June 2023 letter of Mr. Quetzal Tzab Gonzáles, on behalf of local communities, as a non-disputing party submission. It did not admit his class action filing, which was already on the record. PO 9 ¶¶ 12–15
The Tribunal held that the PO 7 measures also apply to the ancillary claim. It refused to reiterate them for two reasons: the President's remarks of 20 October 2023 were informative and related to a negotiation proposal, and the 8 November 2023 Notice beginning a protected-natural-area process has an uncertain outcome. PO 11 ¶¶ 27–42