Bayview Irrigation District et al. v. United Mexican States
ICSID · Investment (ICSID and treaty) · Mexico · 19 Jun 2007
Why it matters
This case clarifies that NAFTA Chapter Eleven does not protect investments that are not located in the territory of the host state. It also confirms that international water treaties do not create private property rights enforceable by individuals under investment treaties. The decision reinforces the territorial limitation of investment treaty protections and the distinction between state-to-state treaty obligations and investor rights.
Summary
The case involved 46 US claimants, including irrigation districts and individuals from Texas, who claimed that Mexico's failure to deliver water under the 1944 Water Treaty amounted to an expropriation of their water rights in violation of NAFTA Articles 1102 and 1110. The claimants argued they had an investment in Mexico in the form of rights to water located in Mexican rivers. The Tribunal, however, found that the claimants did not own water in Mexico; their water rights were granted by Texas and exercised in Texas. Under Mexican law, water in rivers is owned by the nation, and concessions do not create ownership rights. The 1944 Treaty is a state-to-state agreement that does not create private rights. Therefore, the claimants had no investment 'in the territory of' Mexico as required by NAFTA Article 1101. The Tribunal dismissed all claims for lack of jurisdiction, with each party bearing its own costs.
The detail
Parties: Bayview Irrigation District et al. v. United Mexican States
Case number: ICSID Case No. ARB(AF)/05/1
Outcome: Tribunal found it lacked jurisdiction; each party bears own costs.
Applicable law: NAFTA Chapter Eleven, ICSID Additional Facility Rules, 1944 Water Treaty, Mexican Constitution Article 27, Texas water law
Issues in play: Whether US water rights holders could claim property rights in water located in Mexico under NAFTA, and whether the 1944 Water Treaty created private rights of action.
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