Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. v. The United Mexican States
ICSID · Investment (ICSID and treaty) · Mexico · 16 Jun 2010
Why it matters
This award is significant for its detailed analysis of fair and equitable treatment and expropriation in the context of a state's regulatory intervention in a concession. It applied the 'loser pays' principle for costs, and addressed causation and compensation for lost opportunity. The case also illustrates the treatment of multiple claimants under different BITs in conjoined proceedings.
Summary
The case arose from a dispute over a concession to operate Mexico's National Vehicle Registry (Renave). The claimants, French and Argentine investors, held 49% of Renave's shares. After political opposition and allegations of corruption involving a shareholder, Mexico took escalating measures: technical intervention, administrative interventions, requisition, and finally revocation of the concession in 2002. The claimants alleged these actions violated the fair and equitable treatment and expropriation provisions of the France-Mexico and Argentina-Mexico BITs. The tribunal, constituted under ICSID Additional Facility Rules, rejected Mexico's jurisdictional challenge and found that Mexico breached both BITs. It held that the measures, particularly the administrative interventions and revocation, were disproportionate and arbitrary, amounting to indirect expropriation. The tribunal awarded compensation based on the fair market value of the investment as of June 2001, using a discounted cash flow method but adjusting for the concession's risks. It also awarded compound interest and costs, applying the 'loser pays' principle. The award is notable for its thorough analysis of causation, the standard of fair and equitable treatment, and the calculation of damages for a going concern.
The detail
Parties: Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. v. The United Mexican States
Case number: ICSID Case No. ARB(AF)/04/3
Outcome: The Tribunal found Mexico breached fair and equitable treatment and unlawfully expropriated the claimants' investments, awarding compensation and costs.
Quantum: US$ 4,483,164 to Gemplus S.A. and US$ 6,458,721 to Talsud S.A., plus interest and costs
Applicable law: France-Mexico BIT (1998) and Argentina-Mexico BIT (1996); ICSID Additional Facility Rules
Issues in play: The case involved the fair and equitable treatment standard and expropriation provisions under two BITs, with the tribunal assessing whether Mexico's regulatory actions (including administrative interventions and revocation of a concession) amounted to indirect expropriation and unfair treatment.
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