Joshua Dean Nelson and Jorge Blanco v. United Mexican States, ICSID Case No. UNCT/17/1
ICSID · Investment (ICSID and treaty) · Mexico · 5 Jun 2020
Why it matters
This case clarifies the standard for expropriation under NAFTA Article 1110, holding that regulatory measures that do not deprive the investor of all or almost all of the value of the investment do not constitute expropriation. It also reaffirms the high threshold for denial of justice claims under Article 1105, requiring a clear and malicious misapplication of the law.
Summary
Joshua Dean Nelson, a U.S. national, invested in Tele Fácil México, a Mexican telecommunications company. He claimed that Mexico's telecommunications regulator, the IFT, destroyed his investment through three measures: confirmation of criteria proceedings, Decree 77 (which set interconnection rates), and Resolution 127 (which denied Tele Fácil's request for a new interconnection agreement). Nelson also alleged that Mexican courts denied him justice by dismissing his appeal of Decree 77 as untimely. The Tribunal first rejected Mexico's jurisdictional objection that Nelson did not 'control' Tele Fácil under NAFTA Article 1117, finding he had legal control through majority ownership. On the merits, the Tribunal held that there was no expropriation under Article 1110 because Nelson retained ownership and control of Tele Fácil, and the regulatory measures did not deprive him of all or almost all of the investment's value. The interconnection agreement was not a property right capable of expropriation, and the IFT's actions were within its regulatory authority. On Article 1105, the Tribunal found no denial of justice: the Mexican courts' decisions were not clearly improper or malicious, and Tele Fácil's late filing of the appeal was its own fault. The Tribunal dismissed all claims and ordered Nelson to pay 80% of Mexico's legal costs plus the arbitration costs advanced by Mexico, totaling USD 2,054,199.
The detail
Parties: Joshua Dean Nelson and Jorge Blanco v. United Mexican States, ICSID Case No. UNCT/17/1
Case number: italaw/cases/4414
Outcome: Tribunal denied all claims; ordered Claimant to pay Respondent USD 2,054,199 for arbitration costs.
Applicable law: NAFTA Chapter Eleven, UNCITRAL Arbitration Rules (1976)
Issues in play: NAFTA Articles 1110 (expropriation) and 1105 (fair and equitable treatment) vs. Mexico's regulatory measures in telecommunications.
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