KBR, Inc. v. United Mexican States, ICSID Case No. UNCT/14/1
ICSID · Investment (ICSID and treaty) · Mexico · 30 Apr 2015
Why it matters
This case is a landmark on the strict interpretation of NAFTA Article 1121's waiver requirement. The Tribunal held that a claimant must waive all rights to initiate or continue proceedings before any other tribunal regarding measures alleged to violate NAFTA. It clarified that the waiver is a jurisdictional prerequisite, not merely an admissibility issue, and cannot be cured after the deadline. The decision underscores the importance of a clean waiver to avoid double recovery and conflicting decisions.
Summary
KBR, a US company, initiated NAFTA arbitration against Mexico over actions related to a contract dispute with Pemex. KBR's subsidiary COMMISA had obtained an ICC award against Pemex, but Mexican courts annulled it. KBR then sought to enforce the award in New York and Luxembourg while also bringing NAFTA claims. Mexico objected that KBR's waiver under NAFTA Article 1121 was invalid because KBR continued to pursue the enforcement proceedings seeking damages. The Tribunal agreed, finding that the waiver must cover all proceedings regarding the same measures, including enforcement actions. It dismissed the claim for lack of jurisdiction, holding that the waiver is a jurisdictional requirement that cannot be cured after the deadline. The Tribunal also rejected KBR's argument that the waiver was only an admissibility issue. The case highlights the strictness of the NAFTA waiver requirement and the need for claimants to choose between treaty arbitration and other remedies.
The detail
Parties: KBR, Inc. v. United Mexican States, ICSID Case No. UNCT/14/1
Case number: italaw/cases/2693
Outcome: The Tribunal dismissed the claim for lack of jurisdiction due to KBR's failure to provide a valid waiver under NAFTA Article 1121.
Applicable law: NAFTA Chapter 11, UNCITRAL Arbitration Rules (1976), ICSID Administrative Services
Issues in play: The collision was between the NAFTA Article 1121 waiver requirement and KBR's ongoing parallel proceedings in New York and Luxembourg to enforce an ICC award. The issue was whether KBR's waiver was valid when it continued to pursue those proceedings seeking damages.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.