Robert Azinian, Kenneth Davitian, & Ellen Baca v. The United Mexican States, ICSID Case No. ARB (AF)/97/2
ICSID · Investment (ICSID and treaty) · Mexico · 1 Nov 1999
Why it matters
Azinian v. Mexico is a landmark NAFTA case establishing that a claim for expropriation cannot succeed if the investor has not exhausted local remedies and the local court decisions are not arbitrary or a denial of justice. The Tribunal clarified that a breach of contract by a state entity does not automatically amount to expropriation under NAFTA, and that investors must demonstrate a fundamental departure from established legal principles to challenge domestic court rulings.
Summary
The case arose from a waste collection concession granted by the Mexican municipality of Naucalpan to DESONA, a Mexican company owned by U.S. citizens. The concession was annulled by the municipality after only a few months, citing 27 irregularities including misrepresentations about the investors' experience and financial capacity. The investors challenged the annulment in Mexican courts, which upheld the municipality's decision. They then brought a NAFTA claim against Mexico, alleging expropriation. The Tribunal held that the investors had not exhausted local remedies and that the Mexican court decisions were not arbitrary or a denial of justice. The Tribunal found that the annulment was based on valid grounds under Mexican law, including fraudulent misrepresentations, and that the investors had failed to demonstrate any violation of NAFTA. The claim was dismissed, with each party bearing its own costs.
The detail
Parties: Robert Azinian, Kenneth Davitian, & Ellen Baca v. The United Mexican States, ICSID Case No. ARB (AF)/97/2
Case number: italaw/cases/114
Outcome: The Tribunal dismissed the claim in its entirety, finding no violation of NAFTA. Each party bears its own costs.
Applicable law: North American Free Trade Agreement (NAFTA), Chapter Eleven; ICSID Additional Facility Rules; Mexican law
Issues in play: The case involved the interaction between NAFTA's expropriation provisions (Article 1110) and the requirement to exhaust local remedies, as well as the standard for annulment of public service contracts under Mexican law.
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.