Mexico won international arbitration against Eutelsat, a French company

Tatiana Clouthier, head of the Ministry of Economy (SE), informed this Thursday, September 16, that an international tribunal decided to dismiss a claim for more than USD 120 million (2.4 billion pesos) filed by Eutelsat S.A., a French company with an investment in Mexico, against the Mexican State.

The French company brought the claim under the Mexico-France Agreement for the Promotion and Reciprocal Protection of Investments (APPRI) and was established under the Arbitration Rules of the International Centre for Settlement of Investment Disputes (ICSID). "The Arbitral Tribunal confirmed that Mexico did not breach its obligations under the Mexico-France APPRI and rejected the claim against Mexico," reads the SE's press release.

In this regard, Clouthier Carrillo said on social networks that as a result of the efforts of the lawyers of the Secretariat she directs, the case was won, so "it was confirmed that Mexico did not breach its obligations under the Mexico-France APPRI and the payment of more than USD 120 million was rejected". The investors were ordered to pay Mexico for expenses derived from the legal defense in the arbitration led by the Ministry of Economy.

As background, in July 2017, during Enrique Peña Nieto's administration, the claimant Eutelsat S.A. filed a request to submit a claim to arbitration under the Mexico-France APPRI.

Eutelsat acquired in 2014 100% of SATMEX's share capital and thereby became the holder of the concessions that were granted to SATMEX to occupy Mexican geostationary orbital positions. Eutelsat claimed alleged arbitrary acts by the SCT, since the latter had refused to reduce the Satellite Capacity Reserved to the State (CSRE) expressly contained in its concession titles regarding free satellite capacity in favor of the Mexican State.

Eutelsat alleged that Mexico affected its legitimate investment expectations, did not grant it fair and equitable treatment; and treated it in a discriminatory manner compared to the treatment granted to other companies in the sector. The Arbitral Tribunal dismissed these claims. In addition, it ordered Eutelsat to pay proportional costs and expenses of the arbitration.

As a result, the General Directorate of Legal Consultancy for International Trade, part of the Undersecretary of Foreign Trade, coordinated the defense of the Mexican State in this arbitration proceeding, administered by the International Centre for Settlement of Investment Disputes (ICSID), an agency of the World Bank.

The tribunal determined that Mexico did not breach its obligations under the Mexico-France APPRI and dismissed the claims on the merits. As a result, the Tribunal ordered Eutelsat to pay a proportional part of Mexico's legal fees and expenses, as well as to cover part of the arbitration costs.

"This is the third award favorable to Mexico during the administration of President López Obrador in investor-state arbitrations," added Tatiana Clouthier. According to the Ministry of Economy, the APPRIs are international treaties designed to promote international investment flows and provide certainty to operations carried out by foreign investors.

Mexico signed its first APPRI in 1995 and, since then, has generated a wide network of investment treaties in order to turn the country into one of the world's favorite destinations for investment, considering that international flows, especially those coming from foreign direct investments, play a fundamental role in economic development, technology transfer and job creation.

The SE's website specifies that the agreements fulfill four main functions:

They favor the existence of an even floor for competition.

They establish a legal framework of protection and security for investors and their investments.

They guarantee investors' control over their investments.

They provide for an investor-State dispute settlement mechanism when any provision of these APPRIs is contravened and damage has been caused to investors' investments.