The Ministry of Economy (SE) announced yesterday that Mexico will challenge the ruling issued by an international tribunal administered by the International Centre for Settlement of Investment Disputes (ICSID) in favor of the company Odyssey Marine Exploration , after the federal agency together with the Ministry of Environment and Natural Resources (Semarnat) denied the permit for the marine dredging project in Baja California Sur called Don Diego .
More than two years after the procedure was completed, on September 17, the majority of the court issued the award in favor of the US company, forcing Mexico to pay compensation of 37.1 million dollars (mdd) for having blocked the project, which, according to the SE, represents around 1.18% of the amount that the company originally claimed.
In context, between 2016 and 2018, Semarnat denied the Environmental Impact Statement (EIS) for the Don Diego project , which consisted of marine dredging, at a distance of 12 nautical miles (22,224 m) from the closest point to the coast in an area of 61,989.2 hectares, in order to extract seven million tons of phosphate sands annually for 50 years to produce 350 million tons of screened and dried phosphate sands for transport.
“The ruling validates our position that Mexico’s environmental agency, Semarnat, wrongly denied our environmental permit, which received extensive input from external advisors and industry experts to determine an economically viable and environmentally responsible development plan. The project remains strategically significant and commercially viable,” said Mark Gordon, CEO of Odyssey Marine Exploration, in a statement.
In this regard, Mexico argued that the project affected an ecologically sensitive area full of marine fauna , and also provided evidence demonstrating the company’s lack of experience in the mining sector. However, international arbitration was initiated against the country within the framework of the North American Free Trade Agreement (NAFTA) .
“Federal agencies consider that the Court gave disproportionate weight to the statements of two former directors of the General Directorate of Environmental Impact and Risk of Semarnat presented as witnesses by Odyssey, who declared that the denial of the MIA was due to political and not scientific situations. For its part, Mexico’s defense demonstrated that both witnesses incurred conflicts of interest by receiving large payments for testifying, which was not taken into account by the majority of the court,” said the statement from the Ministry of Economy.
The case of the project in the Gulf of Ulloa adds another grain of sand to the pressures that have arisen in the commercial relationship between Mexico and the United States , today through the Treaty between Mexico, the United States and Canada (T-MEC), which greatly emphasizes the care and promotion of foreign investments from these countries.
Along these lines, although Mexico’s reasons could be valid specifically in this case, various specialists have commented to T21 that the lack of legal certainty, as well as the constant change in the requirements for installing projects, have slowed down some investments in the country, which has led to Mexico having to pay some compensations.
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