Tecnicas Medioambientales Tecmed S.A. (“Tecmed”) v. Mexico

On July 28, 2000, Tecnicas Medioambientales Tecmed S.A. (Tecmed) (plaintiff) filed with the International Centre for Settlement of Investment Disputes (ICSID), under the ICSID Rules (Rules) and provisions of a reciprocal investment protection agreement between Spain and the United Mexican States (Agreement), a request for arbitration against Mexico (defendant). Tecmed is located in Spain and is a parent company and majority shareholder to Cytrar. “Cytrar” was first the name of a controlled landfill of hazardous industrial waste located in Mexico. An auction was organized to promote the sale of real property, buildings, facilities, and other assets relating to the landfill. Tecmed was the highest bidder and gained title to the assets. Tecmed organized a company, “Cytrar,” to operate to landfill and incorporated it under Mexican law. In 1996, Tecmed sent two letters to the Mexican government’s hazardous waste agency, INE, requesting that an operating license be issued in the name of Cytrar. INE issued a renewable license that was set to expire on November 19, 1998. However, on November 25, 1998, INE rejected Tecmed’s application for a renewed license to operate the landfill, and required Tecmed to institute a program to close the landfill. Tecmed brought suit against Mexico requesting that it be permitted to operate the landfill until the end of its useful life, in addition to compensation for damages. Tecmed alleged that the reason its application for a renewed license was denied related to a change in the political regime in the municipality where Cytrar is located, rather than deficiencies in Tecmed’s investment in Cytrar itself. In its complaint, Tecmed alleged that when INE did not renew its application to operate the landfill, INE expropriated Tecmed’s investment and caused damage to Tecmed through such expropriation.