The Rule of Law: Mexico's Approach to Expropriation Disputes in the Face of Investment Globalization

Abstract:     
A new constitutional design is emerging in Mexico to address investment and expropriation disputes. Assurance of the rule of law, understood as independent legal process to resolve disputes, is a key element. Although the rule of law assumed growing importance as Mexico's historical expropriations progressed, questions persisted as to its effective application. Mexico's opening in the 1990's to global competition for investment demanded a greater basis for trust in such application. Mexico accordingly provided by treaty to defer investment and expropriation disputes with treaty country investors to binding international arbitration. To address rule of law concerns more broadly, Mexico in 1994 reformed its Constitution to incease its federal judiciary's independence. More recently, federal judicial review benefits from the Constitution's increased rigidity consequent to the fading of single party rule. Recent cases, including the resolution of the Metalclad international arbitration, the Supreme Court's declaration of the constitutional position of treaties relative to legislation, and the Supreme Court's resolution of a constitutional dispute between Congress and the President with implications for private investment in the electric sector, delineate the emerging design and associated, innovative judicial doctrine.

Keywords: Mexico, rule of law, expropriation, investment, globalization, investment globalization, Metalclad, NAFTA, Chapter 11, NAFTA Chapter 11, trade, trade dispute, North American Free Trade Agreement, arbitration, nationalization, international arbitration, judicial review, amparo, monism, dualism, supranational, electricity, electric sector, utility, utilities, railroad, railroads, bank, banking, oil, ecclesiastical, land reform, agricultural, constitutional, rigid, flexible, constitution, constitutional review, banks, international law, public international law, Latin America, Latin America constitutional law, human rights, American Convention on Human Rights, municipal law, domestic law, Mexican constitutional law, Latin American constitutional law, industrial organization, law and development

Accepted Paper Series