Investment arbitration in the process of being resolved due to the cancellation of concessions for the exploitation of lithium

Abstract

Foreign direct investment, essential for the growth and development of States, constitutes up to 35% of their gross domestic product, depending on the risks derived from the country, as well as those of the industry that will be the object of investment. To reduce country risks and promote investment, Mexico has signed bilateral or multilateral treaties and reciprocal investment protection agreements, to reduce country risk by providing legal certainty and protecting investors from possible abuses. These include the acceptance of investment arbitration, an alternative solution to a conflict between a company and a host State, without the intervention of local jurisdictional bodies. The purpose of this study is to demonstrate the guarantees granted to investors through treaties, particularly in extractive industries, which involve large long-term investments, such as mining. Through a literature review, the conceptual framework is established to present an investment arbitration case before the International Centre for Settlement of Investment Disputes (ICSID) filed on June 21, 2024 by Bacanora Lithium Limited and its subsidiaries Sonora Lithium Ltd. and Ganfeng International Trading (Shanghai) Co. Ltd. upon the cancellation of nine concessions for the extraction of lithium.

The conclusion sets out the value of investment arbitration in the face of a series of legal reforms that allowed the cancellation of concessions, which according to the treaties signed by our country can be considered as an indirect expropriation.