NAFTA, Mexico & Metalclad : subtitle understanding the normative framework of international trade law
University of British Columbia
Master of Laws - LLM
This thesis is an attempt to unpack and explain the outcome in the NAFTA investment dispute, Metalclad v. Mexico. It looks at the surrounding circumstances, principles, and relations that, when combined, assist in shedding light on the specific result in Metalclad and the difficulties embedded within the international trade legal regime under which this decision was made. Chapter one discusses the tendency for the regulation of economics and markets to be elevated from the domestic sphere into the international arena. I argue that once a dispute is in the international sphere, it is more difficult to question the normative assumptions underlying the governing laws. This is due, in part to the development within international trade law of an insider network with technical expertise who assume trade law is outside of politics and therefore not open for political debate. I also question the free choice developing countries had to join the international trading system, when freeing markets came to be seen during the 1980's and 90's as the only way toward economic prosperity. I highlight that contesting international trade law is difficult because there is little opportunity for the public, whose lives are affected by the decision to become involved in the decision-making process. Chapter two looks at the facts and values behind the law of NAFTA by exploring Mexico's specific history with foreign investment and relations with the U.S. It traces Mexico's almost revolutionary transition to a neo-liberal economy and embracing of the of the 'free trade' philosophy, the pinnacle of which was the signing of the NAFTA. The NAFTA negotiations are examined in order to inquire into the power relations and attitudes of each party towards the other that then found their way into the text of the treaty. The aim of this chapter is to see how history has shaped current interpretations of the NAFTA by arbitrators, which is exemplified in the Metalclad case. Chapter three then looks at specific problems inherent in the NAFTA treaty and the Chapter 11 process. In this chapter, the NAFTA is described in general terms as is Chapter 11. I present some broad difficulties embedded within the treaty. The arbitral process that decides Chapter 11 disputes is discussed, focusing on problems with the process that could lead to unpredictable decisions or the tribunal being heavily weighted in favour of the investor. Chapter four examines the case of Metalclad v. United Mexican States through the lens which has been constructed in the first three chapters. I discuss the Tribunal's perceptions of both Metalclad and Mexico that are perhaps a product of the narrow economic focus of international trade law, the specific history between Mexico and the U.S. that shaped current interpretations that the Arbitrators gave to events and the structure of Chapter 11 itself and its dispute resolution mechanism that perhaps contributed to the result in the Award. An important part of this chapter is an examination of the troubling informal jurisprudence that is the legal legacy of this case. Chapter five synthesizes the major findings of each chapter and offer some ideas about ways to address some of the concerns highlighted through the Metalclad case.
Law, Peter A. Allard School of