American Mining Corporation Wins Partial Victory in Lawsuit Against Mexico

Sometimes, a defeat can include many triumphs. This is the case of the Mexican government’s efforts to beat back a lawsuit by Legacy Vulcan. This company, the largest U.S. producer of crushed construction stone, sued in 2018 over Mexico’s closure of its limestone mining quarry in the Yucatan peninsula, over concerns that the extractive operation threatened local water quality.

Legacy Vulcan recently won their case at the International Centre for the Settlement of Investment Disputes (ICSID), a secretive arm of the World Bank that rules over cases brought by foreign investors who charge that governmental actions have unfairly reduced their expected profits. But while the ruling was technically a Vulcan victory, the ICSID tribunal awarded the firm only 1 percent of the compensation it had demanded — $15 million instead $1.5 billion.

The Mexican government should be commended for their strong defense in this case. Civil society activists also played a critically important role. Communities near Legacy Vulcan’s CALICA quarry, located very close to touristy Playa del Carmen, have been fighting this mine for decades because of its environmental and health effects on the population, notably children.

Quetzal Tzab González, a Mayan leader, filed an amicus brief that brought the perspective of affected communities into the closed-doors deliberations in the ICSID tribunal.

“What is clear to us is that it was the community mobilization, both inside and outside the country, that ensured the communities’ voices would reach the court and be formally included in the arbitration record,” said Araceli Domínguez, in a press statement by the Peninsular Maya Indigenous Movement and the Mayab Environmental Group.

A lawsuit against Mexico brought by the U.S. sea-bed mining company Odyssey Marine Exploration had a similar outcome in 2024. In that case, the tribunal awarded $37.1 million to the company, less than 3 percent of their original demand of more than $1.3 billion.

The reduced awards in these two cases are better than nothing, but a defeat is still a defeat. By finding Mexico at fault, these international tribunals have tarnished the government’s reputation. And in fact, in this investor-state dispute settlement system (ISDS), governments never really win.

This is a one-way system, in which companies can sue governments but governments cannot sue companies. Even if an ICSID tribunal rules against the foreign investor, defending against these lawsuits costs public treasuries significant sums that could instead be invested in public services.

The best governments can hope for is to not lose or to settle for a small fraction of the original claim.

As part of a corporate siege against Mexico, additional lawsuits are piling up, making Mexico the third-most sued country in the world under the investor-state regime. According to research by the Transnational Institute and the Institute for Policy Studies, Mexico is facing dozens of pending lawsuits totaling several billions of dollars.

Cadence Minerals and REM filed the most recent case on July 29. The British company held a 30 percent stake in the Sonora Lithium project, which the Mexican government canceled when it decided to nationalize all lithium. The remaining 70 percent belonged to the Chinese company Ganfeng, which had already sued Mexico. The amounts they are demanding are not known.

In the meantime, U.S.-based Access Business Group, which owns brands like Amway and Nutrilite, has also recently filed a lawsuit against Mexico for the alleged expropriation of lands in which they operated in the state of Jalisco. In reality, these were lands that were finally returned to the peasants who owned them, in accordance with a 1939 agrarian reform of President Lázaro Cárdenas.

This is Access Business Group’s second lawsuit against Mexico. In the first, the firm demanded the astronomical amount of $2.7 billion, but ICSID dismissed that case because of lack of jurisdiction. Access had sued Mexico under the old rules of the North American Free Trade Agreement, which were revised in the 2020 U.S.-Mexico-Canada Agreement.

In the face of these rising threats, Mexico should push for the total elimination of investor-state dispute settlement during the current review of the regional trade pact and re-examine all of its other international investment and trade agreements that give corporations the right to file these lawsuits.

Unfortunately, the Ministry of Economy made a troubling statement regarding the Vulcan case, affirming Mexico’s commitment to “foreign investment that brings innovation, good wages, and environmental protection, as well as to respecting the rules and procedures contained in international treaties as a fundamental element in providing the legal certainty that makes economic development possible.”

It is a staggering contradiction to pretend that foreign investment will bring “good wages, innovation, and environmental protection” when existing treaty rules allow corporations to evade those positive objectives.

In the alternative world that we need, the legal certainty of governments and of the communities to defend their territories, their water, and their environment must be put before the “legal certainty” of foreign investors.

In the meantime, the impoverished communities of indigenous and working people from the ritzy Mayan Rivera are continuing to seek reparations for the damages done by Legacy Vulcan. They are also demanding that any payments from the Mexican government to Vulcan be conditioned on the requirement that the company be prevented from re-opening the mine or any new extractive projects in Mexico.

These communities had real impact on the outcome of the Vulcan case, showing once again that the power of the people in defending their livelihoods must not be underestimated.

A Spanish version of this article originally appeared in La Jornada.

Earlier this year, IPS collaborated with the Transnational Institute (TNI) to produce a short documentary on the struggle of the communities of Torres de la Paz against the U.S. company Vulcan discussed in this article. To watch the video, just click below.