Originally from World Arbitration and Mediation Review, (WAMR)

On August 26, 2018, the ICSID Convention entered into force in Mexico.  In 1994, as part of chapter 11 of the North America Free Trade Agreement (NAFTA), Mexico agreed to solve disputes under the terms of the ICSID Convention for the first time.  Later, Mexico continued this practice in the successive International Investment Agreements (IIAs).  But all these offers to arbitrate remained ineffective because Mexico had not entered into the ICSID Convention.  The ratification of the ICSID Convention confirms the Mexican history of coherence and consistency in accepting neoliberal policies established more than thirty years ago.  Now, this history of accepting free trade and foreign investment stands out when many states act as defectors.

A comparison between the foreign investment flows and the IIAs’ existence among Latin-American nations indicate that these agreements by themselves can poorly entice foreigners to invest.  States should design domestic policies and reform national laws to attract foreign investment.  These reforms should include the ease of doing business, a stable environment, and the Rule of Law as these factors become decisive in the investment decision process.

         States and investors can justify the existence of IIAs and the ICSID Convention as additional safeguards to endorse good governance and the Rule of Law.  To date, the ICSID Convention remains the most effective mechanism to enforce the standards contained in the IIAs.  Not only do foreigners investing in Mexico benefit from having Mexico as a new contracting party to ICSID, but also the international community.  Mexicans have filed ICSID claims to protect their interests abroad.