The International Centre for Settlement of Investment Disputes (ICSID) — an arm of the World Bank — issued a mixed ruling in the arbitration process initiated against Mexico by U.S.-based Vulcan Materials Company.

In what is being framed as a favorable ruling for Mexico, the ICSID dismissed almost all of the company’s claims, except for one measure related to the expropriation of a property operated by a Vulcan subsidiary.

In that regard, the ICSID ruled that Mexico violated the North American Free Trade Agreement, which was still in effect when the complaint was filed in 2018, by shutting down quarrying operations managed by Calica, a Vulcan subsidiary. 

Although Vulcan sought US $1.53 billion in damages plus interest and costs, the tribunal awarded the company only negligible monetary damages.

The final decision remains confidential until officially released. Vulcan said it will discuss the ruling during its Q2 earnings call on Wednesday.

Mexico’s Economy Ministry (SE) said the government is “carefully analyzing the ICSID decision to determine what legal actions are available.”

The government had been negotiating with Vulcan to permanently end limestone extraction in what is now a protected natural area in the state of Quintana Roo. Earlier this month, President Claudia Sheinbaum said any agreement would require the company to relocate operations to an environmentally viable site and fund environmental remediation of the affected zone.

In a statement, the SE said that Mexico “reaffirms its 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 to provide the legal certainty that makes economic development possible.”

Vulcan, a producer of ready-mixed concrete and asphalt, filed the complaint with the tribunal in 2018, accusing Mexico of violating NAFTA by repudiating an agreement to unlock a portion of Vulcan’s aggregates reserves and arbitrarily shutting down its quarrying operations in the state of Quintana Roo.

Mexican environmental authorities closed parts of Calica’s limestone operations in Quintana Roo in 2018. The government canceled deepwater port access and shipping privileges even though Vulcan’s concession over the property is valid until 2037.

Operations were completely shuttered in May 2022 (the government claimed underwater limestone extraction was causing environmental damage) and Navy personnel seized the company’s port in March 2023. 

In September 2024, the government designated 53,000 hectares between Playa del Carmen and Tulum, encompassing the port and limestone operations, a protected natural area.

With reports from El Economista, Reforma, Aristegui Noticias and Mexico Business News