Abengoa vs. Mexico: Toxic waste
photo by silverfuture/cc by nc sa2.0
  • Amount demanded: US$70 million
  • Outcome: US$40 million
  • Treaty invoked: Mexico - Spain BIT
  • Sector: services (waste management)
  • Issue: environment

by Public Citizen

In December 2009, Abengoa, a Spanish technology firm, filed a claim against Mexico under the Spain-Mexico BIT for preventing the company from operating a waste management facility that the local community of Zimapan strongly opposed on environmental grounds. The plant was to be built on a geological fault line across from a dam and the Sierra Gorda biosphere reserve – a UNESCO World Heritage site and home to Nanhu and Otomi indigenous communities. The region was already contaminated with arsenic from previous mining operations. The community contended that building a waste facility on a fault line, by a dam, in an area contaminated with arsenic, near indigenous communities and an environmental reserve posed a significant environmental threat.

As a result of substantial public opposition, Abengoa’s land use permit was not renewed in December 2007, although construction continued anyway. In April 2009, clashes broke out between a group of people from Zimapan and the Mexican federal police over the plant. As a result, the company’s operating license was revoked several days later. Despite this, the situation escalated as Mexican federal police were accused of abuses against the indigenous population and federal government officials declared the plant could open without municipal authority. In March 2010, the municipality of Zimapan declared that the operating license was invalid because it was not collectively issued by the city council and did not comply with the public interest.

Abengoa alleged that the government actions impeding the operation of its waste plant violated its BIT-protected investor rights. In April 2013 a tribunal ruled in favor of Abengoa, deciding that the denial of an operating license for the controversial hazardous waste facility amounted to an indirect expropriation of Abengoa’s investment and that the local government’s actions violated the corporation’s guarantee of a “minimum standard of treatment.” The tribunal ordered Mexico to pay Abengoa more than $40 million, plus interest, as compensation for its expected future profits from the waste plant and to cover half of the corporation’s own tribunal and legal costs.

last update: April 2021