Claim by Cargill leads to another loss for Mexico

IISD | 2 October 2009

Claim by Cargill leads to another loss for Mexico

By Elizabeth Whitsitt

Mexico has suffered another loss in a series of investor-state arbitral disputes involving its sugar industry. While attempts have been made by Mexico to consolidate similar cases involving its sugar trade, such efforts have been unsuccessful resulting in a number of separate arbitral decisions.

Most recently, a tribunal convened pursuant to a request for arbitration commenced under the ICSID Additional Facility Rules has found Mexico liable to an American company, Cargill Incorporated and its wholly-owned Mexican subsidiary, Cargill de Mexico S.A. de C.V., for violating several provisions of NAFTA.

Initiated some four years ago, Cargill’s claim centered on a 20% tax Mexico imposed on any drink which used High Fructose Corn Syrup (HFCS) as a sweetener. As the HFCS tax was not imposed on beverages that used sweeteners made from sugar cane, Cargill argued that the imposition of the tax, whether considered in isolation or viewed as a series of discriminatory acts, eliminated the most significant market for HFCS produced by Cargill and distributed by Cargill Mexico. In addition, Cargill asserted that the HFCS tax substantially destroyed the value of its investments in the HFCS production and distribution built to serve the Mexican market.

On 18 September 2009 the Tribunal sided with Cargill, awarding it US$77.3 million in damages plus interest and costs: the largest damages award issued to a successful claimant in a NAFTA Chapter 11 dispute to date.

The details of the tribunal’s decision in this dispute are not yet public, and it is uncertain whether Mexico or Cargill will try to set aside the award or pursue other available remedies. It is also not certain how this decision in reasons as well as results accords with the other arbitral decisions relating to Mexico’s sugar industry.


Publicly available arbitral awards involving Mexico’s sugar industry include:

Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. United Mexican States, ICSID Case No. ARB (AF)/04/5 (NAFTA), available here:

Corn Products International, Inc. v. United Mexican States, ICSID Case No. ARB (AF)/04/1 (NAFTA), available here:

source: IISD