CDR | 8 April 2025

Mexico faces French expropriation arbitration

by Andrew Mizner

The expropriation of a hydrogen plant in Mexico early last year has led to the filing of an investment arbitration against the state.

French industrial corporation Air Liquide has filed a dispute against the government of Mexico over the expropriation of a hydrogen plant at an oil refinery.

The case was filed on 7 April at the International Centre for Settlement of Investment Disputes (ICSID), the World Bank’s dispute resolution body, under the terms of the 1998 Mexico-France bilateral investment treaty (BIT).

In 2017 Air Liquide, headquartered in Paris, secured a contract to supply hydrogen to the refinery at Tula de Allende in Hidalgo state, run by state-owned oil company PEMEX. But the site’s hydrogen plant was expropriated by the government in 2024, citing the need to protect the country’s production of motor fuels.

Air Liquide subsequently announced that it had entered into talks with the government over compensation, but has now made a filing at ICSID, where it is represented by the Paris and Mexico City offices of US law firm White & Case. It is not yet known whether the government has appointed external legal counsel.

White & Case and Air Liquide did not respond to requests for comment.

The expropriation decision was taken by the administration of former President Andrés Manuel López Obrador. His successor, Claudia Sheinbaum is from the same party as Obrador and has continued many of his policies.

This is the second ICSID case filed against Mexico in 2025 so far. Four ICSID cases were filed against the state in 2024, the joint-second most cases filed against any country that year. A report published by Freshfields earlier this year suggested that investor-state disputes against Mexico would be popular this year, due to populist reforms including steps favouring state-owned entities, such as PEMEX, in the energy sector.

Those reforms have controversially included replacing the judiciary with elected judges, a decision which has provoked protests within Mexico. The impact of the upcoming judicial elections on the arbitration market was under discussion at this month’s Paris Arbitration Week and the International Bar Association Arbitration Day, held in London.