Metalclad Corp. v. United Mexican States

Metalclad Corporation (plaintiff), a U.S. company, formed a Mexican subsidiary to build a hazardous-waste landfill in Guadalcazar, Mexico. Before Metalclad bought the subsidiary, Mexico and the state of San Luis Potosi told Metalclad that all needed permits would be issued, and Mexico did issue federal construction and operating permits while the state issued a state operating permit. Despite local opposition, construction was completed, but Guadalcazar's town council then denied a municipal construction permit, citing environmental and geological concerns, at a meeting Metalclad wasn't notified of. After losing in Mexican courts, Metalclad brought a NAFTA Chapter 11 arbitration against Mexico (defendant), arguing the municipality lacked authority over hazardous-waste matters and that Mexico's conduct violated NAFTA's fair-treatment and anti-expropriation provisions.