REGULATORY EXPROPRIATION DEVELOPMENTS: DID METALCLAD COMPLY WITH ALL THE DARK PREMONITIONS?

This is the final result of an investigation. Developing practices in international trade and investment law bring new challenges to investors who are always seeking better and more certain grounds to develop their businesses abroad. In that regard, free trade agreements and bilateral investment treaties set a legal frame under which a minimum standard of treatment is set for both the foreign investor and the Host State. The parties to NAFTA, especially the United States and Canada were concerned that Mexico could not be held accountable for measures that would be tantamount to expropriation. With that purpose Chapter Eleven was created with a very broad definition on its terms and a procedure that would allow a foreign investor from another Party, to submit a claim before an international tribunal without having to exhaust the local remedies. These two characteristics allowed Metalclad to submit a claim against Mexico for some domestic measures that allegedly amounted to a creeping expropriation. The Metalclad award introduced a very broad definition of indirect expropriation, which according to some academics it would undermine the regulatory powers of NAFTA Members and would drive states in a race to the bottom regarding safety, environmental and health regulations. My hypothesis is that based on the revision of the Tribunal's award and the recent developments in NAFTA jurisprudence, Metalclad did not have any relevant impact regarding the definition of expropriation. [ABSTRACT FROM AUTHOR]