Marvin Feldman v Mexico

Year of the award: 2002
Forum: ICSID
Applicable investment treaty: NAFTA

Arbitrators:
Prof Konstantinos D. Kerameus - President
Mr Jorge Covarrubias Bravo
Prof David A. Gantz

Executive summary

This case concerns a dispute regarding the application of certain tax laws by Mexico to the export of tobacco products by CEMSA, a Mexican company, owned and controlled by Mr Marvin Feldman, a US citizen. The Claimant alleged that through the conduct of its Ministry of Finance and Public Credit, Mexico's refusal to rebate excise taxes applied to cigarettes exported by CEMSA and Mexico's continuing refusal to recognize CEMSA's right to a rebate of such taxes regarding prospective cigarette exports constituted a breach of NAFTA Articles 1102 (National Treatment), 1105 (Minimum Level of Treatment), and 1110 (Expropriation and Compensation). In total, Feldman claimed in excess of US$ 50 million as compensation.

The Tribunal only found a breach of Article 1102 NAFTA and it compensated Feldman only for the tax rebates that Feldman had actually requested and had not been paid by Mexico. The total amount awarded by the Tribunal was 16,961,056 Mexican pesos (principal amount of 9,464,627 plus simple interest of 7,496,428). The Tribunal rejected Feldman's claim for going concern value (it was not a case of expropriation) and for lost profits (in part because they were covered by the three-year limitation period under Article 1117(2) NAFTA and because the Claimant did not have a viable business and could not have made a profit regardless of whether Mexico had provided the tax rebates).