Government disapproves ruling in favor of Odyssey Marine Exploration

Mexico City. The Government of Mexico, through the Secretariats of Economy (SE) and Environment and Natural Resources (Semarnat), reported that it disapproves of the ruling issued non-unanimously by an international court administered by the International Center for Settlement of Relative Disputes to Investments (ICSID), which forces the country to pay compensation of 37.1 million dollars to Odyssey Merine Exploration. Likewise, he announced that he will seek to annul the ruling before the competent courts.

Through a press release, the aforementioned agencies report that after more than two years of having completed the procedure, on September 17, the majority of the court finally issued the award in favor of the company Odyssey Marine Exploration, which requires the country to pay compensation of 37.1 million dollars for having denied permission for the marine dredging project in Baja California Sur (BCS). This figure represents around 1.18% of the amount that the company originally claimed in arbitration.

The SE and Semarnat explained that between 2016 and 2018, Semarnat denied the Environmental Impact Statement (MIA) of the project “Dredging of black phosphatic sands in the Don Diego deposit”, for which the Odyssey company initiated international arbitration against of Mexico within the framework of the North American Free Trade Agreement (NAFTA).

The work scheduled in the Gulf of Ulloa, in BCS, whose partners included Diego Fernández de Cevallos and Alonso Ancira, consisted of marine dredging, at a distance of 12 nautical miles (22,224 m) from the closest point to the coast in an area of ​​61,989.2 hectares, in order to extract 7 million tons of phosphate sands annually for 50 years to produce 350 million tons of phosphate sands screened and dried for transportation

In the arbitration process, they detailed, Mexico argued that the project affected an ecologically sensitive place where the loggerhead turtle, gray and blue whales, and sea lions live, among others. Likewise, he provided evidence that demonstrated the company’s lack of experience in the mining sector, since its main activity is the search for marine treasures. Furthermore, it was revealed that the marine dredging techniques that Odyssey wanted to implement had not been put into practice anywhere in the world.

Federal agencies consider that the Court gave disproportionate weight to the statements of two former directors of the General Directorate of Environmental Impact and Risk of Semarnat presented as witnesses by Odyssey, who declared that the denial of the MIA was due to political situations and not scientific. For its part, Mexico’s defense demonstrated that both witnesses incurred conflicts of interest by receiving large payments for testifying, which was not taken into account by the majority of the court.

Among the three arbitrators, they specify, there was a dissenting position, which criticized that “Mexico’s reasonable and serious environmental concerns were deliberately ignored by the majority of the court.” Furthermore, he concluded: I cannot help but express the opinion that this unprecedented and disturbing award is novel and innovative in the worst of ways. Due to the serious deficiencies of the resolution, and considering the criticisms expressed by the dissident arbitrator, the Ministry of Economy will initiate a trial to annul the award before the competent courts. Likewise, the Government of Mexico will assert all possible means of defense.

The Government of Mexico reiterates that it will not allow projects that favor minority groups to the detriment of our natural resources to continue being prioritized and will defend its sovereignty at all times for the good of all Mexicans.

The award will be published in the near future on the ICSID website.