VZCZCXRO0373
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2244/01 2111619
ZNR UUUUU ZZH
P 301619Z JUL 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 7661
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 11 MEXICO 002244 
 
SENSITIVE, SIPDIS 
 
STATE FOR EB/IFD/OIA GREG HICKS 
STATE FOR L/CID JEFFREY KOVAR 
STATE FOR WHA/MEX AND WHA/EPSC 
TREASURY FOR IA MEXICO DESK RACHEL JARPE 
 
E.O. 12958: N/A 
TAGS: EINV ETRD KIDE CASC OPIC PGOV MX
SUBJECT: MEXICO 2009 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
REF: STATE 49477 
 
The United States Government is aware of eighteen (18) 
claims of United States persons against the Government of 
Mexico (GOM), three of which have been resolved, and one 
of which where the case has been dismissed.  Eight (8) 
cases are NAFTA Chapter 11 cases. 
 
¶1.  a.  Claimants A 
 
b.  1975 
 
c.  The Claimants signed a profit-sharing contract with a 
sulfur company controlled by the GOM.  The investors were 
to have received payments for the life of the contract, 
but, in fact, received nothing.  In 1975, the sulfur 
company offered to settle the dispute.  Several investors 
did settle, but sixteen did not.  The remaining sixteen 
were told by the company in 1980 that a USD 5 million 
settlement offer would be available, but no money was 
offered to the investors.  The investors were in frequent 
contact with the Department of State concerning their 
claim until August 1997, and despite the Department's 
attempts to assist, the dispute was not resolved.  As of 
June 2005, the Embassy's attempts to obtain current 
contact information on the company and updates on this 
case have been unsuccessful. 
 
¶2.  a.  Claimant B 
 
b.  2000 
 
c.  Claimants are a group of U.S. citizens who, in the 
1970s and 1980s, leased beachfront land along the Baja 
California coast of Mexico.  The land is part of a 
37,000-acre land grant the GOM awarded in 1973 to about 
80 Mexican families.  By the late 1980s, the Mexican 
families, working through a Mexican developer, had leased 
most of the land to the Claimants and other foreigners, 
who paid up to USD 90,000 for 30-year leases and built 
homes, a hotel, and swimming pools. 
 
In 1987, a private Mexican company claiming to be the 
original owner of the land sued the GOM to reclaim the 
land.  The company argued that the GOM had illegally 
seized it through a bureaucratic error.  In 1995, the 
Supreme Court of Mexico agreed, ruling that the land was 
mistakenly included in the land grant, that it belonged 
to the prior Mexican owners, and that the developer did 
not have legal title to lease the land.  The U.S. Embassy 
subsequently attempted to facilitate discussions between 
Claimants and the legal Mexican landowners. 
 
On October 23, 2000, the Mexican Supreme Court ordered 
the Mexican Land Reform Secretariat to evict the 
Claimants and the other foreign owners of 23 houses on 
the property, and return the land to the legal owners 
within ten working days.  On October 30, 2000, the GOM 
began evicting the foreign owners.  U.S. Embassy officers 
were on site to ensure that the Claimants' rights and 
property were respected during the evictions. 
 
Both before and since the October ruling, the Embassy has 
raised this issue at all levels of the GOM.  In November 
2000, the U.S. Ambassador noted to senior GOM officials 
that Claimants made their investments in good faith, and 
urged the GOM to actively promote negotiations between 
Claimants and the legal owners. 
 
A number of members of Claimant have negotiated new lease 
arrangements with the legal Mexican landowners.  The U.S. 
Government has encouraged the Claimants to consult with 
legal counsel regarding their legal rights and options 
under Mexican law. 
 
Claimants also brought their claims before a NAFTA 
Tribunal, submitting a Notice of Intent on October 27, 
2000, which claimed a breach of NAFTA Articles 1102 
(National Treatment), 1105 (Minimum Standard of 
Treatment), and 1110 (Expropriation and Compensation). 
The Claimants seek compensation of at least USD 75 
million for damages caused by the GOM, as well as the 
costs associated with the current proceedings and 
previous legal actions undertaken in Mexico and the U.S., 
including pre-award and post-award interest.  Claimants 
 
MEXICO 00002244  002 OF 011 
 
 
filed a Notice of Arbitration on February 16, 2001. 
 
Consulate officials spoke to the remaining residents in 
May 2006, who reported that several of them hope to buy 
their property back.  However, the land cannot be sold 
until the boundaries are authoritatively determined by 
the federal government, and the owners of the land are 
able to agree on a common development plan with the 
municipal government.  The attorney representing the 
Claimants informed the Consulate that the group of 
approximately 30 American citizens he represents had 
decided not to pursue the case through the Mexican legal 
system due to the cost involved.  He also stated that he 
knew of at least one case where a Claimant had been able 
to buy their property back.  There has been no contact 
with the Mission by the Claimant or the Claimant's 
attorney over the past year. 
 
¶3.  a.  Claimant C 
 
b.  2001 
 
c.  Claimant buys and sells the rights to external 
advertising.  The company has steel outdoor structures 
and buildings in Mexico City where billboards are placed. 
According to the Claimant, beginning in July 2001, Mexico 
City government authorities began cutting down some of 
its billboards without any notice.  The company claims 
that the city's removal and destruction of its steel 
structures constitutes an expropriation under NAFTA 
Article 1110.  On December 12, 2001, Claimant filed a 
notice of intent to submit a claim to arbitration under 
the NAFTA, but did not pursue the claim further. 
 
Claimant has submitted two cease and desist writs to 
obtain the protection of federal authorities and has 
briefed U.S. Embassy officials on the status of its case. 
An Embassy officer met with city officials in May 2002 to 
discuss the case.  The city contends that the Claimant 
received clear and frequent notice of the city's 
intention to remove illegal (in the city's opinion) 
billboards, that the investor's business practices were 
in flagrant violation of applicable law, and that removed 
billboard structures would be returned to their owners 
upon proof of ownership and payment of any fines owed to 
the city.  Claimant alleges that its signs were thrown 
away and it did not have access to the scrap materials. 
 
Claimant informed the Embassy in June of 2006 that it, 
along with 30 other outdoor media companies, signed an 
"Agreement For The Re-ordering Of The Billboards And 
Public Media In Order To Take Back The Urban Image" with 
the GOM.  This Agreement went into effect in June 2005 
and is valid for five years.  It provides for the control 
of billboard placement on certain important streets in 
Mexico City in exchange for faster licensing for new 
public billboard locations.  There has been no contact 
with the Mission by the Claimant or the Claimant's 
attorney over the past year. 
 
¶4.  a.  Claimant D 
 
b.  1995 
 
c.  Claimant's sailboat was confiscated by Mexican 
Customs officials in 1995 on the grounds that it had been 
imported improperly.  The Claimant subsequently lost a 
court case, although the sailboat was returned to him. 
The Secretariat of Finance and Public Credit (Hacienda) 
seized the boat again in 1997 and in January 2003 his 
second appeal was lost.  In April 2004, Embassy officials 
sent a letter to Hacienda on behalf of the Claimant 
requesting that Claimant be given an opportunity to 
purchase the boat. 
 
On November 3, 2004, Ambassador Garza sent a follow-up 
letter to Francisco Gil Diaz, Secretary of Hacienda, 
informing him that the Claimant wanted to meet with the 
proper officials to discuss the disposition of the boat 
and its possible sale.  On July 14, 2005, the Central 
Administrator for Mexican Customs replied to the 
Ambassador's letter indicating that the boat was under 
the custody of SAE (administrative office for seized 
goods).  On July 25, 2005, the Embassy sent a letter to 
SAE informing them that the boat administrator wanted to 
 
MEXICO 00002244  003 OF 011 
 
 
meet with SAE officials to make an offer to buy the boat. 
On September 1, 2005, SAE replied to the Embassy's letter 
indicating that even though the boat is in SAE custody it 
is not for sale.  Once the Mexican courts rule on the 
Claimant's right to the boat, it is possible that the 
boat will be put up for sale.  On June 18, 2007, SAE 
officials reported that the Mexican government still had 
not authorized the sale of the boat. 
 
In 2008, Claimant contacted the Embassy to report that 
since the boat had not received any maintenance since it 
was seized in 1997, it had completely deteriorated and 
was beyond salvaging.  The Claimant is no longer pursuing 
any effort to purchase the boat. 
 
¶5.  a.  Claimant E 
 
b.  2003 
 
c.  In August 1995, Claimant began operations in a joint 
venture as a stowage firm, operating the Specialized 
Container Terminal in the Port of Manzanillo.  Over the 
last ten years, the firm has invested USD 350 million in 
several Mexican ports, which provide employment to 1,000 
workers.  The firm has also invested a significant amount 
in training and integrating the personnel. 
 
Claimants assert that port authorities in Manzanillo and 
the Secretariat of Communication and Transportation (SCT) 
have not delivered to the Claimant the expansion areas 
within the port that are specified in their 1995 contract 
due to environmental problems with the area.  In June 
2002, President Fox issued an order to dedicate other 
adjacent areas to the expansion.  By not delivering the 
expansion areas, the port authorities are not complying 
with the commitments made under the privatization bid and 
are preventing the Claimant from investing in additional 
infrastructure development. 
 
The Claimant claims to have exhausted possible 
alternatives to resolve these issues with port 
authorities and SCT in Manzanillo.  In April 2004 
Claimant filed a formal arbitration complaint.  In early 
2005, Claimant obtained a court order that obligates port 
authorities to provide the land for expansion, but 
Manzanillo's port administration and the Federal Port 
Authority refused to obey the order and are continuing 
with litigation. 
 
By recommendation of the SCT Secretary Tellez, the 
Claimant has had several meetings with Under Secretary of 
Transportation Manuel Rodriguez, to discuss their case. 
The Claimant had hoped that discussions with Mr. 
Rodriguez would be better than previous discussions with 
the Port's Coordinator, Cesar Patricio Reyes Roel. 
However, Claimant asserts that Mr. Rodriguez is also 
unwilling to obey the court orders.  Additionally, 
Claimant reports that Mr. Rodriguez has accused it of 
causing problems for projects in Punta Colonet and other 
ports. 
 
In mid-June 2007, the Claimant obtained a new Court 
Decision ordering the SCT to provide the land for 
expansion at the Port of Manzanillo.  This decision was 
sent to the SCT on June 20, 2007.  On October 26, 2007, 
Claimant received formal notification that 10 hectares of 
land, adjacent to their container terminal, had been 
assigned to the company.  As of June 2009, Claimant has 
been operating in the expanded area of the container 
terminal in Manzanillo.  All parties consider the matter 
to be resolved. 
 
¶6.  a.  Claimant F 
 
b.  2000 
 
c.  Claimant is a United States corporation that sells 
personal and business insurance, including accident and 
fire insurance.  According to Claimant, Mexico 
facilitated the repurchase of a series of debentures 
denominated in Mexican pesos and owned by Mexican 
investors, but did not facilitate the repurchase of a 
series of debentures denominated in U.S. dollars, which 
were owned by Claimant.  Both series of debentures were 
issued at the same time and by the same Mexican financial 
 
MEXICO 00002244  004 OF 011 
 
 
corporation, and each series was issued for a total 
amount of USD 50 million. 
 
In October 2001, this dispute became a NAFTA Chapter 11 
arbitration claim when Claimant officially filed a claim 
against the GOM.  On the basis of the allegations 
highlighted above, Claimant asserts that Mexico violated 
various substantive obligations embodied in Section A of 
Chapter 11 of NAFTA, including NAFTA Article 1110, which 
addresses measures that directly or indirectly 
expropriate an investor's investment.  Claimant seeks USD 
50 million in damages plus applicable interest, 
attorneys' fees and costs for the arbitration. 
 
On February 6 and 7, 2003, the NAFTA Tribunal held a 
hearing on Mexico's jurisdictional objections to 
Claimant's claims.  On July 17, in a preliminary 
decision, the NAFTA Tribunal dismissed all of Claimant's 
claims except for the expropriation claim.  In 2005, 
briefing was completed on the merits of the expropriation 
claim.  The hearing in the case was held in late 
September 2005 and the tribunal issued its ruling in July 
2006, in which it rejected the Claimant's expropriation 
claim as outside the jurisdiction of NAFTA Chapter 11 
but, in doing so, characterized the Government of 
Mexico's actions as discriminatory. 
 
According to the GOM, the Claimant has not continued 
efforts to negotiate a settlement.  There has been no 
contact with the Mission by the Claimant or the 
Claimant's attorney over the past year. 
 
¶7.  a.  Claimant G 
 
b.  2002 
 
c.  Claimant is a Delaware Corporation that alleges its 
property, a share of a joint venture agreement, was 
expropriated by Mexico in violation of NAFTA Article 1110 
through a series of Mexican court actions and decisions. 
In 1988, Claimant entered into a joint venture contract 
with two parties (one of which was Mexican landowner) to 
develop a time-share complex on the Mexican landowner's 
property in Cabo San Lucas, Baja California Sur, Mexico. 
In 1990, Claimant learned that the Mexican landowner had 
transferred the entire property to the third party to the 
joint venture contract.  Claimant therefore employed a 
Mexican law firm to effect the cancellation of the 
contract and recoup its share of money already invested. 
A Mexican court awarded Claimant relief on August 10, 
¶1994. 
 
According to Claimant, unbeknownst to it or its legal 
representative, a former employee of the Mexican law firm 
purported to represent Claimant and collected Claimant's 
award, including the fees payable to the law firm. 
Claimant and its attorney filed suit against the former 
employee in Mexican courts, alleging a number of civil 
and criminal claims, including conversion.  The Mexican 
court dismissed the suit finding, among other things, 
that the relevant limitations period, which ran from the 
time of actual knowledge of the conversion, had lapsed. 
Claimant had argued that actual knowledge of the 
conversion did not occur until two years after the date 
of the court's determination. 
 
Claimant alleges that Mexican court delays and errors of 
law resulted in procedural and substantive injustice and 
amounted to expropriation of its investment in Mexico, in 
violation of NAFTA Article 1110.  In January 2002 
Claimant filed a Notice of Intent under NAFTA Chapter 11, 
claiming damages in the amount of USD 400,000.  According 
to the GOM, Claimant has not submitted a Notice of 
Arbitration or taken any further action.  There has been 
no contact with the Mission by the Claimant or the 
Claimant's attorney over the past year. 
 
¶8.  a.  Claimant H 
 
b.  1999 
 
c.  Claimant is an individual who resides in California 
and purchased a piece of oceanfront property near Baja 
California in 1989.  Claimant claims that he spent more 
than USD 100,000 on improvements to the property between 
 
MEXICO 00002244  005 OF 011 
 
 
1989 and 1992.  According to Claimant, his property was 
seized by GOM officials in 1999.  Claimant alleges that 
immediately after the seizure, substantial construction 
was conducted on the property that destroyed many of the 
improvements he had made. 
 
This dispute became a NAFTA Chapter 11 arbitration claim 
when Claimant filed against the GOM on July 31, 2002. 
Claimant alleges breaches of NAFTA Article 1102 for 
violation of national treatment, Article 1105 for 
violation of treatment in accordance with international 
law, and Article 1110 for expropriation.  Claimant seeks 
USD 1.5 million in damages. 
 
According to the GOM, Claimant has not taken any further 
action.  There has been no contact with the Mission by 
the Claimant or the Claimant's attorney over the past 
year.  In keeping with NAFTA Chapter 11 procedures, 
however, the Embassy does not take an active role on 
behalf of Claimant while dispute resolution measures are 
proceeding. 
 
¶9.  a.  Claimant I 
 
b.  2002 
 
c.  Claimant invested USD 165 million in a plant in 
Mexico for the production of high fructose corn syrup 
(HFCS), intending to sell the product to Mexican soft 
drink bottlers.  On January 1, 2002, the GOM imposed a 
tax of 20 percent on soft drinks containing HFCS.  The 
tax did not apply to soft drinks containing sugar 
(principally produced by the domestic sugar industry). 
Since the tax took effect, Claimant allegedly lost sales 
of USD 75 million, had been forced to shut down its HFCS 
production line, and has incurred penalties for cancelled 
equipment orders. 
 
This dispute became a NAFTA Chapter 11 arbitration claim 
when Claimant filed a notice of arbitration against the 
GOM on October 21, 2003.  Claimant alleges the GOM's tax 
on HFCS violated the national treatment obligation under 
NAFTA Article 1102, the prohibition on performance 
requirements in NAFTA Article 1106 and the prohibition on 
indirect expropriation in NAFTA Article 1110.  Claimant 
seeks damages in excess of USD 325 million. 
 
On March 6, 2006, the World Trade Organization (WTO) 
informed the Mexican government that it had rejected 
Mexico's appeal of the WTO's initial ruling that Mexico's 
20 percent tax on beverages using sweeteners other than 
sugar, principally HFCS, was illegal.  In response in May 
2006, then President Fox sent an initiative to the Lower 
House of the Congress to eliminate the tax in order to 
comply with WTO rulings.  However, it was not until the 
new Congress was in place in September 2006, that this 
issue began to be discussed as part of the bill outlining 
the 2007 Mexican budget.  The initial 2007 budget 
proposal sent to Congress in December 2006 by the 
Calderon administration called for the removal of the 20 
percent tax on drinks made with HFCS, complying with WTO 
rulings, and instead proposed a 5 percent tax on all soft 
drinks, regardless of the type of sweetener.  The Senate 
rejected this proposal and all taxes on soda, including 
the 20 percent tax on HFCS, were eliminated in the final 
budget bill. 
 
Although the tax is no longer in effect, Claimant is 
still seeking before the Chapter 11 tribunal compensation 
for the damages it sustained as a result of the tax.  On 
January 15, 2008, the tribunal issued an award of 
liability by the GOM.  The award on damages has not yet 
been issued. 
 
 
¶10.  a.  Claimants J 
 
b.  2002 
 
c.  Claimants are joint venturers in Mexican facilities 
for the production and distribution of high fructose corn 
syrup (HFCS) for use by Mexican soft drink bottlers and 
other food and drink processors.  They challenge the same 
soft drink tax as Claimant I above.  Since the tax took 
effect on January 1, 2002, Claimants substantially ceased 
 
MEXICO 00002244  006 OF 011 
 
 
the manufacture and sale of HFCS and stopped importing 
and distributing HFCS for use by Mexican soft drink 
bottlers. 
 
This dispute became a NAFTA Chapter 11 arbitration claim 
when Claimants filed their request for institution of 
arbitration proceedings against the GOM on August 4, 
¶2004.  Claimants allege the GOM's tax on HFCS violated 
the national treatment obligation under NAFTA Article 
1102, the prohibition on performance requirements in 
NAFTA Article 1106 and the prohibition on indirect 
expropriation in NAFTA Article 1110.  Claimants seek 
damages in excess of USD 100 million. 
 
On March 6, 2006, the World Trade Organization (WTO) 
informed the Mexican government that it had rejected 
Mexico's appeal of the WTO's initial ruling that Mexico's 
20 percent tax on beverages using sweeteners other than 
sugar, principally HFCS, was illegal.  In response in May 
2006, then President Fox sent an initiative to the Lower 
House of the Congress to eliminate the tax in order to 
comply with WTO rulings.  However, it was not until the 
new Congress was in place in September 2006, that this 
issue began to be discussed as part of the bill outlining 
the 2007 Mexican budget.  The initial 2007 budget 
proposal sent to Congress in December 2006 by the 
Calderon administration called for the removal of the 20 
percent tax on drinks made with HFCS, complying with WTO 
rulings, and instead proposed a 5 percent tax on all soft 
drinks, regardless of the type of sweetener.  The Senate 
rejected this proposal and all taxes on soda, including 
the 20 percent tax on HFCS, were eliminated in the final 
budget bill. 
 
Although the tax is no longer in effect, Claimants still 
sought compensation before the Chapter 11 tribunal for 
the damages they sustained as a result of the tax.  On 
November 21, 2007 the tribunal issued an award finding 
that Mexico's actions did not constitute an 
expropriation, but that its conduct did breach NAFTA 
Article 1106 (Performance Requirements) and Article 1102 
(National Treatment) and awarded Claimants damages in the 
amount of $33,510,091, plus prejudgment interest.  The 
GOM paid the total amount of damages plus interests 
awarded by the tribunal in May 2009. 
 
¶11.  a.  Claimant K 
 
b.  2002 
 
c.  Claimant produces high fructose corn syrup (HFCS) in 
the U.S., some of which it sells and distributes through 
a business unit in Mexico for use by Mexican soft drink 
bottlers.  Claimant challenges the same soft drink tax as 
Claimants I and J above.  Since the tax took effect on 
January 1, 2002, Claimant's distribution facilities in 
Mexico have been largely idle and HFCS production 
capacity in the U.S. has been diverted to markets other 
than Mexico. 
 
This dispute became a NAFTA Chapter 11 arbitration claim 
when Claimant filed its request for institution of 
arbitration proceedings against the GOM on December 29, 
¶2004.  Claimant alleges the GOM's tax on HFCS violated 
the national treatment obligation under NAFTA Article 
1102, the obligation to provide fair and equitable 
treatment under NAFTA Article 1105(1), the prohibition on 
performance requirements in NAFTA Article 1106 and the 
prohibition on indirect expropriation in NAFTA Article 
¶1110.  Claimant seeks damages in excess of USD 100 
million. 
 
On March 6, 2006, the World Trade Organization (WTO) 
informed the Mexican government that it had rejected 
Mexico's appeal of the WTO's initial ruling that Mexico's 
20 percent tax on beverages using sweeteners other than 
sugar, principally HFCS, was illegal.  In response in May 
2006, then President Fox sent an initiative to the Lower 
House of the Congress to eliminate the tax in order to 
comply with WTO rulings.  However, it was not until the 
new Congress was in place in September 2006, that this 
issue began to be discussed as part of the bill outlining 
the 2007 Mexican budget.  The initial 2007 budget 
proposal sent to Congress in December 2006 by the 
Calderon administration called for the removal of the 20 
 
MEXICO 00002244  007 OF 011 
 
 
percent tax on drinks made with HFCS, complying with WTO 
rulings, and instead proposed a 5 percent tax on all soft 
drinks, regardless of the type of sweetener.  The Senate 
rejected this proposal and all taxes on soda, including 
the 20 percent tax on HFCS, were eliminated in the final 
budget bill. 
 
Although the tax is no longer in effect, Claimant is 
still seeking before the Chapter 11 tribunal compensation 
for the damages it sustained as a result of the tax. 
Claimant's NAFTA Chapter 11 claim is still pending.  A 
hearing on the merits was held in early October 2007, and 
the parties await a ruling. 
 
There has been no contact with the Mission by the 
Claimant or the Claimant's attorney over the past year. 
In keeping with NAFTA Chapter 11 procedures however, the 
Embassy does not take an active role on behalf of 
Claimant while dispute resolution measures are 
proceeding. 
 
¶12.  a.  Claimants L 
 
b.  1985 
 
c.  Claimants assert that in 1985, Mexican citizens 
Alfonso Vizcaino and Edelberto Verduzco (brothers-in-law) 
unlawfully seized approximately 125 acres of agricultural 
land owned by Claimants, who are brother and sister and 
U.S. citizens, in Tecoman, Colima.  The land was and 
continues to be a commercially profitable source of 
coconut, lime, mango and papaya, some of which are 
exported to the U.S., together with cattle-raising and 
shrimp farming.  Claimants inherited the land from their 
uncle, a U.S. citizen and long-time resident of Tecoman. 
Vizcaino and Verduzco own land adjacent to the property 
and are powerful figures in the state of Colima, with 
close ties to previous governors. 
 
Claimants assert that after the uncle's death in 1985, 
Vizcaino and Verduzco fraudulently titled the property in 
their names and used their own workers to exploit the 
land, informally known as 'El Buen Vecino' (Good 
Neighbor) ranch.  Claimants filed suit to have their 
rights to the property recognized.  In December 2001, 
after more than 15 years of legal proceedings in the 
local, state and federal courts, the Mexican federal 
court of appeals in Guadalajara denied the last appeal 
and upheld Claimants' ownership rights.  On February 6, 
2002, the land was turned over to their representatives. 
 
Less than one week later, on February 12, 2002, Carlos 
Montes Salazar, President of the local labor tribunal in 
Tecoman, led an invading mob of workers from Verduzco's 
other properties onto the ranch.  The workers claimed to 
be on strike against Verduzco for back pay and other 
benefits.  However, the paperwork requesting approval for 
the strike was filed a year earlier with the labor 
tribunal, yet the workers did nothing until 2002.  Since 
the strike was against Verduzco, Claimants were not 
formal parties in the labor action and were placed in the 
predicament of relying on their long-time opponent 
Verduzco to fight to get his own workers thrown off the 
land he coveted.  None of the signs normally indicating a 
strike in Mexico (red and black flags, protests, etc) are 
evident on the ranch, and the 'strikers' are working the 
land. 
 
The Ambassador, the Consul General and other Consulate 
officials have met with numerous officials in Colima, 
including two governors, requesting that the final order 
of the Mexican court be implemented.  In a meeting with 
officials from the Consulate in September 2003, then- 
governor Fernando Moreno Pena agreed that the strike 
appeared to be a sham used as a delaying tactic to deny 
effective ownership rights to the family.  He also 
asserted that to his knowledge this was the only strike 
in the entire state of Colima.  Although the governor 
indicated he would personally look into the matter and 
resolve it quickly, he took no action.  His successor, 
Gustavo Vazques Montes (apparently a cousin of labor 
magistrate Carlos Montes), likewise took no action to 
enforce the court's order before he died on February 24, 
¶2005. 
 
 
MEXICO 00002244  008 OF 011 
 
 
On March 31, 2004, American Consul in Guadalajara met 
with Vizcaino, his attorney and his son to discuss the 
case.  He claimed the workers were striking against him 
in a dispute over benefits, and he saw no end in sight to 
the strike.  He also claimed that he purchased the 
property from one of the Claimants years ago, but that 
they reneged on the agreement.  When asked why he had not 
accepted the final decision of the court, Vizcaino argued 
that Claimants had not won the litigation.  At that 
point, Vizcaino's attorney interjected and agreed that 
Claimants had won that case giving them full rights and 
possession to the property and that he was only 
representing Vizcaino in a separate breach of contract 
suit filed in 2001.  Vizcaino and his attorney then began 
arguing over the case.  Within an hour after the meeting, 
the attorney contacted the Consulate to confirm his 
earlier statements and to advise that he no longer 
represented Vizcaino.  The estimated value of the land is 
USD 400,000. 
 
The Claimants have since received an offer to purchase 
the property from Verduzco and Vizcaino, also assuming 
responsibility for the strikers if they remain on the 
property.  In March 2006, a payment was made to a court 
account, although closing of the transaction was delayed, 
according to the Claimant's attorney, in order to clarify 
certain tax issues with the local authorities. 
 
In April 2007 the U.S. Consulate in Guadalajara's 
American Citizen Services Section ascertained from the 
Claimants' attorney that the transaction still had not 
closed (although the governor of Colima has informed the 
Consulate that there are no outstanding state or federal 
taxes ).  In April 2007, the Consulate separately 
contacted the Claimants, who reported that they have not 
received any money from the attorney or an update on the 
status of the case.  On June 19, 2007 Claimants contacted 
the Consulate to reiterate that they had not heard from 
their attorney for two months. 
 
After several attempts, on June 17, 2008, ACS staff in 
Guadalajara was able to contact Claimants' attorney who 
confirmed that he had talked to his clients earlier the 
same day.  He confirmed that one of his associates, 
deemed as a trustee, was in possession of the funds from 
the sale of the property.  Further, he reassured us that 
the legal recourse to reduce the state tax issue, still 
outstanding, could take up to two months to be resolve. 
A successful outcome, according to him, would allow the 
claimants to receive a greater sum from the proceeds. 
 
In March 2009, Claimants contacted the Consulate for 
assistance its assistance in communicating with their 
attorney and securing the settlement funds from him.  The 
Consulate made several attempts to contact the Claimant's 
attorney, but received no reply.  On May 9, 2009, Post 
sent an official letter to the Claimant's attorney's 
office requesting a status of the case and information as 
to the settlement payment for the Claimant, and urged the 
attorney to contact the Claimant. 
 
On June 25, 2009, the Claimant's attorney visited the 
Consulate to provide a report on the status of the case 
and the settlement payment.  The Consulate contacted the 
Claimant the next day and conveyed the information the 
attorney had provided.  At this point, this is a private 
dispute between a client'attorney over fees, taxes, and 
so on.  The Consulate is regularly informed by both 
parties, but maintains a professional distance in this 
case. 
 
¶13.  a.  Claimant M 
 
b.  2002 
 
c.  Claimant leased planes to a Mexican aviation company, 
Allegro, that later went bankrupt.  Claimant began a 
legal battle to get its planes returned.  U.S. and 
Mexican courts eventually ruled in their favor, and 
Claimant took possession of its planes.  However, since 
that time, Claimant has been unable to get the Mexican 
Civil Aviation Board (DGAC) to deregister their aircraft, 
a necessary step before the company can bring the planes 
back to the US.  Claimant's losses come from two sources: 
first, several planes were not stored properly after they 
 
MEXICO 00002244  009 OF 011 
 
 
were seized and are now deemed un-flyable; second, 
Claimant is paying high maintenance and storage fees for 
the remaining planes that are flyable.  Claimant alleges 
it has had difficulties dealing with the GOM on almost 
every step of its struggle to repossess and return the 
planes to the U.S. 
 
DGAC's current refusal to deregister the aircraft is 
based on a ruling by the Mexican Labor Board, apparently 
following an injunction filed by Allegro's former 
employees' union.  Claimant argues that the Labor Board's 
decision does not apply to deregistration of the 
aircraft, and that it is based on a statute deemed 
unconstitutional by higher courts.  Claimant has informed 
U.S. Embassy and DGAC that it is formally filing suit 
against the DGAC under a new law that allows private 
industry to sue GOM entities if they are not properly 
applying the law.  In late May 2005 the DGAC informed 
Embassy that it asked the Labor Board for clarification, 
but to date it has not received a response.  There has 
been no contact with the Mission by the Claimant or the 
Claimant's attorney over the past year. 
 
¶14.  a.  Claimant N 
 
b.  2000 
 
c.  Claimant is an investment company involved in 
commercial development, which owned a property of 
approximately 97,000 square meters (24 acres) in one of 
the most expensive areas of Mexico.  On November 10, 
2000, the federal government allegedly expropriated 13.79 
percent of the area of the property in question. 
According to Claimant, the GOM deprived it of its land 
and also interfered with its plans for commercial 
development of the area. 
 
Claimant submitted a Notice of Intent under NAFTA Chapter 
11 on August 28, 2001 claiming a breach of NAFTA Articles 
1102, 1103, 1105, and 1110 (Expropriation).  The Claimant 
seeks relief in the form of either the restoration of the 
property in its original state, as well as the payment of 
USD 30 million in damages, plus corresponding interest; 
or the payment of USD 210 million. 
 
According to the GOM, Claimant has not submitted a Notice 
of ArbitrQion or taken any further action.  There has 
been no contact with the Mission by the Claimant or the 
Claimant's attorney over the past year.  In keeping with 
NAFTA Chapter 11 procedures, however, the Embassy does 
not take an active role on behalf of Claimant while 
dispute resolution measures are proceeding. 
 
¶15.  a.  Claimants O 
 
b.  2004 
 
c.  Claimants are a group of Texas farmers who allege 
their investments in water have been harmed through 
Mexican measures amounting to expropriation under NAFTA 
Article 1110. 
 
Claimants submit that from 1992 to 2002, Mexico 
expropriated water in the Rio Grande in Mexico. 
Claimants allege that they had a right to that water 
under the 1944 Treaty between the United States and 
Mexico Respecting Utilization of Waters of the Colorado 
and Tijuana Rivers and of the Rio Grande, Feb. 3, 1944, 
U.S.-Mexico, T.S. No. 944.  They allege that Mexico 
diverted and seized approximately 1,013,056 acre-feet of 
irrigation water in violation of the Treaty.  The 
specific conduct Claimants complain of includes Mexico's 
building of certain dams and reservoirs, which had the 
effect of manipulating the flow of water in Mexico's 
favor. 
 
Claimants filed a Notice of Intent to Submit a Claim to 
Arbitration under NAFTA Chapter 11 on August 27, 2004 and 
a Notice of Arbitration on January 19, 2005.  They 
estimate their damages to be between USD 320,124,350 and 
USD 667,687,930.  On June 19, 2007, the claims were 
dismissed for lack of jurisdiction.  In January 2008, the 
Claimants asked for a judicial review by a Canadian court 
of the NAFTA tribunal decision.  The Canadian Court 
issued its decision in May 2008, dismissing Bayview's 
 
MEXICO 00002244  010 OF 011 
 
 
application.  There has been no contact with the Mission 
by the Claimant or the Claimant's attorney over the past 
year. 
 
¶16.  a.  Claimant P 
 
b.  2005 
 
c.  Claimant is a U.S. company that invested USD 8 
million in a conveyor belt for transporting aggregate 
materials between the U.S. and Mexico.  The conveyor belt 
crosses the border at the cities of Mexicali and 
Calexico. 
 
The State of Baja California issued an environmental 
permit in 2001, but refused to renew the permit in 2003. 
A revision of the scope of work allowed the firm to 
proceed with a municipal permit from Mexicali and a 
diplomatic note issued by the Federal Government.  The 
firm received final U.S. and Mexico building permits in 
March 2005, but in October 2005 police officers from the 
State of Baja California entered the plant and placed 
closure seals on the equipment.  In November 2005 the 
firm obtained a court injunction voiding the state's 
closure action, but later the same day the City of 
Mexicali revoked its municipal environmental permit.  In 
March 2006, officials from the Department of Ecology for 
the State of Baja California, accompanied by three 
truckloads of armed police officers, entered the facility 
and placed closure seals on plant equipment for a second 
time. 
 
The U.S. owner of the firm reported that in an April 2006 
meeting, the Cabinet Secretary for the state Department 
of Ecology claimed that the company had not complied with 
his department's regulatory requirements and that it has 
various omissions in its (2001 and 2003) permit 
applications to his department - but he refused to 
specify the nature of the alleged omissions and 
compliance failures.  (He also alleged that the company 
was in violation of local zoning ordinances, but this 
issue lies outside the jurisdiction of his agency, 
according to the firm's legal counsel.)  The Embassy has 
raised the issue with the Secretariat of Foreign 
Relations and the Mexican Customs Agency. 
 
Mexican authorities at various levels have largely 
rebuffed or ignored Consular efforts to use our good 
offices.  U.S. EPA Administrator Steve Johnson toured the 
conveyor belt facility and met with Baja California Gov. 
Elorduy on June 28, 2007.  On October 26, 2007, the state 
government issued permits to begin allow the company to 
begin operations.  The company has been in full operation 
since Janurary 2008 and the matter is considered resolved 
by both the company and Embassy officials.  There has 
been no contact with the Mission by the Claimant or the 
Claimant's attorney over the past year. 
 
¶17.  a.  Claimant Q 
 
b.  2000 
 
c.  Claimant purchased undeveloped beachfront property in 
Puerto Escondido in May of 1999 through the Fideicomiso 
system.  Claimant asserts that, in 2000, Claimant began 
plans for developing the property and hired a builder, an 
investment partner and a contractor.  A temporary 
dwelling was erected and the contractor moved onto the 
property to begin work.  Shortly thereafter, the Attorney 
General of Chiapas sent several Chiapas State Judicial 
Police to the property.  They arrested the contractor and 
turned him over to the local authorities where he spent 
about the next year in jail until it was determined that 
he had not committed any crime.  The State Judicial 
Police moved onto the property with officers inhabiting 
the temporary dwelling. 
 
While Claimant is technically still the owner of the 
property, the police effectively prohibit development by 
barring access to the property.  During a visit to the 
property around 2000, the Consul General from Mexico City 
was threatened by a security guard posted at the 
property. 
 
The claimant and her attorney believe that Oaxaca state 
 
MEXICO 00002244  011 OF 011 
 
 
government officials are behind this attempt to obtain 
her property.  Throughout the last year, the Embassy has 
approached government officials in Oaxaca expressing the 
concern and interest of the U.S. Government in this case. 
According to the Claimant's attorney, a court decision on 
this case is imminent. 
 
¶18.  a.  Claimant R 
 
b.  2007 
 
c.  Claimant is a U.S. company who won a concession from 
the municipality of Tlanepantla to install and operate a 
parking meter system in the city.  The newly elected 
mayor decided to withdraw the concession because, 
according to the City, the transfer of concession was 
improperly completed and the Claimant owed back fines and 
revenue.  Claimant invested approximately $5 million USD 
in the project and requested that their property (the 
parking meters) be returned. 
 
In August 2007, the mayor and municipality officials 
accepted an offer presented by the Embassy to meet with 
company representatives (previously the municipality had 
refused to meet with the company).  The case subsequently 
escalated and was heard in the Mexican court system. 
There has been no contact with the Mission by the 
Claimant or the Claimant's attorney over the past year. 
 
FEELEY