Canadian mining company First Majestic Silver Corp. has initiated international arbitration against the Mexican government under the North American Free Trade Agreement (NAFTA).
The company announced on Tuesday that it has filed for arbitration pursuant to Chapter 11 of NAFTA before the International Center for Settlement of Investment Disputes (ICSID), on its own account and on behalf of Primero Empresa Minera SA de CV (PEM), a subsidiary in the country.
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In May last year, the miner notified its intention to arbitrate against Mexico to seek compensation of more than $ 500 million that it claimed SAT had not returned for value-added tax.
The company then indicated that the action taken by the Mexican government, through the SAT, was a violation of the defunct trade agreement regarding the national treatment granted to the investments and investors.
“Despite repeated attempts by the company to encourage the Mexican government to enter into negotiations in good faith to resolve the dispute, the government refused to participate,” First Majestic Silver Corp. said in a statement.
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The mining company categorized the actions taken by the Mexican government as “breaching” the terms of the Advance Rate Agreement, which established a methodology for determining PEM income and taxes for fiscal years 2010 to 2014.
The company’s attorney confirmed that the said agreement is in effect before the federal tax law until it is canceled by the court of last resort.
The company accused the Mexican government of refusing to participate in the mutual agreement procedures under the three international double tax treaties signed by Mexico.
So far, the Economy Ministry, the equivalent body for Mexico’s representation in international trade disputes, has not commented on this matter.