Mexico Wins International Arbitration, Avoids Paying $219 Million to U.S. Funds

Mexico has successfully won an international arbitration case, averting a demand for over $219 million from U.S. investment funds Cyrus Capital Partners and Contrarian Capital Management. The dispute was linked to debt issued by Mexican media company TV Azteca.

The International Centre for Settlement of Investment Disputes (ICSID) tribunal unanimously dismissed the claim on July 30. The tribunal determined that the funds could not be considered investors with protected investments under the North American Free Trade Agreement (NAFTA). Consequently, the tribunal concluded it lacked the jurisdiction to hear the case.

In addition to dismissing the claim, the tribunal ordered Cyrus Capital Partners and Contrarian Capital Management to pay Mexico a "considerable" sum for the costs and expenses associated with the arbitration, though the exact amount was not specified. Mexico's Ministry of Economy hailed the ruling.

The funds initiated the arbitration in 2023, asserting they were U.S. investors who acquired TV Azteca bonds through Cayman Islands subsidiaries. They argued that a ruling by a Mexico City civil court had negatively impacted their investments. Mexico consistently maintained that investment arbitration was not the appropriate venue for resolving disputes between creditors and the television company, emphasizing the government's lack of involvement.