Protection to Foreign and Mexican Investment

November 4th, 2022

What is protection to foreign investment?

Who are protected?

Why is so important?

Are we protected? Who might be protected?


Foreign investors are protected in Mexico by a series of International Treaties executed by and between Mexico with several sovereign countries around the world.

Protection is granted to those companies and individuals investing in Mexico.

It is very important to understand the current business and political environment in Mexico since:

  1. The current Mexican Presidential Administration is willing to nationalize certain industries,
  2. The business environment is adverse, and
  3. . Mexican nationals and foreign nationals need to evaluate will protect their interests.


Both the NAFTA and the United States-Mexico-Canada Agreement (USMCA) contain chapters protecting the rights of investors, providing dispute settlement mechanism to enforce the rights of the investors when they feel that Mexico has infringed their rights (Investor-State Dispute Settlement or “ISDS”).

NAFTA offered broad protections and granted to US and Canadian investors mechanisms to start arbitrations directly against Mexico.

The USMCA eliminated these mechanisms.

Canadian investors will not be allowed to any further extent to start arbitrations against Mexico after March 30, 2023.  ISDS between US investors and Mexico is now restricted. 

The USMCA has two types of investors: (i) those covered by government contracts and (ii) “Other Investors”.

Other Investors without government contracts:

  • may only challenge measures in breach of national treatment and most-favored nation treatment principles and direct expropriation,
  • will be unable to file claims regarding indirect expropriations, violations of “fair and equitable treatment” or the “full protection and security” standards,
  • will be precluded from effective protection against measures that harm their investments.


USCMA AREA. Corporate restructuring (treaty shopping) is a recommended action for US, Canadian and Mexican nationals to protect their interests in Mexico before Marco 30, 2023.

USCMA AREA AND THE REST OF THE WORLD. Defense file is a recommended action.



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