Excerpt:
During the 1980s, the Mexican government decided to open its real estate and personal property market to foreign investors, after many other countries had done so during the 1970s. The objective was to increase the flow of productive investments and thereby to boost employment. Like many underdeveloped countries, Mexico was keen for developed countries to invest to facilitate its economic progress.
In this article, corporate and foreign investment experts, Alejandra Escandón Torres and Paola Díaz Silva, will show how Investment Promotion and Protection Agreements encourage foreign investment in Mexico by affording foreign investors the same level of legal security and fiscal protection as national investors. In particular, the authors will give essential insights into:
. How foreigners can incorporate a company in Mexico;
. What level of investment protection is available;
. What to do if an investment agreement is violated (methods of alternative dispute resolution); and
. Examples of past cases between corporations and Mexican authorities.Necessity of Investment Protection
Developed countries have historically been unsure about their companies investing in countries where the political or economic situation is undefined or unclear. For this reason, underdeveloped countries were ready to conclude State Contracts -- international agreements which introduced a new level of investment protection and alternative forms of dispute resolution. Under these agreements, disputes could be resolved by a national of a third state, or by an international arbitration court, such as the International Centre for Settlement of Investment Disputes (ICSID), which is in charge of administrating an arbitration process.