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SE and SAT win case against Vento Motorcycles

The Ministry of the Economy and the Tax Administration Service (SAT) won an Investor-State case against Vento Motorcycles under the North American Free Trade Agreement (NAFTA).

The NAFTA Arbitral Tribunal issued an award on July 6, determining that Mexico did not breach international commitments against Vento Motorcycles, Inc., by SAT determinations and the sentence to pay costs.

Vento Motorcycles claimed a payment of around $ 3 billion.

On July 6, 2020, an international tribunal established pursuant to NAFTA Chapter XI and the Arbitration (Complementary Mechanism) Rules of the International Center for Settlement of Investment Disputes (ICSID), resolved to dismiss the claims of Vento Motorcycles Inc, investor. American, against Mexico.

Vento Motorcycles

As background, on August 7, 2017, the applicant company filed on its own behalf and on behalf of Motor Bike, S.A. and Mototransp, S.A. (Mexican companies) a request to submit a claim to arbitration under Chapter XI of NAFTA.

Vento claimed the manner and purpose under which two origin verification procedures were performed in 2003 and 2004 for motorcycles produced and assembled in the United States.

As a result of these origin investigations, the authorities concluded that Vento’s motorcycles did not qualify for preferential tariff treatment pursuant to NAFTA Annex 401, and therefore were subject to an ad-valorem tariff of 30 percent.

According to the applicant company, SAT officials applied General Rule 2 (a) of Article 2, section I of the General Import and Export Tax Law (LIGIE) in a discriminatory manner during the verification procedures.

The General Directorate of Legal Consultancy for International Trade, belonging to the Undersecretariat for Foreign Trade, coordinated the defense of the Mexican State in this arbitration procedure, administered by the International Center for Settlement of Investment Disputes (ICSID), an organization of the World Bank.

The court determined that Mexico did not breach its obligations under NAFTA and dismissed the claims on the merits.

The case

In accordance with NAFTA and the rules applicable to arbitration, the award will be made public with the consent of the parties.

The details of the case that are public are available on the website of the Ministry of the Economy and on the ICSID website:

https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB(AF)/17/3

https://www.gob.mx/se/documentos/comercio-exterior-solucion-de-controversias-inversionista-estado-casos-activos-vento-motorcycles?state=published

 

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