The Impact of International Arbitration on Economy and Employment

Arbitration as a Dispute Resolution Mechanism

International arbitration has become a crucial tool for resolving disputes between companies and states. In many cases, arbitration rulings not only affect the finances of the involved countries but also have repercussions on economic stability and employment. The following cases illustrate how this mechanism influences strategic sectors and raises concerns about the fairness of the process.

TV Azteca and U.S. Investment Funds Case

In August 2023, investment funds Cyrus Capital Partners and Contrarian Capital Management filed an international arbitration case against Mexico, alleging non-payment of interest on bonds issued by TV Azteca, owned by Ricardo Salinas Pliego. The claim amounts to $219 million, arguing that the Mexican judiciary favors the businessman by not enforcing the payment of his debts.

The economic impact of this case is significant, as it could undermine foreign investor confidence in Mexico. A ruling against the country could compromise public resources and create uncertainty in financial markets, affecting access to credit and the stability of companies in the media sector.

Odyssey Marine Exploration vs. Mexico

The Odyssey Marine Exploration company, specializing in underwater exploration, sued Mexico after the government denied it permits to extract phosphates in Baja California Sur. In September 2024, an international arbitration tribunal ruled in favor of the company, ordering $37.1 million in compensation.

This case raises concerns about a country’s sovereignty in regulating its environment. Additionally, it puts investments in strategic sectors, such as mining and natural resources, at risk, potentially affecting local employment and regional economic development.

Naftogaz vs. Russia

Ukrainian company Naftogaz filed an international arbitration case against Russia, claiming the expropriation of its assets in Crimea following the peninsula’s annexation in 2014. In December 2024, Finland froze Russian assets worth millions in response to a request based on a ruling by the Permanent Court of Arbitration in The Hague, which awarded $5 billion in compensation to Naftogaz.

This ruling highlights the importance of international arbitration in geopolitical disputes but also exposes challenges in enforcing awards, as Russia has rejected the decision. The economic repercussions affect not only Naftogaz but also commercial relations between European countries and the stability of investments in the region.

Irregularities and Challenges in International Arbitration

While international arbitration is a legitimate dispute resolution mechanism, some cases raise concerns about tribunal impartiality and their impact on national sovereignty. In many instances, imposed compensations may strain public finances and hinder job creation, particularly in strategic sectors such as energy, mining, and telecommunications.

Governments face the challenge of ensuring legal security without compromising their ability to regulate and protect public interests. Meanwhile, companies must assess the risks of operating in markets where regulations can be challenged through international arbitration mech