Mexico confirmed Thursday it would not appeal an International Center for Settlement of Investment Disputes decision requiring it to pay Spanish conglomerate Abengoa around 490 million pesos ($38 million).
"The evaluation that's been made is 'let's not spend more money on something that is obviously a lost cause,'" Economy Secretary Ildefonso Guajardo told Efe in a telephone interview.
A Mexican daily reported Wednesday that the government had ruled out challenging the arbitral ruling requiring it to compensate Abengoa for the closure of a toxic waste disposal plant that company had built in Zimapan, a city in the central state of Hidalgo.
Construction of the facility began in 2006; it was later finished but never started operating.
The project, built by Abengoa unit Befesa, was aimed at preventing industrial residues from being dumped in rivers and aquifers, but former Zimapan Mayor Jose Maria Lozano kept the plant from opening with support from a grassroots civic movement
Lozano and his allies accused Befesa of contaminating local aquifers with arsenic.
The ICSID's decision brings a close to a case that dates back three years.
The final arbitration award has not been set, but the ICSID was expected to provide that figure in the coming days, Guajardo said.
He said "the evaluation made in this case was that the elements ... of non-compliance on the part of the municipal authority are so evident that we would be wasting valuable national resources in bringing the case to the courts."
Looking forward, the secretary said the Zimapan case may lead to legal changes that make local authorities co-responsible when their actions result in the payment of compensation by the federal government. EFE