In 1993, a Mexican Firm, Coterin, received a permit from thegovernment to build a hazardous waste treatment plant in La PedreraValley, in the state of San Luis Potosi, near the city ofGuadalcazar. Metalclad Corporation, a U.S. company, wanted toacquire Coterin and received assurance from the Mexican Governmentthat Coterin obtained the required permits for the construction ofthe facility. After purchasing the facility, in 1994, the City ofGuadalcazar ordered that the construction should be halted since nomunicipal permit was obtained. The City of Guadalcazar stoppedMetalclad from beginning operations at the plant. In 1997, thestate governor issued a decree designating the landfill as aprotected area and put an end to Metalclad’s business of $16.5million. Metalclad requested that a NAFTA arbitral tribunal beconvened to address the dispute. Metalclad Corporation claimed thatit was given unfair treatment blaming the transparency on Mexicanregulations for not receiving fair compensation.
1. Discuss 4 different preventative measures or actions thatcould have been taken by Metalclad Corporation to avoid thissituation.
2. What are some of the advantages and disadvantages for each ofthe preventative actions?