In 1993, a Mexican Firm, Coterin, received a permit from the government to build a hazardous waste treatment plant in La Pedrera Valley, in the state of San Luis Potosi, near the city of Guadalcazar. Metalclad Corporation, a U.S. company, wanted to acquire Coterin and received assurance from the Mexican Government that Coterin obtained the required permits for the construction of the facility. After purchasing the facility, in 1994, the City of Guadalcazar ordered that the construction should be halted since no municipal permit was obtained. The City of Guadalcazar stopped Metalclad from beginning operations at the plant. In 1997, the state governor issued a decree designating the landfill as a protected area and put an end to Metalclad's business of $16.5 million. Metalclad requested that a NAFTA arbitral tribunal be convened to address the dispute. Metalclad Corporation claimed that it was given unfair treatment blaming the transparency on Mexican regulations for not receiving fair compensation.

1. Discuss 4 different preventative measures that could have been taken by Metalclad Corporation to avoid this situation.

2. What are some of the advantages and disadvantages for each of the preventative actions?