Imposing mines through trade agreements?
April 6, 2011
A number of mining companies have been filing for arbitration in international tribunals under trade and investment agreements to seek compensation for mines that governments decided should not go forward. That's correct: the elected government says "no" to a mine (due to community opposition, expected impacts, regulations, or other reasons), and the company then sues for compensation in the World Bank's International Center for Investment Disputes (ICSID).
One such case was dismissed and another filed just in the last month. The hearing for a third -- the case of Pacific Rim vs. El Salvador -- has recently been delayed. These are the latest in an apparent series of cases of mining companies seeking to make money in international tribunals or impose their bad projects on countries that don't want them.
In a decision last week, the ICSID ruled that Milwaukee-based Commerce Group could not bring its case before ICSID under the Central American Free Trade Agreement (CAFTA) because the company had not halted ongoing court proceedings in El Salvador. The company had been seeking damages exceeding $100 million. The technicality spared El Salvador further proceedings for those claims, but the government of El Salvador is still required to pay massive legal fees.
In late February, Crystallex International Corp. (of Toronto) filed an ICSID arbitration suit against Venezuela for stopping its plans for an open-pit mine at the Las Cristinas concessions in a sensitive area including Indigenous Peoples' lands and the Imataca Forest Reserve. The company is seeking US$3.8 billion in "damages." Vannessa Ventures (now Infinito Gold of Calgary) also filed a suit in 2004 over Las Cristinas. That case is still open. Gold Reserve (of Spokane, WA) filed a 2009 suit for $5 billion over its revocation of the nearby Brisas concessions.
In the Pacific Rim vs. El Salvador case, the hearing has been pushed back till May. Pacific Rim (Vancouver-based) filed suit in 2009 under CAFTA because mining permits were denied. Communities did not want the planned destructive mine. The company is demanding $100 million, or about 1% of El Salvador's GDP, in compensation. A coalition has filed an Amicus brief in the case to demonstrate that the mining company's claims are invalid. Meanwhile, attacks and death threats against community defenders have remained a concern following the murder of several activists.
Companies have also been threatening to file such lawsuits to get their projects opened or re-opened. Blackfire Exploration (of Calgary) reportedly threatened to sue Mexico for $800 million under NAFTA provisions over the closure of its barite mine in Chiapas, where a prominent critic of the mine was murdered in 2009. Costa Ricans also faced the threat of compensation claims over their efforts to stop destructive gold mining in their country. Executive revocation of Infinito Gold concessions would allegedly have triggered claims of $1.7billion. In spite of this, the courts ruled against Infinito Gold and the movement against destructive mining convinced the government to pass a ban on open-pit mining and ban on the use of cyanide or mercury in mining (phased in for cooperative small-scale mining).
Blackfire's possible threat of filing suit would not have been the first mining case filed to the ICSID under NAFTA. The other didn't go so well for the Canadian company involved. Glamis Gold (subsequently bought by Goldcorp) filed for arbitration under NAFTA over regulatory measures imposed to protect the environment and Native American sacred sites. The company claimed that the regulations limited its plans for the open-pit gold/silver cyanide heap-leach Imperial mine in southern California, where it would be required to backfill the open-pits. Fortunately, ICSID ruled in 2009 that the regulations did not violate NAFTA and that the company should pay most of the arbitration costs.
Other ICSID pending mining cases involve borax mining in Bolivia (2006) and mineral sands in The Gambia (2009). Older cases filed were over bauxite mining in Jamaica, mining in Burundi, gold mining in Papua New Guinea (Misima mine), gold mining in Burkina Faso, gold mining in Peru, gold, copper, diamond, and cobalt mining in the Democratic Republic of the Congo, gold mining in Mali, phosphate mining in Egypt, gold mining in Armenia, and coal mining in Indonesia.
An Institute for Policy Studies report, Mining for Profits in International Tribunals, documents this trend for extraction companies to capitalize on international trade and investment agreements and highlights how Latin American governments have been particularly targeted.
The study also points out that a surge in bilateral investment treaties and free trade agreements have encouraged mining companies to file these types of lawsuits. Bolivia and Ecuador have taken steps to withdraw from ICSID and renegotiate some investment treaties.
As discussions on pending new U.S. trade agreements with Korea, Panama, and Colombia continue, we will see if the U.S. Administration will protect the rights of communities to grant or witthold their consent to mining projects.
For more information, see
- Institute for Policy Studies report Mining for Profits in International Tribunals
- List of cases before the ICSID tribunal
- Earthworks press release on U.S. dodging bullet on NAFTA Glamis case