How can a private company sue states?

01/10/2015 5670 views

El Salvador Speaker Tour | Guest: Bernardo Belloso

October 1st, 2015, Cluj Napoca, Bucharest – El Salvador is expecting the imminent decision of the World Bank arbitration court which will announce whether Oceana Gold, an Australian-Canadian mining company, is to receive from the state budget the 300 million dollars claimed as damages[i]. Bernardo Belloso, one of the representative figures of the fight against mining in his country, will held a series of presentations in Romania between 9 – 16 October 2015. The guest from El Salvador will visit Romania to discuss about the way how mining companies threaten democratic states by mechanisms such as ISDS and how they try to influence the decisions on mining project approval.

Oceana Gold claims through the international arbitration with El Salvador an amount equivalent to 5% of the country’s gross domestic product. The company claims to have been prejudiced because it failed to obtain the necessary permits for developing a gold mine, despite the fact that authorities consider that regulatory requirements were not met. Initially the company Pacific Rim opened the arbitration in 2009, after three presidents of the state imposed, successively, a moratorium on the approval of new mining projects, in order to protect water resources. Oceana Gold acquired Pacific Rim Mining in 2013, saving it from bankruptcy, and obstinately continued the case at the International Centre for the Settlement of Investment Disputes (ICSID Washington).

Similarly Gabriel Resources filed a complaint against Romania at the arbitration court in Washington on 21 July this year[ii]. The mining company might claim damages up to 4 billion dollars, according to a 2013 statement of Jonathan Henry, CEO[iii] of the corporation. Notwithstanding that Gabriel Resources failed to meet the legal requirements for progressing with the project, its management threatens the Romanian state, claiming full damages for their inability to develop the cyanide gold mine at Rosia Montana.

In general, international trade arbitration cases are tried behind closed doors by three arbiters. This type of dispute may last several years until it is settled and the decisions are final, with no possibility to appeal. The international treaties activated by Gabriel Resources are the Bilateral Investment Treaty Romania-Canada and the Bilateral Investment Treaty Romania-United Kingdom (Jersey Island is represented in international relations by the United Kingdom). Our country has been involved in 11 commercial disputes of this kind, of which 5 were still pending at the end of 2014[iv]. The best known case is the arbitration Ioan Micula, Viorel Micula and others vs. Romania, when the Romanian state lost more than 80 million dollars.

Companies use the mechanism known as “investor-state dispute settlement” (ISDS) to claim damages. Although the investment treaties concluded by the Romanian state after 1990 expose the national budget permanently to commercial claims, Romania prepares to enter a new economic agreement – the Transatlantic Trade and Investment Partnership (TTIP).

Whereas the Romanian government continues to include these investor-state dispute settlement clauses in the trade agreements negotiated, governments in other parts of the world have a totally different approach. El Salvador has reformed its national investment legislation to limit foreign companies’ access to international arbitration courts. Brazil has never signed such treaties and still has significant foreign investments. Bolivia, Ecuador and Venezuela have withdrawn from the convention on the arbitration court in Washington and thus companies may no longer resort to this organism.
If you wish to schedule an interview with Bernardo Belloso:

  • Contact person: Roxana Pencea, Mining Watch Romania, roxana@rosiamontana.ro, mobile: 00723-024300; Bernardo will be accompanied by a Spanish interpreter to ensure proper interview discussions.

Programme of the events
Cluj Napoca

■ 9 October, Press Conference, La Cizmărie, 11.00 hrs

■ 9 October, Debate and discussions, Mărgineanu Hall, Department of European Studies, 19 Avram Iancu St., 18.00 hrs

■ 10 October, Conference and public debate, Casa Tranzit, 16 George Bariţiu St., 17.00 hrs

Bucharest

■ 14 October, Press Conference, Frontline Club, 104-106 Ştirbei Vodă St., 11.00 hrs

■ 14 October, Debate and discussions, Frontline Club, 104-106 Ştirbei Vodă St., 18.30 hrs


Notes for editors

Bernardo Belloso is the President of the Board of Directors of the Association for Development in El Salvador (CRIPDES).

CRIPDES[v] was created in 1984 from more than 300 rural communities from all the regions of El Salvador. National and regional leaders are elected democratically from among community members.

Bernardo Belloso will held a number of presentations and conferences in Romania within the programme Stop Mad Mining, 2015 – European Year of Development.

Three presidents of El Salvador have successively maintained a moratorium on mining, as a response to the wide national opposition. From members of local communities to to the upper echelons of the Catholic Church, people from El Salvador are concerned about the negative impact which gold mining would have on local agricultural communities and on water sources, already very polluted. Four members of local communities who opposed the mine were killed between 2009-2011 for their firm position.

The number of arbitration cases between investors and states has exploded in the last years. Starting with 2013, 169 cases were heard at ICSID, as compared to three cases in 2000. About 35% of them are generated by the oil, gas and mining industry and 50% are against governments in Latin America.

For more information:

“Debunking Eight Falsehoods by Pacific Rim Mining/Oceana Gold in El Salvador” (available in English and Spanish)

“Mining For Profits in International Tribunals: Lessons for the Trans-Pacific Partnership” (available in English and Spanish)

“After Decades of Struggle, Salvadoran Communities Declare Territory Free of Mining” (available in English)

“Water at the Heart of El Salvador’s Struggle Against Neoliberalism” (available in English and Spanish)

[i] http://www.theguardian.com/sustainable-business/2015/may/27/pacific-rim-lawsuit-el-salvador-mine-gold-free-trade

[ii] https://icsid.worldbank.org/apps/icsidweb/cases/Pages/casedetail.aspx?CaseNo=ARB/15/31

[iii] http://www.theglobeandmail.com/report-on-business/international-business/european-business/gabriel-resources-ceo-vows-to-sue-if-romania-kills-europes-biggest-gold-mine/article14240950/

[iv] http://www.juridice.ro/360190/statistica-privind-dosarele-icsid-in-anul-2014.html

[v] http://www.cripdes.net/