Investor-State Arbitration Blackmails El Salvador, Subverts Democracy

(Cabañas, El Salvador/Washington DC/Ottawa/Melbourne) Civil society groups worldwide that support Salvadoran communities and organizations working on mining and environmental issues cheered today’s decision by the ICSID tribunal that Pacific Rim/OceanaGold’s $250 million lawsuit against El Salvador is without merit.

In a ruling released today, the investment tribunal rejected the company’s claims and ordered it to pay $8 million in legal fees and costs to the government of El Salvador.

In 2009, Pac Rim Cayman LLC brought an “investor-state dispute settlement” (ISDS) case against El Salvador before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The company, now a wholly-owned subsidiary of the Canadian-Australian company OceanaGold, sued El Salvador for alleged losses of potential profits as a result of not being granted permits for a gold mining project. The company had failed to meet regulatory requirements for the permits.

“The fact that Pac Rim – now OceanaGold – could sue El Salvador, when it has never had a licence to operate, is an abuse of process,” says Manuel Pérez-Rocha of the Institute for Policy Studies. “That these suits take place far from any transparent, independent court system undermines democracy in El Salvador, and around the world.”

This case is part of what led the Government of El Salvador to decide not to issue new mining permits. That decision has widespread support in El Salvador; a recent poll of the University of Central America (UCA) indicates that 79.5% of Salvadorans are against any gold mining.

“Irrevocable damage has already been done to communities in El Salvador,” says the Salvadoran Roundtable against Metallic Mining (La Mesa). “Pac Rim’s presence in El Salvador has fomented local conflict, which has led to threats, attacks, and assassinations. We want OceanaGold, and all the misery it has caused, out of El Salvador, and for the government to enact a prohibition on any metal mining.”

“By allowing transnational companies to blackmail governments to try to force them to adopt policies that favor corporations, investor-state arbitration undermines democracy in El Salvador and around the world,” says Marcos Orellana of the Center for International Environmental Law (CIEL). “Regardless of the outcome, the arbitration has had a chilling effect on the development and implementation of public policy necessary to protect the environment and the human right to water.”

“This is one of now far too many examples of Canadian mining companies making use of international arbitration to bully governments when their mine projects lack community consent and have not met legal or regulatory requirements. In contrast, communities have no effective means to hold these same companies to account for the systematic and serious harms resulting from their operations”, comments Jen Moore of MiningWatch Canada.

“What we have now is a clear example of what is wrong with investor-state-dispute-settlement clauses, whether they are inserted in domestic laws or bilateral or multilateral investment agreements. El Salvador’s experience confirms the threats to human rights and the environment that occur when corporations bring a suit to tribunals like ICSID,” explains Robin Broad, professor at the American University.

“A mining company that calls itself responsible should not be using mechanisms like ICSID to force governments to do its bidding. Countries like El Salvador have a right to say no to mining without fear of a massive lawsuit”, says Keith Slack of Oxfam America.

“At a time of water scarcity, it is unconscionable for the global trade and investment regime to deny governments of water-stressed countries like El Salvador the policy space to protect local watersheds and ensure the realization of the human right to water,” says Maude Barlow, national chairperson of the Council of Canadians.

“Let us be clear: El Salvador has not ‘won’ anything in this arbitration. El Salvador had to pay more than $12 million just to defend itself. These legal costs are enough to pay for over 2 years of adult literacy classes for 140,000 people. At a minimum, OceanaGold should reimburse El Salvador for the costs of this suit, which never should have taken place. And it should also be responsible for the social and environmental damage left in its wake,” says Jamie Kneen of MiningWatch Canada.

Contacts:
Amanda Kistler, CIEL - [email protected], +1 202 742-5832
Jamie Kneen, MiningWatch Canada - [email protected], +1 613 569-3439, cell +1 613 761-2273
Manuel Perez Rocha, IPS - [email protected], + 1 240 838 6623
Laura Rusu, Oxfam America, [email protected] +1 202 459 3739
Robin Broad, American University, [email protected], + 1 202 885 1478

Notes to editors:
The International Allies against Mining in El Salvador is made up of organizations from Australia, Canada and the United States that support the Salvadoran people as they demand sovereignty, the right to water, healthy communities and a clean environment. Each of the organizations that make up the Allies has a history of solidarity work with El Salvador. More information is available at: www.stopesmining.org