On December 9, 2003, Canadian-owned Glamis Gold filed a Notice of Arbitration under the arbitration rules of the United Nations Commission on International Trade Law and the North American Free Trade Agreement (NAFTA) demanding over $50 million in compensation.
The company is alleging that the government of the United States has breached its obligations under Chapter 11 of the North American Free Trade Agreement, including the following provisions:
(i) Article 1105 - Minimum Standard of Treatment; and
(ii) Article 1110 - Expropriation and Compensation.
The Glamis case dramatically demonstrates the use of trade agreements to undercut efforts by governments to protect the interests of their citizens.
Glamis Gold has been embroiled in a controversy over its Imperial Valley project in southern California for more than ten years. It began acquiring land in 1987, and set up a U.S. subsidiary in order to comply with U.S. law. Eventually it had 187 mining claims and 277 mill sites on almost 650 hectares of land. The proposed mine would be a massive open-pit cyanide heap-leach project. The ore was of such low grade that the project would require about 422 tons of rock to be mined, processed and stored for each ounce of gold produced.
The claims are located in an area actively used by the Quechan Indian Nation for religious purposes, and is considered sacred by them. The Glamis Imperial Project is located in the California desert within an area designated by Bureau of Lands Management, as the "California Desert Conservation Area." The mine will destroy 55 archaeological sites and many rare desert plants and animals. It will consume 389 million gallons of water annually from the underground aquifer.
In 2001, following a six year review, the Department of the Interior denied a permit to Glamis for the Imperial Mine, based on the pollutant impacts of the mine, and on the cumulative adverse impact on the Quechan people. The decision stated that the proposed mine was within a Native American "spiritual pathway" which ran for at least 130 miles in the California Desert area, and that tribal members believed the proposed mine would "impair the ability to travel, both physically and spiritually" along this "Trail of Dreams."
Later that year, the decision was reversed, without consultation, by the Bush administration.
In April 2003, partly in response to the Imperial Project, California passed Bill SB 22 to limit the impacts of open pit mining and required that the holes made by such mining near sacred sites be filled in with waste rock and tailings ("back-filled") and the landscape be re-contoured. The law applies to all open pit mines in the State.
Glamis Gold sees this law as an "expropriation" of the value of its mining investments and are now suing for the amount of the speculative profits they claim to have lost. They claim that "the fair market value of the property interests owned by Glamis Imperial in the Imperial Project far exceeded the acquisition and development costs, and have a net present value of more than $61 million". There is speculation that the Chapter 11 suit is just leverage by Glamis to get more compensation as California takes steps to buy out the claims.
More information about this issue is available in a backgrounder written by Friends of the Earth and Oxfam America at http://www.oxfamamerica.org/static/oa3/files/OA-Glamis_Gold_English.pdf.