MAC: Mines and Communities

Mining for Profits in International Tribunals

Published by MAC on 2010-05-29
Source: Institute for Policy Studies (2010-04-29)

A recent report called "Mining for Profits in International Tribunals" investigates the trend in multinationals, especially mining companies, relying on international arbitration tribunals to resolve disputes over natural resource rights. The case of Pacific Rim on El Salvador is highlighted as a key example (see http://www.minesandcommunities.org/article.php?a=9874)

The report can be downloaded at:- http://www.ips-dc.org/reports/mining_for_profits_in_international_tribunals

Mining for Profits in International Tribunals

Institute for Policy Studies (IPS)

29 April 2010

Transnational corporations are increasingly turning to international arbitration tribunals to resolve disputes over natural resource rights, new report reveals

Washington, DC - In conflicts over rights to valuable natural resources, transnational companies are increasingly using a powerful new weapon: the right to sue governments in international arbitration tribunals.

A new Institute for Policy Studies report, "Mining for Profits in International Tribunals" documents the increased use of these rights by transnational corporations involved in the oil, mining, and gas industries.

Most countries in the world are obliged to provide such sweeping foreign investor rights through an expanding web of international arbitration tribunals, bilateral investment treaties, and free trade agreements.

The report finds that at the most frequently used tribunal, the International Center for Settlement of Investment Disputes (ICSID), 32 of the 128 pending cases are related to oil, mining, or gas. By contrast, 10 years ago there were only three such cases.

Chevron recently won such a case against the government of Ecuador. On March 30, a panel of arbitration judges ordered the government to compensate the oil giant for taking what they deemed to be an unreasonably long time to resolve disputes over oil contracts in domestic courts. The $700 million award for Chevron is the equivalent of about 1.3 percent of Ecuador's GDP.

The international gold mining firms Pacific Rim and Commerce Group are each suing the Salvadorian government, demanding $100 million apiece. That's the equivalent of nearly 1 percent of El Salvador's GDP. To put that in perspective, 1 percent of the U.S. GDP is $138 billion.

According to report co-author Manuel Pérez-Rocha, "The El Salvador cases are a prime example of how trade agreements have given transnational corporations the power to undermine democracy. The people of that country are overwhelmingly opposed to gold mining, and yet these expensive lawsuits have put extreme pressure on the government to grant the permits."

Other key findings of the report:

"The oil, mining, and gas cases highlighted in this report are just one illustration of the imbalance in current rules that govern international investment, says Sarah Anderson, IPS Global Economy Project Director. "Policymakers should pursue alternative approaches that would promote a more equitable balance between corporate interests and the broader public interest."

The Institute for Policy Studies is a community of public scholars and organizers linking peace, justice, and the environment in the U.S. and globally. IPS has partnered with The Democracy Center, based in Bolivia, to create a Network for Justice in Global Investment to help facilitate a debate over a range of policy options, including withdrawing from the current system, rewriting the rules to support sustainable development and protect national sovereignty, and replacing the system with alternative institutions. To learn more, see: http://www.justinvestment.org.

To download the report in English, go to http://www.ips-dc.org/reports/mining_for_profits_in_international_tribunals.

For Spanish, click go to http://es.justinvestment.org/2010/04/extrayendo-ganancias-en-los-tribunales-internacionales.

Sarah Anderson
Global Economy Project Director
Institute for Policy Studies
1112 16th St. NW, Suite 600
Washington, DC 20036
tel: 202 234 9382 x 5227
www.ips-dc.org

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