MAC: Mines and Communities

Court Dismisses U.S. Miner's Claims Against El Salvador

Published by MAC on 2011-03-28
Source: EFE, Statement

But Canada's PacRim isn't giving up

A World Bank arbitration tribunal has, on technical grounds, dismissed a claim by US miner, Commerce Group, that its "rights" were violated by the government of El Salvador.

Ell Salvador had cancelled Commerce's environmental permits in 2006.

Meanwhile, as Canada's Pacific Rim pushes ahead with a similar claim before another tribunal,  Salvadorean civil society organisations have filed an amicus curiae brief against the company.

According to these groups, Pacific Rim "is trying to dictate El Salvador's environment and social policy using CAFTA's arbitration mechanism. [It] amounts to an abuse of process."

See earlier article on MAC: PacRim wins first stage of compensation battle against El Salvador


Court Dismisses U.S. Miner's Claims Against El Salvador


21 March 2011

WASHINGTON - A World Bank arbitration court has sided with El Salvador in a dispute brought by U.S. miner Commerce Group, saying it lacked jurisdiction to hear the case.

The Washington-based International Center for Settlement of Investment Disputes did not delve into the merits of the case, citing the claimants' failure to abide by a provision of the Central American-Dominican Republic Free Trade Agreement.

In handing down its ruling, the court agreed with the Salvadoran government's argument that it lacked jurisdiction because Commerce had violated CAFTA's mandatory waiver provision by not halting ongoing court proceedings in El Salvador.

Commerce Group has mined precious metals in the Central American country since 1968.

Between 1987 and the start of 2006, it expanded its mining and related operations, which were governed by exploration licenses and environmental permits issued by the Salvadoran government.

But El Salvador canceled Commerce's environmental permits in late 2006 and did not renew its exploration licenses.

Commerce argued that those measures constituted a breach of the CAFTA treaty and decided to submit the dispute to ICSID arbitration.

Anti-mining groups allege that Commerce's operations at the San Sebastian gold mine and San Cristobal mill and plant - both in eastern El Salvador - caused environmental damage.

The mining company was seeking $100 million in damages.

Amicus Brief Highlights the Environmental and Human Rights Impacts of Mining in $77 Million Investment Arbitration Case

CIEL Press Release

3 March 2011

Washington, DC: On March 2, 2011, the Center for International Environmental Law (CIEL), on behalf of civil society organizations of the Mesa Nacional Frente a la Minería Metálica (Mesa), filed an amicus curiae brief in the Pac Rim Cayman LLC v. Republic of El Salvador case, currently being heard at the International Center for the Settlement of Investment Disputes (ICSID). The Mesa is a coalition of human rights and environmental organizations working to ban metals mining in El Salvador.

The amicus curiae brief emphasizes the devastating impact on the local environment and on the human rights of the people that depend upon that environment. Moreover, the investor failed to adequately assess the environmental impacts of the mine. Widespread community opposition to mining has led the government of El Salvador to recognize the destructive environmental and social impacts that metals mining poses. This recognition has spurred the country to impose a moratorium on new mining permits.

The ICSID Tribunal will decide whether the government of El Salvador will be forced to pay $77 million to an investor for denying a permit for its El Dorado Mine. Pac Rim Cayman LLC, a U.S. subsidiary of a Canadian mining company, filed claims against El Salvador under the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA).

The amicus brief notes that the Canadian Pacific Rim company relocated its subsidiary from the Cayman Islands to Reno, Nevada, to bring the claim after the permit was denied. According to Saúl Baños from FESPAD in El Salvador, "This relocation fundamentally invalidates the company's claim."

The amicus brief points out that the case does not involve a "legal dispute" under the ICSID Convention, or a "measure" under DR-CAFTA, but rather simply reflects the investor's dissatisfaction with the democratic political process concerning mining's deleterious impacts and sustainable development in El Salvador. "Pac Rim is trying to dictate El Salvador's environment and social policy using CAFTA's arbitration mechanism," said CIEL's Dr. Marcos Orellana, "Pac Rim's claim amounts to an abuse of process."

The civil society member organizations of the Mesa that filed the amicus brief include: Asociación Amigos de San Isidro Cabañas(ASIC); Asociación de Comunidades para el Desarrollo de Chalatenango (CCR); Asociación de Desarrollo Económico Y Social (ADES); Asociación para El Desarrollo de El Salvador (CRIPDES); Comité Ambiental de Cabañas (CAC); Fundación de Estudios para la Aplicación del Derecho (FESPAD); Unidad Ecológica Salvadoreña (UNES); and Movimiento Unificado Francisco Sánchez 1932 (MUFRAS 32).

About Mesa

The Mesa Nacional Frente a la Minería (known as the National Roundtable on Mining) is a broad-based coalition of community-based organizations, research institutes, environmental and faith-based groups at the forefront of a national campaign to ban metals mining in El Salvador. In 2005, after learning about the negative impacts of mining to communities in Honduras and Guatemala, communities from Cabañas and Chalatenango organized themselves as the "Mesa" against the Canadian mining corporation, Pacific Rim. Local and national environmental, religious, legal, and grassroots organizations have joined as they became aware of the environmental degradation, health problems, and labor rights abuses that come with mining. As a result of their fight against mining in El Salvador, the Mesa members have received violent threats, some resulting into death, in order to stop their activism.

About CIEL

Founded in 1989, the Center for International Environmental Law (CIEL),, is committed to strengthening and using international law and institutions to protect the environment, promote human health, and ensure a just and sustainable society. With offices in Washington, DC and Geneva, CIEL's staff of international attorneys work in the areas of human rights and the environment, climate change, law and communities, chemicals, trade and the environment, international environmental governance, biodiversity and wildlife and international financial institutions by providing legal counsel and advocacy, policy research and capacity building. CIEL also directs a joint research and teaching program with The American University's Washington College of Law, focused on international and comparative environmental law, as well as offering internships and fellowships to educate the next generation of international environmental advocates.

Contact: Dr. Marcos Orellana, Center for International Environmental Law, (202) 742-5847

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