MAC: Mines and Communities

Canada's Infinito Gold is suing Costa Rica for more than $1 billion

Published by MAC on 2013-10-08
Source: Global News, Tico Times (2013-10-04)

Calgary-based mining company suing Costa Rica for more than $1 billion

By Jeremy Hunka

Global News

4 October 2013

LA TIGRA, Costa Rica - A billion-dollar showdown is looming in Central America this week as a Calgary-based mining company announced it will sue the country of Costa Rica, infuriating residents who say their sovereignty is being taken away.

Infinito Gold was hoping to operate an open-pit gold mine in the Crucitas region of Costa Rica's north.

On its website, the company says it "...completed all the environmental, social and technical studies and obtained all approvals required under Costa Rican law to develop and operate the Las Crucitas Project."

But the project was held up in court, and after irregularities were found in the approval process the mine's approval was declared illegal.

In 2011, Costa Rica banned all open-pit metal mining.

"It took a lot of effort," says Otto Mendez, who fought against the mining project. "It took a lot of people and a lot of money."

But now, Infinito Gold says it will take the country of Costa Rica to international arbitration.

In a press release, the company said it had "served notice" to Costa Rica in April 2013, and after the country did not respond, its subsidiary announced a massive lawsuit is "imminent," the largest in Costa Rica's history.

The company believes the country is violating its trade agreements with Canada.

Yokebec Soto, spokesperson for Infinito Gold's subsidiary in Costa Rica, told Global News by email the company has already invested $92 million in the project and if the project does not proceed, could lose $1 billion in profits.

Some Costa Ricans are reacting in anger. "It is an insult to the intelligence of our people," says lawyer Edgardo Araya, who also fought against the project.

The suit is also inciting anger in Canada. "I think it's reprehensible," says Jamie Kneen with MiningWatch Canada. "I think it is irresponsible and it is giving the Canadian mining industry a bad name."

But international arbitration expert Gus Van Harten says Infinito Gold may have a case.

He says through international trade agreements signed between countries, international arbitrators have the power to override court and government decisions of sovereign countries.

"So on the one hand, in a way, it's the Costa Rican government's fault," says the associate professor at Osgoode Hall Law School in Toronto.

He also says the international arbitration system is tainted, and that arbitrators, who are given immense power to settle disputes, aren't proper judges.

Some can actually double as lawyers at the same time they are arbitrators, even if they are arguing similar cases. Van Harten says this is a "well-known conflict of interest."

"The point is the people making the decision are the wrong people," he says. "And whatever decision they make, it will lack integrity as a result."

In Costa Rica, the threat of losing a billion dollars to a Canadian company has some concerned.

"Is it worrying, yes it's worrying," says Alfredo Arias who lives near the proposed mining site.

"I feel awful, I don't think that's fair."

Infinito Gold did not respond to numerous requests for comment.


Infinito Gold to sue Costa Rica in World Bank court for $1 billion

By Zach Dyer

Tico Times

4 October 2013

The Canadian mining company said it has exhausted legal options in Costa Rica regarding a lost gold mining concession.

Infinito Gold Ltd. has been embroiled in a protracted legal battle with Costa Rica over its loss of the Las Crucitas gold-mining project and concession. Courtesy of IISA

Canadian gold-mining company Infinito Gold Ltd. announced its intentions to go forward with a $1 billion lawsuit against Costa Rica over the retracted Las Crucitas open-pit gold mining concession in northern Costa Rica, in a statement released on Friday.

The mining company said it plans to go ahead with its threat to take the case to the World Bank's International Centre for Settlement of Investment Disputes (ICSID) after a six-month mediation expired Friday.

Costa Rica and the Canadian mining company have been ensnarled in a protracted legal battle over the canceled Las Crucitas project in Cutris de San Carlos, Alajuela, since environmentalists and locals decried the loss of virgin forest and health concerns over leeching chemicals contaminating drinking water.

Industrias Infinito, S.A., a Costa Rican company owned exclusively by Infinito Gold Ltd, alleges the government violated the Costa Rica-Canada Bilateral Investment Treaty, costing it $92 million in equipment, environmental impact studies, personnel salaries and other costs during the initial phase of the project, and another $1 billion in lost profits.

The British Columbia-based company claims that the suit is the largest Costa Rica has ever faced.

Infinito has been rattling its saber over a potential ICSID arbitration after the company lost its appeal in Costa Rica's Constitutional Chamber of the Supreme Court, known as the Sala IV, in November 2010. In April, the company announced that it would take its case to ICSID if the two were unable to resolve the dispute during the six-month window required under the investment treaty.

The Supreme Court's Civil and Administrative Law Branch annulled the mining concession in November 2011.

The concession would have allowed the extraction of 1 million grams of gold in the area, a business estimated at the time at some $2 billion. In 2008, the company obtained a mining license after then-President Óscar Arias (2006-2010) and his environment minister, Roberto Dobles, declared the project of "national interest."

"This sends a very bad message to foreign investors in North America," said Yokebec Soto, a spokeswoman for Infinito Gold in Costa Rica.

Environment Minister René Castro gave a brief statement Friday afternoon, saying that Costa Rica's treatment of Infinito Gold complied with national laws.

The minister did not take questions after making his remarks, citing the coming legal battle.

Soto said that the ICSID could take up to three years to issue a ruling.

 

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