MAC: Mines and Communities

Tambogrande update: Manhattan seeks arbitration

Published by MAC on 2001-05-01

Manhattan seeks arbitration

Tambogrande Update – February 19, 2004

From: CooperAccion, Peru

On February 16, Manhattan announced that it will commence arbitration proceedings regarding Centromin’s decision concerning the option agreement for the Tambogrande mining project. Centromin is Peru’s publicly-owned mining company and was Manhattan’s potential partner in the development of the Tambogrande mine.

According to the option agreement between Centromin and Manhattan, the company was obliged to demonstrate, by December 1, 2003, that it complied with a number of ‘qualifying conditions.’ On December 10, 2003, Centromin announced that Manhattan had failed to comply with said conditions. According to the terms of the option agreement, Manhattan consequently lost the opportunity to participate in the development of the mine.

Manhattan is challenging Centromin’s decision.

Does Manhattan have a hope?

According to a preliminary legal analysis undertaken by the Mesa Técnica’s legal team, Manhattan hasn’t got much of a chance.

There are two principal impediments:

A. According to the option agreement, Manhattan has the right to challenge Centromin’s decision. However, Manhattan only had thirty days to initiate arbitration proceedings following notification, by Centromin, of its decision. Centromin communicated its decision to Manhattan on December 10, 2003. Manhattan didn’t announce its decision to initiate arbitration proceedings until February 16, 2004 – well outside the thirty-day window.

This analysis appears to be shared by the government. In yesterday’s edition of Gestión, Jaime Quijandría, who was recently renamed as Minister of Energy and Mines, is quoted as saying that Manhattan brought its request for arbitration outside the time frame contemplated by the option agreement. According to the Minister, a legal analysis that he requested from ProInversión supports this position.

B. Even if it were possible to initiate arbitration proceedings at this late date, Manhattan doesn’t appear to have a persuasive argument:

And if Manhattan succeeds in initiating arbitration proceedings?

Should arbitration proceedings somehow be initiated, the option agreement dictates that:

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