El Salvador wins gold mining arbitration

There was celebration yesterday in El Salvador's government and among environmental activists after the country won its seven year legal dispute with Oceana Gold.    Oceana God's predecessor, Pacific Rim, had initiated the arbitration against El Salvador seeking more than $250 million after the country refused to grant it permits to mine gold on the company's El Dorado property in the department of Cabanas.   OceanaGold was ordered to reimburse El Salvador for the country's $8 million in legal costs in defending the suit.  

The Guardian quoted the parties' reactions to the decision:

“For the people of Cabanas who have been fighting to defend their environment, it is mission accomplished,” said El Salvador’s attorney general, Douglas Meléndez Ruiz. “It is an important step for the country to have been victorious in this lawsuit.” 

While an OceanaGold statement expressed disappointment at the verdict, the outcome was celebrated by civil society groups from El Salvador to Canada, although they questioned why the ruling in a case dating back to 2009 had taken so long.  

Bernardo Belloso, president of the Association for the Development of El Salvador, part of a national roundtable opposed to metallic mining, said the ruling “vindicates our right to determine our own development path”.

Despite the favorable result, activists continued their criticism of the arbitration process.   From the New York Times:

The World Bank panel, known as Icsid, is a little-known body that arbitrates disputes initiated by private companies that argue that their rights as investors have been violated by governments. 

Many free-trade agreements incorporate the rights of foreign investors to seek redress from the panel. Activist groups argue that private companies are using the dispute center to fight regulation. 

“The case has been hanging over El Salvador, and the company used this case to try to get permission to work there,” said John Cavanagh, the director of the Institute for Policy Studies, a left-leaning think tank in Washington.... 

The case that Pac Rim brought to the three-person panel proved to be so weak that the finding against it was unanimous. The company had never acquired the rights to all the land it wanted in its concession, which the government rejected in 2005.

You can read my summary of the issues which were involved in this case here.

The long-running dispute over whether gold mining would be permitted in El Salvador included the deaths of several activists against the mine.    The anti-mining movement has long alleged that these deaths were directed by mining interests, but prosecutors never treated the crimes as anything other than "common" violence in the country.

Although El Salvador was victorious in the arbitration, the country still lacks a comprehensive law banning or regulating extractive mineral mining, and continues to act under the moratorium against further mining permits originally adopted during the ARENA administration of president Tony Saca.