Summary: World Bank arbitration body dismisses mining company’s claim against government of El Salvador

14 October 2016: The International Centre for Settlement of Investment Disputes (ICSID), the World Bank’s arbitration body, has ruled that mining company Pac Rim Cayman LLC’s lawsuit against the Salvadoran government is without merit, and hence that El Salvador will not have to pay the company the $250 million that it sought. SRT grantees the Institute for Policy StudiesCIEL and Mining Watch Canada have been involved in international advocacy around the case. Mining Watch has also been providing support to local organisations in El Salvador, and CIEL has conducted legal analysis.

In 2009, Pac Rim Cayman brought an “investor-state dispute settlement” (ISDS) case against El Salvador at the ICSID. The company, now a wholly-owned subsidiary of the Canadian-Australian company OceanaGold, sued El Salvador for alleged losses of potential profits as a result of not being granted a mining concession for a gold project. The government of El Salvador did not issue the concession because the company did not meet key regulatory requirements.

Civil society groups praised the communities in El Salvador that have opposed Pac Rim and have rallied the public and government to oppose new mining projects despite heavy pressure from the company. They expressed deep concern that El Salvador had to pay over $12 million to fund its defense in a case where the mining company never fulfilled all the legal or environmental requirements for a mining license. Saying “water is worth more than gold,” the communities and Salvadoran civil society organisations have emphasised that large scale mining would destroy their water sources and their plans for community development.

Jen Moore, Latin America Programme Coordinator at Mining Watch Canada, said, “This ruling is a relief, but it is not a win. This already costly suit should never have been able to take place. For seven years, it has put a chill on policymaking that could respect the decision of Salvadorans to prohibit metal mining and protect local communities and the environment.”

Full press release from IPS’s website:

Return to grantee stories