Pac Rim Cayman LLC. v. The Republic of El Salvador

Pac Rim Cayman LLC. v. The Republic of El Salvador, ICSID Case No. ARB/09/12  (October 14, 2016)
International Centre for Settlement of Investment Disputes

After the government of El Salvador refused to issue a mining exploitation permit to Pac Rim Cayman LLC (later acquired by OceanaGold), the company invoked El Salvador’s investment law and filed an arbitration claim with the International Centre for Settlement of Investment Disputes (ICSID) seeking US$250 million in damages for lost mining profits.  The mining company complained that it had been induced to spend millions of US dollars developing a mineral deposit between 2002 and 2008, only to have this investment erased after the president of El Salvador imposed a “de facto ban” on metallic mining in 2008.  See para. 3.6.  The government of El Salvador countered that the company simply failed to meet legal requirements to obtain a exploitation permit because it submitted an incomplete application

The ICSID ruled in favor of the government of El Salvador, finding that the mining company failed to meet legal requirements to acquire an exploitation permit.  Specifically, the company did not provide documentation as to the ownership or authorization regarding the full surface area of the requested mining concession, instead submitting documentation for the small portion of the concession area subject to surface disturbance (with the remaining portion of the mine to be developed underground).  Moreover, the company’s exploration permits expired in 2005; therefore, it had no legal right to obtain a concession.   See Parts VIII, X.

The ICSID awarded US $8 million to the government of El Salvador to cover a portion of its arbitration costs, which totaled US $12 million.  See Part XI.    

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Friday, October 14, 2016
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