Mining Firm’s $250m Claim against El Salvador Dismissed

(by Boshra Yazahmeidi)

A multinational mining company that sued the tiny Central American country of El Salvador $250m for refusing to let it mine for gold has had its claim dismissed by the World Bank tribunal.

In addition, the mining company has been ordered to pay $8m towards the $12m legal costs incurred by the Salvadoran government for its defence.

The outcome of this 7-year court proceeding has been a relief for the people of El Salvador, whose slogan “No to mining, yes to life” has become a national rallying cry. However, many have criticised the fact that the lawsuit was even allowed to go ahead, placing a heavy burden on a country where one in three people live beneath the poverty line.  The $250m claim dwarfed the $158m in international aid received by El Salvador in 2014.

Jen Moore, from the Latin American division at Mining Watch Canada, stated: “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.”

The investor-state dispute settlement (ISDS) system, the system that allowed this lawsuit to go ahead in the first place, has been increasingly criticised for its use as a threat to exert pressure on governments not to challenge investors’ actions. A Guardian article about ISDS estimated the number of suits filed against countries to be growing at a rate of one case per week in 2015.  The article adds that as company claims get bigger, it is likely that the massive financial risks to the countries being sued will “effectively grant foreign investors a veto over government decisions”.

OceanaGold, the Australian-Canadian mining firm that filed the case, wanted compensation for being refused the necessary permits to extract gold after it had spent tens of millions of dollars in mineral exploration activities. It was also suing the country for loss of potential profits.

The Salvadoran government maintained that OceanaGold had failed to meet the regulatory requirements, lacked the necessary environmental permissions, did not hold rights to much of the land required for mining, and failed to submit a final feasibility study.

Jesuit Social Services CEO, Julie Edwards, who took part in a panel discussion earlier this year that explored the ethical nature of this lawsuit, stated: “Jesuit Social Services is pleased with the outcome of this court proceeding. In our commitment to social and ecological justice, we will continue to advocate on behalf of communities affected by mining.”

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