International tribunal rejects Milwaukee mining company’s $100 million claim against El Salvador

International community continues to demand reparations for environmental damage

Washington, DC: On March 15, 2011, a tribunal at the International Centre for the Settlement of Investment Disputes (ICSID) rejected Commerce Group Corporation’s claim against the government of El Salvador, essentially tossing out the case.

Steve Watrous, of the Midwest Coalition Against Lethal Mining, a group of student, environmental, and religious organizations that have been pressuring Commerce Group to drop the suit, commented, “We are celebrating this victory together with the communities in El Salvador that have been suffering the effects of gold mining. Now it’s time for Commerce Group to clean up the mess they’ve made in El Salvador.”

A 2006 study of the local waterways surrounding the San Sebastian mine in La Unión, El Salvador, owned by the Milwaukee-based Commerce Group Corporation, revealed elevated levels of cyanide and heavy metals, for example, an aluminum level 1800 times higher than the World Health Organization’s recommended limit.

According to Salvadoran court documents, Commerce Group’s environmental permit was revoked in 2006 for failure to comply with clean-up and other requirements for that permit. At that time, El Salvador’s Minister of the Environment and Natural Resources stated, “The environmental ministry cannot grant permits for mining projects if the company’s environmental impact assessment does not show that they’re going to protect the earth, aquifers, surface, the air and the health of the people that live in the communities.”

The company filed a lawsuit against the government of El Salvador in 2009 through the foreign investor provisions of the U.S.-Central America-Dominican Republic Free Trade, demanding at least $100 million in compensation for alleged lost profits, despite the fact that, according to SEC filings, Commerce Group has not had any earnings since 2002, four years before their permit was revoked

“It’s pretty outrageous that the government of El Salvador has been attacked for protecting the health and safety of its people,” said Al Gedicks, professor of sociology at University of Wisconsin LaCrosse, and author of Resource Rebels. “If anything, it is Commerce Group who should be paying for the toxic legacy they have left behind.”

Even though the case was dismissed, El Salvador paid nearly $800,000 in legal fees for the initial stages of the hearing, according to the government’s report to the tribunal; in addition, the tribunal ordered each party to split the costs of arbitration, or $45,000 each.  Jan Morrill, from U.S.-El Salvador Sister Cities, who has been working closely with the affected communities, commented, “El Salvador has had to pay close to $800,000 just to be dragged through this arduous process for over a year in order to defend itself from a baseless attack. This is money that could have been much better spent by the government investing in economic growth, health and education.”

Press Release by the Midwest Coalition Against Lethal Mining