El Diario de Hoy - Translation: Marina Bonetti

A diplomatic document shows that Pacific Rim lied to the tribunal about the time in which it decided to initiate the lawsuit against El Salvador before the World Bank. The ICSID tribunal could re-open the case, after having already taken an interim decision

An official US government document, sent by the then American Ambassador in El Salvador Charles Glazer, and referred to the Department of State in December 2007, constitutes new evidence for the defense of the Republic, which is in conflict with Pacific Rim mining company before the International Centre for the Settlement of Investment Disputes, ICSID. The defense wants the tribunal of the World Bank to re-consider the interim verdict that it reached in June 2012.

The document was declassified in late September this year, after a request made by the firm Foley Hoag under the Transparency and Freedom of Information of Law of the United States. The firm obtained the information last week and proceeded to prepare a motion that has already been introduced to the tribunal composed of three arbitrators.

Lawyer Luis Parada, coordinator of the defense team of El Salvador, considers this new evidence proof that Pacific Rim was preparing the ground for filing the suit against the country much earlier than it has argued in its pleas before the ICSID; in fact, Pacific Rim has always maintained that it was unaware of the fact that a conflict existed before 2008.

However, in the cable just declassified, referred to as CO5849485, it is found that the former Ambassador Glazer reported to the then Secretary of State, Condoleeza Rice, head of US diplomacy in the second term of President George W. Bush, that there was a concern in the mining sector due to the delays in the responses by the Ministries of Environment and Economy of El Salvador to requests for exploitation of mineral resources.

“It is a cable from the US Embassy in El Salvador directed to Washington, which is entitled ‘The protests of the mining companies about delays in the concession of environmental permits’, and specifically deals with the case of Pacific Rim, saying that the company was already considering an arbitration against El Salvador”, lawyer Luis Parada explains.

The diplomatic document was sent a year and a half before the lawsuit, which is registered in the tribunal as “Pac Rim Cayman LLC v. Republic of El Salvador, ICSID Case No. ARB/09/12”, and was filed in mid-2009.

The expert in international litigation emphasizes that while the paperwork was emerging at diplomatic level, Pacific Rim transferred the name of the mining company from the Cayman Islands – under British jurisdiction – to the United States, in order to benefit from the rights contained in the Free Trade Agreement between the US, Central America and Dominican Republic (CAFTA-DR).

Even though the court dismissed the claim under the trade agreement, it gave the okay to pursue the case under Chapter 15 of the Investment Law of El Salvador – a reform of this law repealed the article in September 2013.

The case proceeded to the merits phase, which was heard during nine days in mid-September of last year, where each of the parties, supported by experts, argued the validity of their claims before the panel.

At the end of these allegations, Luis Parada affirms that they asked the tribunal to consider the re-opening of the interim decision that was issued two years before, since time has revealed the actions of the mining company violate the arbitration proceedings of the financial body that settles such disputes.

Other data exposed by the then Ambassador Glazer in the diplomatic cable is that the investments made by Pacific Rim for the exploration permits amounted to a little more than $30 million dollars, and that the future investments that the company intended to make, at the time Canadian capital, would amount to about $100 million dollars.

These figures were overvalued in the first claim. Pacific Rim(later OceanaGold) argued in court that with the investments that it was planning to make, it was hoping to gain about $301 million dollars from the gold and silver deposits that it had found in the El Dorado area, Department of Cabanas.

In the end, the mining company reduced its claim to $250 million dollars, which is the estimate maintained by the tribunal, in this case that has been pending for more than a year, and whose verdict remains highly uncertain for the parties involved.

Motion without precedents

This new motion that asks to re-examine a decision that has already been taken constitutes a first. The motion is directed to the tribunal composed of the following judges: British V. Vender as president; French Brigitte Stern; Argentinian Guido Santiago Tawil, chosen by each of the parties.

Lawyer Luis Parada believes that although the defense cannot see how El Salvador could not win this case, they need to explore all possibilities and hope that the arbitrators will have the courage to reconsider the interim decision, so that it becomes a precedent in future litigations under the ICSID that premeditate actions by a plaintiff constitute a violation of the arbitration proceedings.

“It’s not a new argument, our position that Pacific Rim lied to the tribunal strengthens our petition in asking for the re-opening of the decision on jurisdiction to prove that Pacific Rim abused the arbitration process as it changed the nationality of its subsidiary when it knew it had a dispute with El Salvador. This can help the tribunal to reconsider the precedent decision, as well as decide to grant El Salvador the arbitration costs amounting to $12.7 million dollars”, Parada comments.

At the time of writing, the ICSID tribunal has not released any statement on whether it accepts the request made by the Defense with the evidence provided by the State Department. The plaintiff company is aware of the motion and is obliged to present a response before the judges.

Pacific Rim, formerly a Canadian company, went bankrupt at the end of 2013 and both its brand and assets were bought by the Australian transnational company Oceana Gold. Now this company is leading the case against the country before the ICSID, and is also working on getting mining supporters in the central region of El Salvador. 

Translated from: http://www.elsalvador.com/articulo/sucesos/salvador-presenta-nueva-evidencia-previo-fallo-del-litigio-con-pacific-rim-90293