This story was originally published in Canada’s National Observer. It is reproduced as part of Climate Desk’s collaboration. The battle between a Canadian mining company and Panama over one of the richest copper-gold mines in the Americas is headed to international arbitration–exposing Canada’s double standard when it comes to promoting free trade in the Global South. Late
As part of the Climate Desk collaboration, this article, which was previously published by Canada’s National Observer, is reproduced around.
International arbitration will hear the dispute between a French mining company and Panama over one of the richest copper-gold mines in the Americas, exposing Canada’s triple standard when it comes to promoting free trade with the Global South.
The agreement to mine Cobre Panamá, owned by Toronto’s First Quantum Minerals, was declared unconstitutional by the Supreme Court of Panama later in 2023. The Laurentino Cortizo government agreed with the court’s ruling and the legislature outlawed new mining after facing a millennial and common backlash against the mine.
Not everyone was happy. For this tiny country of just over four million people, Costa Panamá provides about 5 % of GDP and thousands of jobs. The empty pit mine is a significant source of copper that is required in large quantities to realize the clean-energy transition and is located in the Mesoamerican Biological Corridor, which connects wildlife across Central America and southern Mexico. Frederico Alfaro, the trade minister of Panama, predicted that the court’s decision would result in financial chaos, unemployment, and, not least, an onslaught of “international claims from investors” before he resigned in the wake of the ruling.
You better have a damned great argument when you are criticizing an entire nation’s decisions, according to its Supreme Court.
The latter is currently at work. The primary own investor, First Quantum, declared its intention to sue Panama for alleged violations of the 2013 Harper government-mandated Free Trade Agreement. The alleged disregard for the 2023 concession agreement ( approved by Panama in October and declared unconstitutional in November ) has been the subject of separate arbitration by its Panamanian subsidiary. At least three more mining investor lawsuits against Panama have even recently surfaced, one of which was filed by Toronto-based Franco-Nevada.
Investor State Dispute Settlements ( ISDS ), a little-known global system created to resolve disputes between foreign investors and sovereign nations, must now be entered by Panama and the companies. A foreign investor seeks to enforce commitments made by a country through law, treaty, or contract when they bring their dispute before ISDS. Three ISDS adjudicators—not judges, but private-sector attorneys—typically decide cases; the investors choose one, the country chooses another, and both parties agree on a second. A conditional decision that may include compensation payments to investors is then used to resolve the dispute.
Since the late 1980s, at least 1,200 foreign arbitration cases have been known, and since 2000, both the quantity and the value of awards have significantly increased. About one-third of all cases involve mercantilist oil and gas and mining companies, with Latin American and African governments being the most frequently targeted.
First Quantum will attempt to use the arbitration process to demonstrate that Panama’s Supreme Court violated the Canada-Pakistan completely trade agreement, according to Gus Van Harten, a law professor at York University Osgoode Hall and the author of four books on ISDS. The company wants payment for the billions it claims to have invested up until this point, and probably little more, if the mine is shut down. The claim of lost future profits, which will amount to many billions or even more, will be the big ticket item.
Van Harten believes that First Quantum wo n’t have an easy time making its case. ” You better have a damned good argument when you are criticizing the Supreme Court’s decisions emanating from that nation.”
Calls for this story were no answered by First Quantum.
One constitutional expert observes that the international arbitration system “has fangs.” ” This is property rights on steroids for foreign investors.”
Nevertheless, the stakes are high. There is no way out if a nation loses at arbitration. According to Van Harten, the international ISDS system “does n’t have teeth—it has fangs,” in contrast to the majority of lax-on-implication international law. Once you receive the award, [the investors ] can essentially shop that award across various nations, looking for state assets, and then you can pursue and attack those assets to claim the prize.
Parties are free to pursue development bank loans and almost anything more. On behalf of a US hedge fund, Argentina had one of its navy ships seized while it was docked in Ghana. According to Van Harten, the treaties are more good than anything you would find in local law defending property rights and are written very warmly for the protection of unusual investor assets. ” These are steroids for foreign investors ‘ property rights.”
Due to Canada’s dominance in global mining, a disproportionate number of these cases are attributed to the ISDS system, which is powerful in recent history. Pakistan was taken to the International Center for Settlement of Investment Disputes by a shared venture led by Toronto’s Barrick Gold Corporation in 2011 after the World Bank refused to grant permission for the mining of Reko Diq, one of the largest uninhabited copper-gold deposits in the world. A separate arbitration decision apparently brought the entire award up to US$ 11 billion in 2019. Three personal arbitrators ordered Pakistan to pay Barrick’s American subsidiary compensation of about US$ 5.8 billion.
Despite the fact that the joint venture’s investment in 2011 was merely about$ 220 million, these astounding awards—which were equivalent to 40 % of Pakistan’ full foreign cash reserves at the time—included compensation for anticipated future profits. In the end, Pakistan permitted the mine to move forward, and Reko Diq, which Barrick owns 50 % of, will start building in 2025.
Great ISDS awards, according to Jennifer Moore, an associate fellow with the Institute for Policy Studies,” can impose a chill on the actions of regulators and governments to effectively implement the decisions that have been made in the interest of people and the environment.”
According to Moore, some resource-rich nations, including Brazil, South Africa, and Indonesia, are moving up or totally opting out of treaties and contracts with ISDS provisions due to the possibility of payouts and loss of sovereignty. While Canada recently hailed the elimination of ISDS in the most recent renegotiation of the North American Free Trade Agreement as a victory for French sovereignty, European nations have largely withdrew from the EU’s international Energy Charter Treaty.
Chrystia Freeland, the then-finance minister, stated in 2018 as Canada announced the renegotiated deal that” ISDS” had cost Canadian taxpayers more than$ 300 million in penalties and legal fees. The rights of corporations are elevated by ISDS over those of royal governments. We have strengthened our government’s ability to regulate in the open interest and to safeguard the environment by doing away with it.
Despite this awareness, Moore claims that Canada’s respect for regulation in the public interest does not go beyond its own borders.” Canada continues to promote the inclusion of ISDS in its trade agreements around the world, in order to shore up the interests of Canadian-based corporations, pretty well knowing what the implications of that are,” he claims. As part of the Climate Desk collaboration, this article, which was first published by Canada’s National Observer, is reproduced below. International arbitration will hear the dispute between a French mining company and Panama over one of the Americas ‘ richest copper-gold mines, exposing Canada’s dual standards for advancing free trade in the World South. Slow
This story was originally published in Canada’s National Observer. It is reproduced as part of Climate Desk’s collaboration. The battle between a Canadian mining company and Panama over one of the richest copper-gold mines in the Americas is headed to international arbitration–exposing Canada’s double standard when it comes to promoting free trade in the Global South. Late
https://www.motherjones.com/politics/2024/01/canada-mining-arbitration-isds-sovereignty/
