[CTC] New mining ISDS case under Colombia FTA

Wed Mar 9 16:54:35 PST 2016

From Ben Beachy at the Sierra Club...

A U.S. mining corporation has just launched a $16.5 billion ISDS case against Colombia under the U.S.-Colombia Free Trade Agreement for creating a national park on Amazon rainforest land <https://www.google.com/maps/place/Taraira,+Vaup%C3%A9s,+Colombia/@-1.1873142,-71.2899209,7.25z/data=!4m2!3m1!1s0x91fce4d83bb4e1e3:0xbdaa6c2666871546> where the corporation had a concession to mine for gold.  

The corporation, Tobie Mining and Energy, claims that Colombia's decision to create the national park and to prohibit mining within its borders was fraudulent and "expropriated" the company's investment, in violation of the U.S.-Colombia FTA.  See below for details.  As far as I'm aware, this is the first ISDS case to be brought under the FTA.  

The corporation is demanding that either Colombia reverse course and allow the company to mine for gold in the Amazonian national park, or that it pay $16.5 billion -- more than 22 percent of Colombia's national budget <http://www.reuters.com/article/colombia-economy-idUSL1N12E01D20151014>. 

Investment Arbitration Reporter

TWO NEW TREATY-BASED DISPUTES CENTER ON FRICTION BETWEEN COLOMBIAN MINING AND NATIONAL PARKS – AND HIGHLIGHT DIFFERING TRANSPARENCY RULES IN CANADIAN AND U.S. FTAS
Mar 09, 2016 | By Luke Eric Peterson And Zoe Williams <>

Following a request to the Republic of Colombia for disclosure of any disputes notified under the United States-Colombia Free Trade Agreement (FTA), Colombia’s Ministry of Trade has released a recently-filed notice of arbitration under that agreement (click to download <http://www.iareporter.com/wp-content/themes/iareporter/download.php?post_id=24769>).

The notice dated February 19, 2016 was lodged by three parties – Cosigo Resources (Canada), Cosigo Resources Sucursal Colombia (Colombia) and Tobie Mining and Energy Inc. (U.S.A.) – all professing to have interests in a gold mining concession.

We discuss the notice of arbitration – which Colombia has released – in greater detail further below.

Also as this article was going to press, a Canadian mining company, Eco Oro Minerals Corp, announced that it had lodged a Notice of Intent to arbitrate under the Canada- Colombia free trade agreement (FTA). We discuss that dispute, where the notice of intent is not public, directly below.

Eco Oro says notice given, but neither side releases it – and Canada-Colombia FTA seems to leave scope for non-publication

In an announcement on March 7, 2016 <http://www.eco-oro.com/s/NewsReleases.asp?ReportID=741972&_Type=News-Releases&_Title=Eco-Oro-Minerals-Notifies-Colombian-Government-of-Investment-Dispute>, the Canadian junior mining company Eco Oro says that it has been hampered in exploring and exploiting a wholly-owned gold mining venture, the Angostura Project, due to the government’s “unreasonable delay in clarifying the limits of” a national park, the Santurbán Páramo, and whether that park overlaps with the Angostura Project. The company also complains of the government’s “persistent failure to provide clarity as to Eco Oro’s right to continue developing its mining project in light of further undefined requirements and later as a consequence of the Constitutional Court’s decision of February 8, 2016, which has broadened the prohibition of mining activities in páramo areas.”

Colombia’s Ministry of Commerce has told IAReporter that they are not releasing, for the moment, the Notice of Intent in deference to the investor’s professed desire to seek amicable resolution of the dispute. Although the Canada-Colombia FTA brings some transparency to arbitrations under that agreement, the wording of the provision arguably leaves some scope for governments to decline to release preliminary filings, such as Notice of Intent. Article 830 of the treaty provides for publication of all arbitral awards, but does not directly address Notice of Intent or Notices of Arbitration. Instead, Article 830 provides that “All other documents submitted to, or issued by, the Tribunal shall be publicly available, unless the disputing parties otherwise agree, subject to the deletion of confidential information.” (It’s not clear whether a Notice of Intent is a document submitted to, or issued by, a tribunal; even if it were, investors and governments appear to each enjoy a veto right over publication of such documents.)

Unrelated mining arbitration now pending under U.S. Colombia treaty

Apart from the Eco Oro dispute, Colombia also faces an active arbitration under the U.S.-Colombia FTA, after a trio of claimants filed a request for arbitration on February 19, 2016. That request follows an earlier filing of a Notice of Intent under the FTA.

Notably, the U.S.-Colombia FTA provides for broader transparency than the Canada-Colombia FTA, with certain categories of materials – including Notices of Intent and Notices of Arbitration – included within the scope of Article 10.21. That treaty articles obliges the respondent-state to “promptly transmit (such documents) to the non-disputing Parties and make them available to the public”

Colombia has accordingly released the Notices filed by the three claimants – Cosigo Resources (Canada), Cosigo Resources Sucursal Colombia (Colombia) and Tobie Mining and Energy Inc. (U.S.A.) – and we discuss the dispute below.

Claimants cite harm to gold mining investment

The three claimants all profess to have interests in a gold mining concession in the Taraira region near Colombia’s border with Brazil. The investors claim that Tobie, the US investor, “staked out” those interests in 2007, subsequently transferred a majority interest to the Canadian claimant Cosigo, only to take back most of that shareholding in 2015 from its Canadian co-claimant.

The claimants note that the prospect of extractive activity in the area sparked conflict among local indigenous groups, with long-standing associations coming out against mining. However, one group, the Association of Indigenous Communities of Tairara and Vaupés (ACITAVA) was more favourably disposed toward the project, and the notice suggest that they were granted a 20% ownership share of the concession. (An earlier Notice of Intent (click to download <http://www.iareporter.com/wp-content/themes/iareporter/download.php?post_id=24773>) lodged in relation to this investment had included that Colombian NGO as a prospective claimant, however ACITAVA is no longer cited as a claimant in the Notice of Arbitration).

Resolution creates national park encompassing claimant’s mining concession

The claimants say that the Colombian co-claimant initiated technical approval of their venture, and this was granted in December of 2008. The claimants say that final legal approval of the project was granted by the National Mining Agency in April of 2009. However, the claimants allege that an unexplained five month delay ensured that they were unable sign the mining concession until October 29 2009. In their Notice the claimants contend that, on the same day, a resolution was published which created the Yaigoji Apaporis national park, encompassing the area of the mining concession.

The claimants allege that the unexplained delay was thus a deliberate attempt on the part of Colombian authorities to slow down the approvals process until the park could be established, thus casting a shadow over the legality of the now-signed mining concession. The notice further claims that the consultation process for the approval of the park was conducted fraudulently by authorities who, for example, falsified the appearance of majority consent for the park, despite not carrying out the required consultations with all affected communities.

Claimants or their allies domestic legal challenges to the national park; constitutional court has ordered all mining activity to cease in park

ACITAVA filed a number of legal challenges to the park, including a nullification suit against the Network of National Natural Parks, and an accion de tutela (a legal mechanism for challenging alleged violations of constitutional rights) alleging that authorities had improperly conducted the consultation for the national park. For its part, the National Mining Agency filed a suit seeking to nullify the mining concession, despite, the claimants contend, having issued the approval of the licence before the park was created. While none of these domestic cases had been resolved at the time of filing, the Constitutional Court has subsequently ruled <http://www.telesurtv.net/english/news/Court-Halts-Mining-in-Colombian-Avatar-National-Park-20150906-0001.html> to suspend all mining activity in the park.

In their FTA claim, the claimants portray themselves as victims of a fraud, and note that they have received no compensation for the loss of their concession, as allegedly required under both domestic law and Article 10.7 of the US-Colombia Trade Promotion Agreement. Therefore, the claimants seek either the return of the concession or the fair market value of the project, which the claimants place at $16.5 billion. (They do not clarify how they have reached this sum.)

Notice is anomalous in some respects

The notice does not explain how Cosigo, a Canadian company, might claim under the U.S.-Colombia FTA. However, the notice does allude to a possible coming claim against Colombia under the Canada-Colombia FTA.

Indeed, the ownership interests of the U.S. and Canadian claimants is left vague in the Notice of Arbitration. Whereas the earlier Notice of Intent had given some description of the relative shareholdings of each claimant over time, the Notice of Arbitration omits such detail.

Further, while the Notice is couched as a request under the UNCITRAL rules, the claimants also express a desire that the American Arbitration Association serve as the “arbitrating authority”. The notice does not clarify whether this is a reference to a mere administrative role, or a proposal that the AAA rules be used for the case. (The U.S.-Colombia FTA doesallow parties to agree to use rules other than those of ICSID or UNCITRAL.)

The claimants have nominated a Texas-based attorney, Brian Coleman, as arbitrator. Mr. Coleman does not appear to have served as investment treaty arbitrator previously. His website <http://www.colemanmediation.com/> indicates that he has worked as a trial attorney, and domestic arbitrator and mediator. The claimants are represented by the Law Office of Kevin W. Boyd. This is their first known appearance in an investment treaty arbitration.

Colombia has not yet announced who it will hire as legal counsel.

Short URL: http://tinyurl.com/jddmk6g <http://tinyurl.com/jddmk6g>
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