An Australian mining company with strong connections to Vancouver has lost an international trade dispute against the government of El Salvador.
The (US)$250-million claim filed in 2008 by OceanaGold's Vancouver-based subsidiary, Pacific Rim Mining, was found to have no merit.
According to the ruling earlier this month by the International Centre for Settlement of Investment Disputes, the company must pay the government of El Salvador (US)$8 million to cover legal fees. In a news release, OceanaGold said it was "disappointed".
In 2013, Pacific Rim Mining was bought by OceanaGold, which maintains its North American headquarters on Hornby Street in Vancouver. This takeover made OceanaGold owner of the El Dorado property 65 kilometres northeast of El Salvador's capital, San Salvador.
The company has estimated that there are 1.4 million ounces of gold on the site. It's near the basin of the country's largest river, the Rio Lempa.
But Pacific Rim was unable to recover the precious metals after the government of El Salvador stopped issuing mining permits in 2008. This was done to protect water supplies in the heavily populated country, which is the size of the state of Massachusetts.
The mining ban prompted Pacific Rim to launch its complaint under the Central American Free Trade Treaty. According to the Washington, D.C.-based group Public Citizen, the Vancouver company filed the "the first challenge of an environmental policy under CAFTA".
"It employs controversial terms that allow foreign investors to privately enforce the treaty by directly suing signatory governments," Public Citzen stated in one report on the case. "This occurs outside of domestic court systems, in foreign arbitral tribunals, where foreign investors can demand compensation over what they deem violations of their new CAFTA rights."
In 2009, three antimining activists in El Salvador were murdered, and Pacific Rim vehemently denied any involvement.
In an interview with the Straight in 2010, vice president for investor relations Barbara Henderson said the company had “overwhelming” backing from the community. “Our experience working there has been overall extremely positive,” she said.
However, some Salvadoran activists in Vancouver were very supportive of the government's refusal to issue permits and held a candlelight vigil outside the company's office that year.
Despite the government of El Salvador's clear victory at the international tribual, a group called International Allies Against Mining in El Salvador has still claimed that there were no winners in the dispute.
“The fact that Pac Rim—now OceanaGold—could sue El Salvador when it has never had a licence to operate, is an abuse of process,” said Manuel Pérez-Rocha of the Institute for Policy Studies in a news release. “That these suits take place far from any transparent, independent court system demonstrates why we are opposed to the Trans-Pacific Partnership and other so called free trade agreements.”