EL SALVADOR – Canadian mining company, Pacific Rim Mining Corporation has been allowed to proceed under El Salvador’s investment law but not under the provisions of the Central America Free Trade Agreement according to a World Bank panel ruling.
Pacific Rim initially filed a case against the government of El Salvador in 2009. The Canadian company was denied mining permits after activists from the country persuaded the government to bar the company from operating there.
National Roundtable on Metallic Mining of El Salvador (La Mesa) persuaded the Salvadoran government to halt gold extraction by denying mining permits to Pacific Rim, US-based Commerce Group, and Sebastian Gold Mines. They bolstered the cases by illustrating the lack of environmental impact assessments and poor environmental records.
La Mesa is a large organization of community groups and human rights NGOs working to prevent gold extraction in El Salvador.
In response Pacific Rim used rules from the ‘free trade’ agreement between the US and six other countries in the region. In 2010 the Canadian company won the first stage of proceedings on these grounds.
The mining companies pursued the case at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) demanding US$100 million each in damages on the grounds declared in the investment chapter of the Central America-Dominican Republic -US Free Trade Agreement (CAFTA-DR) that came into effect in 2005.
According to La Mesa representative Vidalina Morales, “Pacific Rim has assailed our country, breaching environmental requirements, undermining laws, provoking environmental damage, economic losses, social conflict and corruption, and it should be judged for that. But the roles have been inverted, and it is the company that sues the country and the perpetrator who sues the victim.”
The ICSID will make a binding decision on whether El Salvador unfairly failed to license the mine proposed by the Pacific Rim Mining Corporation or had the sovereign right to reject it after the company had already made investments.