The Canadian gold mining company Pacific Rim issued a press release today announcing its intention to seek $315 million in its international arbitration against the government of El Salvador. The arbitration is pending before the World Bank's International Center for Settlement of Investment Disputes in Washington, D.C.
In a decision by the arbitration panel last year, the arbitrators dismissed claims under the CAFTA treaty, but are permitting the lawsuit to go forward under provisions of El Salvador's own internal investment laws.
Up to this point, there has been no ruling on the central issue of the case -- did El Salvador violate any legal rights of Pacific Rim by not granting the Canadian firm the permission to move from exploration to actual production at the company's El Dorado mine in the department of Cabañas? The ICSID has only ruled that it has jurisdiction to hear the case and that the case cannot proceed under CAFTA, but only under El Salvador's investment law.
Pacific Rim indicated that the $315 million damage amount was calculated by FTI Consulting. FTI Consulting is a global consulting firm which is often used by law firms as expert witnesses on damages in commercial litigation. The authors of this calculation are economists, but not experts in the areas of mining or environmental damages.
Tom Shrake, president of PacRim, took a shot at the government of El Salvador in the press release:
"The filing of the Memorial represents a significant milestone in the Arbitration. We are very confident in the merits of our case and our ability to receive fair-value for our expropriated assets. Unfortunately, we are not alone. Because of a pattern of mistreatment of foreign investors by the Government of El Salvador, the country is now the single worst jurisdiction in all of Latin America in attracting foreign investment and the slowest growing economy in Central America for the eighth consecutive year. Poverty has skyrocketed to 47.5% of the population, an increase of approximately 10%, over the same eight-year period. We continue to reach out to the Government of El Salvador to end this dispute to allow our Salvadoran employees to get back to work."The government of El Salvador has not granted production permits for gold mining under the left wing Funes administration nor the prior right wing government of Antonio Saca.