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Mining injustice through international arbitration

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Earthworks | 24 August 2020

Mining injustice through international arbitration

El Tambor is a controversial gold mining project in Guatemala. After years of local protests and litigation, the Guatemalan Supreme Court ordered a halt to the project in 2016 for lack of prior consultation with Indigenous people. This decision was recently reaffirmed by Guatemala’s Constitutional Court. The court-ordered suspension of the project and ongoing community protests are now under attack in an international arbitration case brought against the Guatemalan government by a United States company. This investigation examines the Kappes, Cassiday & Associates (KCA) arbitration suit, which is now entering the merit stage at the Washington, DC headquarters of the World Bank Group.

In late 2018, Nevada-based KCA initiated its lawsuit against the Guatemalan government at the International Centre for Settlement of Investment Disputes (ICSID) for over US$400M. In its notice of arbitration, the company argues that it met all regulatory requirements, obtained the necessary permits, and got community support for the El Tambor mining project just north of Guatemala City. KCA alleges that the Guatemalan government violated the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) by not providing adequate protection to KCA’s investment against community protests, effectively claiming that the government did not do enough to suppress local opposition to the company’s mine. It also claims to have been harmed by the court-ordered suspension of its mine over lack of government-led prior community consultation.

This report examines and provides evidence that challenges KCA’s claims and responds to its omissions, finding that:

  • Instead of respecting legitimate community opposition to its gold-mining project, KCA
  • increased its efforts to build the mine.
  • The company never lived up to regulatory requirements in Guatemala.
  • In its notice of arbitration, the company omits any mention of the use of violent force to open the mine. However, KCA’s mine became operational as a result of the use of violent repression against local communities carried out by militarized private and state armed forces under a corrupt government.
  • KCA leadership, including president Daniel Kappes, has been subject to arrest warrants and criminal investigation in Guatemala.

This investigation further reveals how KCA is taking advantage of a supranational arbitration system to try to strongarm the Guatemalan government into either greenlighting its controversial gold project, or compensating the company for hundreds of millions of dollars in future profits it had little hope of ever earning.

Read the report (pdf)


 source: Earthworks