In anticipation of an imminent ruling from the World Bank’s little known investor-state arbitration tribunal that could force El Salvador to pay Canadian mining firm OceanaGold US$301 million, a Salvadoran delegation is in Canada to discuss how this arbitration process threatens democratic decision making, public health and the environment here and beyond.
“As United Nations expert Alfred de Zayas recently expressed, the impact that investor-state arbitrations have already had and will have on human rights is very worrisome,” warned Yanira Cortez, Deputy Attorney for the Environment for El Salvador’s Human Rights Prosecutor’s Office, at an event in Ottawa this week. “We know that just the threat of these lawsuits can force governments in the Global South – and even here in Canada – to go against the public interest when it comes to health and environmental protections.”
Since May 11, Cortez and Marcos Gálvez, President of the Association for the Development of El Salvador, have been sharing how their country’s sovereign decision to halt large-scale mining on environmental grounds could be punished any day now by the secretive International Center for the Settlement of Investment Disputes (ICSID) in Washington, DC. Gálvez's organization is also a founding member of the country's National Roundtable against Metal Mining.
They have also been reminding Canadians of the dangers they face through investor provisions in existing and proposed free trade agreements, such as the North American Free Trade Agreement (NAFTA), the Canada and European Union Comprehensive Economic and Trade Agreement (CETA), and the Trans Pacific Partnership (TPP).
OceanaGold (originally Pacific Rim) is suing El Salvador for an amount equivalent to the country’s 3-year budget for health, education, and public security for not having granted it a permit to put a gold mine into operation, despite its project not having met regulatory requirements and despite a broad-based consensus in El Salvador rejecting large-scale mining. Filed in 2009, this ICSID suit is taking place in an undemocratic, closed door arbitration tribunal and could undermine El Salvador's sovereignty and right to legislate social and environmental policies in the public's interests. For example, a proposed legislative ban on mining has been stalled in the Salvadoran legislature for years, partly due to government fears of further suits in response.
Meanwhile, mining-affected communities lack access to justice for the harms that they have faced. Neither are their appeals on human rights and environmental grounds considered relevant in the strictly commercial ICSID tribunal system. In response, communities are beginning to rebuild sovereignty from the ground up with municipal plebiscites to declare themselves free of mining. Three municipalities in the department of Chalatenango declared themselves a mining-free territory in March.
“If the ICSID forces El Salvador to pay the US$301 million, where is that money going to come from? From the already limited education and health budgets in the country?” asked Gálvez at a Toronto demonstration outside OceanaGold’s investor relations office. “It is clear that these foreign investor protections completely ignore protecting peoples’ well-being, their land, their communities and livelihoods – whether they’re Salvadoran or Canadian.”
In fact, Canadian taxpayers have already paid out US$143 million to foreign corporations as a result of NAFTA lawsuits filed over public interest laws deemed barriers to profit. And the country could be on the hook for tens of millions more. In a case eerily similar to the one El Salvador faces, Lone Pine Resources is suing Canada for $250 million in response to Quebec’s decision on health and environmental grounds to put a moratorium on shale gas mining, better known as fracking.
The number of investor-state suits has ballooned in recent years. As of 2013, there were 169 investor-state suits being heard at ICSID, up from only three in 2000, and nearly 50 percent of all 169 suits were against Latin American countries. For Canada, the trend is similar. Over the last decade, the number of NAFTA suits has doubled, with Canada the target in over 70 percent of cases. Surprisingly, successive Canadian governments continue to promote these investor-state dispute settlement provisions in trade and investment agreements.
However, governments elsewhere are rethinking this model. El Salvador has reformed its national investment law to limit foreign corporations’ access to international arbitration tribunals such as the ICSID. Brazil has never signed onto any such provisions and still boasts significant foreign investment. In 2011, Australia promised not to sign any further agreements that permit access to ISDS (although there are concerns that the Trans Pacific Partnership may change that). Indonesia and South Africa are considering withdrawing from investment agreements containing ISDS provisions or letting them expire. Others, such as Germany and France could oppose ISDS in new EU-North American agreements. Bolivia, Ecuador and Venezuela have withdrawn from the ICSID convention outright so that suits cannot be brought against them in that forum.
As Gálvez and Cortez’s stay in Canada draws to an end, Gálvez draws hope from this growing global concern over these powerful international tribunals. “Salvadorans, Canadians, and many others elsewhere face a common threat. Let’s continue to call on our governments to withdraw from these treaties and provisions that leave us all so vulnerable.”
René Guerra is Salvadoran-Canadian and is Executive Director of SalvAide, a Canadian NGO that has accompanied El Salvador’s struggle for social justice since 1985. He is also co-founder of Canadians against Mining in El Salvador.