US and Canadian Mining Companies Seek to Sue Colombia for $16.5billion

Originally posted by IAReporter. March 9th 2016

Following a request to the Republic of Colombia for disclosure of any disputes notified under the United States-Colombia Free Trade Agreement (FTA), Colombia’s Ministry of Trade has released a recently-filed notice of arbitration under that agreement (click to download).

The notice dated February 19, 2016 was lodged by three parties – Cosigo Resources (Canada), Cosigo Resources Sucursal Colombia (Colombia) and Tobie Mining and Energy Inc. (U.S.A.) – all professing to have interests in a gold mining concession.

We discuss the notice of arbitration – which Colombia has released – in greater detail further below.

Also as this article was going to press, a Canadian mining company, Eco Oro Minerals Corp, announced that it had lodged a Notice of Intent to arbitrate under the Canada- Colombia free trade agreement (FTA). We discuss that dispute, where the notice of intent is not public, directly below.

Eco Oro says notice given, but neither side releases it – and Canada-Colombia FTA seems to leave scope for non-publication

In an announcement on March 7, 2016, the Canadian junior mining company Eco Oro says that it has been hampered in exploring and exploiting a wholly-owned gold mining venture, the Angostura Project, due to the government’s “unreasonable delay in clarifying the limits of” a national park, the Santurbán Páramo, and whether that park overlaps with the Angostura Project. The company also complains of the government’s “persistent failure to provide clarity as to Eco Oro’s right to continue developing its mining project in light of further undefined requirements and later as a consequence of the Constitutional Court’s decision of February 8, 2016, which has broadened the prohibition of mining activities in páramo areas.”

Colombia’s Ministry of Commerce has told IAReporter that they are not releasing, for the moment, the Notice of Intent in deference to the investor’s professed desire to seek amicable resolution of the dispute. Although the Canada-Colombia FTA brings some transparency to arbitrations under that agreement, the wording of the provision arguably leaves some scope for governments to decline to release preliminary filings, such as Notice of Intent. Article 830 of the treaty provides for publication of all arbitral awards, but does not directly address Notice of Intent or Notices of Arbitration. Instead, Article 830 provides that “All other documents submitted to, or issued by, the Tribunal shall be publicly available, unless the disputing parties otherwise agree, subject to the deletion of confidential information.” (It’s not clear whether a Notice of Intent is a document submitted to, or issued by, a tribunal; even if it were, investors and governments appear to each enjoy a veto right over publication of such documents.)

Unrelated mining arbitration now pending under U.S. Colombia treaty

Apart from the Eco Oro dispute, Colombia also faces an active arbitration under the U.S.-Colombia FTA, after a trio of claimants filed a request for arbitration on February 19, 2016. That request follows an earlier filing of a Notice of Intent under the FTA.

Notably, the U.S.-Colombia FTA provides for broader transparency than the Canada-Colombia FTA, with certain categories of materials – including Notices of Intent and Notices of Arbitration – included within the scope of Article 10.21. That treaty articles obliges the respondent-state to “promptly transmit (such documents) to the non-disputing Parties and make them available to the public”

Colombia has accordingly released the Notices filed by the three claimants – Cosigo Resources (Canada), Cosigo Resources Sucursal Colombia (Colombia) and Tobie Mining and Energy Inc. (U.S.A.) – and we discuss the dispute below.

Claimants cite harm to gold mining investment

The three claimants all profess to have interests in a gold mining concession in the Taraira region near Colombia’s border with Brazil. The investors claim that Tobie, the US investor, “staked out” those interests in 2007, subsequently transferred a majority interest to the Canadian claimant Cosigo, only to take back most of that shareholding in 2015 from its Canadian co-claimant.

The claimants note that the prospect of extractive activity in the area sparked conflict among local indigenous groups, with long-standing associations coming out against mining. However, one group, the Association of Indigenous Communities of Tairara and Vaupés (ACITAVA) was more favourably disposed toward the project, and the notice suggest that they were granted a 20% ownership share of the concession. (An earlier Notice of Intent (click to download) lodged in relation to this investment had included that Colombian NGO as a prospective claimant, however ACITAVA is no longer cited as a claimant in the Notice of Arbitration).

Resolution creates national park encompassing claimant’s mining concession

The claimants say that the Colombian co-claimant initiated technical approval of their venture, and this was granted in December of 2008. The claimants say that final legal approval of the project was granted by the National Mining Agency in April of 2009. However, the claimants allege that an unexplained five month delay ensured that they were unable sign the mining concession until October 29 2009. In their Notice the claimants contend that, on the same day, a resolution was published which created the Yaigoji Apaporis national park, encompassing the area of the mining concession.

The claimants allege that the unexplained delay was thus a deliberate attempt on the part of Colombian authorities to slow down the approvals process until the park could be established, thus casting a shadow over the legality of the now-signed mining concession. The notice further claims that the consultation process for the approval of the park was conducted fraudulently by authorities who, for example, falsified the appearance of majority consent for the park, despite not carrying out the required consultations with all affected communities.

Claimants or their allies domestic legal challenges to the national park; constitutional court has ordered all mining activity to cease in park

ACITAVA filed a number of legal challenges to the park, including a nullification suit against the Network of National Natural Parks, and an accion de tutela (a legal mechanism for challenging alleged violations of constitutional rights) alleging that authorities had improperly conducted the consultation for the national park. For its part, the National Mining Agency filed a suit seeking to nullify the mining concession, despite, the claimants contend, having issued the approval of the licence before the park was created. While none of these domestic cases had been resolved at the time of filing, the Constitutional Court has subsequently ruled to suspend all mining activity in the park.

In their FTA claim, the claimants portray themselves as victims of a fraud, and note that they have received no compensation for the loss of their concession, as allegedly required under both domestic law and Article 10.7 of the US-Colombia Trade Promotion Agreement. Therefore, the claimants seek either the return of the concession or the fair market value of the project, which the claimants place at $16.5 billion. (They do not clarify how they have reached this sum.)

Notice is anomalous in some respects

The notice does not explain how Cosigo, a Canadian company, might claim under the U.S.-Colombia FTA. However, the notice does allude to a possible coming claim against Colombia under the Canada-Colombia FTA.

Indeed, the ownership interests of the U.S. and Canadian claimants is left vague in the Notice of Arbitration. Whereas the earlier Notice of Intent had given some description of the relative shareholdings of each claimant over time, the Notice of Arbitration omits such detail.

Further, while the Notice is couched as a request under the UNCITRAL rules, the claimants also express a desire that the American Arbitration Association serve as the “arbitrating authority”. The notice does not clarify whether this is a reference to a mere administrative role, or a proposal that the AAA rules be used for the case. (The U.S.-Colombia FTA doesallow parties to agree to use rules other than those of ICSID or UNCITRAL.)

The claimants have nominated a Texas-based attorney, Brian Coleman, as arbitrator. Mr. Coleman does not appear to have served as investment treaty arbitrator previously. His website indicates that he has worked as a trial attorney, and domestic arbitrator and mediator. The claimants are represented by the Law Office of Kevin W. Boyd. This is their first known appearance in an investment treaty arbitration.

Colombia has not yet announced who it will hire as legal counsel.

Short URL: http://tinyurl.com/jddmk6g

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6 Reader Comments

  1. Joey says:

    We also can't allow governments to take private land claims away. There are probably thousands of people who have invested in this project and are looking to it for employment and government intervention is overstepping its rights. I think the company is right to be suing the government since they will suffer due to shareholder confidence dropping and potentially have to reduce their workforce to compensate for losses. This is what will drive us into poverty, no one wants to invest in these countries because of the political instability and is the reason why such large populations live in sub-par conditions. Mining companies (in North America) are mandated to have reclamation and environmental plans to protect the areas that they work in, You can't just protest every mining project in the world because of this false perception that you've been fed by the liberal media and the administrations of feel good governments that don't actually care about the working class people in the country.Environmental activists and protection agencies as of late have been doing considerably more harm than good because of their lack of knowledge and determination to "make the world a better place".

  2. Gilles Pilon says:

    Knowledge is now a top value on this planet.
    Why the need for more and more gold? When all the gold will have been pulled from the earth, what will we choose as top value? An arbitrary decision is on the making. We will resort to less and less precious resources and the earth will be left in shambles.
    Knowledge will still be top value, with no collateral damages.

  3. Malcolm Nazareth says:

    Why do I get the sick feeling that my nation USA's name is written in crap all over the Trade Agreement that emboldens mining corporations, such as Tobie Mining and Energy, to sue developing nations, such as Colombia, and wipe out their populations and especially the poor through criminal lawsuits? USA, shame on you! Obama, shame on you for advocating for the TPP which will exponentially spread out the US crap all over the Pacific rim nations. What utter sh*t! Stop it now. Take some tablets and fix your problem. Don't crap all over the globe

  4. Elsa Collins says:

    The Colombian people are already suffering,
    Stop the killing of our people,
    Stop destroying our country, stop polluting the environment, the rivers , the land with the miming activities
    Stop destroying the lives of our Colombian people,
    We need the protection of the international community now,

    A big thank you

    Elsa Collins , Alan Collins and Family

  5. Kev says:

    No company should have the right to sue a Democratic country … Nations have a right to determine their destiny . Enviromental rights trump economic rights .
    The companies are wrong and their Directors and Lawyers should be shot. Go Home USA . Fuck off and die Multinationals. Death to America …. so much evil

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