Mining Injustice Through International Arbitration

Introduction

Across the Global South, and especially in Latin America, international mining companies have used a combination of disturbing tactics to forcibly open mining operations in places where communities have resisted them.

First, they resort to repression. Then, if that fails, they sue governments in international tribunals — which can overrule or punish governments that fail to meet the demands of these corporations. Arbitration suits like this are made possible by international investment agreements, such as the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).

In Guatemala, the U.S. mining firm Kappes, Cassiday & Associates (KCA) relied on repression by private and state security forces to overcome years of local resistance to the El Tambor gold mine. When unwavering community resistance again forced a halt in operations, the company filed a claim in Guatemalan courts complaining the government had failed to protect its investments. The court threw it out.

But now, KCA is using the unjust, international arbitration system to strong-arm the Guatemalan government into green-lighting the unwanted mine — or compensate KCA for hundreds of millions of dollars in unearned profits.

In its $400 million claim, which is currently proceeding at a World Bank Group tribunal, the Nevada-based KCA argues that the Guatemalan government failed to provide adequate protection for KCA’s investment against local resistance. But KCA’s claim omits evidence of how violent police repression against peaceful protestors was used to open its mine.

This report exposes the misrepresentations and omissions in KCA’s claims to the International Center for Settlement of Investment Disputes (ICSID), while highlighting the inherent injustice in the supranational Investor State Dispute Settlement system (ISDS).

Key Findings

The report findings demonstrate that:

1. Instead of respecting legitimate community opposition to its gold-mining project, KCA increased its efforts to build the mine.
2. KCA never lived up to regulatory requirements in Guatemala.
3. KCA’s mine became operational as a result of the violent repression of local communities by private and state armed forces under a corrupt government.
4. KCA leadership has been subject to arrest warrants and criminal investigation in Guatemala.

Locals didn’t want the mine, but KCA didn’t care.

Radius Gold, KCA’s joint venture partner, abandoned the El Tambor project in 2012 and took a $3.8M loss over the clear lack of community support for mining. Radius identified the project as a “problematic asset,” raising questions about why KCA stuck around.

The community protest, known as the “Peaceful Resistance La Puya,” successfully delayed construction work on the mine for two years until police repression enabled the company to access the site in May 2014.

KCA never lived up to local regulatory requirements in Guatemala.

KCA was the only company to be granted an operating permit in 2011, during a presidential moratorium on new mining licenses. An expert reviewer claimed the environmental impact assessment used to obtain this permit was one of the worst they had ever seen. A Guatemalan court also found that KCA never obtained the required municipal construction permit.

The same year, the Ministry of the Environment and Natural Resources undertook an inspection and found that the mine was violating over a hundred labor and environmental law provisions.

In 2017, a Guatemalan court threw out KCA’s claim against authorities for lack of adequate protection. Now, with its leadership under criminal investigation and its mine suspended, KCA is now bringing this same complaint to the World Bank tribunal.

Under the circumstances, the fact that KCA’s suit was admitted by the arbitration panel at all illustrates the injustice of an ISDS system that should not exist in the first place.

Despite unfettered access to Guatemala’s economic, political, and military elites, KCA failed to gain broad community support for its project, secure and maintain the necessary permits to operate, or respect environmental regulations. Rather, legal actions and unwavering community opposition ultimately halted the project.

KCA and its associates should be investigated for violating court orders and human rights. It is also urgent that both the Guatemalan government and KCA respect local opposition to gold mining in defense of clean water and community health, and stop pursuing this harmful project.

Overall, companies should be required to rely on domestic courts to fight their claims, rather than having recourse to arbitration that puts undue pressure on governments and courts. Such claims can interfere with the implementation of decisions, policies, and regulations that are meant to protect people and the environment.

Sample Tweets

New @IPS_DC @Earthworks #MiningInjustice report debunks #NVmining company, KCA, claims that it had community support and respected regulations in $400M suit against #Guatemala: https://ips-dc.org/mining-injustice #StopISDS #NomasTLC Solidarity with #LaPuya

Nuevo informe por @IPS_DC @Earthworks sobre #InjusticiaMinera desmiente empresa minera estadounidense, KCA, que dice tener apoyo comunitario y haber respetado normas en demanda contra #Guatemala por $400M: http://bit.ly/InjusticiaMinera #StopISDS #NomasTLC Solidaridad con #LaPuya

Guatemala court-ordered suspension of a gold mine and ongoing protests at #LaPuya are under attack in $400M arbitration against #Guatemala by #NVmining company. New @IPS_DC @Earthworks #MiningInjustice report: https://ips-dc.org/mining-injustice #StopISDS #NomasTLC #LaPuya

Suspensión de mina de oro por tribunales y protestas permanentes de #LaPuya bajo ataque en arbitraje de $400M contra #Guatemala por minera estadounidense. Nuevo informe sobre #InjusticiaMinera por @IPS_DC @Earthworks: http://bit.ly/InjusticiaMinera #StopISDS #NomasTLC #LaPuya

Sample Facebook Posts

“KCA, a Nevada-based mining company, is suing Guatemala for more than US$400 million over the suspension of El Tambor gold mine long opposed by Peaceful Resistance La Puya.
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KCA claims that it met regulatory requirements, obtained permits, and got community support for the mine, but a new report reveals this couldn’t be further from the truth. https://ips-dc.org/mining-injustice“

“KCA, una empresa minera con sede en Nevada, está demandando a Guatemala por más de US$400M por la suspensión de mina de oro El Tambor, en contra de la cual sigue luchando la Resistencia Pacífica La Puya.
[espacio]
KCA afirma que cumplió con los reglamentos, obtuvo todos los permisos y obtuvo apoyo comunitario para la mina. Nuevo informe revela que esto no podría estar más lejos de la verdad. http://bit.ly/InjusticiaMinera“

“Nevada mining company, KCA, pressured for violent police repression to operate it’s gold mine in Guatemala, but the Peaceful Resistance La Puya would not back down. Now, KCA is suing the Guatemalan government for over US$400M in lost profits. New report debunks KCA’s claims of unfair treatment and lack of adequate police protection: https://ips-dc.org/mining-injustice“

“La empresa minera estadounidense, KCA, presionaba para la violenta represión policial para operar su mina de oro en Guatemala, pero la Resistencia Pacífica La Puya jamás se echó para atrás. Ahora, KCA está demandando al gobierno guatemalteco por más de US$400M en ganancias futuras perdidas. Nuevo informe desmiente las afirmaciones de KCA ante tribunal del Grupo de Banco Mundial sobre el trato injusto y la falta de protección policial adecuada: http://bit.ly/InjusticiaMinera“

Download our Press Release in English or Spanish [PDF]

Media Contacts:

Olivia Alperstein
olivia@ips-dc.org
202-787-5205