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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
ICSID Case No. ARB/09/12
Pac Rim Cayman LLC
Claimant,
v. The Republic of El Salvador
Respondent.
) ) ) ) ) ) ) ) )
THE REPUBLIC OF EL SALVADOR'S COUNTER-MEMORIAL ON THE MERITS
Fiscalía General de la República Foley Hoag LLP de El Salvador
i
TABLE OF CONTENTS
I. Introduction ..........................................................................................................................1
II. Pac Rim's Claims Must Fail Because Pac Rim Did Not Have a Right to a Mining Exploitation Concession or to the Exploration Licenses ...................................................12
A. Pac Rim did not have a right to a Mining Exploitation Concession in El Dorado....................................................................................................................17
1. The legal regime for mining under the Salvadoran Mining Law ...............17
2. Claimant did not comply with the land ownership or authorization requirement ................................................................................................30
3. Claimant did not comply with the requirement to submit a Feasibility Study ........................................................................................60
4. El Salvador did not have a legal obligation to change its Mining Law so that Pac Rim's application could be approved under a new law ..............................................................................................................76
5. Pac Rim did not have a right to continue exploring after the original exploration licenses expired and its application for the concession was pending .............................................................................84
B. Pac Rim did not have a right to apply for and receive other exploration licenses included in its claims ................................................................................86
1. Claimant did not have a right to apply for and receive the exploration licenses in Guaco, Huacuco, and Pueblos ..............................86
2. Claimant did not have a right to a new exploration license in Santa Rita .............................................................................................................89
3. Claimant has not established that it has or ever had any rights in Zamora/Cerro Colorado .............................................................................91
4. Even if Claimant had any valid exploration licenses, they would not be "real property rights in a mineral estate," as Pac Rim claims .........92
III. Pac Rim Was Not Entitled to an Environmental Permit for Exploitation .........................94
A. Realization by the Ministry of Environment that it lacked the capacity to fulfill its obligations to protect the Salvadoran population and the environment ...........................................................................................................94
ii
B. The Ministry of Environment had legitimate concerns about Pac Rim's proposed project specifically ...............................................................................100
1. Comments from the public consultation were "difficult to address" .......103
2. Claimant's dismissive response ................................................................105
3. Claimant's expert report does not address the Ministry's concerns .........108
4. Pac Rim resigned itself to getting the environmental permit through political means ............................................................................111
C. Pac Rim did not earn the necessary social license to operate ..............................115
D. Strategic Environmental Evaluation ....................................................................119
E. Moratorium law still pending...............................................................................123
IV. Pac Rim's Claims Under El Salvador's Investment Law Are Without Merit ..................126
A. The Tribunal's jurisdiction to decide this dispute is limited by the Investment Law ....................................................................................................126
1. The only claims that can be made in an arbitration under Article 15 of the Investment Law of El Salvador are claims regarding the substantive rights and protections included in the Investment Law ........127
2. Salvadoran law is the applicable law to decide the content of the Investment Law's substantive rights and protections ...............................135
3. The Investment Law imposes a significant limitation on investments related to the exploitation of the subsoil ..............................141
4. A three-year statute of limitations applies to Claimant's claims related to the application for the El Dorado concession ..........................143
B. Pac Rim has not alleged any facts and has not made any arguments in support of a claim of breach of Articles 5 or 6 of the Investment Law ...............143
C. The facts alleged by Pac Rim cannot support a claim of breach of Article 8 of the Investment Law .........................................................................................144
D. Pac Rim would not have been able to sustain a claim for expropriation under international law in any event ....................................................................147
1. Pac Rim had no valid mining rights capable of being expropriated under international law ............................................................................148
iii
2. Pac Rim has failed to establish that El Salvador's regulatory conduct constitutes expropriation under international law ......................150
V. Damages ...........................................................................................................................159
A. Pac Rim is not entitled to compensation ..............................................................159
1. There is no causal link between El Salvador's conduct and any harm to Pac Rim, and therefore Pac Rim cannot be compensated for any damages in this arbitration ...........................................................159
B. The applicable law on damages ...........................................................................166
1. Salvadoran law is the applicable law in this arbitration ..........................166
2. Salvadoran law provides a basis for compensation for Claimant's alleged losses ...........................................................................................167
3. Claimant would not be entitled to compensation under general principles of international law .................................................................169
C. Pac Rim's quantum analysis is seriously flawed ..................................................172
1. Valuation methods and assumptions used by Claimant's experts ............172
2. Pac Rim used the wrong valuation methods to calculate damages in this case ....................................................................................................175
3. Pac Rim applied the wrong valuation methods in a seriously flawed manner ..........................................................................................189
D. Claimant is not entitled to prejudgment interest because it is not entitled to compensation .......................................................................................................198
VI. Jurisdictional Issues .........................................................................................................202
A. Reservation of rights with regard to jurisdictional issues already decided ..........202
B. Additional objections to jurisdiction ....................................................................203
1. Jurisdiction for Pac Rim's claims related to mining rights is exclusively reserved to Salvadoran courts ...............................................203
2. Pac Rim's claims related to its application for the El Dorado exploitation concession are time-barred ..................................................207
3. Conclusion on additional objections to jurisdiction.................................210
VII. Conclusion .......................................................................................................................211
iv
VIII. Costs .................................................................................................................................215
A. Claimant's "perfected right" to a concession .......................................................215
B. Claimant's access to ICSID arbitration ................................................................217
C. New frivolous arguments on the merits ...............................................................219
D. Conclusion on costs .............................................................................................220
IX. Request for Relief ............................................................................................................222
v
TABLE OF AUTHORITIES
Laws
Civil and Commercial Procedure Code of El Salvador, Legislative Decree No. 712, Sept. 18, 2008 ....................................................................................................................... 131, 137, 138
Civil Code of El Salvador, Un-numbered Decree, published in the Official Gazette No. 85, Book 8, Apr. 14, 1860, amended by Decree No. 512, published in the Official Gazette No. 236, Book 365, Dec. 17, 2004 ................................................................................... passim
Constitution of the Republic of El Salvador, Legislative Decree No. 38, Dec. 16, 1983, published in the Official Gazette No. 281, Book 234 ...................................................... passim
Environmental Law of El Salvador, Legislative Decree No. 233, published in Official Gazette No. 79, Book 339 of Apr. 5, 1998 amended by Legislative Decree No. 237, published in Official Gazette No. 47, Book 374 of Mar. 9, 2007 ................................... 95, 103
Investment Law of El Salvador, Legislative Decree No. 732, Oct. 14, 1999 ............................... passim
Mining Law of El Salvador, Legislative Decree No. 544, Dec. 14, 1995 (prior to amendment) ........ 17
Mining Law of El Salvador, Legislative Decree No. 544, Dec. 14, 1995, published in the Official Gazette No. 16, Book 330 of Jan. 24, 1996, amended by Legislative Decree No. 475, July 11, 2001, published in the Official Gazette No. 144, Book 352 of July 31, 2001 ............................................................................................................................ passim
Regulations of the Mining Law of El Salvador and its Amendments, Legislative Decree No. 47, June 20, 2003, published in the Official Gazette No. 125, Book 359 of July 8, 2003 .................................................................................................................................. passim
Cases
Amoco International Finance v. Iran, Award No. 310-56-3, 15 Iran-US Claims Tribunal Rep. 189 (1987) .............................................................................................................. 178
Anaconda-Iran Inc. v. The Government of the Islamic Republic of Iran and the National Iranian Copper Industries Company, Interlocutory Award, Award No. ITL 65-167-3, 13 Iran-US Claims Tribunal Rep. 199 (1986) ..................................................... 200
Archer Daniels Midland Company and Tate & Lyle Ingredients Americas Inc. v. The United Mexican States, ICSID Case No. ARB(AF)/04/05, Award, Nov. 21, 2007 ....... 200
Asian Agricultural Products Ltd. v. Republic of Sri Lanka, ICSID Case No. ARB/87/3, Final Award, June 27, 1990 ............................................................................................ 181
Autopista Concesionada de Venezuela, C.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/00/5, Award, Sept. 23, 2003 .......................................................... 182, 200
vi
Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Decision on the Application for Annulment of the Argentine Republic, Sept. 1, 2009 ........................... 135
Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Award, Aug. 27, 2009 ................................................................. 148
Biloune and Marine Drive Complex Ltd. v. Ghana Investments Centre and the Government of Ghana, UNCITRAL, Award on Compensation and Costs, June 30, 1990................................................................................................................................. 179
Biwater Gauff Ltd v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, July 24, 2008 ................................................................................................................... 161
British Claims in the Spanish Zone of Morocco (Spain v. United Kingdom), PCA Case II U.N.R.I.A.A. 615, Award, May 1, 1925 ......................................................................... 200
Case Concerning Elettronica Sicula S.p.A. (USA v. Italy), Judgment of 20 July, 1989 I.C.J. Reports 15.............................................................................................................. 160
Case Concerning the Factory at Chorzów (Germany v. Poland), 1928 P.C.I.J (Series A) No. 17, Judgment (Sept. 13) ........................................................................................... 170
Case No. 309-2001, Constitutional Chamber of the Supreme Court of El Salvador, June 26, 2003............................................................................................................................. 44
Case of James and Others v. The United Kingdom, European Court of Human Rights, Application No. 8793/79, Judgment, Feb. 21, 1986 ....................................................... 131
Case of the S.S. Wimbledon, 1923 P.C.I.J. (Series A) No. 1 (Aug. 17) ...................................... 199
CME Czech Republic B.V. (The Netherlands) v. The Czech Republic, UNCITRAL, Final Award, Mar. 14, 2003 ..................................................................................................... 200
CME Czech Republic B.V. v. The Czech Republic, UNCITRAL, Partial Award, Sept. 13, 2001......................................................................................................................... 155, 156
CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Ad Hoc Committee on the Application for Annulment of the Argentine Republic, Sept. 25, 2007 ........................................................................ 135, 187
Compañia de Aguas del Aconquija AS and Vivendi Universal SA v. The Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, July 3, 2002 ............... 135
Constitutional Chamber of the Supreme Court of Justice, Final Judgment No. 2-92, July 26, 1999............................................................................................................................. 46
Desert Line LLC v. The Republic of Yemen, ICSID Case No. ARB/05/17, Award, Feb. 6, 2008................................................................................................................................. 200
vii
Duke Energy Electroquil Partners and Electroquil S.A. v. Republic of Ecuador, ICSID Case No. ARB/04/19, Award, Aug. 18, 2008 ................................................................. 200
Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Award, Nov. 13, 2000 .................................................................................................................. 158
GAMI Investments, Inc. v. The Government of the United Mexican States, UNCITRAL, Final Award, Nov. 15, 2004 ............................................................................................ 152
Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, Sept. 16, 2003 ........ 148
Glamis Gold, Ltd. v. United States of America, UNCITRAL, Award, May 14, 2009 ............... 152
Hoffland Honey Co. v. National Iranian Oil Co., Award No. 22-495-2, 2 Iran-US Claims Tribunal Rep. 41 (1983) .................................................................................................. 161
Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Decision of the Ad Hoc Committee on the Application for Annulment of Mr. Soufraki, June 5, 2007 .................................................................................................... 135
Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, Aug. 2, 2006 ....................................................................................................... 132
Industria Nacional de Alimentos, S.A. and Indalsa Perú ("Lucchetti"), S.A. v. The Republic of Peru, ICSID Case No. ARB/03/4, Decision on Annulment, Sept. 5, 2005................................................................................................................................. 135
International Systems & Controls Corporation v. National Iranian Gas Company, National Iranian Oil Company, the Islamic Republic of Iran, Award No. 464-494-3, 24 Iran-US Claims Tribunal Rep. 47 (1990) .............................................................. 200
Klöckner v. The Republic of Cameroon, ICSID Case No. (ARB/81/2), Decision on the Application for Annulment Submitted by Klöckner Against the Arbitral Award, Oct. 21, 1983 ................................................................................................................... 135
M.C.I. Power Group L.C. and New Turbine, Inc. v. The Republic of Ecuador, ICSID Case No. ARB/03/6, Decision on Annulment, Oct. 19, 2009 ........................................ 135
Marvin Roy Feldman Karpa v. The United Mexican States, ICSID Case No. ARB(AF)/99/01, Award, Dec.16, 2002 .................................................. 154, 155, 156, 200
McCollough & Company, Inc. v. The Ministry of Post, Telegraph and Telephone, The National Iranian Oil Company and Bank Markazi, Award No. 225-89-3, 11 Iran-US Claims Tribunal Rep. 3 (1986) ................................................................................. 200
Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1, Award, Aug. 30, 2000 ............................................................................................. 154, 179
viii
Methanex Corporation v. United States of America, NAFTA, Final Award, Aug. 3, 2005154, 155
Mohammad Ammar Al-Bahloul v. Tajikistan, SCC Case No. 064/2008, Final Award, June 8, 2010............................................................................................................................. 162
Mr. Franck Charles Arif v. Republic of Moldova, ICSID Case No. ARB/11/23, Award, Apr. 8, 2013 ............................................................................................................ 180, 200
Mr. Patrick Mitchell v. The Democratic Republic of Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, Nov. 1, 2006 ...................... 135
MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award, May 25, 2004 ................................................................................... 158
Nordzucker v. The Republic of Poland, UNCITRAL, Third Partial and Final Award, Nov. 23, 2009................................................................................................................... 161, 162
Norwegian Shipowners' Claims (Norway v. United States of America), PCA Case I U.N.R.I.A.A. 307, Award, Oct. 13, 1922 ....................................................................... 200
Occidental Exploration and Production Company (OPEC) v. The Republic of Ecuador, LCIA Case No. UN 3467, Final Award, July 1, 2004 .................................................... 200
Occidental Petroleum Corporation and Occidental Exploration and Production Company (OPEC) v. The Republic of Ecuador, ICSID Case No. ARB/06/11, Award, Oct.5 2012 .......................................................................................................... 188
Otis Elevator Company. v. The Islamic Republic of Iran and Bank Mellat (formerly Foreign Trade Bank of Iran), Award No. 304-284-2, 14 Iran-US Claims Tribunal Rep. 283 (1987) .............................................................................................................. 160
Phelps Dodge Corp. and Overseas Private Investment Corp. v. The Islamic Republic of Iran, Award No. 217-99-2, 10 Iran-US Claims Tribunal Rep. 121 (1986) .................... 187
Pope & Talbot Inc. v. The Government of Canada, NAFTA, Interim Award, June 26, 2000................................................................................................................................. 152
PSEG Global Inc and Konya Ilgin Elektrik Üretim ve Ticaret Limited Širketi v. Republic of Turkey, ICSID Case No. ARB/02/5, Award, Jan. 2007.............................................. 154
R.J. Reynolds Tobacco Company v. The Government of the Islamic Republic of Iran and Iranian Tobacco Company (ITC), Award No. 145-35-3, 7 Iran-US Claims Tribunal Rep. 181 (1984) ................................................................................................ 200
Ronald S. Lauder (United States) v. The Czech Republic, UNCITRAL, Final Award, Sept. 3, 2001 ................................................................................................... 151, 155, 156
ix
RosInvestCo UK Ltd. v. The Russian Federation, SCC Case No. 079/2005, Final Award, Sept. 12, 2010 ................................................................................................................. 200
Rudloff Case (Merits), US-Venezuela Mixed Claims Commission, (1903-5) IX U.N.R.I.A.A. 255 ............................................................................................................ 178
S.D. Myers, Inc. v. Government of Canada, UNCITRAL, Partial Award on the Merits, Nov. 13, 2000 .......................................................................................................... 155, 156
SAIPEM S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/7, Award, June 30, 2009 ..................................................................................................... 200
Saluka Investments BV v. The Czech Republic, UNCITRAL, Partial Award, Mar. 17, 2006......................................................................................................................... 155, 156
SD Myers Inc. v. Canada, UNCITRAL, Second Partial Award, Oct. 21, 2002 ......................... 161
Shufeldt claim (Guatemala, United States of America), PCA Case II U.N.R.I.A.A. 1079, Award, July 24, 1930 ...................................................................................................... 178
Sistem Mühendislik Inşaat Sanayi ve Ticaret A.Ş. v. Kyrgyz Republic, ICSID Case No. ARB(AF)/06/1, Award, Sept. 9, 2009 ..................................................................... 188
Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, Case No. ARB/84/3, Award on the Merits, May 20, 1992..................................................... 181, 200
Starrett Housing Corporation, Starrett Systems, Inc., Starrett Housing International, Inc. v. The Government of the Islamic Republic of Iran, Bank Markazi Iran, Bank Omran, Bank Mellat, Award No. 314-24-1, 16 Iran-US Claims Tribunal Rep. 112 (1987) .............................................................................................................................. 200
Swisslion DOO Skopje v. The Former Yugoslav Republic of Macedonia, ICSID Case No. ARB/09/16, Award, July 6, 2012.................................................................................... 148
Sylvania Technical Systems Inc. v. The Government of the Islamic Republic of Iran, Award No. 180-64-1, 8 Iran-US Claims Tribunal Rep. 298 (1985) ............................... 200
Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID Case No. ARB(AF)/00/2, Award, May 29, 2003 ........................................................... 155, 156, 183
Total S.A. v. The Argentine Republic, ICSID Case No. ARB/04/01, Decision on Liability, Dec. 27, 2010 .................................................................................................................. 155
Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB/AF/00/3, Award, Apr. 30, 2004 ..................................................................................................... 158
Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Award, Dec. 8, 2000 ............................................................................................................ 181, 183
x
Wena Hotels Ltd. v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Annulment, Feb. 5, 2002................................................................................................. 171
Other Authorities
Andrew Newcombe, The Boundaries of Regulatory Expropriation in International Law, Transnational Dispute Management, July 2007 .............................................................. 156
Bin Cheng, General Principles of International Law as Applied by Courts and Tribunals (2006) .............................................................................................................................. 160
Borzu Sabahi, Compensation and Restitution in Investor-State Arbitration: Principles and Practice (2011) ................................................................................................................ 160
Christoph Schreuer, Consent to Arbitration, in The Oxford Handbook of International Investment Law (P. Muchlinski et al. eds., 2d ed. 2009) ............................................... 206
Christopher Dugan et al., Investor-State Arbitration (2008) ...................................... 148, 152, 155
Ian Brownlie, Principles of Public International Law (6th ed. 2003) ......................................... 150
Mark Kantor, Valuation for Arbitration: Compensation Standards, Valuation Methods and Expert Evidence (2008) ............................................................................ 185, 186, 189
Pamela B. Gann, The U.S. Bilateral Investment Treaty Program, 21 Stan. J. Int'l L. 373 (1985) .............................................................................................................................. 151
Report of the International Law Commission on the work of its fifty-third session, "Draft Articles on Responsibility of States for Internationally Wrongful Acts, with commentaries" U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (2001) . passim
Sergey Ripinsky and Kevin Williams, Damages in International Investment Law (2008) ... passim
Statement of Purpose ("Exposición de Motivos") of the Investment Law of El Salvador .. 133, 134
Suzanne A. Spears, The Quest for Policy Space in a New Generation of International Investment Agreements, 13(4) J. of Int'l Economic L. 1037 (2010) ............................... 151
Thomas W. Wälde and Borzu Sabahi, Compensation, Damages and Valuation in International Investment Law, Transnational Dispute Management, Feb. 10, 2007 ...... 186
Vaughan Lowe, Regulation or Expropriation? 55(1) Current Legal Problems 447 (2002) ...... 151
World Bank, Legal Framework for the Treatment of Foreign Investment, Report to the Development Committee and Guidelines on the Treatment of Foreign Direct Investment: Volume II (1992) ......................................................................................... 178
Zachary Douglas, The International Law of Investment Claims (2009) ............................ 148, 149
xi
Timeline for Pac Rim Cayman v. El Salvador Dispute 01/24/1996 Mining Law enters into force, with a maximum exploration license period of 5
years. (CL-210) 07/10/1996 Kinross receives 3-year exploration license for El Dorado Norte. (C-326) 07/23/1996 Kinross receives 3-year exploration license for El Dorado Sur. (C-317) 09/10/1997 Pac Rim Cayman LLC ("PRC") is formed by Pacific Rim Mining Corp.
("PRMC") as a holding company incorporated in the Cayman Islands. (C-12) 07/15/1999 Kinross obtains 2-year extension for both El Dorado exploration licenses. This
brings the total time for both licenses to 5 years, the maximum at the time. The expiration of the El Dorado licenses was thus going to be in July 2001. (C-329, C-330)
03/--/2000 Dayton Acquisitions, a subsidiary of Dayton Mining Corporation, merges with
Mirage Resource Corporation, acquiring its Salvadoran interests. (Memorial, para. 72)
06/28/2001 Legislative Decree No. 456 extends all exploration licenses for that year until
December 31, 2001. (CLA-211) 07/11/2001 Amendment to the Mining Law enters into force, extending the maximum
period of exploration from 5 to 8 years. (Memorial, para. 76) 12/10/2001 Kinross obtains second 2-year extension for both El Dorado exploration
licenses. (C-268, C-269) 04/--/2002 PRMC merges with Dayton Mining Corporation, Inc., acquiring Kinross El
Salvador and the El Dorado exploration licenses. (Memorial, para. 128) 01/--/2003 Kinross El Salvador changes its name to Pacific Rim El Salvador, S.A. de C.V.
("PRES"). (NOA, para. 50) 12/18/2003 PRES obtains third extension of the El Dorado exploration licenses. This
extension is for one year, beginning January 1, 2004. This brings the total length of the licenses period to eight years, the limit. (C-13)
09/08/2004 PRES submits first Environmental Impact Study ("EIA") for El Dorado to the
Salvadoran Ministry of the Environment ("MARN"). (Memorial, para. 175) 12/15/2004 PRES writes to MARN letting the Minister know that more than 60 days have
passed since original El Dorado EIA was submitted with no response and that the company is suffering damages as a result of this delay. (R-55)
xii
12/22/2004 PRES submits its application for the exploitation concession to the Salvadoran Ministry of the Economy ("MINEC"). (R-2)
01/01/2005 The El Dorado Norte and El Dorado Sur Exploration Licenses finally expire. 01/21/2005 PRES submits a final Pre-Feasibility Study based only on the Minita deposit. (C-
9) 02/01/2005 MARN responds to first El Dorado EIA with observations. (C-133) 4/21/2005 PRES responds to MARN’s observations "Vol. IV." (C-136) 5/05/2005 PRES's local counsel submits memorandum arguing that the land ownership or
authorization requirement should not apply for underground mining concessions. (R-30)
06/01/2005 Dorado Exploraciones SA de CV ("DOREX") is formed in El Salvador and
added to PRC's corporate structure. 06/28/2005 Bureau of Mines informs Pac Rim that the office of the Secretariat for
Legislative and Judicial Affairs agrees with the interpretation of the Ministry of Economy and the Bureau of Mines regarding the land ownership or authorization requirement. Fred Earnest reported to Tom Shrake that surface owner authorization was one of the main things missing from PRES's concession application and that obtaining it was "a nearly (if not totally) impossible task." (C-291)
07/27/2005 Ericka Colindres leaves MARN unable to finalize MARN’s comments on the El
Dorado EIA. (Memorial, para. 242) 09/08/2005 Second EIA for El Dorado project submitted to MARN in response to
comments and further observations from MARN in April and August 2005. (C-8)
09/23/2005 Public consultation period opens for El Dorado EIA. (C-152) 09/28-29/2005 DOREX obtains exploration licenses for Huacuco, Pueblos, and Guaco.
(Memorial, para. 210) 09/--/2005 MINEC considered trying to amend the Mining Law to exclude underground
mines from the land ownership or authorization requirement – what Pac Rim needed for its application to proceed – but this did not happen. (R-35, C-400)
10/--/2005 Dr. Robert Moran issues report concluding that the El Dorado exploitation EIA
would not be acceptable to regulatory agencies in most developed countries. (C-165)
xiii
01/--/2006 Ericka Colindres joins PRES as Supervisor of Environmental Protection. (Colindres Witness Statement, para. 3)
01/16/2006 PRES submits EIA for Santa Rita exploration; the environmental permit for
exploration is received in June. (Memorial, paras. 326, 329) 02/17/2006 DOREX submits EIA for Huacuco exploration. (Memorial, para. 341) 03/29/2006 MARN officials meet with F. Earnest, E. Colindres, and L. Medina of PRES to
discuss observations from public comment period on El Dorado EIA. (C-163) 06/--/2006 MARN official allegedly told Claimant that all mining projects are "en stop." (C-
168) 07/5-6/2006 MARN revokes Commerce Group's environmental permits after inspection
found lack of compliance with the terms of the permits. 07/09/2006 Newspaper quotes Minister of Environment Barrera stating that the Ministry
will not authorize any mining project that will harm the environment. (R-120) 07/14/2006 MARN provides additional observations on El Dorado EIA. (C-169) 08/11/2006 Dr. Manuel Pulgar-Vidal, hired as a consultant, submits his final report
regarding mining in El Salvador, concluding that the country is currently not equipped to move forward with mining and recommending that the country complete a Strategic Environmental Evaluation before making a decision about whether or not to develop mining and, if so, under what conditions. (R-129)
09/12/2006 PRES sends response to observations from public consultation. (C-170) 10/02/2006 MINEC writes to PRES giving it 30 days to provide the documents missing
from its exploitation concession application: documentation of land ownership or authorization, an environmental permit, and a technical, economic feasibility study. (R-4)
10/25/2006 PRES sends responses to MARN’s “Final Observations.” (C-171) 11/07/2006 PRES responds to MINEC's October 2nd letter, claiming just impediment with
regard to the environment permit, but does not provide documentation of land ownership or authorization for the area requested or a feasibility study. (R-5)
11/09/2006 Pac Rim admitted in a news release that it may not be able to get the concession
until the Mining Law was changed. (C-309) 12/04/2006 MINEC responds to PRES's November letter, giving PRES 30 days to turn in its
Environmental Permit. (R-6)
xiv
12/05/2006 PRES submits water treatment plant proposal in response to Ministry's July observations. (C-174)
12/13/2006 PRMC announces suspension of drilling at Santa Rita because of local
opposition. (C-263) The suspension continues into 2008. 01/--/2007 The 30-day period under the law for PRES to respond to the Ministry of
Economy's warning letters runs out without PRES having submitted the missing requirements.
05/07/2007 At a meeting with Minister of Economy and Minister of Environment, all
mining companies are told that "all mining activity in the country would be halted until such time as an Evaluación Ambiental Estratégica . . . of the mining industry was conducted." (Memorial, para. 298)
06/24/2007 Minister of Environment Carlos Guerrero quoted in news report confirming that
the Ministry would not be granting concessions until a study of the potential effects of mining was completed. (R-122)
08/07/2007 DOREX submits EIA for Guaco. (Memorial, para. 350) 08/17/2007 DOREX submits EIA for Pueblos. (Memorial, para. 350) 10/24/2007 By this date, Claimant had hired its international arbitration counsel and C&M
Capitolink became a registered lobbyist for Claimant in the United States. (R-128, R-118)
11/--/2007 Claimant supports a New Mining Law in El Salvador that would change the
requirements it had not met to obtain an exploitation concession. (R-36) 12/11/2007 PRC is de-registered in the Cayman Islands. (R-68) 12/13/2007 Pac Rim Cayman LLC is registered as a limited liability company in Nevada.
(R-69) 03/11/2008 According to a press report, President Saca urges caution regarding mining
exploitation, saying that the legislature should study the issue. (C-1) 11/24/2008 PRES, on the verge of submitting its Notice of Intent, writes to MARN asking
for the status of its environmental permit request. (Memorial, para. 302) 12/04/2008 MARN responds to the request for a status update by sending observations
regarding the water treatment plant. (C-180) 12/09/2008 PRC files Notice of Intent to submit a claim to arbitration under CAFTA.
xv
02/--/2009 PRMC decided to defer completion of the Feasibility Study that it had been working on since 2006. (R-20)
04/30/2009 PRC files Notice of Arbitration.
07/14/2009 Santa Rita exploration license expires. (R-23)
07/17/2009 PRES attempts to request an extension of the four year Santa Rita exploration license. (R-23)
07/20/2009 MINEC tells PRES that the Santa Rita license expired on the 14th and cannot be renewed after that date. (R-23)
07/22/2009 DOREX reapplies for the expired Santa Rita exploration license. (Memorial, para. 334)
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an exploi
explorati
explorati
4
speculati
areas as i
rather tha
to as muc
NTRODUC
This c.
vador when
y then decide
Instea.
on to try to fo
right. It is n
ompany's fai
g "lost profit
When.
ion licenses h
d could not b
lf years to co
xploitation c
to concentra
itation conce
ion. Pacific
ion areas for
Instea.
ive "two-trac
it attempted
an focus on f
ch land as po
CTION
case is about
time was run
ed to make a
ad of acceptin
orce the Gov
ow trying to
iled gamble
s" based on
n Pacific Rim
held by its p
e extended p
onduct the ex
concession in
ate its time, m
ession for a s
Rim could h
which Pacif
ad, Pacific R
ck strategy,"
to prepare th
fulfilling the
ossible for fu
t a Canadian
nning short
a big gamble
ng the conse
vernment to
o convince th
and, in fact,
property rig
m went to El
predecessors,
past January
xploration w
n that area.
money, and
small, well-u
have focused
fic Rim was
Rim made a c
engaging in
he required m
e legal requir
uture explora
1
n mining com
to apply for
and failed.
equences of
grant it a go
his Tribunal
to pay it a w
ghts the comp
Salvador in
, granted in
y 1, 2005. Th
work necessa
Pacific Rim
effort on com
understood a
d on the "Min
able to com
conscious de
n new explor
materials for
rements for
ation. Pacifi
mpany that p
a mining ex
its decisions
old mining co
to order the
windfall from
pany never h
April 2002,
1996, would
his meant th
ary to prepare
m could have
mpleting the
area within t
nita" deposi
mplete even a
ecision to em
ration activit
r a concessio
a smaller are
fic Rim want
urchased ex
xploitation co
s, the compa
oncession to
people of E
m the nationa
had.
, it knew tha
d soon reach
hat Pacific Ri
e the applica
made the re
e work neces
the vast area
t, the only d
a pre-feasibil
mbark on a ri
ties in the ex
on applicatio
ea, sought to
ted to contin
xploration rig
oncession. T
any started th
o which it ne
El Salvador to
al treasury b
at the two
the eight-ye
im only had
ation for a
easonable
ssary to appl
a licensed for
deposit in the
lity level stu
sky and high
xpiring licen
on. Pacific R
o stake its cla
nue exploring
ghts
The
his
ever
o pay
by
ear
two
ly for
r
e
udy.
hly
nse
Rim,
aim
g the
expiring
acquiring
struggled
have bee
5
explorati
concessio
considera
would no
the Minit
everythin
company
"formalit
6
Salvador
to compl
to submit
applicatio
time limi
additiona
officials
the requi
license area
g new explor
d to meet the
n the sole ob
As a r.
ion, Pacific R
on area, faili
ation. In fac
ot have been
ta deposit. B
ng. Pacific R
y's failure to
ty" that coul
Pacifi.
ran Governm
ete its applic
t an incompl
on without r
its to correct
al two years
also tried to
rement to sh
s by includin
ration licens
e requiremen
bject of its at
result of its d
Rim submitt
ing to fulfill
ct, because o
able to mee
But Pacific R
Rim expecte
comply with
d not stand i
ic Rim also m
ment officials
cation for the
lete applicat
review for al
t deficiencies
to try to com
accommoda
how land ow
ng a large un
es to engage
nts for its app
ttention.
decision to st
ed an incom
the minimum
of its risky an
et the require
Rim was not
d the Govern
h the relevan
in its way.
misunderstoo
s, who went
e concession
ion for the c
lmost two ye
s in the appl
mplete a Fea
ate Pacific R
wnership or a
2
nexplored ar
e in explorati
plication for
take out as m
mplete applic
m requireme
nd speculativ
ements even
interested in
nment to gra
nt legal prov
od the good
out of their
n. These Go
concession in
ears, to avoid
ication. Thi
sibility Stud
Rim with ano
authorization
rea in its requ
ion activitie
r the exploita
much land as
ation for an
ents to have
ve "two-trac
for a smalle
n a smaller c
ant it rights a
visions. It vi
will and goo
way to help
overnment of
n December
d triggering
is gave Pacif
dy, but it still
other legal re
n from the lan
uested conce
s elsewhere,
ation conces
s possible fo
unreasonabl
its applicati
k strategy,"
er concession
concession; i
and permits
ewed the law
od intentions
Pacific Rim
fficials allow
of 2004 and
the Mining L
fic Rim clos
l failed to do
equirement i
ndowners fo
ession and
, even as it
sion that sho
or future
ly large
on admitted
Pacific Rim
n only cover
it wanted
regardless o
w as a
s of multiple
m be in a pos
wed Pacific R
d held the
Law's mand
e to an
o so. These
it could not m
or the reques
ould
d for
m
ring
of the
e
ition
Rim
atory
meet,
sted
concessio
meet the
7
Governm
Governm
change it
El Salvad
8
change th
strategy a
with. Pa
the Unite
tried to e
But the la
to the req
9
the laws
obligatio
ICSID ca
has the le
This self-
the sole i
on area, by a
requirement
Inste.
ment officials
ment of El Sa
ts laws, so th
dor's Govern
But th.
he relevant p
and drafted a
cific Rim hi
ed States to p
nlist the assi
aw was not p
quirements o
What .
of El Salvad
n to change
ase in which
egal obligati
f-evident prin
instrument u
attempting to
t.
ead of apprec
s made to he
alvador, had
hat Pacific R
nment officia
hese officials
provision of
a new law th
red lobbyist
put pressure
istance of Pr
passed and a
of the Mining
Pacific Rim
dor and neith
its laws to a
El Salvador
on to make i
nciple is also
under which
o change the
ciating the e
elp it, Pacific
a legal oblig
Rim could ob
als to bend to
s from the Ex
the law as P
hat reversed
s in El Salva
on El Salva
resident Saca
as a result Pa
g Law in for
m still fails to
her El Salvad
accommodat
r was a respo
its investmen
o recognized
this arbitrati
3
e Mining Law
xtraordinary
c Rim has ac
gation to do
btain the con
o its whims.
xecutive Bra
Pacific Rim w
in its favor a
ador to gain
dor to accom
a to get its n
acific Rim's
rce at the tim
o understand
dor nor any o
e a foreign i
ondent and p
nt in accorda
d in the text o
ion proceeds
w so that Pac
y efforts that
cted as if the
whatever w
ncession it w
anch of Gov
wanted. So P
all the requir
legislative s
mmodate the
new law thro
concession a
me Pacific Ri
is that it wa
other countr
investor. As
prevailed, it
ance with th
of the Invest
s.
cific Rim's a
t these Salva
ese officials,
as necessary
wanted. Pacif
vernment wer
Pacific Rim
rements it co
support for it
e company.
ugh the Nati
application r
im went to E
as obligated t
ry in the wor
s established
is the foreig
he laws of the
tment Law o
application c
adoran
and the enti
y, including
fic Rim expe
re unable to
changed its
ould not com
ts new law a
Pacific Rim
ional Assem
remained sub
El Salvador.
to comply w
rld has a lega
d in another
gn investor w
e host State.
of El Salvado
could
ire
ected
mply
and in
m also
mbly.
bject
with
al
who
or,
1
Pac Rim
El Salvad
CAFTA
phase, ex
of El Salv
1
value of
Salvador
mineral d
never had
allow for
1
been defi
to bring a
was not l
explorat
Rim and
not gran
1 For easeto the comCayman a2 Four of tfor as a mdeposits woutside thexploratio
Pacifi0.
Cayman ("P
dor with the
claims were
xclusively ba
vador.
Pac R1.
six undergro
r.2 Pac Rim
deposits that
d an applicat
r their extrac
This c2.
ined and ans
an early end
legally entit
tion licenses
d is not liabl
nting new en
e of reference,mpanies, evenacting in El Sa
the six deposmining exploitwere in explorhe original El on licenses an
ic Rim initiat
Pac Rim") as
threat of a C
dismissed f
ased on the j
Rim comes to
ound gold an
seeks this $3
t are still und
tion for a mi
ction.
case is simpl
swered since
to a claim th
tled to a min
s included in
le for any al
nvironmenta
, we will use
n though it waalvador.
its involved intation concessration areas oDorado explo
nd deposits.
ted this arbit
s the claiman
CAFTA arbi
for lack of ju
urisdiction t
o this Tribun
nd silver dep
301 million b
derground, in
ining exploit
le. In fact, th
e 2010, when
hat, in El Sa
ning exploit
n its claims.
lleged dama
al permits f
"Claimant" aas the Canadia
n Pac Rim's csion, called thoutside of thatoration licens
4
tration in Ap
nt,1 after its a
tration did n
urisdiction, th
the Tribunal
nal seeking a
posits plus tw
based on a th
n expired ex
tation conce
he key issue
n El Salvado
alvador's view
tation conce
El Salvado
ages as a res
for explorat
nd "Pac Rim"an parent, Pac
claims were inhe "El Doradot 12.75 km2 are areas. See
pril 2009, us
attempt to in
not work. Fo
his arbitratio
found it had
an award for
wo early exp
heory that it
xploration are
ssion admitt
to be decide
or filed its Pr
w, is devoid
ession and h
or breached
sult of not g
tion. This C
" throughout cific Rim Min
nside an area o concession area. The twomap on page
sing a shell s
ntimidate the
our years lat
on proceeds
d under the I
$301 millio
loration area
t has propert
eas, even tho
ted, much le
ed in this arb
reliminary O
d of legal me
has no right
d no legal du
granting the
Counter-Mem
the Counter-Mning Corp., an
of 12.75 km2
application." o early explora
16 for the loc
subsidiary ca
e Governmen
er, and after
to the merits
Investment L
on, as the alle
as in El
ty rights over
ough Pac Ri
ss awarded,
bitration has
Objections try
rit: Pac Rim
ts in the
uty toward
e concession
morial
Memorial to rnd not Pac Ri
2 Claimant ap The other twation areas arcations of the
alled
nt of
r all
s
Law
eged
r the
m
to
s
ying
m
Pac
n and
refer im
pplied wo re e
demonstr
by any co
1
Section,
El Salvad
exploitat
requirem
regard to
provide e
requested
technical
14
arbitratio
and Salva
concessio
Esperanz
1
omission
included
1
to believe
property
discovery
rates that in
onduct of El
Sectio3.
El Salvador
dor demonst
ion concessi
ments to obtai
o the environ
evidence of o
d for the con
l and econom
El Sal4.
on are now c
adoran law e
on. As a res
za fail.
El Sal5.
ns of the Gov
in its claims
To sup6.
e that two re
rights over m
y. Regardle
fact Pacific
l Salvador. A
on II is the m
demonstrate
trates that Pa
ion in El Dor
in the conce
nmental perm
ownership o
ncession. Se
mic justificat
lvador's argu
onfirmed by
experts. The
sult, Pac Rim
lvador also s
vernment cau
s.
pport its cas
epealed mini
mineral depo
ss of what th
Rim's losses
As a result, a
most importa
es that all of
ac Rim's clai
rado must fa
ssion, indep
mit. First, Pa
r authorizati
econd, Pac R
tion for the c
uments durin
y recognized
ey each conf
m's claims rel
shows that P
used it any h
e on the mer
ing codes fro
osits located
hese old min
5
s were cause
all of Pac Ri
ant Section o
f Pac Rim's c
ims related to
ail because P
endent of an
ac Rim did n
ion from the
Rim did not s
concession fo
ng the Prelim
d mining exp
firm that Pac
lated to Min
ac Rim cann
harm with re
rits and for l
om El Salvad
d in explorati
ning codes fr
ed by its own
im's claims m
of this Count
claims must
o its applica
Pac Rim did
ny action or i
not comply w
e owners of t
submit a feas
for which it w
minary Objec
perts, interna
c Rim did no
nita, South M
not sustain a
espect to the
lost profits, P
dor uphold i
ion areas by
rom 1881 an
n actions and
must be dism
ter-Memoria
fail for lack
ation for a m
not meet the
inaction by E
with the lega
the surface o
sibility study
was applying
ctions Phase
ational minin
ot have a righ
Minita, Bals
any claims th
other explor
Pac Rim urg
its argument
the mere fac
nd 1922 migh
d decisions, n
missed.
al. In this
of legal mer
ining
e legal
El Salvador
al requireme
of the area
y to provide
g.
e of this
ng law exper
ht to the
amo, and N
hat any acts o
ration licens
ges the Tribu
that it acqui
ct of their
ht have said
not
rit.
with
ent to
the
rts,
Nueva
or
ses
unal
ired
when the
investme
codes, El
relevant t
that any m
pursuant
provision
party, inc
permits a
exploitat
receive s
1
legal righ
expired o
the miner
exploitat
1
Guaco, H
company
with the
Mining L
obtaining
had been
ey were in fo
ent in 2002 a
l Salvador's
times for Pa
mineral depo
to a mining
ns of the Min
cluding Pac
a private inve
ion concessi
uch a conce
El Sal7.
ht to continu
on January 1
ral deposits
ion concessi
With r8.
Huacuco, and
y had a right
expired expl
Law and the
g new explor
n held by any
orce, they we
and when Pac
Constitution
c Rim's inve
osits in the s
exploitation
ning Law. T
Rim, to acqu
estor to acqu
ion, but, as in
ssion.
lvador furthe
ue exploring
, 2005. This
that it contin
ion must fail
regard to the
d Pueblos, E
to obtain the
loration licen
Mining Reg
ration licens
y other comp
ere not the la
c Rim applie
n, Mining La
estment, clea
subsoil conti
n concession
Thus it is not
uire property
uire rights to
ndicated, Pa
er demonstra
in the El Do
s is an additi
nued to explo
l.
e deposits lo
El Salvador d
ese new exp
nses of El D
gulations pro
es that inclu
pany affiliate
6
aw of El Salv
ed for the co
aw, and Inve
arly provide
nue to belon
n granted by
t possible un
y rights in m
o extract min
ac Rim was n
ates that neit
orado area af
ional reason
ore in the 12
cated in the
demonstrates
ploration lice
Dorado Norte
ohibited Pac
uded any area
ed with Pac R
vador when
oncession in
estment Law
that the sub
ng to the Stat
the State in
nder current
mineral depos
nerals upon t
never able to
ther Pac Rim
fter the origi
n why all of P
2.75 km2 are
new explora
s that neither
enses to the e
e and El Dor
Rim and any
as of expired
Rim. The tw
Pac Rim ma
2004. Cont
w that were in
soil belongs
ate until they
accordance
Salvadoran
sits in El Sal
the granting
o meet the re
m nor its sub
inal explorat
Pac Rim's cl
ea of the requ
ation license
r Pac Rim no
extent that th
rado Sur. Th
y affiliated c
d exploration
wo mineral d
ade its
trary to those
n force at all
to the State
y are extracte
with the
law for a pri
lvador. The
of an
equirements
sidiaries had
tion licenses
laims related
uested
es known as
or any affilia
hey overlapp
he Salvadora
company fro
n licenses th
deposits loca
e old
l
and
ed
ivate
law
to
d a
d to
ated
ped
an
om
hat
ated
in those n
arbitratio
and El D
those dep
not inclu
no legal b
1
the licens
explorati
for a new
without h
2
Pac Rim
Therefor
2
this arbit
However
argument
2
environm
regarding
applicatio
2007. El
new explora
on (Nance D
orado Sur ex
posits when
de those dep
basis for Pac
With r9.
se expired in
ion of the are
w exploration
having appli
Finall0.
has not pres
e, Pac Rim c
The fa1.
ration. El S
r, for the sak
ts.
Sectio2.
mental permi
g metallic m
ons related t
l Salvador w
ation license
Dulce and Co
xploration li
the old explo
posits in an a
c Rim to mak
regard to any
n 2009 with n
ea. Neither P
n license afte
ed for a rene
ly, with rega
sented any ev
cannot claim
acts set forth
alvador subm
ke of comple
on III discus
it for exploit
mining, includ
to metallic m
would like to
areas that Pa
oyotera), are
censes. By
oration licen
application f
ke claims ab
y deposit in
no allegation
Pac Rim nor
er Pac Rim a
ewal. Thus,
ard to the exp
vidence that
m compensati
h in Section I
mits that the
teness, El Sa
sses the prob
tation and El
ding the susp
mining annou
note, howev
7
ac Rim has i
e located in t
operation of
nses expired
for a mining
bout those tw
the former e
n that the Go
r its subsidia
allowed the i
any such cla
ploration are
t it has any e
ion for a righ
II are suffici
e Tribunal's i
alvador will
blems with P
l Salvador's e
pension of re
unced to all m
ver, that this
included am
the area of th
f the law, Pa
on January
exploitation
wo deposits i
exploration l
overnment h
aries had any
initial explor
aims must b
eas known as
exploration r
ht it has not
ient to dismi
inquiry shou
respond to t
Pac Rim's ap
efforts to de
eview of env
mining comp
issue is unn
mong its claim
he expired E
ac Rim lost a
1, 2005, and
n concession
in this arbitr
license area
had impeded
y right to exp
ration period
e dismissed.
s Zamora/Ce
rights to thos
established.
iss all of Pac
uld, therefore
the rest of Pa
pplication for
evelop a resp
vironmental
panies in El
necessary to
ms in this
El Dorado No
any rights to
d Pac Rim di
n. Thus, there
ration.
of Santa Rit
d Pac Rim's
plore or to ap
d to expire
.
Cerro Colora
se areas.
.
c Rim's claim
e, end here.
ac Rim's
r an
ponsible poli
permit
Salvador in
decide this c
orte
id
e is
ta,
pply
do,
ms in
icy
May
case.
El Salvad
or to exp
rights and
policy wa
damage t
2
under the
24
Salvador
Rim cann
fact that t
claims th
included
Investme
Pac Rim
decide di
statute of
concessio
2
Salvador
2
damages
Constitut
dor's actions
loration lice
d failed to m
as implemen
to Pac Rim.
In Sec3.
e Investment
This a4.
r. Having inv
not escape th
this arbitrati
hat may be br
in the Inves
ent Law plac
must compl
isputes relate
f limitations
on.
El Sal5.
r did not and
In Sec6.
with referen
tion of El Sa
s in this area
enses, becaus
meet the lega
nted. Nothin
ction IV, El
t Law.
arbitration ha
voked jurisd
he consequen
ion only proc
rought in thi
stment Law;
ces limitation
ly with, inclu
ed to explora
applies to C
lvador applie
d could not h
ction V, El S
nce to any va
alvador, the M
did not affe
se Pac Rim h
al requiremen
ng that the G
Salvador sh
as only been
diction under
nces of that
ceeds under
is arbitration
2) Salvador
ns on investm
uding the ex
ation license
Claimant's cla
es these lega
ave breached
Salvador dem
alue it has ca
Mining Law
8
ct Pac Rim's
had, by its ow
nts to acquir
Government d
hows that it d
n allowed to
r the Investm
choice. The
the Investm
n are claims
an law is the
ments related
clusive juris
es and exploi
aims related
al principles
d its obligati
monstrates th
alculated for
w, and the Inv
s rights (or la
wn decision
re additional
did or did no
did not breac
proceed und
ment Law an
e most impor
ment Law of E
regarding th
e applicable
d to mining
sdiction of th
itation conce
d to the appli
to the facts
ions under th
hat Pac Rim
r the deposit
vestment Law
ack thereof)
ns and action
rights befor
ot do could h
ch any of its
der the Inves
nd seeking it
rtant conseq
El Salvador
he rights and
law in this a
activities in
he courts of E
essions; and
ication for th
of this case,
he Investme
cannot poss
ts still underg
w are clear t
to a concess
ns, lost all its
re any such
have caused
obligations
stment Law o
s protection,
quences of th
are: 1) the o
d obligations
arbitration; 3
the subsoil t
El Salvador
4) a three-y
he El Dorado
to show tha
nt Law.
sibly claim
ground. The
that undergr
sion
s
of El
, Pac
he
only
3) the
that
to
year
o
at El
e
ound
mineral d
exploitat
no altern
Salvador
wrong va
2
Salvador
express r
has jurisd
raises tw
proceed t
2
Rim's rea
expectati
including
granted.
eliminate
this Tribu
2
this arbit
and costs
with the
concessio
deposits belo
ion concessi
ative theory
r will finally
aluation meth
Sectio7.
r wants to ma
reservation o
diction to de
o additional
to the merits
Sectio8.
al dispute wi
ion that El S
g change its
But El Salv
e important l
unal will ren
Finall9.
ration justifi
s in this arbit
legal require
on when it k
ong to the St
ion. Pac Rim
of damages
show that th
hods for this
on VI includ
ake it clear t
of its right un
ecide this dis
objections i
s under the In
on VII is the
ith El Salvad
alvador had
Mining Law
vador was no
legal require
nder an awar
ly, in Section
ies an order
tration. Pac
ements. It th
knew it had n
tate until the
m never held
that could r
he valuation
s case, but ar
des a reserva
that it is filin
nder the Con
spute under t
identified aft
nvestment L
e conclusion
dor is that El
an obligatio
w so that Pac
ot under any
ements Pac R
rd creating a
n VIII, El S
that Pac Rim
Rim deman
hen initiated
no such right
9
moment the
d a concessio
result in an a
methods pro
re also appli
ation of right
ng this Count
nvention with
the Investme
fter the Tribu
Law of El Sa
. At the end
l Salvador di
on to do anyt
Rim's appli
legal obliga
Rim could no
legal obliga
alvador will
m reimburse
nded a conce
an arbitratio
t. When it w
ey are extrac
on. El Salva
award of dam
oposed by P
ied in a signi
ts with regar
ter-Memoria
h regard to t
ent Law of E
unal's decisio
alvador.
d of this case
id not live up
thing to acco
ication for th
ation to chan
ot meet, and
ation where n
l demonstrate
El Salvador
ession in El S
on alleging a
was confront
cted pursuan
ador then sho
mages to Pac
Pac Rim not o
ificantly flaw
rd to jurisdic
al on the Me
the Tribunal'
El Salvador.
on that allow
e, it will be c
p to Pac Rim
ommodate P
he concessio
nge its Minin
d Pac Rim ca
none exists.
e that Pac R
r for all of its
Salvador wit
a perfected r
ted with und
nt to a mining
ows that ther
c Rim. El
only are the
wed manner.
ction. El
erits under an
's finding tha
El Salvador
wed this case
clear that Pac
m's unfounde
Pac Rim,
n could be
ng Law to
annot expect
Rim's conduc
s legal expen
thout comply
right to the
disputable
g
re is
.
n
at it
r also
e to
c
ed
that
t in
nses
ying
evidence
concessio
expert te
forced El
than thre
3
changed
whatever
3
facts rega
Salvador
that it ha
of nation
made a st
(and thus
explorati
Strategic
know unt
"by this p
political
but only
3
could hav
in the Prelim
on, Pac Rim
stimony to p
l Salvador to
e years later
The w0.
its statemen
r it believes i
Most 1.
arding when
r's Abuse of P
d no idea the
nality from th
tatement to a
s before the c
ion and explo
Environmen
til March 20
point [May 2
and would th
through poli
Had P2.
ve ended wit
minary Obje
insisted on
prove its com
o suffer the f
r, it has not d
worst part of
nt of the facts
it will take t
notably, dur
n it knew of a
Process obje
ere was a dis
he Cayman I
a newspaper
change of na
oitation wou
ntal Evaluat
008. Pac Rim
2007], the C
herefore not
itical means.
Pac Rim adm
th an award
ection phase
prolonging t
mpliance wit
full expense
delivered on
Pac Rim's b
s and its argu
o survive to
ring an earlie
a dispute wit
ection. Pac R
spute with E
Islands to Ne
r. But now C
ationality), th
uld be proces
ion. This is
m admits for
laimant was
t be resolved
."
mitted this fac
on jurisdicti
10
of this arbit
the arbitratio
h the require
of a defense
its promises
behavior in th
uments at ev
the next pha
er phase of th
th El Salvad
Rim asserted
El Salvador u
evada in Dec
Claimant fre
hat no enviro
ssed for anyo
the very fac
r the first tim
aware that t
d by means o
ct during the
ion. Instead
tration that it
on, promisin
ements of Sa
e on jurisdict
s.
his arbitratio
very phase o
ase.
he arbitratio
dor that allow
d during the
until March 2
cember 2007
eely admits th
onmental pe
one until aft
ct Pac Rim p
me in paragra
the delay PR
of technical e
e jurisdiction
d, El Salvado
t had no righ
ng to provide
alvadoran law
tion and the
on has been h
f this arbitra
on, Pac Rim
wed it to surv
proceedings
2008 (after P
7), when Pre
hat it was to
ermits for me
ter El Salvad
previously cl
aph 300 of it
RES faced at
environment
nal objection
or has been f
ht to a
e evidence an
w. Pac Rim
merits, but m
how it has
ation, doing
asserted spe
vive El
s on jurisdict
Pac Rim's ch
esident Saca
old in May 20
etallic minin
dor conducte
laimed it did
ts Memorial
t MARN wa
tal assessme
n phase, this
forced to pro
nd
m thus
more
ecific
tion
hange
007
ng
ed a
d not
that
s
ent,
case
oceed
to the me
repealed
Mining L
Pac Rim'
millions
abuse of
resources
3
Memoria
exploitat
answer is
erits of this c
mining code
Law, to try to
's continued
of dollars no
the internati
s for the Gov
Havin3.
al, we now tu
ion concessi
s no.
case, where P
es and on a c
o defend an
insistence th
o matter its n
ional arbitral
vernment an
ng presented
urn to the de
ion in El Do
Pac Rim has
convoluted i
indefensible
hat it should
noncomplian
l system has
nd the people
this summa
ecisive issue
rado and to
11
s resorted to
nterpretation
e argument fr
d be granted a
nce with the
resulted in
e of El Salva
ary of El Salv
in this arbitr
the explorat
frivolous ar
n of the wor
from the Prel
a concession
legal require
a considerab
ador.
vador's comp
ration: was P
tion licenses
rguments bas
rd "and" in A
liminary Obj
n or paid hun
ements and n
ble waste of
plete respon
Pac Rim ent
s included in
sed on old,
Article 37 of
jections pha
ndreds of
no matter its
time and
nse to Pac Ri
titled to a mi
n its claims?
the
ase.
s
m's
ining
The
II. PRE
34
Claimant
Claimant
merely ar
Claimant
Claimant
applicatio
3
Dorado P
on Janua
exploitat
and the r
concessio
3
Dorado S
Claimant
Dorado N
expiratio
emergenc
3 Claimanii. 4 Memoria
PAC RIM'S RIGHT TO AEXPLORAT
In its 4.
t spends rem
t lists severa
reas which C
t was nowhe
t only ever s
on did not m
Claim5.
Project,"3 wh
ry 1, 2005 a
ion concessi
emaining 62
on.
Claim6.
Sur, a 75 km
t knew, Dayt
Norte and El
n date."4 Da
cy legislativ
nt Pac Rim Ca
al, para. 72.
CLAIMS MA MINING
TION LICE
300-plus pag
markably littl
al deposits an
Claimant hop
ere near obta
ubmitted on
meet the requ
mant creates c
hen there is r
nd the allege
ion which co
2.25 km2 wh
mant obtained
m2 area origin
ton had obta
l Dorado Sur
ayton convin
e extension
ayman LLC's
MUST FAILG EXPLOITENSES
ge Memoria
e time expla
nd properties
ped to explo
aining (or eve
ne application
uirements of
confusion by
really no suc
ed "Project"
ould not even
ich were not
d the existing
nally granted
ained those li
r Exploration
nced the Gov
to allow for
Memorial on
12
L BECAUSETATION CO
l claiming d
aining the rig
s without ack
ore or to whic
en requestin
n to mine on
the Salvado
y referring to
ch thing. Th
consists of a
n be admitte
t subject to a
g exploration
d in 1996, by
icenses in M
n Licenses w
vernment to
more explor
n the Merits a
E PAC RIMONCESSIO
damages of m
ghts it claim
knowledging
ch Claimant
ng) the rights
ne single dep
oran Mining
o the entire 7
he exploratio
an applicatio
ed for evalua
any applicati
n licenses to
y merging w
March 2000 a
were rapidly
amend the M
ration: in 20
and Quantum,
M DID NOTON OR TO T
more than $3
s to have had
g that many
t hoped to sta
s to mine the
posit in El Sa
Law.
75 km2 area
on rights to th
on for a 12.7
ation under th
ion for an ex
o El Dorado
ith Dayton i
at a time whe
approaching
Mining Law
001, the Gov
, Mar. 29, 201
T HAVE A THE
300 million,
d in El Salva
of these are
ake a claim.
ese deposits.
alvador, and
as "the El
his area expi
75 km2 area
he Mining L
xploitation
Norte and E
n 2002. As
en "the El
g their final
w and grant it
vernment
13 ("Memoria
ador.
d that
ired
Law
El
t an
al") at
extended
President
friendly m
draft so t
be develo
explorati
eight-yea
3
When the
pre-feasib
describe
meet sev
inadmiss
Governm
a result, C
which Cl
3
Claimant
continued
5 Memoria6 Transcri(C-336). 7 MemoriaDorado NAmended
d the maximu
t of Pacific R
mining laws
that El Salva
oped in a tim
ion of the 75
ar exploratio
But C7.
e exploration
bility level p
how Pac Rim
eral requirem
ible and the
ment is in no
Claimant ha
laimant requ
Moreo8.
t had no righ
d exploration
al, para. 76.
ipt, Company
al, para. 140 (Norte and El Dd Mining Law
um explorati
Rim Mining
. . . which w
ador would b
mely way."6
km2 El Dor
on term finall
Claimant faile
n period end
proposal to m
m's 2004 exp
ments of the
requested co
way respon
d no right to
uested a conc
over, follow
hts to the dep
n in the expi
Interview: Ca
("at PRES's rDorado Sur Exw, the Explorat
ion term from
Corp., in a 2
we, as a matt
be open and r
Thus, Claim
rado license
ly expired on
ed to comple
ded, Claiman
mine a single
ploitation co
Salvadoran
oncession co
sible for Cla
o the exploita
cession.
ing expiratio
posits in thos
ired license a
atherine McL
equest, on 18xploration Liction Licenses
13
m five to eig
2004 intervi
ter of fact, h
receptive to
mant knew w
area needed
n January 1,
ete its explor
nt applied for
e deposit, the
oncession ap
Mining Law
ould therefor
aimant's failu
ation conces
on of the exp
se areas. Th
area and gra
Leod-Seltzer, P
8 December 2censes to 1 Jas could not be
ght years.5 C
ew, explaine
had a hand in
mining inve
when it obtain
d to be compl
, 2005.7
ration goals
r an exploita
e Minita dep
pplication for
w. The incom
re not be gra
ure to submi
ssion for Min
ploration lice
he Mining La
ants no contin
Pacific Rim M
003, MINECanuary 2005. e extended bey
Catherine Mc
ed that El Sa
n helping the
estment and
ned the licen
lete before t
before the li
ation conces
posit. In Par
r the Minita
mplete appli
anted under t
it the require
nita, the only
enses acquir
aw explicitly
nuing rights
Mining Corp.
C extended the According toyond a total o
cLeod-Seltz
alvador has "
e governmen
allow depos
nses that all
the licenses'
icenses expi
sion based o
rt A below, w
deposit faile
ication was
the law. The
ed materials.
y deposit for
red from Day
y prohibits
s to the form
, June 28, 200
e terms of theo Article 19 oof eight years
er,
"very
nt
sits to
red.
on a
we
ed to
e
As
r
yton,
er
04
e El of the .").
license h
to the are
Director
apply for
discovere
concessio
Claimant
an unjust
another s
from the
rights to
Esperanz
3
with resp
environm
explorati
Rita expl
8 Mining LGazette Npublished(Authorit9 Witness Witness Sexplotacióvigencia d10 Regulat20, 2003, Art. 17 (A11 Memor
older.8 Clai
ea after the e
of the Burea
r an exploita
ed during the
on to mine a
t's attempts t
tified, large a
subsidiary—
Governmen
the other dep
za, South Mi
Finall9.
pect to other
mental permi
ion because o
loration licen
Law of El Sal
No. 16, Book 3d in the Officity RL-7(bis))
Statement ofStatement"), pón no conservde la licencia
tions of the Mpublished in
Authority RL
ial, paras. 33
imant is ther
eight-year ex
au of Mines,
tion concess
e exploration
any of the oth
to evade the
area for the c
—fail under th
nt, Pac Rim h
posits within
inita, Balsam
ly, in Part B,
exploration
it for explora
of local oppo
nse before it
lvador, Legis330 of Jan. 24al Gazette No).
f Gina Mercedpara. 16 ("El tva ningún derde exploració
Mining Law ofthe Official G
L-8(bis)).
1-334.
efore wrong
xploration ter
explains: "T
sion does not
n license's p
her deposits
prohibition
concession a
he law.10 Th
had no rights
n the expired
mo, and Nanc
, we show th
licenses. C
ation of Sant
osition.11 Cl
t expired. Cl
lative Decree4, 1996, ameno. 144, Book
des Navas de titular de la licrecho sobre cuón.").
f El SalvadorGazette No. 1
14
g to indicate
rm expired.
The holder o
t retain any r
eriod of vali
mentioned i
against cont
and by secur
hus, entirely
s and could h
d El Dorado
ce Dulce.
hat Pac Rim
laimant rece
ta Rita and w
laimant then
laimant tried
e No. 544, Dended by Legis352 of July 3
Hernández, Dcencia ya expualquier yacim
r and its Amen25, Book 359
that it has so
As Gina Na
of the now-ex
right over an
idity."9 Clai
in its Memor
tinued explo
ring new exp
apart from a
have had no
license area
also did not
eived the exp
was unable to
n failed to re
d to request a
ec. 14, 1995, pslative Decree1, 2001 ("Mi
Dec. 16, 2013pirada que no miento que ha
ndments, Leg9 of July 8, 20
ome sort of c
avas de Hern
xpired licens
ny deposit it
imant did no
rial. As we
oration—both
ploration lice
any alleged a
lawful expe
a including C
have the rig
ploration lice
o complete i
equest a rene
a new licens
published in te No. 475, Juining Law"), A
3 ("Navas de solicita una caya descubier
gislative Decr003 ("Mining
continued cl
nández, form
se that does
t may have
ot apply for a
describe bel
h by request
enses throug
acts or omiss
ectations for
Coyotera, Nu
ghts it claims
ense and
its planned
ewal of the S
se through bo
the Official uly 11, 2001, Arts. 16, 19, 2
Hernández concesión de rto durante la
ree No. 47, Jug Regulations
aim
mer
not
a
low,
ting
gh
sions
ueva
s
Santa
oth
27.d)
une "),
15
of its Salvadoran subsidiaries but, in accordance with the Mining Law, no new license was
granted.12 Claimant now has no rights to explore Santa Rita and no claims that any acts or
omissions of the Government affected its rights to Santa Rita. In addition, Claimant has not even
attempted to describe its alleged rights or claims regarding the "early exploration properties" of
Zamora/Cerro Colorado.13 Claimant, admittedly, had not been granted any rights to these areas.
12 Mining Law, Art. 27 (RL-7(bis)); Mining Regulations, Arts. 11, 17 (RL-8(bis)). 13 Memorial, paras. 669, 687.
Santa Rita
Zamora-Cerro Colorado
El Dorado
Minita
South Minita
Coyotera
10 km
20 k
m
N
Vein
Deposit
Proposed El Dorado
Infrastructure Area
Nance Dulce
Nueva Esperanza
Balsamo
4.5
km
The map above shows the exploration areas identified by Claimant as part of its claims in this arbitration. The 200 km2 area on the right, which Claimant labels "El Dorado" includes the Guaco, Huacuco, and Pueblos exploration license areas surrounding the 12.75 km2 area of the requested concession (in light brown). The deposits for which Claimant seeks damages are identified by name. Claimant's Pre-Feasibility Study was based on a proposal to mine only the Minita deposit.
16
A
4
explorati
the proce
licenses a
4
whether t
be econo
area from
concessio
justificat
The Mini
concessio
14 Memor15 Mining16 Miningminero ecy aprovecof the minexploitatio17 In fact uprovision deposits. Art. 24 (CNews Rel
A. Pac RDorad
1.
As Cl0.
ion phase an
edures for re
and exploita
The tw1.
there are val
omically min
m within the
on is determ
ions.15 The
ing Law doe
on in order t
ial, para. 51.
Law, Art. 24
Law, Art. 23conómico en echamiento de ning economion and use of
until the 2001to extend theMining Law
CL-210). Clailease, Change
Rim did not do
The legal r
aimant expla
d an extracti
questing the
ation concess
wo steps are
luable miner
ned. Once a
exploration
mined based o
exploitation
es not allow
to continue u
4 (RL-7(bis)).
3 (RL-7(bis)) el área autorizlos mineralesc potential in
f the minerals
1 amendmentse area to a totaof El Salvado
imant's predees to Salvador
have a righ
regime for m
ains, there is
ion, or explo
e different au
sions.
distinct. A
rals in the gr
deposit has
area to requ
on the size o
n concession
for an applic
unfinished ex
("Concluida lzada, se solics…") ["Upon n the authorize will be reque
s, the law expal of 10 km2 ior, Legislativ
ecessor, Daytoran Mining L
17
ht to a Minin
mining under
s a two-step
oitation, phas
uthorizations
company ob
round, where
been located
uest for explo
f the minera
should be re
cant to seek
xploration.17
la exploraciónitará el otorgaconclusion o
ed area, the grested…"].
pressly limitedif the Bureau
ve Decree No.on, supportedaw, Aug. 23,
ng Exploita
r the Salvado
framework f
se.14 El Salv
s needed for
btains an exp
e they are loc
d and studied
oitation. Th
al deposits an
equested afte
a larger area
7
n y comprobaamiento de la
of the exploratranting of the
d the concessdeemed it ne. 544, Dec. 14
d the amendm2001 (C-225
tion Conces
oran Mining
for mining in
vador's Mini
each step: e
ploration lice
cated, and w
d, an applica
e surface are
nd the applic
er exploratio
a for its expl
ada la existena Concesión ption, and prooe Concession
sion area to 5 ecessary for th4, 1995 (prior
ment. Pacific R5).
ssion in El
g Law
n El Salvado
ing Law outl
exploration
ense to ident
whether they
ant can choo
ea of the
cant's techni
on is comple
loitation
ncia del potenpara la explotaof of the existfor the
km2, with a he best use ofr to amendmeRim Mining C
or: an
lines
tify
can
ose an
cal
ete.16
ncial ación tence
f the ent), Corp.,
4
the Minin
holder w
mining la
the owne
extracted
the subso
until the
exploitat
4
has the ri
exploitat
to mine t
has a rea
18 Miningen el subs["All minand physiNo. 732, OEstado, elmay grant19 Mining20 Expert Rat 9. 21 Mining
As Cl2.
ng Law, own
hen the mine
aw expert Ja
er of in-situ m
d from State-
oil, there is n
mineral dep
ion concessi
There3.
ight to explo
ion concessi
that deposit,
l property ri
Law, Art. 2 (
suelo del terrieral deposits cal state, are Oct. 14, 1999l cual podrá ot concessions
Law, Art. 35
Report of Jam
Law, Art. 10
aimant repea
nership of th
erals have be
ames Otto, w
mineral depo
-owned depo
no transfer of
osits found i
ion granted b
fore, accord
ore and has n
ion holder—
met the con
ght: the righ
(RL-7(bis)) ("torio de la Reexisting in ththe property o
9 ("Investmenotorgar conces
for its exploi
5 (RL-7(bis)).
mes M. Otto o
0 (RL-7(bis)).
atedly affirm
he minerals i
een extracte
who has helpe
osits and the
osits."20 Thu
f ownership
in the subsoi
by the State.
ding to the Sa
no property r
—someone wh
ncession appl
ht to extract t
"Son bienes depública, cualhe subsoil of tof the State .
nt Law"), Art. siones para suitation."]; Me
on Eight Mini
18
ms, the State
is only transf
d from the s
ed draft min
concession
us, during ex
. There can
il are extract
alvadoran M
rights in the
ho has studie
lication requ
the minerals
del Estado, tolesquiera que the territory o. ."]; Investm7(b) (Author
u explotaciónemorial, paras
ing Law Ques
owns depos
ferred to the
subsoil.19 As
ning laws in m
holder is the
xploration, w
be no chang
ted from the
Mining Law,
deposits. O
ed a deposit
uirements, an
from the gr
dos los yacimsea su origen
of the Republiment Law of E
rity RL-9(bi.") ["The sub
s. 16, 39, 433
stions, Dec. 1
sits in the gro
e exploitation
s explained b
many countr
e owner of th
when the min
ge in owners
ground purs
an explorati
On the other h
, defined the
nd received t
round.21
mientos minern, forma y estic, regardless
El Salvador, Ls)) ("El subsusoil belongs t.
19, 2013 ("Ott
ound.18 Und
n concession
by internatio
ries: "the Sta
he minerals
nerals remain
ship unless a
suant to a va
on license h
hand, an
e area necess
the concessi
rales que existado físico…"of origin, for
Legislative Deuelo perteneceto the State, w
to Expert Rep
der
n
onal
ate is
n in
and
alid
holder
sary
ion—
ten ") rm ecree e al
which
port")
44
Claimant
were revo
Article 7
replaced
which ev
and neve
exploitat
text of th
1995 Min
4
provides
demonstr
Accordin
mining . 22 Memor23 Memor24Mining de Vega o("Ayala/F1995 han in the Minforce."]. 25 Ayala/Fley antigulaw cease26 Claimanpara. 482.
The cu4.
t's activities
oked long be
5 of the 199
the 1881 mi
ver applied to
er applied—t
ion concessi
he 1995 Mini
ning Law by
Claim5.
an automati
rates the exis
ng to Claima
. . was its cl
ial, paras. 16-
ial, para. 94.
Law, Art. 75 on AdministraFratti de Vega
sido derogadning Codes en
Fratti de Vegaua deja de tenes to have lega
nt Pac Rim C.
a) Thint
urrent Minin
in El Salvad
efore 2001, t
5 Mining La
ining code.24
o Claimant,
to Claimant's
ion and its al
ing Law. Cl
y speculating
mant relies on
ic right to a c
stence of mi
ant, "the mos
ear and uneq
-23, 49, 51, 8
(RL-7(bis)). ative Law: Ana Expert Repodas expresamenacted prior to
a Expert Repoer efectos juríal effects."].
Cayman LLC's
he old repealeerpret the 19
ng Law, draf
dor. The ear
the year Cla
aw specifica
4 Claimant's
is disingenu
s investment
lleged rights
laimant cann
g about El Sa
n the repeale
concession f
ineable depo
st critical ele
quivocal rec
6 n.156, 458-
See also Expnalysis of Issuort") at 8 ("[T]ente y careceno 1995 have b
ort at 6 ("Si uídicos.") ["If
s Notice of A
19
ed mining co995 Mining L
fted in 1995,
rlier mining c
imant began
ally repeals th
s lengthy dis
uous. The co
t is irrelevan
s in this arbit
not override
alvador's his
ed laws to all
for an explor
osits in the ar
ement of El S
ognition tha
-460, 462-467
pert Report ofues Related to]odas las normn absolutamenbeen expressl
una ley es expa law is expre
Arbitration, Ap
odes of 1881Law
, is and has a
codes cited r
n considering
he 1922 min
scussion of th
ontent of pro
nt.25 Claiman
tration must
the clear pro
storical treatm
lege that the
ration licens
rea of the ex
Salvador's hi
at the discove
7, 479, 507-50
f José María Ao Salvadoran mas en los Cónte de fuerza ly repealed an
resamente deessly repealed
pr. 30, 2009 (
1 and 1922 a
always been
repeatedly b
g investing i
ning code, w
he earlier pr
ovisions that
nt's applicat
be consider
ovisions of E
ment of min
e current Salv
e-holder wh
xploration lic
istorical fram
erer of a valu
08, 561, 571-
Ayala MuñozMining Law,
ódigos Minernormativa.")
nd have absol
erogada por und by a subseq
("NOA"), para
are irrelevan
applicable t
by Claimant2
n El Salvado
which had
rovisions, no
do not apply
ion for an
red based on
El Salvador's
ning.
vadoran law
ho discovers
cense.26
mework for
uable minera
-572.
z and Karla Fr, Dec. 20, 201ros anteriores
["[A]ll provilutely no lega
na ley posteriquent law, the
a. 37; Memor
nt to
to
22
or.23
one of
y—
the
s
w
and
al
ratti 13 a
isions al
ior, la e prior
rial,
deposit h
To suppo
cites the
1995 Min
true: it is
Salvador
together
holder ga
work tha
Both the
4
conclusio
holder do
about the
are distor
sections,
alleged in
27 Memor28 Memor29 Memor30 See Melicense hoof the Exp
has the right
ort its propos
1881 and 19
ning Law do
absurd to tr
ran legislatur
an argument
ains "a subst
t results in th
conclusion a
Pac R6.
on because th
oes not have
e various pro
rtions of the
El Salvador
nterpretation
ial, para. 465
ial, paras. 466
ial, para. 482
morial, parasolders; the subploitation Con
to demand a
sition that ex
922 Mining C
oes not grant
ry, as Claima
re eliminated
t from Articl
tantive right
he verificatio
and the asse
Rim cannot id
he law does
the right to
ovisions of th
actual text a
r explains ho
ns.
.
6-468.
.
. 471-482 (arbsurface minencession;" an
a concession
xplorers can
Codes and th
t such sweep
ant does, to i
d when it rep
les 10, 19, an
to the grant
on or proof o
rtions on wh
dentify any p
not say wha
demand a co
he Mining L
and meaning
ow the plain
rguing that Arerals subject td the languag
20
n from the St
"demand" c
hen claims it
ping rights to
insert into th
pealed the ol
nd 23 of the
of a Conces
of the existe
hich it is bas
provision in
at Pac Rim w
oncession fr
Law not only
g of the Salv
text of the M
rticle 10 grantto an exploratge of Article 2
tate for the e
concessions f
t would be "
o explorers.2
he 1995 Min
ld laws. Cla
Mining Law
ssion upon th
ence of econo
ed are flawe
the 1995 Mi
wants it to sa
rom the State
y fail to supp
vadoran prov
Mining Law
ts "real propetion license "o23 regarding c
exploitation o
from the Sta
absurd" to c
8 In fact, th
ning Law pro
aimant tries t
w that an exp
he conclusio
omic mining
ed.30
ining Law to
ay: an explor
e. Pac Rim's
port its concl
visions. In th
contradicts
erty rights" toonce located,concessions i
of that depos
ate, Claimant
consider that
e opposite is
ovisions that
to cobble
ploration rig
on of explora
g potential."2
o support its
ration rights
s assertions
lusion, but al
he following
Claimant's
exploration become the ois mandatory)
sit."27
t
t the
s
t the
ghts
ation
29
lso
g sub-
object ).
4
to explor
their hold
asserting
4
terms "lic
There is n
use of the
same law
cannot si
depends
4
license co
31 Memor32 Memor33 See Ottdenote maconcessiowhere mathroughou
Claim7.
ration license
ders. The A
g:
[T]he "ExplprovisLicenamounterm.3
Claim8.
cense" and "
no basis for
e term "conc
w. The text o
imply redefin
on such rede
Dr. Ti9.
onfers only t
ial, paras. 47
ial, para. 472
o Expert Repatters relatingn is not appli
atters pertaininut the Mining
i
mant's first m
e holders.31
rticle refers
term "conceoitation Consions of the lse," which, ants to a "con32
mant cites no
"concession"
ignoring the
cession" is so
of Article 10
ne the term "
efinition.
inetti, El Sal
the right to e
1-475.
.
ort at 10 ("Thg to the authoried to matters ng to such exp Law.").
i. An expldepositexplora
mischaracteriz
Article 10, i
only to "the
ession" as usncession," aslaw. Insteadas employed
ncession" wit
source for th
" were used p
e distinction
omehow diff
0 is clear and
"concession"
lvador's Con
explore and
hroughout therization that gpertaining toploration are
21
lorer does nt by the mereation area
zation is that
in fact, says
concession.
sed in Articles the latter te, it includes
d in the Amethin the gene
his assertion
purposefully
included in
fferent from a
d is limited to
" in this prov
nstitutional la
the right to r
e Mining Lawgrants the righo exploration paddressed, th
ot acquire ae discovery o
t Article 10
nothing abo
." Claimant
e 10 is not lierm is used ialso the "Ex
ended Minineral meaning
n. In fact, it
y with distinc
the law and
all other use
o exploitatio
vision becau
aw expert, co
request an ex
w, the term conht to mine andprior to the g
he term 'licens
an ownershipof that depos
provides rea
out explorati
tries to evad
imited to then later
xploration g Law, g of that
is clear from
ct and clear
d arguing tha
es of the sam
on concessio
use its flawed
onfirms that
xploitation c
ncession is usd process minranting of a cse' is consiste
p interest in sit within an
al property ri
on licenses o
de this by
e
m the law tha
meanings.33
at this particu
me term in th
ons. Claiman
d legal theor
t an explorat
concession:
sed consistennerals. The teconcession, anently used
a
ights
or
at the
3
ular
e
nt
ry
tion
ntly to erm nd
5
subsurfac
property
minerals.
34 Expert RReport"), Minería, úlos yacimde solicitayacimientimplicaríade validezeste tipo spretension("[L]icencexploracióexplotació(formales licencia dEl que desque se le oof locatingconcessiosubstantivexploratioThe discoa concessi35 Memor36 Otto Exde la mate
An exonly vactivitas welconcedeposhavinggoodsnull angranteraise oabove
In add0.
ce minerals—
interest of e
.36 Mining l
Report of Jospara. 26 ("La
únicamente comientos de las
ar la concesiótos que se enca una especie z de acuerdo asabe de antemnes de dominicias de explorón de sustancón de las susty sustantivos
de exploraciónscubre sólo adotorgue una cg and explorin to exploit th
ve), which areon license holoverer only acion."] (empha
ial, para. 473
xpert Report, eria por parte
xploration licvests the holdties to find thll as the exclssion. Neithits located ing discovereds that alreadynd void undeed a license oownership cle-cited article
dition, not ev
—much less
exploitation c
law expert Ja
sé Albino Tina licencia de eonfiere al titusustancias mi
ón respectiva. cuentren en elde ocupaciónal ordenamien
mano, en virtuio en tal licenración mineracias mineralesancias que ses) establecidon no adquieredquiere un deconcesión.") [ing for minerahe substancese established ilder does not cquires a rightasis in origina
.
Question 1. Sdel Art. 103,
cense grantedder with the he mineral dlusive right t
her of these rn the explorad it. This woy have an ower the Salvadof this kind klaims by virte.34
ven exploitat
exploration
concession h
ames Otto ex
etti on Salvadexploración qular la facultadinerales para Ninguna de
l área de expln de bienes qunto jurídico sa
ud de lo que dncia."). See aa otorgan el ds, y en el casoe descubran sios en la ley de un derecho d
erecho (que n["[M]ining exal substances,s discovered, in the Miningacquire an ow
t (which is noal).
See also Tine ha fundamen
22
d under Artiexclusive ri
deposits for wto apply for
rights entailsation area simuld imply a
wner—the Stdoran legal fknows in adtue of such l
tion concess
licenses, as
holders is the
xplains:
doran Constitque se otorga dd exclusiva dlas que ha sidesas facultad
loración por eue cuentan coalvadoreño. A
dispone el artíclso Ayala/Fraerecho a reali
o de realizar uiempre y cuane Minería y sude propiedad o es el de pro
xploration lice, and in the evprovided that
g Law and its wnership righot an ownersh
etti Expert Repntado el Art. 3
icle 19 of theight to conduwhich it has the appropri
s the acquisitmply by the sort of approtate—which framework.
dvance that thlicense, acco
sions confer
Claimant su
e right to exp
tutional Law, de conformide realizar acti
do otorgada ydes conlleva lael mero hechoon propietarioAquél al que culo precitadatti de Vega Eizar actividad
un descubrimindo se cumplau Reglamentodel yacimient
opiedad sino eenses grant thvent of makint certain requRegulations
ht over the dephip right but a
port, para. 3135 de la ley d
e Mining Lauct mining been grante
iate tion of the mere fact oopriation of would be Whoever is hey may notording to the
ownership r
uggests.35 In
ploit the sub
Dec. 9, 2013dad al Art. 19 ividades mine
y el derecho taa adquisicióno de haberlo do –el Estado-,
se le otorga udo, que no pueExpert Reportdes de localizaiento, solicitaan determinad
o…. Por endeto por el hechel derecho a ehe right to engng a discoveryuirements (for
are met. . . . Hposit on acco
a right to expl
1 ("La regulacde Minería de
aw
ed,
f
t e
rights to the
ndeed, the re
bsurface
("Tinetti Expde la Ley de
eras para locaambién exclus
n de los descubierto, lolo cual carec
una licencia dede fundament at 13 ación y
ar la concesióndos requisitose, el titular deho de encontrexplotar) en egage in activity, to apply forrmal and Hence, the ount of findingoit) if it is gra
ción constitucconformidad
eal
pert
alizar sivo
o cual ería
de ntar
n de s e una arlo. l caso ties r a
g it. anted
cional d al
5
10 of the
exploitat
5
its asserti
that "the
license h
automati
practical
no right t
cual el titusi aún no propietariis the basishall be thif the min37 Otto Ex38 Memor39 Memor40 See Ayarecurso m
ArticltransfconceMinindoes nconceactualArticlconcethe leg
It is cl1.
Mining Law
ion concessi
Claim2.
ions about A
right [to the
older by me
cally granted
effect."39 C
to receive th
ular de la conse es titular d
io de ellos es is for Article he owner of thnerals are still
xpert Report a
ial, para. 477
ial, para. 485
ala/Fratti de Vminero, sí da d
le 10 states thferable. It dossion holder
ng Article 2, not grant its ssion rights l deposits, cole 10. In effession), not thgally created
lear, therefor
w confers no
ion holders i
ii
mant's asserti
Article 10. C
e concession]
re operation
d, "the 'exclu
Claimant igno
he concession
ncesión –y sólde una concesel Estado.") [35 of the Minhe 'extracted' in the subsoi
at 10.
(citing Ferm
.
Vega Expert Rderecho (exclu
hat a conceses not say thr; that is precand Miningholder owneto exploit th
onstitute the ect, it is the rhe subsoil dd real proper
re, that Claim
o rights on ex
is the right to
i. An explconcess
ons about A
Claimant cite
] is born and
n of law."38 A
usive right' c
ores that the
n.40
lo éste– será eión, o si los m
["In the Constning Law, accminerals. As
il, they belong
mandois Exper
Report at 16 (usivo en algun
23
ssion is a reahat subsoil dcluded by Co
g Regulationsership of minhe subsurface
real propertright to mineeposits themrty right.37
mant's argum
xploration li
o extract min
lorer has ansion, nothing
Article 19 of t
es Article 19
d from the ou
According to
conferred un
e exclusive ri
el dueño de lominerales todatitution, this mcording to wh a consequeng to the State.
rt Report at 66
("El hecho denos casos) a s
al property rideposits are oonstitution As Article 3. Anerals in thee mineral esty interest cre subsoil depmselves, whic
ment is based
icense holder
nerals from t
n exclusive rig more
the Mining L
9 as supportin
utset adds to
o Claimant,
nder Article
ight is to req
os minerales 'avía permanematter is reguhich the concence, if there is ."].
6-67).
e tener licencisolicitar la co
ight and is owned by theArticle 103, A concession
e ground. Thetate, not the
reated by posits (i.e. thch constitute
d on a false
rs and the rig
the ground.
ight to apply
Law are just
ng its expert
o the assets o
if a concessi
19 would be
quest a conce
'extraídos.' Cecen en el subulated under Aession holder not yet a con
ia de exploracncesión, pero
e
n e
he e
premise. Ar
ght it confer
y for a
t as inaccurat
t's conclusio
of the explor
ion is not
e deprived of
ession. Ther
Consecuentembsuelo, el Article 103, w
(and no one encession hold
ción, y descubo no exime al
rticle
rs on
te as
n
ration
f
re is
mente
which else) er, or
brir el
5
concessio
explorati
license ex
concessio
concessio
apply for
54
it is "man
that it 'sh
obligatio
not mand
solicitantede explotaconcesiónresource, not exempto obtain tminerals dNavas de solamente["It is impgrants no 41 Memor42 Otto Exnot requirconcessio43 Otto Ex
Contr3.
on is simply
ion license a
xpires. The
on applicatio
on, the right
r a concessio
Pac R4.
ndatory" tha
hall be verifie
n to apply fo
datory.43
e de cumplir lación. Esto en de explotacidoes give onept the applicathe exploitatidoes not, per Hernández W
e da un derechportant to poinright to recei
ial, para. 482
xpert Report are the holder on").
xpert Report,
ary to Claim
that no one
s long as the
license hold
on to be gran
provided fo
on before the
iii
Rim makes th
t a "concessi
ed' by the M
or an exploit
los requisitoss, el titular de
ión.") ["The fe the right (an
ant from meeton concessionse, have a rig
Witness Statemho de solicitont out that theive the conces
.
at 26 ("[l]ike mof an explorat
Question 2.
mant's allegat
else is perm
e application
der still has t
nted. Once a
or in Article
e license exp
i. Pac RimMinistr
he surprising
ion 'shall be
Ministry."41 T
tation conces
, formales y se una licenciafact of having n exclusive riging the necesn. In other w
ght to obtain ament, para. 17r un concesióe Mining Lawssion."] (emph
mining codestion license th
24
tions, the eff
mitted to appl
n for the conc
to meet the r
an exploratio
19 has been
pires, that ex
m was not rery was not re
g assertion th
requested' b
This is not ac
ssion,42 and
sustantivos, na de exploraci
an exploratioght in certainsary requirem
words, an explan exploitatio7 ("Es importaón, pero no daw only confershasis in origin
s in most othehat has made
fect of the ex
ly for a conc
cession is fil
requirements
on license ho
exercised. I
xclusive right
equired to apequired to gr
hat, under Ar
by the Explo
ccurate. In f
granting of
necesarios parión no tiene, pon license and
n cases) to appments, formal loration licenson concessionante hacer noa ningún deres a right to renal).
er nations, thea discovery t
xclusive righ
cession in th
led before th
s for its expl
older applies
If the license
t is relinquis
pply for a corant the conc
rticle 23 of t
oration Licen
fact, an expl
an exploitati
ra tener derechper se, derechd discoveringply for the conand substant
se holder thatn."] (emphasisotar que la Leyecho a recibir equest a conce
e El Salvador to apply for a
ht to apply fo
e area of a v
he exploratio
loitation
s for a
e holder fail
shed.
oncession ancession
the Mining L
nse holder, a
lorer has no
ion concessi
ho a la conce
ho a obtener g the mining ncession, but ive, to be entit discovers s in original); y de Minería
r la concesiónession, but it
Mining Law mining
or a
valid
on
s to
nd the
Law,
and
ion is
sión
does itled
n.")
does
5
exclusive
that it wo
holder ha
would m
it. Never
concessio
if, and w
"The exp
during th
choose to
having ch
before th
5
to the Mi
submitted
forth a se
5
describes
concessio
44 Otto Ex45 Mining46 Otto Ex
As me5.
e right to app
ould be econ
as the require
ake sense to
rtheless, it is
on. The Salv
hen, to apply
ploration lice
he term of its
o never apply
hosen to app
he exploratio
In add6.
ining Law, th
d the require
eries of steps
Minin7.
s both "comp
on applicant
xpert Report a
Law, Arts. 3
xpert Report,
entioned abo
ply for a con
nomically an
ed technical
o apply for th
s never mand
vadoran Min
y for a conce
ense holder m
s license, app
y."44 Thus,
ply for a con
n licenses ex
dition, it is n
here is no au
ed document
s for reviewi
ng legislation
petency requ
must show
at 28.
8-43 (RL-7(b
§ 2.2.
ove, the Min
ncession in th
d technically
competence
he concessio
datory that a
ning Law lea
ession. As d
may choose
ply on a non
Pac Rim did
cession, Pac
xpired.
not mandator
utomatic righ
ts, which Cla
ing the appli
n expert Jam
uirements" an
that it has th
bis)).
25
ning Law doe
he area of th
y feasible to
e and financi
n while one
an exploratio
aves it up to
described by
to apply for
n-exclusive b
d not have to
c Rim was no
ry for the Mi
ht to a conce
aimant did n
ication after
mes Otto expl
nd "concessi
he required t
es provide th
he license. T
mine a certa
ial means to
still has the
on license ho
the explorat
y mining legi
a concessio
basis after its
o apply for a
ot required t
inistry to gra
ession, even
not do. Indee
it is submitt
lains that the
ion applicati
echnical and
hat the licens
Therefore, on
ain deposit,
carry out ex
exclusive ri
older apply f
tion rights ho
islation expe
n on an excl
s license has
concession
to apply for t
ant a concess
if the applic
ed, the Mini
ted.45
e Salvadoran
ion requirem
d financial co
se holder has
nce studies s
and the licen
xploitation, i
ight to apply
for the
older to deci
ert James Ot
lusive basis
s expired, or
at all and,
the concessi
sion. Accor
cant has
ing Law sets
n Mining La
ments."46 Fir
ompetence t
s an
show
nse
it
y for
ide
tto:
on
ding
s
aw
rst, a
to
carry out
exploitat
needs mo
discover
a concess
through,
commun
automati
must sho
exploitat
5
concessio
informati
required
governm
concessio
documen
5
process l
Bureau o
47 Mining48 Otto Ex49 Otto Ex50 Navas d
t the mining
ion are nece
ore money an
gold-bearing
sion to a com
or make tech
ities. Thus,
cally granted
ow that it is f
ion project i
Secon8.
on applicatio
ion for the G
as part of th
ment informat
on."49 The a
nts.50
Once 9.
eading to a d
of Mines mus
Law, Arts. 6
xpert Report,
xpert Report a
de Hernández
exploitation
ssarily more
nd more tech
g veins in th
mpany that c
hnical mista
it is only sen
d a concessio
financially an
in a sound m
nd, an applic
on.48 As des
Government'
he concession
tional need,
application w
an applicatio
determinatio
st ensure tha
, 8, 9 (RL-7(b
§ 2.2.
at 15.
z Witness Stat
n project.47 T
e onerous tha
hnical exper
he ground. T
could cut cor
akes that cou
nsible that a
on to extract
nd technical
manner.
ant must pro
scribed by M
s decision on
n application
and are imp
will not be ad
on is admitte
on of whethe
at the applica
bis)); Otto Ex
tement, paras
26
The financia
an those for
rtise to extrac
The Governm
rners to save
uld negativel
company th
t those mine
ly capable o
ovide all the
Mr. Otto, the
n the applica
n requiremen
ortant for de
dmitted for c
ed for review
er or not a co
ant publishes
xpert Report,
. 19-21.
al and technic
exploration.
ct and proce
ment has an i
e costs, aband
ly impact the
hat discovers
erals from the
of realizing th
documentat
requested do
ation: "Each
nts under Mi
eciding whet
consideration
w (which Pa
oncession sh
s informatio
§ 2.2.
cal compete
. Logically,
ess gold than
interest in av
don the proj
e environmen
s deposits is
e ground. T
he much mo
tion required
ocuments pr
h of the docu
ining Law A
ther or not to
n without th
c Rim's was
hould be gran
on about its a
nce standard
a company
n it does to
voiding gran
ect partway
nt and local
not
The company
ore complica
d for a
rovide neces
umentation
Article 37 ser
o grant a min
he required
not), there i
nted. The
application a
ds for
nting
y
ated
sary
rve a
ning
is a
and
provide f
applicatio
express t
consider
process t
6
the matte
contents
and then
provides
mining e
capacity
6
no such t
Even if P
applicatio
comment
51 Mining52 Mininghábiles, dsolicitud."the next fiprocessingpublic or 53 Mining54 Mining
fifteen days f
on, or who b
heir opposit
the objectio
o continue o
If the 0.
er to the Min
of the applic
decide whet
factors that
xploitation c
of the applic
Thus, 1.
thing as an a
Pac Rim had
on would sti
t process, an
Law, Arts. 4
Law, Art. 41eclarándola s") ["After the
fifteen businesg of the applithe applicant
Law, Art. 43
Regulations,
for persons f
believe that t
ion to the ap
ns and the a
or to stop the
process con
nister of Econ
cation file, o
ther or not to
the Minister
concession, i
cant, and the
the plain tex
automatic rig
met the form
ill have been
nd the bound
0-41 (RL-7(b
1 (RL-7(bis)) in lugar si noevidence is s
ss days, rejectication to concan appeal th
3 (RL-7(bis)).
, Art. 15 (RL-
from the gen
they will be
pplication.51
applicant's re
ere if the obj
tinues follow
nomy for his
order any inv
o grant the c
r must take i
including th
e characterist
xt of the Min
ght to a minin
mal requirem
n subject to a
ded power of
bis)).
("resolverá soo fuere fundadsubmitted, theting it if it is utinue."]. The
he decision of
-8(bis)).
27
neral public w
negatively a
Under the M
esponse, and
ections are w
wing publica
s/her decisio
vestigations a
oncession.53
into account
e national in
tics of the pr
ning Law an
ng exploitati
ments of the
a substantive
f the Ministe
obre la Oposida, en cuyo cae Bureau shalunjustified, in
e Article provf the Bureau o
who have a
affected by th
Mining Law
then decide
well-founded
ation, the Bu
on. The Min
and inspecti
3 Article 15
in deciding
nterest, the fi
roposed min
nd Regulation
ion concessi
Mining Law
e technical ev
er of Econom
ición, dentro daso ordenará sl issue a decisn which case
vides that eitheof Mines to th
legitimate in
he proposed
w, the Bureau
e whether to
d.52
ureau of Min
nister can ev
ons he/she d
of the Minin
whether or n
financial and
ning operatio
ns demonstr
ion as Claim
w, which it d
valuation, th
my to grant o
de los siguiense continúe csion on the Othe Bureau sher the objectinhe Minister of
nterest in the
d concession,
u of Mines w
allow the
nes will subm
aluate the
deems necess
ng Regulatio
not to grant
d technical
on.54
rates that the
mant alleges.
did not, the
he public
or deny the
ntes quince díon el trámite
Objection withhall order theng members of Economy.
e
, to
will
mit
sary,
ons
the
ere is
ías de la
hin of the
applicatio
mistaken
ClaimanInterp
Accordin10, "explorights undAmendedLaw consproperty rtitleholde
Article 19right to thconcessiominerals within thelicense ar
"The langArticle 23mandatorunequivoconcessiorequestedExploratiholder, an'shall be vthe Minis
6
concessio
55 Memor56 Memor57 Memor
on for the ex
n allegations
t's Mistakenpretation
ng to Article oration der the d Mining stitute real rights of the
er."55
9 provides a he on for located e explorationrea.56
guage of 3 is ry. It states ocally that theon 'shall be d' by the ion License nd that it verified' by stry."57
Thus, 2.
on from El S
ial, para. 471
ial, para. 477
ial, para. 482
xploitation c
is shown in
n
Art. 10. Tproperty tsurface laof the surlocated atreal propeact, with tconsequensecurity f
n
Art. 19. THolder thactivities,for whichconferredconfers thconcessio
e
Art. 23. Uof the exiauthorizedexploitatithe grantithrough agranting oLicense Hextended it complieLaw, in th
Claimant's a
Salvador upo
.
.
.
oncession. T
the followin
Text of
The deposits rthat differ froand; not so thrface where tht the surface; erty right thatthe prior authntly, said con
for mining opThe Exploratihe exclusive p, to locate theh it was grantd and to an inhe exclusive ron. Upon conclusstence of thed area, the gron and use ong of such C
a Resolution fof a contract Holder for a t
at the requeses with the rehe opinion of
allegation th
on a simple s
28
The text of t
ng table:
f 1995 Minin
referred to inom the propehe quarries thhey are foundconsequentl
t is transferrahorization of ncession is caperations. ion License vpower to perfe deposits of ted, within thndefinite deptright to apply
sion of the exe mining econranting of the
of the mineralConcession shfrom the Minbetween the
term of thirtyst of the interequirements ef the Ministry
hat it had a ri
showing that
the law in co
ng Law
n this Law arerties that conhat are an inted, provided tly, a concessiable by an inf the Ministryapable of bei
vests in the Lform mining
f mineral subshe limits of thth. In additiony for the resp
xploration, annomic potente Concessionls will be reqhall materialinistry, followMinistry and
y years, whichrested party, established iny. . . .
ight to dema
t it had disco
ontrast to Cla
re real nstitute egral part they are ion is a
nter vivos y; ing a
Anpel
License
stances he area n, it
pective
Apheacn
nd proof tial in the n for the quested; ize
wed by the d the h may be provided n the
PrfawtR
and an explo
overed a dep
aimant's
Clear Mean
Article 10 donot accord a property righexploration license holde
Article 19 provides a licholder the exclusive righapply for a concession; nothing morePac Rim wasrequired to apfor a concessand the Miniswas not obligto grant Pac Rim's applica
oitation
posit is
ning
oes real
ht to
ers.
cense
ht to
e. s not apply sion, istry gated
ation.
unsuppor
on which
6
condition
in an exp
requirem
64
considere
expect its
requirem
58 Memorconcessio59 Memor60 Mining61 Otto Exmandatory
rtable.58 Cla
h it seeks to r
Claim3.
n for the gran
ploration lice
ments that mu
a) Ploa cartotechnilocatioirrefut
b) Thegrante
c) Thwith a
d) Theprofes
e) Thegeolog
f) Th
The re4.
ed.61 Salvad
s application
ments: "There
ial, para. 52 (n upon discov
ial, para. 488
Law, Art. 37
xpert Report ay.").
aimant's alleg
rely.
b) MaLaw
mant incorrec
nting of a co
ense area.59
ust be submit
ot plan of theographic maical description, boundaritably establi
e ownership ed by the ow
he Environma copy of the
e Technical-ssionals enga
e exploitatiogist or a com
he others esta
equirements
doran Consti
n to be consi
efore, if an a
(referring to thvery of a min
.
7.2 (RL-7(bis)
at 15 ("The su
gations are d
andatory natw
ctly insists th
oncession," w
But Article
tted with an
e property wap of the areaion, extensioies and nameshed;
deed of the wner;
mental Permite Environme
-Economic Faged in the s
on program fmpetent profe
ablished in t
of Article 3
itutional law
dered, much
applicant for
he explorationneable deposit
)).
ubmission of a
29
disproven by
ture of the re
hat there is o
which it claim
37.2 of the M
application
where the acta, topographon of the reqe of borderin
property or
t issued by thental Impact
Feasibility Stsubject matte
for the first fifessional in th
the regulatio
7 are manda
w expert Dr. T
h less granted
a mining ex
n license beint"). See also
all the listed d
y the text of
equirements
only one "fun
ms is the dis
Mining Law
for an explo
tivities will bhic plan and quested area ng properties
the authoriz
he competenStudy;
tudy prepareer;
five years, sihe subject m
ons.60
atory for an a
Tinetti confi
d, if it has no
xploitation co
ng "followed Memorial, pa
documentatio
the Mining L
in Article 37
ndamental su
scovery of a
w provides a l
oitation conc
be carried ouits respectivwhere its s are
zation legally
nt authority,
ed by
gned by a matter;
application t
irms that an
ot complied
oncession do
immediately aras. 465-468
on listed in the
Law provisi
7.2 of the M
ubstantive
mineral dep
list of
cession:
ut, ve
y
to be
applicant ca
with the leg
oes not meet
by an exploit.
e Article is
ons
Mining
posit
annot
gal
t all
tation
the requi
without m
submit al
admitted
are "plain
Claimant
6
environm
for an ex
the feasib
two subs
6
complian
intensely
it would
requirem
62 Tinetti E63 Mining64 NOA, p65 Claiman("ResponsResponde66 RejoindObjection
rements esta
merit."62 Ar
ll the docum
that the requ
n and explici
t cannot now
As El 5.
mental permi
xploitation co
bility study r
ections.
2.
In the6.
nce with Arti
y factual inqu
"produce ev
ments of Artic
Expert Repor
Regulations,
para. 8.
nt Pac Rim Cse (Preliminarent's Prelimina
der (Preliminans, May 31, 20
ablished by t
ticle 18 of th
mentation list
uirements to
it,"64 and tha
w claim that t
Salvador ex
it, Claimant
oncession ap
requirement.
Claimant drequiremen
Preliminary
icle 37.2.b),
uiry"65 that c
vidence – inc
cle 37.2.66 I
rt, para. 50.
, Art. 18 (RL-
Cayman LLC'sry Objectionsary Objection
ary Objection010, at 153:13
the law on th
he Mining R
ted in Article
o obtain a mi
at it needed a
the other req
xplained in it
failed to com
pplication: th
. We will de
did not compnt
y Objection p
the land ow
could not be
cluding expe
n its Memor
-8(bis)).
s Response tos)"), paras. 13n, May 12, 20
ns), para. 132.3-154:3.
30
his matter, it
Regulations r
e 37.63 Claim
ining exploit
an environm
quirements c
ts Preliminar
mply with tw
he land owne
escribe these
ply with the
phase of this
wnership or a
decided in a
ert evidence –
rial on the M
o Respondent'3, 142; Claima010 ("Rejoind
See also Tra
ts claim to ob
reinforces th
mant, in its N
tation conce
mental permit
can be ignore
ry Objection
wo of the oth
ership or aut
e fundament
land owners
s arbitration,
authorization
a preliminary
– to demons
Merits, howev
's Preliminaryant Pac Rim C
der (Prelimina
anscript of He
btain the con
e need for ap
Notice of Ar
ssion under
t to complet
ed.
ns, in additio
her Article 37
thorization re
al deficienci
ship or autho
, Claimant in
n requiremen
y stage. Cla
strate" that it
ver, Claiman
y Objection, FCayman LLCary Objection
earing on Pre
ncession is
pplicants to
rbitration, in
Salvadoran
e its applicat
on to the lack
7.2 requirem
equirement a
ies in the nex
orization
nsisted that i
nt, was "an
aimant promi
t had met the
nt has produ
Feb. 26, 2010C's Rejoinder s)"), para. 142
eliminary
n fact
law
tion.
king
ments
and
xt
its
ised
e
ced
0 on 2.
no new f
utterly fa
6
requirem
applicabl
given all
its promi
Claimant
Therefor
and, for t
6
understan
rather tha
area it de
ahead, de
6
documen
Novembe
not have
67 Memor("Williamthe Amenrequireme68 Memor
factual evide
ailed to comp
Claim7.
ment, but rath
le requireme
the time it n
ise to the Tri
t has change
e, the fact re
that reason a
Claim8.
nd the requir
at Claimant c
esired. Inste
emanding a c
Claim9.
nts. Accordi
er 2004, with
spent the tim
ial, para. 560
ms Expert Statnded 1996 Minent in subpara
ial, para. 190
nce to count
ply with the
mant likewise
her presented
ent for explo
needed to pro
ibunal that it
d course and
emains: Claim
alone, had no
a) Cla
mant's problem
rement, or th
could not co
ad of changi
concession w
mant's problem
ng to Claima
hout having
me necessary
. See Expert tement") at 32ning Law rela
agraph (b).").
.
ter the evide
land owners
e produced n
d an entirely
itation conce
oduce eviden
t would dem
d now argue
mant did not
o right to a c
aimant want
m with Artic
hought it did
omply with A
ing its strate
without com
m is clearly
ant, Pac Rim
decided the
y to consult
Statement of 2 ("All of the ate to the app
31
nce submitte
ship or autho
no expert test
new argume
essions for m
nce and expe
monstrate com
s that the req
t comply wit
concession.
ted more than
cle 37.2.b) w
d not apply to
Article 37.2.b
gy to seek a
mplying with
illustrated fr
m was finaliz
area of the c
and reach ag
f John P. Willdocumentatiolication for a
ed by El Sal
orization req
timony that
ent that "Art
metallic min
erts, Claima
mpliance wit
quirement do
th Article 37
n it could ha
was never tha
o gold explo
b) and still s
a smaller con
the applicab
from Claiman
zing its conc
concession.6
greements w
liams on Minion requirememetallic min
lvador showi
quirement.
it met the A
ticle 37(2)(b
nerals."67 Th
ant has been
th the require
oes not appl
7.2.b) of the
ave been leg
at Claimant
oitation conc
stake its claim
ncession, Cla
ble legal prov
nt's Memori
cession appli
68 Of course
with landown
ing Law, Marents set forth ining Concessi
ing that Clai
Article 37.2.b
b) is not an
hus, having b
unable to m
ement. Inste
y to it.
Mining Law
gally entitled
did not
cessions, but
m to the hug
aimant press
visions.
al and relate
ication in lat
e Pac Rim co
ners since it h
r. 27, 2013 in Article 37.2on except the
imant
b)
been
meet
ead,
w
d to
ge
sed
ed
te
ould
had
2 of e
not even
area poss
without r
concessio
explored
"reasonab
it had a p
7
large" an
Law requ
authoriza
comply w
69 Memor70 Memor71 ApplicaExploitatiConcesión2.3 (R-2) operacionextienda lmunicipalrazonableque tambiidentificadshows tha(IRR), anyworkers, tnot think but also opotential a72 Memor
decided wha
sible for its c
regard to the
on applicatio
based on th
ble" based o
plan to mine.
Accor0.
n area,72 Pac
uirements. P
ation for the
with the "sur
Thereexploi
ial, para. 192
ial, para. 205
ation: Converion Concession de Explotac("Este estudi
nales, grandesla vida de la olidades . . . , l
e solicitar solaién las otras ádas como zonat, due to the fything that exthe municipalit reasonable
other nearby aas the Conces
ial, para. 205
at area to req
concession.69
e Mining Law
on, Pac Rim
e low operat
on its investm
.71
rding to Clai
Rim reduced
Pac Rim nev
entire area i
rface owner
are two maiitation conce
.
, n.393.
rsion of El Doon (Solicitud:ción El Dorado [de pre-fact
s costos capitaoperación serála República damente el áreaáreas cercanasnas con potenfavorable opextends the lifelities . . . , theto request on
areas containinssion area."].
.
quest—Pac R
9 Claimant a
w requireme
explained th
ting costs an
ment to reque
imant's own
d the reques
ver attempted
it requested.
authorization
in things thaession at this
orado Norte an Conversión d
do), Dec. 22, 2tibilidad] mueales y tasa intá favorable alde El Salvadoa de las vetas s donde se en
ncial, como árerating costs, e of the operae Republic of nly the areas ong mineralize
32
Rim was sol
admits that i
ents for a con
hat it was req
nd high capit
est the small
admissions,
ted area to 1
d to provide
Pac Rim's o
n issue" in J
at are lackings time: the en
nd El Doradode Licencias 2004 ("Conceestra claramenterna de retornl proyecto, y por, y a los inve
Minita y Mincuentran vetaea de Conceshigh capital ction will be bEl Salvador a
of the Minita aed veins and g
lely focused
it originally
ncession app
questing a la
tal costs, cla
ler area requ
, after being
12.75 km2, an
documentat
own official
June 2005:
g in our requnvironmenta
o Sur LicenseEl Dorado Noession Applicnte, que debidno (TIR) muypor ende a losersionistas. Bnita 3, área deas mineralizadsión.") ["This costs and verybeneficial to thand the investand Minita 3 geological zon
on requestin
applied for a
plication.70 I
arger area th
aiming that it
uired to mine
told that 62
nd still igno
ion showing
s discussed t
uest for the al permit and
s into an El Dorte y El Dor
cation" or "Apdo a los bueny baja, que cus trabajadoresBasado en este la planta y pdas y zonas g[pre-feasibili
y low internalhe project andtors. Based onveins, plant anes identified
ng the larges
a 62 km2 are
Indeed, in th
han it had ful
t would not b
e the one dep
km2 was "to
red the Mini
g ownership
the failure to
d
Dorado rado Sur a pplication") anos costos ualquier cosa s, las to, no nos parpresa de colaseológicamentity] study cleal rate of returnd therefore thn the above, wand tailings dd as having
st
ea,
he
lly
be
posit
oo
ing
or
o
at 6, §
que
rece s, sino te arly n
he we do
dam,
7
requirem
this requi
Salvador
documen
requirem
task."74 C
been exe
7
the lando
Exploitat
approxim
requested
7
Rim was
feigned s
Director
view that
73 Memo f("Pac Rim74 Pac Rim75 Conces
the aunot to
Thus, 1.
ment and chos
irement. By
r, the time to
ntation of ow
ment because
Claimant can
mpt from co
Claim2.
owners for th
tion Concess
mately 1.6 km
d.75
This d3.
forced to ad
surprise that
of the Burea
t the Mining
from Fred Ea
m Internal Me
m Internal Me
sion Applicat
uthorization otally) impos
Claimant's o
se not to cha
y 2008, when
correct this
wnership or a
it considere
nnot now de
omplying wit
b) Clatha
mant did not a
he surface ar
sion. Pac Ri
m2 of the 12.
deficiency w
dmit in its R
this was an
au of Mines,
g Law require
arnest to Tom emo re Surfac
emo re Surfac
tion at 4 (R-2
of the land osible task.73
own docume
ange its requ
n Pac Rim ar
defect had l
authorization
ed that comp
emand comp
th this Minin
aimant provian 13% of th
allege or pro
rea over the r
im provided
.75 km2 area
was brought t
ejoinder to E
issue at all),
informed P
ed PRES to
Shrake regare Owner Auth
ce Owner Aut
).
33
owners. . . . t
ents show th
uest to reflect
rgues it first
long passed.
n. Claimant
liance would
ensation by
ng Law requ
ided proof ohe area reque
ovide eviden
requested co
proof of ow
a requested—
to Claimant's
El Salvador's
, "in March 2
RES that sev
acquire own
rding Surface horization") (
thorization (C
the latter is a
hat Pac Rim k
t the very lim
became awa
Pac Rim ne
hoped to ge
d be a "nearl
arguing that
uirement.
of ownershipested for the
nce that it ow
oncession in
wnership or a
—i.e., less tha
s attention al
s Preliminary
2005, Ms. G
veral person
nership of, or
Owner Auth(C-291) (emp
C-291).
a nearly (if
knew that it
mited area fo
are of its dis
ever provide
et away with
ly (if not tot
t its applicat
p or authorizaconcession
wned or had p
its Applicat
authorization
an 13% of th
lmost immed
y Objections
Gina Navas d
ns in MINEC
r authorizati
horization Issuphasis added).
had not met
or which it m
spute with El
ed the requir
ignoring thi
ally) imposs
tion should h
ation for less
permission f
tion for an
n for only
he total area
diately. As
s (after havin
de Hernández
C were of the
ion to use, th
ue, June 28, 2.
t this
met
l
red
is
sible
have
s
from
Pac
ng
z, the
e
he
2005
entire lan
its own o
need auth
mine.77
74
2005 "tha
mining la
Division
uncertain
trying to
the time t
interpreta
Fred Earn
surface o
applicatio
76 Rejoind77 Letter fattached M78 Pac Rim79 Memor80 Pac Rim81 Navas dsolicitadoRepúblicasimplemehacer el rinversioniopinion o
nd surface ov
opinion, prep
horizations f
Claim4.
at the office
aw and was
of Mines."7
nty within bo
help "resolv
that the Min
ation had be
nest, the Pre
owner author
on.80 There
der (Prelimina
from MinisterMemorandum
m Internal Me
ial, paras. 217
m Internal Me
de Hernández la opinión de
a no significabente un intentorequerimientoista extranjerof the Secretar
verlaying the
pared by its S
from landow
mant now furt
of the Secre
in agreemen
8 So Claima
oth MINEC
ve the confus
nistry and the
en affirmed
esident of Cl
rization was
was no "unc
ary Objection
r of Economym, "Interpretac
emo re Surfac
7, 219.
emo re Surfac
z Witness State la Secretaríaba que nosotro de buscar uno de la propiedo, ante su insiry for Legal a
e concession
Salvadoran l
wners for the
ther admits t
etariat for Le
nt with the in
ant contradic
and the Bure
sion."79 In f
e Bureau of M
by the Presi
aimant's Sal
one of the m
certainty" or
ns), para. 30.
y to Secretary ción Ley de M
ce Owner Aut
ce Owner Aut
tement, para. a para Asuntoros tuviéramona opinión ddad del inmuistencia.") ["T
and Legislativ
34
n."76 Soon th
legal counse
entire area o
that the Bure
egislative an
nterpretation
cts its own al
eau of Mines
fact, Claiman
Mines had a
ident's Secre
lvadoran sub
main things m
r "confusion"
for LegislativMinería," May
thorization (C
thorization (C
45 ("El hechoos Legislativoos ninguna due alto nivel reeble, como un
The fact that tve Affairs of t
hereafter, on
el, outlining i
of the conce
eau of Mine
nd Judicial A
n of the Mini
llegations th
s on the issu
nt's exhibit s
agreed on an
etariat for Le
bsidiary, repo
missing from
" about the r
ve and Legal y 5, 2005 (R-3
C-291) (emph
C-291).
o que la Minios y Jurídicos uda sobre el siespecto de la na muestra dthe Minister othe Office of t
n May 5, 200
its argument
ssion for an
s informed P
Affairs had re
istry of Econ
hat there was
ue" and that C
shows that it
n interpretatio
egislative and
orted to Tom
m Pac Rim's
requirement.
Affairs, May30).
hasis added).
istra de Econo de la Presideignificado de posición de qde tratar de aof Economy rthe President
05, Pac Rim
t that it did n
undergroun
Pac Rim in J
eviewed the
nomy and the
s "considerab
Claimant wa
was inform
on and that t
d Legal Affa
m Shrake tha
concession
.81 Mr. Earn
y 25, 2005 wit
omía haya encia de la ese requisito
que no se debayudarle a un requested the of the Repub
sent
not
d
June
e
ble
as
med at
this
airs.
at
nest
th
. Era ería
blic
noted tha
have 30 d
was "a ne
Mines wa
applicatio
7
of Mines
October 2
applicatio
land subj
7
ownershi
applicatio
activities
does not mseek a higfollowed, 82 Pac Rim83 Pac Rim84 Letter fPREVIENestablecidTREINTATestimonipor los prbetter reacestablishesubmit theproperty sfor mining85 Letter f
at if the Bure
days to prod
early (if not
as "sympath
on—"this bu
More 5.
s finally trigg
2, 2006. Th
on, including
ject to the co
In resp6.
ip or authori
on; the area
s in El Dorad
mean that we gh-level opini
as an attemp
m Internal Me
m Internal Me
from Bureau oNESE, a la Sodo en los ArtícA DIAS preseios de venta dopietarios delch a decision,ed in Articles e following dsales agreemeg exploitation
from Pacific R
eau of Mines
duce the "aut
totally) imp
hetic" and ho
uys us time."
than a year
gered the 30
his letter gave
g certified co
oncession.84
ponse to the
ization docum
of land acco
do for 2008 s
had any doub
ion regarding t to assist a fo
emo re Surfac
emo re Surfac
of Mines to Pociedad 'PACIculos 36, 37 nente a esta Dirde los inmuebl área solicita, WARNS the36, 37 numer
documentationents or legallyn . . . ."] (emp
Rim El Salvad
s requested t
horizations o
ossible task.
olding off on
"83
later, howev
-day period
e Pac Rim th
opies of the
October 20
ments relate
ounted for di
submitted to
bt about the mthe position t
oreign investo
ce Owner Aut
ce Owner Aut
acific Rim ElIFIC RIM ELnumeral 2 y 3rección la doc
bles debidameada para la expe company PAral 2, and 38 on: 1. Certifiedy executed autphasis added).
dor to Bureau
35
the missing a
of the land o
."82 Mr. Ear
n starting the
ver, with no r
by sending a
hirty days to
registered la
06 letter, Pa
d to the sam
id not signifi
o the Salvado
meaning of thithat the propeor, at its insist
thorization (C
thorization (C
l Salvador, OL SALVADO38 de la Ley dcumentación ente inscritos plotación de lACIFIC RIMof the Miningd copies of ththorizations f.
u of Mines, No
application c
owners," som
rnest express
30-day peri
resolution of
a prevención
o submit item
and purchase
ac Rim merel
me parcels it h
icantly chan
oran Ministry
is requiremenerty ownershitence."].
C-291).
C-291).
ct. 2, 2006 (ROR, S.A. DE Cde Minería, pasiguiente: 1. o autorizaciola mina. . . .")
M EL SALVADg Law, that whe duly recordfrom the lando
ov. 11, 2006
components,
mething Mr.
sed relief tha
iod for curin
f this key iss
n (warning le
ms missing fr
es or authori
ly submitted
had referred
ge.85 In fact
ry of Econom
nt. It was simip requiremen
R-4) ("Para mC.V.', . . .de coara que en el Copias certif
ones otorgada) ["The BureDOR, S.A. D
within THIRTYded official trowners in the
(R-5).
, Pac Rim w
Earnest note
at the Bureau
ng defects in
sue, the Bure
etter) dated
rom its
izations for t
d updated
d to in its orig
t, in its repor
my, Pac Rim
mply an attempnt should not b
mejor proveer onformidad aplazo de
ficadas de los as en legal forau, in order to
DE C.V., . . . aY DAYS it manscripts of the area request
ould
ed
u of
the
eau
the
ginal
rt of
m
pt to be
a lo
rma o
as must
he ted
included
land own
equivalen
7
defect in
86 2008 ADorado E87 69 + 930.127.
a map of the
nership or au
nt to, at mos
Articl7.
an applicati
Annual Report
xploitation C
3 = 162. The
e areas it ow
uthorization r
t, 1.62 km2,
le 38 of the M
ion for a min
t of Exploratio
Concession, Fe
conversion fr
wned that cle
requirement
which is les
Mining Law
ning exploita
on for the Woeb. 2009 ("20
rom hectares t
36
arly shows t
.86 Roundin
ss than 13%
only allows
ation concess
ork Done by P008 Annual R
to km2 is 100
that it still ha
ng up, the are
of the reque
s a maximum
sion after th
Pacific Rim EReport"), § 6 (R
0:1, so 162 he
PamAGpirearshfoclowau
ad not comp
ea it claimed
ested area.87
m 30-day tim
e official wa
El Salvador inR-3).
ectares is 1.62
ac Rim submmap with its 2Annual ReporGovernment.
ink outline isequested conrea and the chapes are theor which Paclaimed to havwnership or uthorization.
plied with the
d to own is
me limit to cu
arning letter
n the Proposed
2 km2. 1.62/1
mitted this 2008 rt to the (R-3) The s the
ncession colored e only land c Rim ve
e
ure a
is
d El
2.75=
received
granted i
adjudicat
option un
7
Memoria
authoriza
with this
7
concessio
8
undergro
the limite
the under
argument
88 Mining89 Memor90 Respon91 Pac Rim
by the appli
n December
ted. Once th
nder the law
Thus, 8.
al on the Mer
ation for add
mandatory r
The r9.
on. There is
The fo
b) Thegrante
In resp0.
ound mine, th
ed surface ar
rground min
t was proper
Law, Art. 38
ial, Section IV
nse (Prelimina
m Internal Me
icant.88 Afte
r had run), th
he thirty day
was for the
Pac Rim did
rits, Pac Rim
ditional land.
requirement
c) Threq
i
requirement
s no limiting
ollowing doc
e ownership ed by the ow
ponse to El S
he applicant
rea where m
ne and the ab
rly rejected b
8 (RL-7(bis)).
V.F.
ary Objection
emo re Surfac
er this period
he applicatio
s passed and
application
d not own or
m does not al
.89 It is, ther
t for its explo
he land ownequested in a c
i. The reqproject
of Article 37
language in
cumentation
deed of the wner;
Salvador's P
only needs t
ining activit
bove-ground
by the Gover
s), para. 147.
ce Owner Aut
37
d had run (or
on could no l
d the applica
to be rejecte
r have autho
llege any new
refore, indisp
oitation conc
ership requirconcession
quirement is t proponent p
7.2.b) applie
n the provisio
n shall also b
property or
Preliminary O
to demonstra
ties are to be
mining faci
rnment in 20
thorization (C
r even after t
longer be law
ation defects
ed.
orization for
w facts abou
putable that
cession appl
rement applie
not limited plans to dire
es to all prop
on:
be submitted
the authoriz
Objections, C
ate ownersh
e conducted –
ilities are to b
005.91 Altho
C-291).
the second 3
wfully admit
were not co
the property
ut owning or
Claimant fai
ication to be
es to the ent
to surface pectly affect
perty covered
: . . .
zation legally
Claimant arg
hip of, or auth
– i.e., where
be located."
ough Pac Rim
30-day period
tted, reviewe
orrected, the
y at issue. In
r having
iled to comp
e admitted.
ire area
roperties the
d by the
y
gued that, "fo
horization to
e the entranc
90 This
m now prim
d
ed, or
only
n its
ply
e
for an
o use,
e to
marily
argues th
Salvador
impacted
8
the Minin
Article 3
technical
actividad
with whi
authoriza
contain th
8
import th
qualifyin
"where th
provision
requirem
"surface
surface a
8
"where th
92 Memorthese procproposed 93 Mining
hat Article 37
r will explain
d, included in
First, 1.
ng Law. Tw
7.2.a) requir
l description
des" or "prop
ch Claimant
ation for the
he qualifier
Claim2.
he Article 37
ng the genera
he activities
n. Even if th
ment (which i
activities."
and undergro
Secon3.
he activities
ial, para. 576ceedings, PREmining opera
Law, Art. 37
7.2.b) simply
n why the arg
n the Memor
Pac Rim's in
wo provision
res an applic
, coordinate
perty where t
t failed to co
"inmueble"
"where the a
mant thus mak
7.2.a) limitat
al term, "pro
will be carri
he text of 37
it is not), the
Claimant's i
ound.
nd, at the tim
will be carri
("as ClaimanES did obtainations").
7.2 (RL-7(bis)
y does not ap
gument limi
rial as a fallb
nterpretation
s in Article 3
cant to provid
s and bound
the activities
omply, requir
or "property
activities wil
kes two mis
ion into Arti
perty." In a
ied out" lang
.2.a) were ap
ere would be
nterpretation
me it submitte
ied out" to re
nt pointed outn all the surfac
)).
38
pply to appli
iting the requ
back argume
n is not supp
37.2 of the M
de detailed i
daries—for th
s will be carr
res that the a
y." Unlike A
ll be carried
takes in inte
icle 37.2.b) e
ddition, Clai
guage of Art
pplicable to
e no basis for
n ignores the
ed its Applic
efer to the en
t on numerouce rights over
ications for m
uirement to s
ent,92 is inco
portable base
Mining Law
information—
he "inmueble
rried out."93
applicant mu
Article 37.2.a
out" after th
erpreting 37.
even though
imant tries t
ticle 37.2.a)
the ownersh
r limiting the
e fact that ac
cation, Claim
ntire area of
s occasions dr areas that wo
metallic con
surface area
orrect.
ed on the tex
use the term
—such as a l
e en el cual
Article 37.2
ust prove ow
a), this Artic
he term "prop
2.b). Claim
h the latter ha
to force a me
that is not in
hip or author
e reference t
ctivities can
mant underst
f the concess
during the preould have bee
ncessions, El
s directly
xt of Article
m "inmueble.
location map
se realizará
2.b), the Arti
wnership or
cle does not
perty."
mant tries to
as no langua
eaning on th
n the text of
rization
to "activities
happen on th
tood the phra
sion. In
liminary phasen affected by
l
37 of
."
p, a
n las
icle
age
e
that
s" to
he
ase
se of y its
complian
entire are
parts whe
its descri
for purpo
by neces
own actio
concessio
understoo
concessio
84
the surfac
forces a d
Claimant
concessio
need to p
distingui
Indeed, th
undergro
94 ConcesConcessioDec. 200495 Under Sfrom argu96 Mining
nce with Arti
ea of the requ
ere surface a
iption of the
oses of that A
sary implica
ons in submi
on area in re
od that the p
on area, and
Third4.
ce area of th
distinction th
t's "prelimin
on, it is impo
physically af
shed underg
he drafters s
ound, where
sion Applicaton Applicatio4 (R-25).
Salvadoran Lauing that the te
Regulations,
icle 37.2.a),
uested conce
activities wo
"property w
Application,
ation 37.2.b)
itting detaile
esponse to th
phrase "wher
not just som
d, the argume
he entire con
hat is not fou
ary" plans an
ossible for P
ffect for its su
ground mines
specifically d
the extractio
tion at 4, § 2.n, Dec. 2004
aw, the doctrierm "property
, Art. 2 (RL-8
Claimant su
ession with i
uld take plac
where the act
the "inmueb
, is the entire
ed mapping,
he Article 37
re the activit
me small part
ent that the e
cession requ
und in the la
nd its desire
Pac Rim to h
urface work
s from open-
defined "Min
on of minera
1, and at 7, §§(R-24) and M
ine of "actos py" means som
8(bis)) (empha
39
ubmitted the
its Applicati
ce. Claiman
ivities will b
ble" or "prop
e area reque
coordinates
.2.a) require
ties will be c
t of it.95
explicit requi
uested should
aw. In this re
to expand it
ave known i
ks. The draft
-pit mines, b
ne" as: "The
al substances
§ 4.0 and 4.1 Map 2, Locati
propios" (estmething differ
asis added).
coordinates
ion for the C
nt's Applicat
be carried ou
perty" referre
sted for the
s and other in
ement demon
carried out" r
irement to o
d be ignored
egard, it is w
ts operations
in 2004 wha
ters of the M
but reasonab
physical pla
s is carried o
(R-2); Map 1ion of Conces
toppel) wouldrent in Article
s and maps c
Concession, n
tion for the C
ut" thus leav
ed to in Arti
concession.9
nformation f
nstrates that
referenced th
own or have
d for undergr
worth noting
s after obtain
at surface pro
Mining Law c
ly chose not
ace, whether
out."96 The d
1, Location ofssion, Conces
d apply to pree 37.2.b).
covering the
not just those
Concession a
e no doubt th
icle 37.2.a),
94 Claimant'
for the entire
Claimant w
he entire
authorizatio
round mines
that given
ning the
operty it wou
could have
t to do so.
r at the surfa
drafters
f Concession,ssion Applicat
clude Claima
e
and
hat,
and
's
e
well
on for
s
uld
ace or
, tion,
ant
purposefu
area for e
8
not have
one. Wh
open-pit
found in
centers o
8
Number
requirem
lists the r
exploitat
97 Memor
fully required
either type o
In its 5.
to comply w
hereas Claim
and undergr
Article 37.2
on the unamb
As the"Concit contconceMininreferreobservCONCMINEdocum
In turn37(2)(concethe AmEl Sal
This a6.
1 lists the re
ments for app
requirements
ion concessi
ial, paras. 563
d ownership
f mine.
ii
Memorial, C
with Article 3
mant's first lin
round mines
2) between m
biguous word
e title to Articession for Etains the docssions. "Min
ng Law as med to as non-ves, Article CESSION FERALS,' whimentation req
n, the determ(b) is intendessions must mended Minlvador.97
argument is b
equirements
lications for
s for applica
ions for mine
3-564.
or authoriza
i. The req
Claimant has
37.2.b), but
ne of attack w
, Claimant's
metallic mine
d: "and." Ac
icle 37(2) inExploitation cumentation nes" are defi
metallic miner-metallic mi37(2) "is notOR METALich would imquirements f
mination of wed to apply tbe made on
ning Law, vi
baffling. Ho
for applicati
r exploitation
ations for pro
es were diffe
40
ation from al
quirement ap
s now chang
the new argu
was to draw
newest argu
es and non-m
ccording to C
ndicates, thatof Mines anrequirementned in Articral deposits,ineral deposit entitled 'FOLLIC OR NOmply that it cfor either typ
whether the rto applicantsthe basis ofewed in ligh
ow could the
ions for expl
n concession
ocessing plan
erent from th
ll landowner
pplies to bot
ed its princip
ument is as u
w a distinction
ument attemp
metallic quar
Claimant an
t provision and Quarries,"nts for both tycle 2 of the A whereas "quits. As Mr. WOR EXPLOION-METALcontains the pe of Conces
requirement s for metallicf a systematiht of the Con
e title of Arti
loration licen
ns for mines
nts. If the ap
hose for qua
rs in the enti
th mines and
pal argumen
unsupportab
n (not in the
pts to make
rries. Claim
nd its expert
applies to " meaning thypes of
Amended uarries" are Williams ITATION LLIC
ssion."
in Article c mining c review of
nstitution of
icle 37.2 be
nses, numbe
and quarries
pplication re
arries, there w
ire concessio
d quarries
nt for why it
ble as the ear
e law) betwee
a distinction
ant's argume
John William
hat
clearer?
er 2 lists the
s, and numb
equirements
would simpl
on
did
rlier
en
n (not
ent
ms:
er 3
for
ly be
a separat
Otherwis
that the l
of the tex
the merit
"systema
requirem
8
allegedly
purported
ignoring
solely ab
Claimant
not requi
as Claim
do now t
8
explorati
98 Memor99 Memor100 Vienna101 Claimamap and tLaw, Art.descripcióbe carriedis not limi
e subparagra
se, the fact th
isted docum
xt, and this is
ts stage of th
atic review"
ment, a) throu
Based7.
y conducted
dly support t
the use of th
bout quarry e
t is mistaken
ire a search f
ant sought to
o property w
Claim8.
ion and explo
ial, para. 564
ial, para. 565
a Convention
ant's argumentechnical desc 37.1.a) (RL-
ón técnica y ed out, technicaited in the wa
aph, or some
hat number 2
mentation is r
s what Claim
his arbitration
of the Minin
ugh f), applie
d on the alleg
a "systemati
the argumen
he word "inm
exploitation,
n. "Inmueble
for suppleme
o do before t
where non-m
mant also rep
oitation righ
.
.
on the Law o
nt is thoroughcription of the7(bis)) ("Plan
extensión del al descriptionays Claimant
e other indic
2 applies to c
required for b
mant had und
n. Its new ar
ng Law in lig
es to its appl
ged ambigui
ic review" of
nt that Claim
mueble" in th
is the only "
e" means pro
entary mean
to property a
metallic mine
eats its flaw
hts holders ha
of Treaties, M
ly underminee property to bno de ubicacióárea solicitad
n and extensioseeks to impo
41
ation that 37
concessions
both types o
derstood unt
rgument that
ght of the Co
lication is ab
ty of the me
f the Mining
mant can disre
he same Arti
"substantive
operty, unqu
s of interpre
affected by s
erals are foun
ed argument
ave a real pr
May 23, 1969,
ed by the use obe included inón del inmueb
da") ["Plot plaon of the requose.
7.2.b) was lim
for both min
of application
til coming up
t a concessio
onstitution, t
bsurd and un
eaning of "an
g Law and fo
egard this re
icle, claims t
antecedent
ualified. The
etation.100 Th
surface work
nd.101
t that Article
roperty right
1155 U.N.T.
of "inmueblen a requestedble en el cualan of the propuested area"].
mited to qua
nes and quar
ns. This is th
p with a new
on applicant
to determine
nworkable.98
nd" in Articl
ound two Ar
equirement.
that Article
for that term
e meaning is
he term cann
ks, nor as Cla
e 10 recogniz
t in subsoil m
.S. 331, Art. 3
" in Article 3d exploration ll se realizaránperty where th This propert
arries.
rries indicate
he plain mea
w argument f
should cond
e whether eac
e 37.2, Claim
rticles that
Claimant,
30, which is
m."99 But
s clear and d
not be restric
aimant seeks
zes that
metallic mine
31 (RL-81).
7.1.a), requirlicense. Mini
n las actividadhe activities shty for explora
es
aning
for
duct a
ch
mant
s
oes
cted
s to
eral
ring a ing des, hall
ation
deposits.
have a pr
must, con
8
relate to m
quarries"
a concess
subject to
insists, A
would be
property!
could be
minerals,
case, min
exploitat
authoriza
9
concessio
establish
102 Memor103 Miningsurface orya sea sup
102 As alrea
roperty right
nsider the rig
Claim9.
materials at
" versus "min
sion to explo
o the require
Article 37.2.b
e granted wit
! If Claiman
excavated a
, like non-m
nes or quarri
ion concessi
ation for the
Claim0.
ons would b
es that the m
rial, para. 567
g Regulationsr undergroundperficial o sub
ady explained
t to extract th
ghts of priva
mant makes a
the surface.
nes and quar
oit a metallic
ement of sho
b) does not a
thout requiri
nt's interpreta
and removed
etallic miner
ies, for mine
ion in El Sal
land include
iii
mant finally a
e contrary to
mining of me
7.
s, Art. 2 (RL-d, where the ebterráneo don
d, Article 10
he State-own
ate landowne
a further inte
Accepting
rries" would
c deposit wit
owing owner
apply to meta
ing any docu
ation were c
d without so m
rals, can be l
rals at the su
lvador must p
ed in the req
i. The req
argues that ap
o the "basic c
etallic minera
8(bis)) (definextraction of mnde se lleva a
42
0 recognizes
ned deposits
ers before gr
erpretative m
Pac Rim's n
d lead to the
th an open-p
rship or auth
allic deposit
umentation o
correct, the e
much as con
located at th
urface or und
provide docu
quested conce
quirement is
pplying Arti
constitutiona
als, as a prod
ning "Mine" amineral substcabo la extrac
that exploita
. Of course
ranting conc
mistake by as
ew argumen
nonsensical
pit mine (i.e.
horization of
ts, concessio
of ownership
entire surface
nsultation wi
he surface or
derground, a
umentation
ession.
not unconst
icle 37.2.b) t
al order in E
ductive use o
as: "The physitances is carricción de las s
ation conces
the State ca
essions.
ssuming that
nt regarding
result that a
, not a quarr
f the land.103
ns for open-
p or authoriz
e of a landow
ith that owne
r in the subso
an applicant
of ownership
titutional
to metallic m
El Salvador, w
of the State's
ical place, whied out." / "Msustancias min
ssion holders
an, and in fac
t quarries alw
"mines or
an applicatio
ry) would no
If, as Claim
-pit mining
zation for the
wner's prope
er. Metallic
oil. In either
for an
p or
mine exploita
which
s own prope
hether at the MINA: Lugar f
nerales.").
s
ct
ways
on for
ot be
mant
e
erty
r
ation
erty,
físico
is an acti
be in the
But every
reason, th
land own
circumsta
applicabl
9
2005 opi
Law,105 n
Article 2
integrity,
of the sam
9
the right
104 Memor105 Navas 106 Legal O107 Constitthe Officiderecho aposesión, life, physiconservatprivada desin ser preright to lifjudged in
ivity in the p
public inter
y time some
he Mining L
nership or au
ances of eac
le to Claiman
The S1.
nion for the
noted that m
of the Cons
, freedom, se
me.107
Dr. M2.
to security i
rial, para. 570
de Hernánde
Opinion from
tution of the Ral Gazette No
a la vida, a la iy a ser proteg
ical and moraion and defenel derecho a leviamente oídfe, freedom, paccordance w
public interes
est when it c
one seeks to
Law requires
uthorization,
h specific ca
nt and is, in
Salvadoran C
Bureau of M
ining involv
stitution state
ecurity, work
Méndez indica
includes the
0 (emphasis in
z Witness Sta
m Dr. Marta A
Republic of Eo. 281, Book integridad físgida en la conal integrity, libnse of the samla vida, a la libda y vencida eproperty and pwith the law. .
st."104 But C
can be done
o mine, it is n
applicants t
to help the M
ase. This req
fact, ground
Constitution r
Mines, Dr. M
ves dangers t
es that every
k, property,
ated that Sal
right to enjo
n original).
atement, para
Angélica Ménd
El Salvador, L234 ("Constitica y moral, a
nservación y dberty, security
me.]. See alsobertad, a la pren juicio con possession, n. . ."].
43
Claimant see
in a technica
not necessari
to submit det
Ministry ma
quirement ha
ded in the Co
recognizes p
Marta Ménde
to life, health
y person has
and to be pr
lvadoran Co
oy one's prop
. 44.
dez for Burea
Legislative Detution"), Art. a la libertad, adefensa de losy, work, prop
o Constitutionropiedad y poarreglo a las or of any othe
eks to take th
ally and env
rily in the pu
tailed inform
ake the right
as always be
onstitution.
property righ
ez, a primary
h, and prope
the right to
rotected in th
nstitutional j
perty withou
au of Mines D
ecree No. 38,2 (Authority
a la seguridads mismos.") [
perty and possn, Art. 11 ("Nosesión, ni deleyes . . . .") [er rights with
his point too
vironmentally
ublic interest
mation, inclu
decision dep
een in the M
hts and secur
y drafter of th
erty.106 As sh
life, physica
he preservati
jurisprudenc
ut risks, distu
Director, May
Dec. 16, 198y RL-121) ("Td, al trabajo, a[Every personsession, and t
Ninguna persone cualquier otr["No one can
hout first bein
far. Mining
y safe mann
. For this
uding eviden
pending on t
Mining Law
rity rights. I
he 1995 Min
he highlighte
al and moral
ion and defen
ce has held t
urbances, or
y 31, 2005 (R-
83, published Toda personaa la propiedadn has the rightto be protectedna puede ser ro de sus derebe deprived
ng heard and
g can
er.
nce of
the
In her
ning
ed,
nse
that
fear
-32).
in a tiene d y t to d in
echos of the
and that t
Indeed, th
includes
property
explained
mean tha
authoriza
9
congruen
that the s
Mining L
for assum
where on
108 See, e.g2003 (RLtranquilido inmueblpreventivaright is eqwithout ripreventati109 Case N33) ("estamedidas pciudadanoque afectato an obliggoods andsecurity th110 Legal Opertenezcparticular111 Tinetti
the State mu
he Supreme
an obligatio
of citizens.1
d in her 2005
at the State w
ation."110
Salvad3.
nt with the C
subsoil belon
Law were we
ming, as Clai
nly the subsu
g., Case No. 3-33) ("En su
dad, es decir, ules que cada uas para no suf
quivalent to a isks, disturbanive measures
No. 309-2001,a vertiente delpertinentes (inos, de tal sueraría de manergation for thed property of hat would dir
Opinion froma al Estado, nes sin su auto
i Expert Repo
ust take appr
Court of El
n for the Sta
09 Therefore
5 opinion, "t
will permit ex
doran Const
Constitution.
ngs to the Sta
ell aware of
imant does, t
urface would
309-2001, Codimensión deun derecho deuno posee, o bfrir ningún daright to peace
nces or fears, to avoid any
, Constitutionl derecho a la ncluso, prevenrte que si no sra directa el dee State to adopcitizens, suchectly affect th
m Dr. Marta Ano significa quorización.").
ort, paras. 7-9
opriate preca
Salvador ha
ate to take ap
e, as Dr. Mé
the fact that
xcavation un
titutional law
He begins b
ate in Article
this Constitu
that the Min
d be directly
onstitutional Ce seguridad me poder disfrubien la tranquaño o perturbae, meaning, aand also withdamage or di
nal Chamber oseguridad . .
ntivas) para lase realiza tal aerecho a la prpt appropriateh that if the Sthe property ri
Angélica Méndue va a permi
.
44
autions to pr
as explained
ppropriate pr
éndez, a draf
the subsoil m
nder private
w expert, Dr.
by noting tha
e 2. It is the
utional provi
ning Law dra
impacted w
Chamber of thmaterial, tal deutar sin riesgouilidad de queación.'") ["In
a right to be abh the peace ofisruption."].
of the Suprem. se refiere a a protección dactividad, exisropiedad.") ["e (even prevetate does not ght."].
dez, May 31, itir que se exc
rotect people
that the righ
reventive me
fter of the M
minerals bel
property wit
. Tinetti, con
at the Minin
erefore clear
ision.111 Ac
afters uninten
when requirin
he Supreme Cerecho 'equivos, sobresaltose el Estado tomthe dimensioble to enjoy of mind that th
me Court of Eque es una obde los bienes stiría una viol"this aspect ofntative) measact, it would
2005 (R-32) cave subterrán
e and their p
ht to security
easures to pr
Mining Law in
ong to the S
thout the ow
nfirms that th
ng Law expre
that the draf
ccordingly, th
ntionally inc
ng ownership
Court of El Savale a un derecs ni temores lmará las med
on of materialone's goods anhe State will t
El Salvador, Jubligación del muebles o inlación a la sef the right to ssures for the pbe a violation
("el hecho deneamente las
property.108
y of property
rotect the
n question,
State does no
wner's
he requireme
essly recogn
fters of the
here is no ba
cluded the ar
p or authoriz
alvador, June cho a la los bienes mudidas pertinenl security, thisnd property ake appropria
une 26, 2003 Estado adopt
nmuebles de loguridad matesecurity . . . rprotection of n of material
e que el subsupropiedades
y
ot
ent is
nizes
asis
rea
zation
26,
uebles ntes y s
ate,
(RL-tar las os
erial efers the
uelo de
for the ar
required
Constitut
94
He expla
9
to underg
Salvador
that socie
initiative
greatest n
Court ha
individua
112 Tinetti113 Constitsocial. Elacrecentarpaís.") ["EState shalwealth an
rea of the co
the landown
tional rights.
Dr. Ti4.
ains that the r
dominowneragains(erga obligalegal a
Claim5.
ground mine
r cannot igno
etal well-bei
s within nec
number of th
s confirmed
al rights and
Howeeconogeneraand unfreedo
i Expert Repo
tution, Art. 10l Estado fomer la riqueza nEconomic freel encourage ad ensure that
ncession. D
ners' authoriz
.
inetti confirm
right to prop
nion or owner in a situatiost specified pomnes). The
ation, but a gauthority gra
mant disregar
erals without
ore its laws o
ing limits eco
cessary cond
he country's
that the righ
the best inte
ever, it is impomic freedomal right to frenlimited. Buom, in terms
ort, para. 13.
02 (RL-121) entará y proteacional y paraedom is guara
and protect prits benefits re
Dr. Tinetti ag
zation even f
ms Dr. Mend
perty is absol
ership is an aon of legal apersons, but ese types of general duty anted to the o
rds this provi
t considering
or its citizens
onomic freed
ditions to incr
inhabitants.1
ht to econom
erests of the
portant to pom for a licenseedom, whe
ut the truth is of legal free
("Se garantizegerá la iniciaa asegurar losanteed, providrivate enterprieach the great
45
grees with Dr
for activities
dez's 2005 an
lute:
absolute righauthority that
also againstrights do noto respect anowner by law
ision when i
g anyone else
s' Constitutio
dom; the Sta
rease nation
113 As Dr. T
mic freedom i
community
oint out that se to believere private ins each indiviedom, may o
a la libertad etiva privada ds beneficios dded that it doise within thetest number o
r. Méndez th
s in the subso
nalysis of A
ht, since it plt is enforceat everyone o
ot impose a snd not interfw.112
it insists that
e's interests.
onal rights.
ate shall enc
nal wealth an
Tinetti explai
is limited by
:
it is commoe that there onitiative can idual's right only exist an
económica, endentro de las de ésta al mayes not conflic
e conditions nof the country
hat the drafte
oil to protec
Article 2 of th
laces the able not onlyor anyone specific fere with the
t the State m
. But the Go
The Constit
ourage and p
nd assure the
ins, the Salv
y the need to
n to mistakeonly exists a be absolute to economic
nd operate
n lo que no secondiciones n
yor número dect with social necessary to iny's inhabitants
ers purposefu
ct the landow
he Constituti
y
e
must grant rig
overnment of
tution provid
protect priva
e benefits to
vadoran Supr
o protect othe
e
c
e oponga al innecesarias pare habitantes dinterests. The
ncrease nations."].
fully
wners'
ion.
ghts
f El
des
ate
the
reme
ers'
nterés ra
del e nal
9
exploitat
to the are
complies
Constitut
El Salvad
Constitut
9
Court of
challenge
Supreme
114 TinettiJudgmentseñalar qudesenfrenpuede ser cuanto libconstitucilos demás115 Tinettiel derechodos normaexistir supdecisión dde la Ley right to prother, are may be silawmaker116 Constit
subjecensuriother intere
The M6.
ion concessi
ea of the con
s with the pro
tional rights
dor, the requ
tion of El Sa
Claim7.
El Salvador
e the land ow
Court of El
i Expert Repot No. 2-92, Juue, muchas veno y creer que
absoluta e ilibertad jurídicaionales y legas y con el inte
i Expert Repoo de propiedaas válidas y cpuestos en losde quienes dede Minería.")
roperty or domtwo equally vtuations wherrs who drafted
tution, Art. 17
ct to a numbing a harmonindividuals' st114
Mining Law,
ion must obt
ncession.115
ovisions of t
of its citizen
uirement in A
alvador.
mant's argum
r can rule tha
wnership or a
Salvador. U
ort, para. 16 (quly 26, 1999 (Aeces, se incurr únicamente eimitada, cuana, únicamenteales, encaminaerés y el biene
ort, para. 19 ("ad o dominio pcoherentes en s cuales ellos cretaron la Le) ["The articlemain, on the ovalid, coherenre they may cd the Mining
74 (RL-121).
er of legal anic exercise freedom and
therefore, c
tain authoriz
El Salvador
the Mining L
ns. Thus, far
Article 37.2.b
ent would be
at a law is un
authorization
Unless and u
quoting ConstAppendix 3 tore en el error existe un dere
ndo lo cierto ee puede existiradas a asegurestar de la com
"El artículo qupor un lado yprincipio. . . pueden entra
ey de Mineríae of the Salvaone hand, andnt rules, in prconflict, and thLaw to establ
46
nd constitutiof such righd community
orrectly prov
zation from a
must ensure
Law for obta
r from being
b) ensures th
e misguided
nconstitution
n requiremen
until the Sup
titutional Chao Tinetti Expde confundir
echo general des que el derecr y operar conar su ejerciciomunidad.").
ue reconoce y el que garant. Tal como s
ar en conflictoa para estableadoran Constid the article thrinciple. . . Ahat is the truelish the requir
ional limitatht without inty wellbeing
vides that an
all landowne
e that an app
aining a conc
g contrary to
hat the Minin
d in any even
nal.116 In thi
nt of the Mi
preme Court
amber of the Spert Report)) (r libertad econde libertad, encho de libertan sujeción a uo armónico y
y garantiza entiza la liberta
se detalla en eo y éste es el vecer el requisiitution that rehat guarantee
As explained ine reason behinrement of Art
tions aimed anterfering wit
and
n applicant f
ers in the are
plicant such
cession in or
o the Constitu
ng Law is co
nt because on
is case, Pac R
ining Law be
were to decl
Supreme Cou("Sin embargonómica con lan donde la in
ad económicauna serie de liy congruente c
n la Constitucad económica,el apartado anverdadero funito contenido ecognizes ands economic frn the previound the decisioticle 37.2.b)."
at th
for an
ea correspond
as Pac Rim
rder to protec
utional order
onsistent wit
nly the Supre
Rim did not
efore the
lare the
urt of Justice, o es importana licencia y elniciativa privaa de cada uno,imitaciones con la libertad
ción de El Sal, por el otro, s
nterior, sí puedndamento de en el Art. 37.
d guarantees thfreedom, on ths section, ther
on of the "].
ding
ct the
r of
th the
eme
Final nte l ada , en
d de
lvador son den la .2.b) he he re
requirem
simply de
effect, an
including
comply w
9
single sen
authorize
during th
areas tha
complian
applies to
entrance
The Trib
stage bec
99
Prelimina
the surfac
117 Memor118 Respon119 Respon120 Respon
ment unconsti
ecide a requ
nd regardless
g the Directo
with it.
Claim8.
ntence of its
ed to use. A
he preliminar
t would have
nce, Claiman
o land "wher
to the under
unal will rec
cause it was
Claim9.
ary Objectio
ce owners w
rial, para. 576
nse (Prelimin
nse (Prelimin
nse (Prelimin
itutional, Ar
uirement is un
s of any argu
or of the Bur
d) Claow
mant alleges t
s Memorial w
ccording to
ry phase of t
e been affec
nt cites its ar
re the mine p
rground min
call that Clai
"an intensely
mant follows
ons stage wit
within the pro
6.
nary Objection
nary Objection
nary Objection
rticle 37.2 is
nconstitution
uments abou
reau of Mine
aimant admiwners of the a
that it has sa
without prov
Claimant, "a
these procee
ted by its pr
rgument in th
project is loc
e and the ab
imant insiste
y factual inq
its concluso
th the asserti
oposed El Do
ns), para. 143
ns), para. 147
ns), para. 13.
47
the law and
nal and choo
ut its Constitu
es, must com
its that it didarea requeste
atisfied the re
viding any in
as Claimant
dings, PRES
oposed mini
he Prelimina
cated,"118 wh
ove-ground
ed that this is
quiry."120 Bu
ory statement
ion that "PRE
orado Explo
.
.
must be com
ose to ignore
utionality, al
mply with it a
d not own or ed in the con
equirement o
nformation a
pointed out
S did obtain
ing operation
ary Objection
hich it inexp
mining facil
ssue could n
ut now Claim
t harkening b
ES maintain
oitation Conc
mplied with.
e it. As long
ll Govermen
and oblige ap
have permisncession
of Article 37
about the lan
on numerou
all the surfa
ns."117 As p
ns stage that
plicably limit
lities are to b
not be determ
mant provide
back to its a
ned good rela
cession area
. No one can
g as the law i
nt officials,
pplicants to
ssion from th
7.2.b) in one
d it owns or
us occasions
ace rights ove
proof of its
t the requirem
ted to "wher
be located."1
mined at that
es no new fa
arguments in
ations with a
, and believe
n
is in
he
e
is
er
ment
re the
119
t
acts.
n the
all
ed it
could get
is not tru
2005, Fre
of the "m
authoriza
this is ex
Pac Rim
impossib
1
for all the
are appro
1
decided t
Tribunal
121 Memor122 Pac Ri123 Letter attached 124 El Salvabout 987National R
t whatever 'p
ue. The exhib
ed Earnest w
main things"
ations from a
xactly what P
owned just t
ble to obtain
Pac R00.
e land within
oximately 1,0
Pac R01.
to pursue oth
will recall C
Claimconceuse mexpropClaimhave p
rial, para. 576
m Internal M
from MinisteMemorandum
vador obtaine7 properties inRegistry is att
permission' t
bit Claimant
wrote to Tom
missing from
all the land o
Pac Rim had
the area of th
all the perm
Rim's assessm
n their desire
000 individu
Rim did not h
her means to
Claimant's ad
mant could hassion size; b
more surface lpriate any la
mant or authoproceeded w
6.
Memo re Surfa
er of Economym, "Interpreta
ed informationn the requestetached as Exh
that may be r
t cites in the
m Shrake des
m Pac Rim's
owners was "
told the Min
he plant, "bu
missions beca
ment in 2005
ed 12.75 km
ual owners w
have the requ
o demand the
dmission in t
ave revised tby seeking toland; by seekand that privorize Claimawith the appli
ace Owner Au
y to Secretaryación Ley de M
n from the Saed concession hibit R-127.
48
required from
very same p
scribing the s
concession
"a nearly (if
nister of Eco
ut not the res
ause there are
5 was correct
m2 area would
within that ar
uired authori
e concession
the Prelimin
the applicatio obtain ownking to haveate owners w
ant to use, etcication, hopi
uthorization (C
y for LegislatiMinería," Ma
alvadoran Natarea. The in
m them if it
paragraph st
surface owne
application.
f not totally)
onomy, who
st of the area
e many own
t. Obtaining
d have been
rea.124
izations, cou
n without com
nary Objectio
on (e.g., by nership or aue the Governwere not wilc.); or Claiming that the B
C-291).
ive and Legalay 5, 2005 (R-
tional Land Rndex of registe
became nec
tates the opp
er authorizat
. He wrote t
impossible t
at the time
a, and they b
ners."123
g ownership
nearly impo
uld not obtai
mplying with
ons stage:
changing theuthorization tnment lling to sell t
mant could Bureau of
l Affairs, May-30) (emphasi
Registry in 20ered owners o
cessary."121 T
osite. In Jun
tion issue as
that getting
task."122 Ind
described th
believe that i
or authoriza
ossible. Ther
n them, and
h the law. T
e to
to
y 25, 2005 wiis added).
10 that there aobtained from
This
ne
s one
deed,
hat
it is
ation
re
The
ith
are m the
1
requirem
kind of a
provides
what was
Pac Rim'
Navas de
lease agre
whether o
about the
while see
1
have com
so.130 Ind
125 Rejoin126 Navas 127 Memorresolved, would be 128 Memor129 Navas 130 Memorits applicadone so.")
Minesissue i
As alr02.
ment and chos
authorization
on this poin
s required, an
's suggestion
e Hernández
eement, or au
on or below t
e requiremen
eking to chan
Claim03.
mplied with t
deed, Pac Ri
nder (Prelimin
de Hernánde
rial, para. 576given that thecarrying out.
rial, para. 576
de Hernánde
rial, para. 229ation for an E).
s would ultimin Claimant'
ready noted,
se not to com
n was require
nt, the Direct
nd Pac Rim
n that the aut
, former Dir
uthorization s
the property
nt are just po
nge the law.
e) El to c
mant even trie
the law if on
im now labe
nary Objection
z Witness Sta
6 ("the questiese surface ow").
6 (quoting Pa
z Witness Sta
9 ("if the BureExploitation C
mately resolv's favor. Clai
however, th
mply. Even
ed is far-fetc
tor of the Bu
simply did n
thorization b
rector of the
so that Pacifi
for which au
ost hoc excus
Salvador didcure the defe
es to excuse
nly the Gover
els the statem
ns), para. 49.
atement, para
on of what kiwners did not
ac Rim Interna
atement, para
eau of Mines Concession to
49
ve its appareimant chose
here was no "
Pac Rim's n
ched.127 Acc
ureau of Min
not like the a
be directed to
Bureau of M
ic Rim could
uthorization is
ses for its de
d not have a fect in its app
its lack of c
rnment had
ments from th
s. 43-45.
ind of 'permist have any leg
al Memo re S
. 50.
had asked PRinclude a sma
ent uncertainthe latter co
"uncertainty
new argumen
cording to th
nes answered
answer and a
o El Salvado
Mines, explai
d carry out mi
s given."129
eliberate cho
a legal obligaplication
compliance b
explicitly to
he Bureau o
ssion' PRES cgitimate intere
Surface Owne
RES to purchaller concessi
nty on this ourse.125
y."126 Pac Ri
nt that it did
he exhibit tha
d Pac Rim's q
argued with
or is nonsens
ins, "Permiss
ining exploit
Claimant's n
oice to ignore
ation to advi
by implying
old the comp
f Mines abo
could obtain west in the activ
er Authorizati
hase additionaion area, PRE
im knew the
not know w
at Claimant
questions ab
her about it.
se. As Gina
sion could be
tation activiti
new argumen
e the require
se Claimant
that it would
any how to
ut its non-
was not easilyvities that PR
on (C-291)).
al lands or to rES would hav
e
what
bout
.128
e a
ies,
nts
ement
how
d
do
y RES
revise ve
complian
Mining L
applicatio
Pac Rim
had alleg
Claimant
1
been forc
(which n
the Gove
Claimant
admitted
1
it needed
take the G
applicatio
Governm 131 Memor132 Rejoin133 Pac Ri
nce with Arti
Law" and cla
on because o
did not think
gedly voiced
t must have c
The w04.
ced to argue
ever change
ernment did n
t did not nee
that it knew
Claimconceuse mexpropClaimhave pMinesissue i
The G05.
d to do by all
Government
on, change t
ment's efforts
rial, para. 230
nder (Prelimin
m Internal M
icle 37.2.b) a
aims that it d
of the suppor
k it would h
support for
complied wi
weakness of C
that it canno
d and was ap
not tell it spe
ed the Gover
w its options
mant could hassion size; b
more surface lpriate any la
mant or authoproceeded ws would ultimin Claimant'
Government
lowing the c
t's goodwill a
the law, or te
s to help the
0.
nary Objection
Memo re Surfa
as "conversa
did not consi
rt it had rece
have to fix its
its project.
ith Salvador
Claimant's p
ot be held re
pplicable fro
ecific steps t
rnment to tel
and chose to
ave revised tby seeking toland; by seekand that privorize Claimawith the applimately resolv's favor. Cla
applied the l
ompany extr
and convert
ell the compa
company ca
ns), para. 49 (
ace Owner Au
50
ations with M
ider its failur
eived from G
s deficient ap
But to make
an law.
position is de
sponsible fo
om the time
to take to cu
l it how to fi
o try to chan
the applicatio obtain ownking to haveate owners w
ant to use, etcication, hopive its appareaimant chose
law. The Go
ra time to fix
it into a lega
any what to
annot becom
(emphasis add
uthorization (C
MINEC abou
re to comply
Government
pplication be
e claims und
emonstrated
or its failure
Claimant m
ure the defect
fix the applic
nge the law in
on (e.g., by nership or aue the Governwere not wilc.); or Claiming that the Bent uncertaine the latter co
overnment w
x its applicat
al obligation
do to get the
me an obligati
ded).
C-291).
ut clarifying
y a "fundame
officials.131
ecause Gove
der the Invest
by the fact t
to comply w
ade its inves
t in its applic
cation; Pac R
nstead of co
changing theuthorization tnment lling to sell t
mant could Bureau of nty on this ourse.132
went above a
tion.133 Clai
n to ignore an
e concession
ion to ignore
the Amende
ental flaw" in
In other wo
ernment offi
tment Law,
that Claiman
with the law
stment) beca
cation. In fa
Rim has alrea
mplying wit
e to
to
and beyond w
imant wants
ny defects in
n. But the
e or change
ed
n its
ords,
cials
nt has
ause
act,
ady
th it:
what
to
n its
its
law for P
Governm
lawfully:
which it w
applicant
1
Rim knew
Governm
Gavida d
requirem
requirem
concessio
against th
the Minis
1
134 Witnespara. 7 ("Euna conce135 Gavidi
Pac Rim. As
ment's suppor
"At no time
was not enti
t is solely re
Claim06.
w as early as
ment's interpr
describes tha
ment because
ment given th
on."135 Whe
he Governm
stry of Econ
As Cl07.
In theobtainEconoMeetithe beauthen
ss Statement oEn ningún moesión a la que
ia Witness Sta
s explained b
rt of Pac Rim
e was I willin
itled under th
sponsible fo
f) Clathe
mant took adv
s 2005 that i
retation of th
at Pac Rim co
"they expre
he large numb
en the May 5
ment's interpr
omy, the com
aimant descr
matter of thn the authoriomia" has acings have beest course of ntic interpret
of Yolanda Momento yo huno tuviera de
atement, para
by former M
m was alway
ng to grant P
he laws of E
r its failure t
aimant chosee risk of tryin
vantage of th
ts applicatio
he law chang
ould not com
ssed to me t
ber of land o
5, 2005 mem
etation of Ar
mpany bega
ribes in its M
he interpretatzation of the
cknowledgeden held with
f action shoutation or a ch
Mayora de Gavubiera estado erecho de con
a. 4.
51
Minister of Ec
ys limited to
Pacific Rim,
l Salvador."
to comply w
e not to try tng to change
he extra time
on could not
ged. Former
mply with th
hat it was im
owners in th
morandum fro
rticle 37.2.b
an seeking al
Memorial:
tion of the lae surface owd that somethh political could it becomehange in the
vidia, Dec. 20dispuesta a ot
nformidad con
conomy, Yol
helping it ob
or any othe
134 Eventua
with the legal
to cure the de the mining
e to try to ch
move forwa
r Minister of
e land owne
mpossible fo
e area they w
om Claiman
b) did not sw
lternative cou
aw regardingwners, the "M
hing needs toonsultants to e necessary te law. It is ho
0, 2013 ("Gavtorgarle a Pacn las leyes de
landa de Gav
btain the con
r company,
ally goodwill
l requiremen
defect but insg law
hange the law
ard unless th
f Economy Y
ership or auth
r them to me
wished to ob
nt's local cou
way the Burea
urses of acti
g the need toMinistra de
o be done. determine
to seek an oped that a
vidia Witnesscific Rim, ni ae El Salvador.
vidia, the
ncession
a concession
l runs out an
nts.
stead assume
w. Indeed, P
he law or the
Yolanda de
horization
eet this
btain as a
unsel arguing
au of Mines
ion.
o
s Statement"),a otra empres").
n to
nd an
ed
Pac
g
and
, sa,
1
Pac Rim'
obtain th
forward."
argument
Law as w
would ac
not be pe
136 Memor288)) (ori137 Memor138 Email 139 Memorany eventConstituti
courseTom S
Shortl08.
's local coun
e "kind of au
"138 Pac Rim
t, but omits t
written had to
ctually be a "
ermitted in th
We shlandowownerto the
Howebe ob
Regarspecifyou hatext ofratherchanglogica
This wwith a
rial, para. 222ginal emphas
rial, para. 224
from Ricardo
rial, paras. 21t. That is a poion.
e of action wShrake's visi
ly thereafter
nsel sought a
uthentic inte
m repeatedly
the part of th
o be observe
"reform" of t
he Salvadora
hare your opwners authorship practiclatter the ow
ever, that is served.
rding how tofically as relaave preparedf Section 37
r than clarifyging its meanal and desirab
would mean a reform of th
2 (quoting El sis omitted, cu
4.
o Suarez to Lu
14, 224, 574. ower that belo
will be clear it in Septemb
, Pac Rim's l
assistance fro
erpretation th
y touts Mr. S
he response
ed.139 Mr. Su
the law unde
an legal syst
inion that thrize subsurfa
ce enshrined wner of the s
the current
o reconcile thates to the "ad, it appears with the tex
ying an opaquning, assignible—to the t
that rather thhe text unde
Dorado Projeurrent emphas
uis Medina, S
It is worth noongs solely to
52
after the meber.136
local counse
om Ricardo S
hat we need
uarez's respo
where Mr. S
uarez inform
er the guise o
em:
he legal requiface mining i
in our legal subsoil is the
t legal text,
hat text with authentic intto us that in
xt of the propue passage ong a differentext.
han an interper the guise o
ect Report forsis added).
Sept. 23, 2005
oting that Mro the Salvador
etings to [be
el sought an
Suarez in the
for the minin
onse as sym
Suarez explic
med Pac Rim
of an interpr
irement thatis not consissystem, sinc
e State. . . .
and the one
h State ownerterpretation"n contrastingposed interpof the law, ynt scope—al
pretation, weof an interpre
r the Month E
5 (C-289) (em
r. Suarez had nran legislature
e] held durin
"authentic in
e Vice-Presi
ng project to
mpathetic to i
citly advised
m that their "i
retation and t
t surface stent with thece according
e that must
rship, and " proposal thg the current pretation, you would belthough
e are dealingetation,
Ending 31 Au
mphasis added
no power to ie under Artic
ng
nterpretation
ident's Offic
o move
ts constitutio
d that the Mi
interpretatio
that this wou
e g
hat
e
g
ugust 2005 (C
d).
interpret the lcle 131 of the
n."137
e to
onal
ining
n"
uld
C-
law in
1
Secretary
this appa
Claimant
this inter
President
conclusio
of the law
guise of a
that inspi
and her c
concessio
140 Email 141 ResponInterpreta142 Claima143 Email 144 Gavidi
sometdoctri
A cou09.
y for Legisla
arent attempt
t complained
rnal memoran
t's Office sen
on: Claimant
w—"rather th
an interpreta
ires it."143 A
colleagues in
on.
The faOfficethen fbecauthe intthe repI madinterpinterpwould
from Ricardo
nse from Secration," Octobe
ant's Rejoinde
from Ricardo
ia Witness Sta
thing alloweine that inspi
uple of week
ative and Leg
t to change th
d repeatedly
ndum.142 Bu
nt to Claima
t's proposed
han an interp
ation, someth
As former M
n the Ministr
act that I hade of the Presfor an authenuse I or my trterpretation peated and ie these attemreted in the reted, which
d be able to m
o Suarez to Lu
retary for Leger 6, 2005 (R-
er (Preliminar
o Suarez to Lu
atement, para
d for neitherires it.140
ks later, in an
gal Affairs o
he law using
in the Prelim
ut now Claim
ant's local co
"interpretati
pretation, we
hing allowed
inister de Ga
ry already kn
d asked the Sident of the
ntic interpretrusted colleaof this provinsistent requ
mpts to be sumanner Paci
h seemed to bmove forwar
uis Medina, S
gislative and L-34).
ry Objection)
uis Medina, S
a. 5.
53
r in our legal
n opinion req
of the Preside
g a procedur
minary Obje
mant has pro
unsel two w
ion" would a
e are dealing
d for neither
avidia explai
new: the requ
Secretary forRepublic, fi
tation of thisagues harborision of the Muests by Pacure there wasific Rim insibe the only wrd with its co
Sept. 23, 2005
Legal Affairs
, paras. 2, 35,
Sept. 23, 2005
l system, no
quested by th
ency of El S
re intended o
ection phase
oduced an e-
weeks earlier
actually chan
g with a refo
in our legal
ins, the resp
uirement wa
r Legal Affairst for its ops requiremenred any doubMining Lawific Rim's res no way theisted it shouway that Paconcession ap
5 (C-289) (bo
s to Minister o
, 43.
5 (C-289) (em
r in the
he Minister o
Salvador like
only to interp
that El Salv
-mail from th
arriving at t
nge the mea
orm of the te
l system, nor
ponse confirm
as for the ent
airs of the pinion, and nt, was not bt regarding
w. Faced witepresentativee law could b
uld be cific Rim pplication.144
ld added, und
of Economy r
mphasis in orig
of Economy
ewise objecte
pret the law.
vador relied o
he Vice-
the same
aning of the t
xt under the
r in the doctr
med what sh
tire area of th
th es, be
4
derline in orig
re: "Authentic
ginal).
y, the
ed to
141
on
text
rine
he
he
ginal).
c
1
considere
ownershi
would sp
requirem
and bosse
company
"exactly
1
Pac Rim
if a legisl
reducing
land."148
its applic
legislatur
1
be chang
145 Letter El Salvad146 Letter 147 Email Gehlen, O148 Memor149 Email commitmARENA wready in th
Pac R10.
ed amending
ip or authori
pecifically ex
ment.146 The
es at Pac Rim
y would only
what we nee
Accor11.
decided to w
lative solutio
the concess
Thus, even
cation, Pac R
re to pass the
By No12.
ged for its ap
from Bureau
dor, Sept. 13, 2
to Elí Valle w
from Fred EaOct. 25, 2005
rial, para. 229
from Fred Eaent of supporwill ensure thhe legislative
Rim then supp
g the Mining
ization requi
xclude under
President of
m, describin
y need author
ed."147
rding to Clai
wait for the l
on could be
ion area or t
though Pac
Rim made no
e amendmen
ovember 200
plication to
of Mines Dir2005 ("Letter
with Proposed
arnest to Tom(C-400) (emp
9.
arnest to Tomrt for the projehat the reform area").
ported an ef
g Law to cha
rement for u
rground min
f PRES, Fred
ng the propos
rizations for
imant, this in
law to be cha
implemented
trying to buy
Rim knew t
o efforts to fi
nts.149
06, Pac Rim
move forwa
rector to Elí Vr to Elí Valle
d Amendment
m Shrake, Barbphasis added)
m Shrake, Feb.ect from the P
m passes]. With
54
ffort to chang
ange Articles
underground
nes from the
d Earnest, pa
sed amendm
r where surfa
nitiative was
anged: "Mr.
d, such a sol
y or acquire a
that this was
ix it. Instead
admitted in
ard: "Pacific
Valle with Prowith Propose
ts to the Mini
bara Henderso.
. 15, 2006 (C-PCN [one of th a great deal
ge the law. T
s 24 and 37 t
d mines.145 T
land authori
assed the pro
ment that for u
ace installati
s not actually
Shrake and
lution would
authorization
s one of the "
d, it focused
its public re
Rim's Explo
oposed Amened Amendmen
ing Law (R-3
on, Catherine
-295) ("we hathe moderate l of satisfactio
The Ministe
to get rid of
The proposed
ization or ow
oposal on to
underground
ions would b
y introduced
the Compan
d be preferab
n to use mor
"main things
d on lobbying
eports that th
oitation Con
ndments to thents to the Min
5).
e McLeod-Sel
ave sought anparties – thei
on, I can info
er of Econom
the surface l
d amendmen
wnership
his colleagu
d operations
be constructe
d in 2005, an
nies believed
ble to further
re surface
s" missing fr
g the Salvad
he law neede
ncession
e Mining Lawning Law") (R
ltzer, and Bill
nd obtained thir vote along wrm you that w
my
land
nts
ues
the
ed as
nd
d that
r
rom
oran
ed to
w of R-35).
l
he with
we are
applicatio
Dorado E
Salvador
there wou
Canadian
mining p
law."151
1
proposal
only the
increased
Claimant
"leading
cousin, H
engaged
in Decem
Governm
150 Pacificadded). 151 Pacific(emphasis152 Propos153 Memor154 Email 155 Email 156 Letter
on for the El
Exploitation
ran Mining L
uld be no co
n regulatory
permit will be
Follow13.
to replace th
land on whic
d its efforts i
t was commu
lobbyist and
Herbert Saca
C&M Capit
mber 2007 an
ment."156 Ms
c Rim Mining
c Rim Minings added).
sed New Mini
rial, para. 300
from Tom Sh
from Tom Sh
from Claiman
l Dorado pro
Concession
Law."150 An
oncession un
authorities,
e granted pri
wing the fail
he Mining L
ch the comp
in 2007 to ob
unicating wi
d political str
, to move fo
tolink, and o
nd February
s. Mary Anas
g Corp., News
g Corp., 2007
ing Law of E
0.
hrake to Mark
hrake to sever
nt's counsel to
oject remains
will be gran
nd by 2007, P
ntil the law w
Pacific Rim
ior to the exp
led efforts to
Law in 2007,
any would l
btain its conc
ith Mark Klu
rategist," Fid
orward.155 C
ne of its U.S
2008 to mee
stasia O'Gra
s Release, El D
Annual Repo
l Salvador, N
k Klugmann, M
ral recipients,
o El Salvador
55
s in process
nted prior to
Pac Rim was
was changed.
m Mining Cor
pected refor
o reinterpret
which woul
ocate mining
cession throu
ugmann, a po
del Chavez M
Claimant has
S. lobbyists t
et with "vari
ady, a column
Dorado Proje
ort (Canada),
Nov. 2007, Art
May 18, 2007
Aug. 14, 200
r's counsel, Ap
however it i
the forthcom
s even more
. In its 2007
rp. mentione
rmation of th
or amend th
ld require ow
g infrastruct
ugh "politica
olitical cons
Mena, to wo
admitted tha
traveled to E
ious officials
mnist for the W
ect Update, N
with Letter to
ts. 34, 35, 38,
7 (C-306).
07 (C-307).
pr. 22, 2011 (
is uncertain w
ming reform
open about
7 Annual Rep
ed that "it is
he El Salvad
he law, Claim
wnership or
ture.152 Clai
al means."15
sultant,154 an
ork with Pres
at by late 20
El Salvador w
s of the Salv
Wall Street J
Nov. 9, 2006 (
o Shareholder
, 52, 54 (R-36
(Exhibit R-1
whether the
mation of the
the fact that
port for the
unlikely tha
oran mining
mant support
authorizatio
mant also
53 In mid-20
nd counting o
sident Saca's
007 it had
with Mr. Shr
vadoran
Journal, also
(C-309) (emp
rs at 10 (R-37
6).
28).
El
El
t
at a
g
ted a
on for
007,
on its
s
rake
o
phasis
7)
traveled t
lobbyist,
CEO, tes
1
Claimant
1
from 12.7
would sti
have auth
undergro
1
to the Ap
third of th
concessio
not show
157 Letter 158 Transc159 See MaDec. 2004
to El Salvad
and several
stified:
We coremedI was El Salpoint.
But th14.
t filed this ar
Even 15.
75 km2 to th
ill not have m
horization fo
ound mine C
The su16.
pplication fo
he total area
on is under a
w ownership
from Claiman
cript of Hearin
ap 5, Lands P4 (R-28).
dor in Februa
Salvadoran
onsidered vadies to the sitlobbying. I w
lvador. I was158
he Salvadora
rbitration wh
g) In evepos
if Claimant
he 1.6 km2 co
met the lega
or even the la
laimant prop
urface area C
r the Conces
a requested f
a surface are
or authoriza
nt's counsel to
ng on Objecti
Purchased or i
ary 2008 and
Governmen
arious--at thituation. I mewas lobbyins doing num
an Mining La
hen its effort
any event, Cen if it had rssible size
had been wi
overed by Cl
l requiremen
and directly
posed to con
Claimant ow
ssion. Map
for the conce
ea of less tha
ation.159
o El Salvador
ions to Jurisdi
in Process and
56
d attended a
nt officials.15
s point we cean, I talked
ng in the Unimerous--nume
aw was not c
ts to change
Claimant woueduced the s
illing to redu
laimant's ow
nt to obtain t
above a por
nstruct.
wns or has au
5 only inclu
ession. As M
an 0.2 km2 of
r's counsel, Ap
iction, May 3
d Location of
dinner with
57 Tom Shra
considered vad to counsel iited States toerous things
changed, des
the law faile
uld have beesize of the co
uce the area
wnership or a
the concessio
rtion of the a
uthorization
des an area o
Map 5 shows
f land, for m
pr. 22, 2011 (
3, 2011, at 46
f Infrastructur
Mr. Shrake,
ake, Pac Rim
arious in El Salvadoo pressuring at that
spite Claima
ed.
en unable to oncession to
of the reque
authorization
on. Claiman
access ramp
for is repres
of 4 km2, or
s, the propos
much of whic
(R-128).
1:14-19.
re, Concessio
, the U.S.
m's President
or
ant's best eff
cure the defo the smalles
sted concess
ns, Claimant
nt did not ow
and most of
ented in Ma
less than on
sed mine for
ch Claimant
n Application
t and
forts.
fect t
sion
t
wn or
f the
ap 5
ne-
the
did
n,
1
gold depo
area own
regarding
Feasibilit
and acce
(more tha
The grap
160 See Fig(R-49), anReport, N161 This de
In add17.
osit denomin
ned by Claim
g the size an
ty Study on
ss ramp (mo
an 60%), are
phic below sh
gure 4.3, "Ovnd Figure 9.1,
Nov. 2003) (R
emonstrative
dition, accord
nated Minita
mant or for w
d location of
the relevant
ore than 80%
e outside the
hows the res
verall Plan Vie, "Schematic -50).
exhibit has b
ding to Claim
a is located o
which it has a
f the Minita
area of Map
%), and a sign
e areas for wh
sults of this s
ew Decline anCross-Section
een provided
57
mant's own d
outside the u
authorization
and Minita
p 5 shows th
nificant porti
hich Pacific
superimposit
nd Minita Zonn of the Main
in more deta
documents,
underground
n.160 Superim
3 veins prov
hat most of th
ion of the co
Rim has ow
tion:
nes" (from Prn Minita Vein
ail as Exhibit R
a significant
projection o
mposing the
vided by Cla
he undergrou
ombined Min
wnership or a
re-Feasibilityns," (from MD
R-51.
t portion of t
of the surfac
e information
aimant in its
und mine are
nita deposit
authorization
y Study, Jan. 2DA Technical
the
e
n
Pre-
ea
n.161
2005) l
58
The structure of the underground mine is located at the top of the map, showing the tunnels and spirals of the ramps. The locations of the Minita and Minita 3 veins, taken from Claimant's 2005 Pre-Feasibility Study, are shown in red and blue. These locations have been georeferenced and superimposed on a portion of Map 5, which shows the location of the proposed underground mine in relation to the areas, outlined in pink, for which Pac Rim claims ownership or authorization.
1
3), consti
submitted
concessio
demonstr
located u
legally gr
for which
1
met the l
areas it o
least 200
1
landowne
of this re
exploitat
Mining L
and then
Governm
Objection
complian
162 Letter
As wi18.
itutes the sol
d to justify t
on applicatio
rate that a sig
under the lan
ranted the co
h it has show
There19.
egal requirem
owned or had
05 of the surf
El Sal20.
ers for the en
quirement, b
ion concessi
Law was not
Pac Rim be
ment in late 2
n phase by p
nce with the
from Claiman
ill be discuss
le basis for t
the economic
on. In short,
gnificant por
nd it owns or
oncession, ev
wn ownership
fore, Claima
ment for a c
d authorizati
face land req
h) Co
lvador's Min
ntire area inc
but did not o
ion applicati
changed, de
gan preparin
2007.162 Cla
promising to
requirement
nt's counsel to
sed below, th
the calculatio
c feasibility
, because Cla
rtion of the m
r has authoriz
ven if Claim
p or authoriz
ant's own sub
oncession by
on for. Mor
quirement an
onclusion on
ning Law req
cluded in its
obtain owner
ion. Rather,
espite Pac R
ng to file this
aimant avoid
provide fac
t. Given the
o El Salvador
59
he Minita de
on of reserve
of its applic
aimant's own
mineral depo
zation for, th
mant had redu
zation.
bmissions di
y reducing th
reover, as no
nd did nothin
land surface
quired Pac R
concession
rship of or au
Pac Rim sou
im's best eff
s arbitration
ded a decision
tual evidenc
opportunity
r's counsel, Ap
eposit, with t
es in Claima
ation for the
n submission
osit it propo
he Ministry o
uced the area
isprove its a
he size of its
oted, Claima
ng to cure th
e requiremen
Rim to own o
application.
uthorization
ught to chan
forts through
as a new wa
n on this issu
ce and expert
y, however, C
pr. 22, 2011 (
two veins (M
ant's Pre-Fea
e entire 12.75
ns to the Go
sed to mine
of Economy
a requested t
allegation tha
s requested c
ant was fully
he defect.
nt
or obtain per
. Pac Rim w
for the land
nge the law.
hout 2005, 2
ay to pressur
ue in the Pre
t reports dem
Claimant ha
(R-128).
Minita and M
asibility Stud
5 km2
overnment
is not even
y could not h
to the 1.6 km
at it could ha
concession to
y aware since
rmission of th
was fully awa
d included in
The Salvad
006, and 200
re the
eliminary
monstrating
s provided n
Minita
dy
have
m2
ave
o the
e at
he
are
n its
doran
07,
its
no
new evid
indisputa
requirem
failure to
exploitat
1
Claimant
Applicati
updated v
complete
1
to the lan
provide t
connectio
from the
submitted
1
163 Conces164 Letter 165 Letter engineerinof exploit
dence and on
able that Cla
ments for its e
o comply wit
ion concessi
3.
Claim21.
t did not sub
ion, Pac Rim
version of th
ed the actual
The O22.
nd ownership
the required
on with the l
Bureau of M
d its Pre-Fea
Claim23.
the ElgeneraPacifi
ssion Applica
from Bureau
from Pacific ng and designtation of the s
nly a new arg
imant did no
exploitation
th the land su
ion.
Claimant dStudy
mant likewise
bmit a techni
m submitted
he Pre-Feasib
Feasibility S
October 2006
p and author
Feasibility S
land ownersh
Mines for a F
asibility Stud
mant now alle
l Dorado PFSally understoic Rim mana
ation at cover
of Mines to P
Rim El Salvan of the ramp,ubterranean m
gument that
ot comply w
concession t
urface requir
did not comp
e failed to co
cal, econom
only a "Prel
bility Study
Study requir
6 letter from
rization requ
Study with d
hip and auth
Feasibility St
dy and added
eges that
S was in facood by mininagement that
letter (R-2).
Pacific Rim E
ador to Bureau, access routemine, and clo
60
it did not ha
ith Article 3
to be admitte
rement, Clai
ply with the
omply with A
mic Feasibilit
iminary Pre-
one month l
red by Salva
the Bureau
uirement, also
detailed plan
horization req
tudy and pro
d the plans f
t a feasibilityng specialistt were respon
El Salvador, O
u of Mines, Ns and infrastrsure of the m
ave to compl
37.2.b), one o
ed by the Bu
imant could
requirement
Article 37.2.
ty Study. W
-Feasibility
later in Janua
adoran law.
of Mines, m
o alerted Pac
s.164 Consis
quirement, i
ofessional pl
for the six sp
ty study as thts such as thensible for ma
Oct. 2, 2006 (R
Nov. 11, 2006ructure, a taili
mine).
ly. As a resu
of the manda
ureau of Min
not have be
t to submit a
d) of the Mi
With its Conce
Study."163 I
ary 2005, bu
mentioned ab
c Rim to its
stent with its
n its respons
lans, Pac Rim
pecific areas
hat term is e members oaking the
R-4).
6, at 3.b (R-5)ings dam, a fl
ult, it is
atory
nes. Due to
en granted a
a Feasibility
ining Law:
ession
It submitted
ut it never
bove with reg
failure to
s failure to ac
se to the requ
m simply re-
requested.16
of
) (including low plant, me
its
an
an
gard
ct in
uest
-
65
ethod
This claim
pre-feasib
Second, P
admitted
by the Sa
Feasibilit
prelimina
1
merely in
greater th
advisor to
Study an
feasibility
166 Memor167 Rejoin168 ExpertRelated Econcludesdetail andinternatio169 Behre feasibilityand increa
determwell aPRES
m is simply
bility and fe
Pac Rim wa
ly never com
alvadoran M
ty Study sho
ary study.168
The d24.
n the name.
han that of a
o the minera
d concluded
y study:
The dstated
rial, para. 522
nder (Prelimin
t Report of BeExploration Ars, based on itsd supporting dnal mineral in
Dolbear Expey study requirase the accura
mination wheas the BureauS's Concessio
not true. Fir
asibility stud
s working on
mpleted that
Mining Law."
ows that it is
a) Difa m
difference bet
The level of
pre-feasibil
als industry w
d that it was l
document Pacd to be a "Pre
2 (emphasis in
nary Objection
ehre Dolbear reas, Jan. 6, 2s experience tdocumentationndustry report
ert Report, pares much greaacy of cost es
ether to procu of Mines pon Applicatio
rst, Claiman
dies and spe
n the actual
study, which
167 Third, ev
not sufficien
fference betwmere formali
tween a Pre-
f detail and t
ity study.169
with extensiv
less compreh
cific Rim sue-feasibility
n original).
ns), para. 154
Minerals Indu2014 ("Behre that the Pre-fen for it to be cting codes.").
aras. 19-23. Sater depth of dtimation.").
61
ceed with thepersonnel chon.166
nt and SRK C
cifically con
feasibility st
h it concede
ven ignoring
nt to be cons
ween a Pre-Fity
-Feasibility S
the confiden
Behre Dolb
ve experienc
hensive than
ubmitted to thStudy" and d
4.
ustry AdvisorDolbear Exp
easibility Studconsidered a F.
See also Behrdetail than a P
e El Doradoarged with r
Consulting k
ntracted for a
tudy from 20
s is the same
g that admiss
sidered anyt
Feasibility a
Study and a
nce level of a
bear, a well-
ce, reviewed
n what would
he Governmdoes not me
rs, El Doradoert Report"), dy does not cFeasibility St
re Dolbear ExPre-feasibility
Project, as reviewing
knew the diff
a pre-feasibi
006 into 200
e "feasibility
sion, the con
thing more th
and a Feasibi
Feasibility S
a feasibility s
-regarded ind
d Claimant's
d be required
ment is clearlyet the
o Concession para. 34 ("Beontain sufficitudy, as stipul
xpert Report, py Study to ver
fference betw
ility study.
09, and it
y study requi
ntent of the P
han a
ility Study is
Study is not
study will be
dependent ex
Pre-Feasibil
d for a full
y
Application aehre Dolbear ient technicallated by
para. 29 ("A rify its finding
ween
ired
Pre-
s not
e
xpert
lity
and
gs
1
because i
its applic
Feasibilit
1
Feasibilit
Pre-Feas
Feasibilit
McIntosh
and does
exploitat
1
it hoped t
discovery
Septemb
170 Behre 171 PacificStudy") at172 Pre-Fe
comprstandaGoverExplo
In 20025.
it had not fin
cation. Claim
ty Study and
Both C26.
ty Study, rec
ibility Study
ty Study stat
h Engineerin
not have the
ion concessi
Claim27.
to propose e
y was annou
er 2005, Cla
PacifiMinitaCompdelinezone. study
Dolbear Expe
c Rim Miningt i (C-9).
asibility Stud
rehensivenesards or that wrnment for it
oitation Conc
04, Pac Rim
nished the ex
mant therefo
d then began
Claimant an
cognized tha
y for the El D
tes that it wa
ng.172 Thus,
e requisite le
ion.
mant, in fact,
expanded ope
unced only af
aimant report
ic Rim's expla, which rem
pany is satisfeated, and thThe Compato take into
ert Report, pa
g Corp., Pre-F
dy at 9 (C-9) (
ss of a Feasiwould be cont to make a dcession shou
was not in a
xploration an
ore complete
n working on
d SRK Cons
at it was "a C
Dorado Proje
as based on a
the docume
evel of detai
did not rush
erations incl
fter the appl
ted:
loration stratmains open afied that the
hen commissany will then
consideratio
ara. 28.
Feasibility Stu
(emphasis add
62
ibility Studynsidered necdecision as tould be grante
a position to
nd technical
d and submi
n the required
sulting, the c
Canadian Nat
ect located in
a "Conceptu
nt itself emp
l to support
h to complete
luding a dep
ication for th
tegy is to coat depth and target has beion a resourc
n amend the Mon the new o
udy, El Dorad
ded).
y under interncessary by tho whether or
ed.170
complete th
work for the
itted the less
d Feasibility
company con
ational Instru
n El Salvado
ual Undergro
phasizes that
Claimant's a
e the require
osit called S
he concessio
ontinue to drialong strikeeen adequatece estimate fMinita pre-f
ounces define
do Project, Jan
national he r not an
he required f
e area it wan
s detailed, le
y Study.
ntracted to p
ument 43-10
or."171 In ad
ound Mine D
t it is not a F
application f
ed Feasibility
South Minita
on was filed.
ill test South, until the ely for this gold
feasibility ed by the
n. 21, 2005 ("
feasibility stu
nted to inclu
ss definite P
prepare the P
1 . . . compli
ddition, the P
Design" by
Feasibility St
for a 12.75 k
y Study beca
a, whose
. Thus, in
h
d
"Pre-Feasibili
udy
de in
Pre-
Pre-
iant
Pre-
tudy
km2
ause
ity
1
economic
feasibility
would no
proposed
prepare t
the Pre-F
SRK esti
Feasibilit
1
had sent
within 30
working
173 PacificCompone174 PacificDorado E175 PacificResults, DAnnounceproposed / haulage 176 SRK C177 SRK C
SouthanalysSouth
Indeed28.
c assessmen
y study for t
ot move forw
d expanded p
he required
Feasibility St
imated that i
ty Study.177
As Cl29.
the prevenci
0 days or hav
on the requi
In Noprojecdrillin
c Rim Miningnt of Pacific R
c Rim MiningExploration Ta
c Rim MiningDec. 13, 2005 es Fiscal 2006expanded operamp on the E
Consulting Pro
Consulting Pro
h Minita resosis of a prop
h Minita simu
d, in Decem
t of a combi
this expande
ward with its
program" wa
feasibility st
tudy it prepa
t would cost
aimant's own
ión (warning
ve its file clo
ired Feasibil
vember 200ct is in progrng in and aro
g Corp., NewsRim's Explora
g Corp., Newsargets to Beco
g Corp., News(C-405). See
6 Third Quareration will bEl Dorado is m
oposal for El
oposal for El
ource estimatosed operatiultaneously.
mber 2005, Cl
ined Minita/
ed operation.
s El Dorado m
as undertaken
tudy in 2006
ared in 2005
t about half a
n documents
g letter) requ
osed—Pac R
ity Study:
6, PRMC reress. Certain ound the Min
s Release, Souation Strategy
s Release, Souome Focus of
s Release, Pace also Pacificterly Results,
be undertakenmade.").
Dorado Proje
Dorado Proje
63
te, which wiion that invo173
laimant was
South Minit
"174 At the t
mine plans u
n.175 Claima
6.176 Nothing
was anythin
a million dol
s describe, b
uiring that Pa
Rim had been
ported: "A fengineering
nita and Sout
uth Minita Goy, Sept. 9, 200
uth Minita Def 2006 Drill P
cific Rim Ann Rim MiningMar. 14, 200 before a deci
ect Feasibility
ect Feasibility
ill provide anolves mining
planning to
ta operation
time, Claima
until a "full f
ant did in fac
g in SRK's 2
ng more than
llars to comp
by late 2006—
ac Rim subm
n unable to c
feasibility stug informationth Minita de
old Zone Con05 (C-253) (e
efinition DrillProgram, Dec
nounces Fiscag Corp., News06 (C-428) ("Aision to comm
y Study, Jan.
y Study, Jan.
n economic g Minita and
"commissio
. . . followe
ant explicitly
feasibility st
ct hire SRK
2006 proposa
n a prelimina
plete the req
—after the B
mit the Feasi
complete and
udy for the En garnered freposits has ta
ntinues to Evoemphasis add
ling Nears Coc. 6, 2005 (C-
al 2006 Secons Release, PacA full feasibimence constru
2006 (C-42).
2006, at 19 (C
on a prelimin
d by a full
y stated that
tudy of a
Consulting
al suggests t
ary study; in
quired El Do
Bureau of M
bility Study
d was still
El Dorado from technicaken longer
olve as a Key ed).
ompletion; Ne-254).
nd Quarterly cific Rim ility study of auction of an a
C-42).
nary
it
to
that
ndeed
rado
ines
al to
ew El
a access
1
that Pac R
included
continued
force of t
submissi
Article 9
which ma
Claimant
based on
1
required
October 2
a feasibil
178 Pacificadded). 179 PacificResults, D180 Propos
complcompothe ansecon
In Decgeotecthe geDorad
Indeed30.
Rim was we
a provision
d application
this Law the
on of a pre-f
8 provided t
aintained the
t supported w
simply dem
Pac R31.
feasibility st
2006 and the
lity study, C
c Rim Mining
c Rim MiningDec. 15, 2006
sed New Mini
lete than origonents neces
nticipated timd calendar q
cember 2006chnical data eotechnical ddo feasibility
d the propos
ell-aware tha
in Article 98
n processing
existence o
feasibility stu
that it was "w
e requiremen
would have a
monstrating th
Rim needed s
tudy. In Feb
e allotted tim
laimant chos
g Corp., News
g Corp., News(C-427) (emp
ing Law, Art.
ginally expessary to commeframe for quarter of 20
6, PRMC repwas comple
drilling is reqy study that i
sed new min
at it had not f
8 for pendin
g for any com
f mining pot
udy."180 Th
without preju
nt of a techn
allowed Pac
he existence
such a chang
bruary 2007,
me had passe
se to put the
s Release, El D
s Release, Pacphasis added)
. 98 (R-36).
64
ected, which mplete the ban
completion 07."178
ported: "drileted during thquired to comis currently u
ing law push
fulfilled Arti
ng application
mpany that h
tential in the
is special pr
udice to the
nical econom
Rim, and on
e of mining p
ge to the law
, after Pac R
ed to cure the
feasibility s
Dorado Proje
cific Rim Ann).
has caused nkable feasiof the study
lling for the phe current qmplete certaunderway."1
hed by Pac R
icle 37.2.d).
ns. This pro
had "demons
e authorized
rovision wou
provisions o
mic feasibility
nly Pac Rim
potential wit
because Cla
Rim had recei
e defect in it
study "on ho
ect Update, N
nounces Fisca
a delay in geibility study.
y has been ex
purposes of quarter. The iain componen
79
Rim in 2007
The propos
oposed articl
strated as of
area pursuan
uld apply onl
of the preced
y study. Thu
m, to receive
th just a pre-
aimant never
ived the war
ts applicatio
old" to furthe
Nov. 9, 2006 (
al 2007 Secon
enerating . As a result xtended to th
collecting information nts of the El
demonstrate
sed new law
le provided f
the entry int
nt to the
ly to Pac Rim
ding article,"
us, the new l
a concession
feasibility st
r completed
rning letter i
n by submitt
er explore th
(C-309) (emp
nd Quarter
. . . he
from l
es
w
for
to
m.
"
law
n
tudy.
the
n
ting
he
phasis
Balsamo
definite m
1
Report su
work to c
study, pr
including
study, rev
new reso
181 PacificMining Pe182 2008 AEl Doradode PACRIempezaro2008.") ["reorganizeon the revfeasibility183 2008 Aestudios t2009, un Eincluye esde extraccEstudio dPila de Cominero. CEstudio d
deposit. In
mine plan fo
Pacifistudy,drill dand infeasibwith aestimathe cu
But th32.
ubmitted to t
complete the
ojected for 2
g: structural
vised plans f
ource estimat
c Rim Miningermit Granted
Annual Reporo fue detenidoIM. Luego dn los trabajos
"In 2006, the e the data obt
vised calculatiy study in earl
Annual Reporécnicos con lEstudio de Fastudios técnicción; Estudiosetallado de coolas; RevisiónComo se mene Factibilidad
2008, the co
or El Dorado
ic Rim is pro, which had b
define the Banclude them bility study wa mine plan fate and provurrent prices
he feasibility
the Governm
e "final feasi
2009, would
and geotech
for the tailin
te.183
g Corp., Newsd; Local Staff
rt, § 7 (R-3) ("o para reorgan
de un informe s técnicos parFinal Feasibiltained in past ion of reservely 2008."].
rt, § 7 (R-3) ("a informaciónactibilidad mácos tales comos estructuraleostos para el dn del Estudio
ncionó anteriod en 2009.") [
ompany desc
:
oceeding witbeen put on
alsamo gold in the updat
will provide tfor El Dorad
viding a measof commodi
y study and m
ment of El Sa
ibility study"
be "more co
hnical studies
ngs dam, the
s Release, Pacffing Reduced,
"Durante el añnizar los datode avance en
ra retomar y clity Study fordrilling camp
es in July 200
"Los datos obn existente enás completo qo: Estudios ms y geotécnicdesarrollo y ode Mina Sub
ormente, todos"The data obt
65
cribed its pla
th the El Dorhold in Febrdeposit, qua
ted study. Cothe Compan
do based on tsure of the pities and con
mine plan we
alvador expl
" during 200
omplete" and
s, a final hyd
underground
cific Rim Susp, July 3, 2008
ño 2006 el Esos obtenidos en la revisión dcompletar el er the El Doradpaigns conduc06, technical w
btenidos de lan el proyecto vque el present
metalúrgicos enos; Estudio H
operación de mterránea y Plas estos datos tained from h
ans to compl
rado project ruary 2007 iantify its golompletion ofny and its shathe updated
project's valunsumables.18
ere never co
lains that the
08.182 Pac Ri
d would con
drogeologica
d mine, and
pends Furthe8 (C-262).
studio de Facen campañas pdel cálculo deestudio final ddo Project wacted by PACRwork began to
as perforacionvan a dar comtado en años pn nuevos cue
Hidrogeológicmina; Revisióanta de Proceserán incorpo
holes drilled in
lete a feasibi
feasibility in order to ld resources f the areholders resource
ue based on 81
mpleted. Th
e company b
im promised
ntain addition
al study, a de
the processi
er Drilling in
tibilidad Finapasadas de pe
e reservas en Jde factibilidadas delayed in oRIM. After ao resume and
nes hechas en mo resultado apasados. Esteerpos mineralico Final Proyeón del Estudioeso; Nuevo cáorados en un an 2007 and o
ility study w
he 2008 Ann
began technic
d that the new
nal informat
etailed costs
ing plant, an
El Salvador U
al para el proyerforación a cJulio de 2006d a principiosorder to a progress rep
complete the
2007 y otros a principios de nuevo estudizados y el precto El Dorado de Presa parálculo de recuactualizado ther technical
with a
nual
cal
w
tion,
s
nd a
Until
yecto cargo , se de
port e final
de dio roceso do; ra
urso
l
1
the 2005
delaying
Feasibilit
submitted
actually s
1
had not e
Prelimina
1
admissio
studies alothat is moas: MetalgeotechnidevelopmPlant Studan update184 Rejoin185 Memor
In sho33.
Pre-Feasibi
and never c
ty Study was
d a "Pre-Fea
something m
In the34.
ever complet
ary Objectio
ClaimdiffereMininsame
Never35.
n, Claimant
the ElgeneraPac Rdetermwell aPRES
ong with the e
ore complete tllurgical studiical studies; F
ment and operady; New calcud Feasibility
nder (Prelimin
rial, para. 522
ort, Pac Rim'
lity Study an
ompleted. U
s anything m
asibility Stud
more.
b) Pacstu
Preliminary
ted the requi
ons,
mant is not "sent from the
ng Law," as adocument.18
rtheless, in it
asserts:
l Dorado PFSally understo
Rim managemmination wheas the BureauS's Concessio
existing inforthan those preies on new mi
Final Hydrogeation; Revisedulation of minStudy in 2009
nary Objection
2 (emphasis in
's own docum
nd the need f
Until this arb
more than its
dy," Pac Rim
c Rim has adudy
y Objection p
ired Feasibil
suggest[ing] e feasibility sasserted by R84
ts Memorial
S was in facood by mininment that weether to procu of Mines pon Applicatio
rmation on theesented in pasineralized bodeological Studd Tailings Daning resource9."].
ns), para. 154
n original).
66
ments repeat
for a Feasibi
bitration, Pac
name impli
m is estopped
dmitted that
phase of this
ity Study. A
that the feasstudy requireRespondent
on the Meri
t a feasibilityng specialistere responsibceed with thepersonnel chon.185
e project willst years. The dies and the edy for the El Dam Study; Rev. As mention
4 (emphasis ad
tedly acknow
ility Study, s
c Rim never
ied. Indeed,
d from arguin
it did not su
s arbitration,
As Claimant
sibility studyed by the Sain its Reply.
its, in direct
ty study as thts such as theble for makine El Doradoarged with r
l result in a Fenew study in
extraction proDorado Projevised Undergned above, all
dded).
wledge the s
something th
indicated th
having cont
ng that the s
ubmit the req
, Claimant ac
stated in its
y on hold is lvadoran . They are th
contradictio
hat term is e members ong the Project, as
reviewing
easibility Studncludes techniocess; Structuect; Detailed cground Mine al these data w
shortcomings
hat Pac Rim
hat the Pre-
tracted for an
study was
quired Feasib
ccepted that
Rejoinder o
he
on to its earli
of
dy in early 20ical studies su
ural and cost study for and Processin
will be include
s of
kept
nd
bility
t it
on the
ier
009 uch
mine ng ed in
1
its Pre-Fe
Law."186
and-on fr
required
"mining s
though C
complete
considera
Pac Rim
was neve
1
once and
way blam
"unpredic
Mining C
186 Rejoin187 Pacific(R-20).
Claim36.
easibility Stu
Claimant re
rom 2006 int
by Salvador
specialists" w
Claimant spen
e feasibility s
ably" to qual
has repeated
er done.
Pacifi37.
d for all, that
med El Salva
ctability in c
Corp. explain
A feasfiscal fiscal discovCompto: undue tocapitainputs
nder (Prelimin
c Rim Mining
mant's new as
udy is not th
epeatedly sta
to 2009, whe
ran law) to "
would view
nt several ye
study with n
lify as a "fea
dly acknowl
ic Rim Minin
no Feasibili
ador for such
capital costs"
ned:
sibility study2006 and pu2009 while
very of the Bpany decidedpredictabilit
o recent econal items; the s have stabili
nary Objection
g Corp., Repo
ssertion is de
he complete "
ated that it w
en it decided
sav[e] cash."
the submitte
ears after sub
new informat
asibility stud
edged, by w
ng Corp.'s U
ity Study has
h failure but
" due to "rec
y for the El Dut on hiatus bthe basis of
Balsamo depd to defer comty in capital nomic volatiCompany's fized and the
ns), para. 154
rt of Foreign
67
emonstrably
"feasibility s
was working
d to defer co
"187 Therefo
ed Pre-Feasi
bmitting the
tion, which s
dy" in the Un
words and act
U.S. Governm
s ever been c
rather attrib
cent economi
Dorado projebetween latethe study wa
posit. In Febrmpletion of costs as chanlity become focus on savstudy can ac
4.
Issuer (Form
false. Claim
study require
on the comp
ompletion of
ore, Claiman
ibility Study
pre-feasibil
still "would
nited States o
tions, that th
ment filing in
completed.
buted the dec
ic volatility.
ect . . . was ie fiscal 2007as expandedruary 2009 . the feasibilinges in comreflected in
ving cash unccurately ref
m 6-K) Exhibit
mant already
ed by the Sa
plete feasibi
f that study (i
nt's assertion
y as a feasibil
lity study wo
have to be u
or Canada is
he required F
n September
Tellingly, C
cision not to
." Specifical
initiated in 7 and early d due to the
. . the ity study due
mmodity pricethe prices fo
ntil these flect change
t 99.2, Sept. 1
y admitted th
alvadoran Mi
lity study of
i.e., the one
n now that
lity study ev
orking on a
updated
s outrageous
Feasibility St
r 2009 confir
Claimant in n
proceed to
lly, Pacific R
e es
for
ed
14, 2009, § 3.
hat
ining
ff-
ven
s.
tudy
rms,
no
Rim
.1.2
1
according
Mining L
1
14
and could
it to mak
the Minis
Feasibilit
14
contrary
188 Pacific(R-20). 189 Rejoin190 Memor
econopermi
This f38.
g to Claiman
Law."189
Thus, 39.
the req
the reqbecauattribu
there hsince
the dobe concountr
These40.
d not cover t
ke a decision
stry that it w
ty Study.190
Claim41.
to its admiss
c Rim Mining
nder (Prelimin
rial, para. 527
omic realitiestting proces
feasibility stu
nt, "the same
Claimant ha
quired Feasi
quired Feasiuse of incomputable to El S
have been nethe Pre-Feas
ocument it hansidered a Fery.
e admissions
the necessary
regarding an
was working
c) ThinsDo
mant argues th
sion that it w
g Corp., Repo
nary Objection
7.
s; and, uncers.188
udy, the com
e document"
as expressly
ibility Study
ibility Studyplete exploraSalvador),
ew deposit dsibility Study
as been workeasibility Stu
clearly show
y technical a
n exploitatio
on expandin
he Pre-Feasibsufficient to orado
hat, regardle
was working
rt of Foreign
ns), para. 154
68
rtainty in the
mpletion of w
" as "the feas
admitted tha
y was never c
y has been ination or insu
discoveries ay, and
king on wouudy in the U
w that the su
and economi
on concessio
ng the known
bility Study ssupport the a
ess of the nam
on the "mor
Issuer (Form
4.
e timing of th
which Claim
sibility study
at:
completed,
ndefinitely deufficient reso
and changes
uld have to bUnited States
ubmitted Pre
ic informatio
on. Indeed, P
n resources a
submitted byapplication f
ame of the Pr
re complete"
m 6-K) Exhibit
he El Dorad
mant deferred
y required by
elayed or waources (and f
in the "econ
be "updated cs or Canada,
e-Feasibility
on for the M
Pac Rim adm
after submitt
y Pac Rim wfor the conce
re-Feasibility
" required fe
t 99.2, Sept. 1
o
d in 2009, is
y the Salvad
as never possfor no reason
nomic landsc
considerablyClaimant's h
Study did n
Ministry to rel
mits that it to
ting the Pre-
would be ession in El
y Study and
easible study
14, 2009, § 3.
oran
sible n
cape"
y" to home
ot
ly on
old
-
y, the
.1.2
submitted
a stateme
finance th
assertion
sufficient
14
mining e
deposits,
in a Feas
requested
14
describe
Plan refe
best be c
scoping o
14
191 Memor192 Behre 193 Behre
d Pre-Feasib
ent of reserv
he project ba
ns, however,
t information
Accor42.
xploitation c
and the tech
ibility Study
d. Claimant'
Behre43.
the mine pla
erenced in Cl
onsidered at
or Conceptu
Behre44.
"lacksFeasib
"does suppo
rial, paras. 51
Dolbear Expe
Dolbear Expe
bility Study f
es; and 2) a
ased on the r
addresses th
n or detail to
rding to Arti
concession "
hnical justifi
y about the d
's submitted
i
e Dolbear, ex
an as basic a
laimant's Pre
t pre-feasibil
al level stud
e Dolbear fur
s a full rangebility Study"
not supply aort full Feasib
17-520.
ert Report, pa
ert Report, pa
fulfilled the
"top mining
results of the
he fact that th
o justify the
icle 24 of the
"shall be gran
ications give
deposits and
Pre-Feasibi
i. The PrePlan"
xpert advisor
and integral t
e-Feasibility
lity level acc
dy."193
rther noted th
e of technica" and
a sufficient ability Study
ara. 30.
ara. 30.
69
requirement
g finance com
e Pre-Feasib
he submitted
12.75 km2 c
e Salvadoran
nted based o
en by the Con
the mine pla
lity Study fa
e-Feasibility
rs to the min
to any minin
y Study was a
curacy, and p
hat the Pre-f
al studies tha
amount of deaccuracy. T
t of Article 3
mpany" alleg
bility Study.1
d Pre-Feasib
concession re
n Mining Law
on the magni
ncession Ho
an has to jus
alls short.
y Study is ba
nerals industr
ng project.192
a "conceptua
possibly at th
feasibility St
at are normal
etailed enginThe Pre-feasi
37.2.d) becau
gedly was lin
191 Neither o
bility Study f
equested by
w, the surfac
itude of the d
older." Thus
stify the conc
ased on a "C
try throughou
2 They note
al design" so
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tudy:
lly included
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ning up to
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Pac Rim.
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ut the world
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in a full
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luded
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mation
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d,
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at
er to clude
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Feasibilit
it to be co
codes."19
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statemen
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about 700
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194 Behre 195 Behre 196 Memor197 Pre-FeFeasibilityDorado," 198 Pre-Fe
detaileestima
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ty Study "do
onsidered a
95
Claim46.
nt of "reserve
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s and reserve
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t to mine the
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Dolbear Expe
Dolbear Expe
rial, para. 518
asibility Study Study was "www.pacrim
asibility Stud
ed engineeriation that inc
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oes not conta
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mall portion
bly justify a
ta 3 veins, w
es reported i
ong and 300
tudy are from
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ert Report, pa
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8.
dy at 25-26 (C"based on min
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ing drawingscrease cost e
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ain sufficient
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hich were pa
in the Pre-Fe
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m two veins
r explains, a
posit:
nsiders the Eudy would re
ara. 32.
ara. 34.
C-9). Pacific Rning the Mini(R-45).
C-9) (emphasi
70
s that are useestimation ac
deficiencies
t technical d
pulated by in
e-Feasibilityng a small poter concessio
e fact that the
it,196 but doe
ested conces
concession.
art of the Mi
easibility Stu
de."198 Thu
contained w
much small
El Dorado Prequire appro
Rim Mining Cita deposit alo
is added).
ed for designccuracy."194
s, Behre Dolb
detail and sup
nternational
y Study is baortion of theon area
e Pre-Feasib
es not mentio
ssion area.197
As the Pre-F
inita deposit
udy, are two
s the resourc
within an are
ler concessio
roject as proximately 1.6
Corp.'s websione." Pacific
n and materi
bear conlude
pporting doc
mineral indu
ased on only e requested 1
bility Study i
on that those
7 A study of
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t and were th
of four vein
ces and reser
a of only ab
on area woul
oposed in the60 square
ite concedes tRim Mining
ials/supplies
ed that the P
cumentation
ustry reporti
one deposit 12.75 square
included a
e reserves are
f the Minita
Study explain
he basis for t
ns "in an area
rves present
out 0.21 km
ld have been
e
that the Pre-Corp., "El
Pre-
for
ing
te-
e
ns,
the
a
ed in
m2.
n
14
area cove
understoo
that:
14
understan
the neces
one depo
199 Behre 200 Pre-Fe
kilomwithinthat Pkilomkilomoperatwishe
In add48.
ering a small
od by Claim
Due tonorth estimaDevelbetter largerthe sothis ar
Thus, 49.
nding as to e
ssary explora
osit it propos
Dolbear Repo
asibility Stud
meters to safen the concessacific Rim's
meters of areameters shown
tion, is exced to have fo
dition to the
l fraction of
mant at the tim
o the distribuend of the Mates 2.5% oflopment Assdefinition a
r resource exouth end of Mrea were [sic
the Pre-Fea
even the Min
ation activiti
sed to mine.
ort, paras. 44,
dy at 48 (C-9)
ely execute thsion boundaExploitation
a rather than to be necessssive and incr continuing
fact that the
the total req
me of the stu
ution and limMinita vein, of the ounces sociates] has and suggests xtending to thMinita . . . inc] removed f
asibility Stud
nita deposit.
ies for the re
, 46.
) (emphasis ad
71
he mine planaries. . . . It isn applicationthe project esary for the Ecludes surfac
g its explorat
Pre-Feasibi
quested conc
udy. For exa
mited nature one hole witin the Minitrecommendthat further
he north andndicated unrefrom the esti
dy evidences
This reconf
equired Feasi
dded).
n for the Mins Behre Dolbn for 12.75 sestimate of 1El Dorado mce area that tion program
ility Study w
cession, even
ample, the P
of the drillinth a high-grata vein. . . . [ded further ddrilling mig
d down dip. esolved comimate.200
s a lack of co
firms that Pa
ibility Study
nita deposit bear's opiniosquare 1.6 square mine Pacific Rim
ms.199
was limited to
n that area w
re-Feasibilit
ng at the ade assay . . Mine
drilling for ght generate
Drilling in mplexities and
omplete defin
ac Rim had n
y, even with
on
m
o two veins
was not well
ty Study exp
.
a
d
nition and
not complete
respect to th
in an
plains
ed
he
1
defined t
Objection
Consultin
limits of
Feasibilit
the area e
area requ
to the 12
km2 area
Mining L
1
Dorado e
Claimant
"[s]evera
Nance D
201 MemorApplicatioConcessio202 Reply added)). 203 Pre-Fe204 See Coexploratio
Claim50.
he 12.75 km
n phase, "[n]
ng finally m
the Explorat
ty Study con
eventually re
uired to mine
.75 km2 area
requested b
Law.
In fac51.
exploration l
t's intent to e
al other vein
ulce and La
rial, para. 205on and the El on area of 62
(Preliminary
asibility Stud
oncession Appon licenses: N
iii
mant admits t
m2 area for th
]ear the end
entions that
tion License
ntains very g
equested for
e a known de
a for the prop
based on the
t, the Januar
licenses expi
explore Zanc
targets . . . y
Coyotera, ar
5 ("As ClaimaDorado PFS,square kilom
Objections),
dy at 31 (C-9)
plication at 5,Nance Dulce, S
i. The Presquare
that the Pre-F
he concession
of the Pre-F
Pacific Rim
e areas to an
general inform
the concess
eposit, the P
posed conce
size of the d
ry 2005 Pre-
ired, include
cudo, Nueva
yet to be dril
re even outs
ant is now aw, the Bureau o
meters was too
para. 140 (cit
).
, § 2.2 (R-2) (San Matías, C
72
e-Feasibilitykilometer re
Feasibility S
n.201 As El S
Feasibility St
m 'has elected
Exploitation
mation abou
sion. Far fro
re-Feasibilit
ession. Such
deposits disc
Feasibility S
es a section o
a Esperanza,
lled."203 Som
side the requ
ware, followinof Mines conc
o large.").
ting Pre-Feas
(listing veins Coyotera, Por
y Study doesequested con
Study was su
Salvador exp
tudy submitt
d to convert 6
n Concession
ut an area alm
om justifying
ty Study was
h a study sim
overed, as re
Study, comp
on "Explorat
La Coyotera
me of the "ex
uested conces
ng the submiscluded that th
ibility Study
outside the crvenir, El Gal
s not even mencession are
ubmitted befo
plained in th
ted in Januar
62.73km2 fr
ns [sic].'"202
most five tim
g the request
s completed
mply cannot j
equired by A
leted the mo
tion Targets,
a, Nance Du
xploration ta
ssion area.20
ssion of the Che originally r
at 140 (C-9)
oncession arellardo, Iguana
ention the 12ea
fore Claiman
he Prelimina
ry 2005, SRK
om within th
So the Pre-
mes greater t
ted area as th
without reg
justify the 12
Article 24 of
onth the El
," highlightin
ulce, and
argets," such
04 Indeed, th
oncession requested
(emphasis
ea, but withina, and La Hue
2.75
nt
ary
K
he
-
than
he
ard
2.75
f the
ng
h as
he
n the erta).
Study sta
exploitat
1
concessio
only at tw
Study to
determin
failed eve
1
requirem
area for a
applicant
1
based on
approxim
requested
larger in
205 Pre-FePre-Feasibvein. Seechart of thsurface,[aarea, but d206 Mining
ates, "La Coy
ion."205
The M52.
on area base
wo veins in a
discuss and
ne the project
en to define,
Thus, 53.
ments of Salv
a mining pro
t found durin
The le54.
a "conceptu
mately 0.21 k
d concession
the future. A
asibility Studbility Study, C Pacific Rim
he 2003 resouand] potentialdata on its res
g Law, Arts. 2
yotera is a si
Mining Law d
d upon a tec
a tiny fractio
justify the e
t's economic
, much less e
despite fillin
vadoran law b
oject was 1) b
ng exploratio
iv
egal deficien
ual mine plan
km2; and 3) i
n area, but ra
As expressly
dy at 31 (C-9)Claimant alsoMining Corp
urce estimate lly open-pitabserve estimate
24, 37.2.d) (R
ignificant ex
does not per
chnical and e
on of the requ
entire area re
c and technic
examine, the
ng over 200
because, inte
based on the
on; and 2) te
v. It is cleminimaSalvado
ncies of the P
n;" 2) it is ba
it does not ev
ather general
y conceded i
) (emphasis ado refers to a pp., http://wwwwith the state
ble"). The Nues was not inc
RL-7(bis)).
73
xploration tar
rmit a compa
economic stu
uested area.
equested. It
cal viability w
e entire area
pages, the P
er alia, it fai
e size and loc
echnically ju
ear that the Pal requiremeoran law
Pre-Feasibili
ased on mini
ven refer to
lly reference
in the Pre-Fe
dded). In addotential open
w.pacrim-miniement that theueva Esperanzcluded in the
rget with po
any to reque
udy that look
Rather, the
is impossibl
when the su
at issue.
Pre-Feasibili
ils to show th
cation of the
ustified.206
Pre-Feasibilents to justify
ity Study are
ing a deposit
(much less s
es the desire
easibility Stu
dition to this rn-pit mine to eing.com/s/Elde "Nueva Espeza vein is withPre-Feasibilit
otential for fu
st a large ex
ked, on a pre
e law require
le for the eva
ubmitted tech
ity Study doe
hat the reque
e mineral dep
lity Study didy a concessio
e evident on
t located und
study) the 12
to explore a
udy, it was n
reference to Lexploit the Nudorado.asp (Reranza vein r
thin the requety Study.
uture open-p
xploitation
eliminary ba
es a Feasibili
aluators to
hnical study
es not fulfill
ested 12.75 k
posits the
d not meet thon under
its face: 1) i
der an area o
2.75 km2
an area five t
not submitted
La Coyotera inueva Esperan
R-48) (showinresource is neested concessi
pit
asis,
ity
l the
km2
he
it is
of
times
d
n the za
ng a ear ion
with an in
achieve a
exploitat
complete
claim ove
legally-re
1
companie
required
1
to secure
was suffi
concessio
207 Pre-Fe208 Rejoinon hold isResponde209 Otto E210 See Beno funds fand could
ntent to justi
a very differe
ion concessi
ed the Pre-Fe
er a large are
equired Feas
As mi55.
es to prepare
to carry out
Manyfeasibfeasibcostlyexplorcompaadditiacquir
Thus, 56.
e funds.210 It
icient for the
on to extract
asibility Stud
nder (Prelimins different froent in its Repl
xpert Report
ehre Dolbear Efrom operatio
d rightly be de
ify the 12.75
ent goal: to f
ions, and De
easibility Stu
ea when its e
sibility Study
ining law ex
e a pre-feasib
the full feas
y explorationbility studies bility study (ay and requireration compaanies to use onal fundingre competen
it made sen
t does not m
e Governmen
t its mineral
dy at 9 (C-9).
nary Objectionm the feasibil
ly. They are t
at 28.
Expert Reporons that it eithescribed as a 'j
5 km2 conces
facilitate "[t]
evelopment o
udy because
exploration l
y was never
pert James O
bility study t
sibility study
n companies or having o
as required bes specializedany. It is coma pre-feasib
g or to attracncy and to pa
se for Pac R
ake sense, h
nt to rely on
resources.
ns), para. 154lity study reqthe same docu
rt, para. 70 (noher managed o'junior miner.
74
ssion, as the
]he conversi
of capital fun
it wanted to
licenses exp
completed.2
Otto describe
to attract the
y:
are capable ne prepared by Mining Ld expertise nmmon for juility study as
ct a partner oay for a full f
Rim to begin
however, to l
for a decisio
4 ("Claimant iquired by the Sument.").
oting that betor operated" a'").
law require
ion of the ex
nd-raising ac
o continue ex
pired on Janu
208
es, it is not u
e necessary f
of preparingfor them, bu
Law Article 3not usually funior exploras an aid in a
or suitor in ofeasibility st
with a pre-f
later claim th
on on wheth
is not 'suggesSalvadoran M
tween 2003 anand thus, "wa
ed, but was i
xploration lic
ctivities."207
xploring and
uary 1, 2005
uncommon f
financing or
g pre-ut a full 37.2(d)) is found in an ation acquiring order to tudy.209
feasibility stu
hat that preli
her or not to
st[ing] that theMining Law,' a
nd 2008, "Pacas not an oper
intended to
censes to
Claimant
d maintain its
. The actual
for junior
partnership
udy as a first
iminary stud
grant a 30-y
e feasibility stas asserted by
cific Rim recerating compan
s
l,
t step
dy
year
tudy y
eived ny
1
different
km2 expl
requested
1
it was no
feasibility
be determ
1
following
continue
on Janua
explorati
Pac Rim
maximum
Thirty da
option un
211 Miningmina y haa que se reactividadese refiere preceded Law shallstudies ththe previo212 Mining
Claim57.
things, and
loitation con
d concession
Pac R58.
otified of pro
y study. Th
mined based
Pac R59.
g the request
exploration
ry 1, 2005.
ion done bef
had submitt
m 30-day tim
ays after the
nder the law
g Regulationsaya precedidoefiere el Art. es y estudios el Artículo anby an Explorl be proven wat were perfo
ous Article."].
g Law, Art. 3
mant knew th
that the "Pre
ncession did n
n.
d) Cla
Rim submitte
oblems with t
e application
on the mate
Rim's applica
ts from the B
activities in
Legally, Pac
fore the licen
ted a deficien
me limit to cu
second prev
was for the
s, Art. 18 (RL Licencia de E23 de la Ley,que fueron ejnterior.") ["Wation License
with the documrmed during t.
8 (RL-7(bis))
hat a pre-feas
e-Feasibility
not demonst
aimant had t
ed its concess
that applicat
n's complian
erials submitt
ation was def
Bureau of M
n the area of
c Rim's Feas
nses expired.
nt applicatio
ure the defec
vención, whe
application
L-8(bis)) ("CuExploración, , se hará con decutados dura
When an Exploe, the existencments that are the effective
).
75
sibility study
Study" it su
trate the econ
to submit a F
sion applicat
tion, Pac Rim
nce with the
ted to the Go
ficient as sub
Mines in late 2
El Dorado a
sibility Study
.211 Thus, lo
on. Followin
cts in its exp
en the defect
to be rejecte
uando se solicla demostrac
documentos qante la vigencoitation Concce of the depo
consistent orterm of such
y and a feasib
ubmitted wit
nomic and te
Feasibility St
ation on Dece
m never subm
legal require
overnment a
bmitted in 20
2006. Pac R
after the expl
y had to be c
ong before an
ng the 2006 p
ploitation con
ts had still no
ed. From tha
cite Concesiónción de la exisque sean congcia de esa Liccession is apposit or depositr in accordancLicense and t
bility study
th its applica
echnical fea
tudy with its
ember 22, 20
mitted a new
ements (or la
at the time.
004, and rem
Rim could no
loration licen
completed ba
ny alleged b
prevención,
ncession app
ot been cure
at point forw
n para la explstencia del o dgruentes o acocencia y el inflied for, and its referred to ce with the acthe final repo
were two
ation for a 12
asibility of th
s application
004. Even a
w application
ack thereof)
mained defic
ot legally
nses had exp
ased on the
reach in 200
Pac Rim had
plication.212
ed, the only
ward, Pac Rim
lotación de unde los yacimiordes con las forme final a it has been in Art. 23 of
ctivities and ort referred to
2.75
he
n
after
n or a
must
cient
pired
08,
d a
m
na entos
que
the
in
could not
beginnin
followed
rather tha
requirem
exploitat
1
considere
economic
resource
Although
claim to
concessio
rights all
insufficie
1
itself has
Salvador
Accordin
quarries,
213 Memor
t receive the
g with a dec
d by its decis
an comply w
ments for an e
ion concessi
Pac R60.
ed seeking a
cally justify,
estimates,21
h Claimant in
in El Salvad
on based on
eged in this
ent materials
4.
Pac R61.
s failed to co
r may only o
ng to Article
the State ma
rial, paras. 36
e concession
cision to purc
ion to attem
with the law,
exploitation
ion as of the
Rim could ha
a smaller con
, but it chose
3 but these d
ncludes info
dor, Claiman
the 2004 ap
arbitration m
s presented w
El Salvadothat Pac R
Rim asserts it
mply with th
btain those r
3 of the Min
ay Grant Lic
65-367.
based on its
chase explor
mpt to capture
and 3) culm
concession u
end of 2006
ave submitted
ncession area
e not to. Cla
documents w
ormation abo
nt's actual cla
plication. Th
must be eval
with it.
or did not haRim's applica
ts claims und
he laws of E
rights by com
ning Law: "F
censes or Co
76
s incomplete
ration license
e the largest
minating in it
under the M
6.
d a new appl
a, which it m
aimant relies
were not part
out all the de
aim is that th
herefore, bas
uated with r
ave a legal obation could b
der the Salva
El Salvador.
mplying with
For the explo
oncessions, p
e application
es close to th
area possibl
ts decision n
Mining Law—
lication, but
might have be
s, without ex
of any appli
eposits it hop
he Governme
sed on Claim
regard to the
bligation to be approved u
adoran Inves
A company
h the Mining
oration and
provided the
n. By its own
heir expirati
le for future
not to comply
—Pac Rim ha
it never did
een able to t
xplanation, o
ication to th
ped to explor
ent should h
mant's own c
2004 applic
change its Munder a new
stment Law.
y seeking min
g Law and R
exploitation
provisions o
n choices—1
on date, 2)
exploration
y with two k
ad no right to
d. It could ha
technically a
on 2006 and
e Governme
re and stake
have granted
choices, the
cation and th
Mining Law w law
But Pac Ri
ning rights in
Regulations.
n of mines an
of this Law a
1)
key
o an
ave
and
2008
ent.
a
a
he
so
im
n El
nd
and
its Regul
rights it c
1
deciding
effect in
Law with
1
Rim state
1
Governm
that it cou
to increa
from "ex
214 Miningpodrá OtoReglamen215 Memor216 Memor217 Memor
lations are m
claims under
Pac R62.
to merge wi
2001 are the
h which it fa
But in63.
es that it view
Pac RDecemapplicGoverthe opthe Buadminlaw – provenviabil
This i64.
ment was ver
uld take adv
se non-agric
xtraordinary s
g Law, Art. 3 orgar Licencianto.") (empha
rial, paras. 12
rial, para. 454
rial, para. 26.
met."214 Havi
r that law.
Rim alleges th
ith Dayton a
e same laws
ailed to comp
n fact, Pac R
wed the requ
Rim filed its Cmber 2004 wcation procernment interpen working ureau of Minnistrative verwhich largen ore reserveity of the Pro
s the crux of
ry accommod
vantage of th
cultural job o
signs of goo
(RL-7(bis)) (
as o Concesioasis added).
23-127.
4 (emphasis a
ing failed to
hat it conduc
and acquire t
applicable to
ply.
Rim considere
uirements of
Concession Awith the reasedure was arest in develo
relationshipnes, there warification of ely consistedes and MARoject – the C
f the dispute
dating to Pac
hat supportiv
opportunities
od will shown
("Para la explones, Siempre
added).
77
comply wit
cted due dili
the El Dorad
o Pac Rim's
ed itself exe
f the Mining
Application sonable unda formality: opment of thp that prevailas simply nothe substant
d of verificatiRN's sign-offConcession w
e between Cl
c Rim for a n
ve relationshi
s to reduce p
n by the Bur
loración y expe que se cump
th the law, P
igence in El
do exploratio
application,
mpt from co
Law as "a f
with MINEderstanding
given the lohe El Doradoled between
o question thtive requiremion of the idf on the enviwould be gra
laimant and t
number of y
ip. Claiman
poverty,217 an
reau of Mine
plotación de mpla con lo disp
ac Rim does
Salvador in
on licenses.21
, including th
omplying wi
formality":
EC in g that the ong history oo Project andPac Rim an
hat upon ments of the dentified ironmental anted.216
the Governm
years, and Cl
nt knew the c
nd it therefo
es and the As
minas y cantepuesto En est
s not have th
2001 before
15 The laws
he 1995 Min
ith the law. P
of d nd
ment. The
laimant decid
country want
ore benefitted
samblea" an
eras, el Estadota Ley y su
he
e
in
ning
Pac
ded
ted
d
nd the
o
Bureau o
But Pac R
knowing
Governm
and good
whatever
concessio
1
with the r
admit the
arbitratio
itself had
complyin
1
socially r
designing
deposit to
218 Memor219 Navas 220 Transcany assuralaw? A. N221 NOA, Statement
of Mines' "ac
Rim was not
it had not co
ment into gra
d-faith effort
r Pac Rim w
on without m
But as65.
requirement
e application
on by insistin
d to admit th
ng with the l
Pac R66.
responsible m
g a mine and
o develop a m
rial, para. 628
de Hernánde
cript of Hearinances that youNo").
para. 14; First"), para. 41.
ctive collabo
t satisfied wi
omplied with
anting the con
ts to work wi
anted, includ
meeting seve
s Gina Nava
ts under the M
n to be proce
ng that it rec
at no one ev
aw.220
a) Pacsee
Rim has repea
mining comp
d obtaining t
mine with th
8.
z Witness Sta
ng on Objectiur Concession
st Witness Sta
oration" to try
ith the "extra
h the legal re
ncession any
ith the comp
ding change
eral legal req
as de Hernán
Mining Law
essed.219 Clai
eived vague
ver assured P
c Rim wanteeking "extrao
atedly told th
pany.221 But
the needed au
he least nega
atement, para
ions to Jurisdin application
atement of Th
78
y to help bri
aordinary sig
equirements
yway. Based
pany, Pac Ri
its laws, to
quirements.
ndez explains
w, the Bureau
imant has att
e "assurances
Pac Rim that
ed to stake itordinary pro
his Tribunal
t, in fact, Cl
uthorization
ative impact
s. 60-61.
iction, May 3would be app
homas C. Shra
ing a success
gns of good
s, Pac Rim tr
d on the Gov
m expected
allow Pac R
s, where the
u of Mines c
ttempted to s
s" in support
it could rec
ts claim to thofits"
l that it is an
aimant was
ns for the sm
possible. R
3, 2011, at 473proved if it di
ake, Dec. 31,
sful project t
will" it rece
ried to pressu
vernment's p
the Governm
Rim to obtain
application
ould not, an
sustain its cla
t of its proje
eive the con
he largest po
environmen
not focused
mall area arou
Rather, Claim
3:5-8 (Q: Didid not comply
2010 ("First
to Cabañas.2
eived. Instea
ure the
previous sup
ment to do
n a huge
failed to com
d would not
aims in this
ct, but Claim
ncession with
ossible area,
ntally and
on carefully
und a known
mant was sole
d you ever recy with the exi
Shrake Witne
218
ad,
pport
mply
t,
mant
hout
y
n
ely
ceive sting
ess
focused o
Claimant
Salvador
sharehold
1
company
is our foc
explorati
reasonab
explorati
available
222 Pacific10, 2002 (223 Pacific224 Memordeposits in225 Memor226 Pac Ri227 See e.gSept. 23, 2program, the MinitaSecond Qproducersremainingfor new ch
on staking th
t's own exhib
r as an oppor
ders in 2000
Our exstage projeca prem
This w67.
y's activities
cus."226 As a
ion,227 instea
le concessio
ion areas can
e data, incom
c Rim Mining("Pac Rim 20
c Rim Mining
rial, para. 97 n Latin Amer
rial, para. 120
m 2002 Prese
g., Pacific Rim2002 (C-233)which is desia Vein."); Pac
Quarter Results with larger og to be tested,hutes of mine
he largest cla
bits, Pacific
rtunity to ma
, the year be
xploration stprojects, enh
ct or the Commium.223
was in line w
in El Salvad
a result, Pac
ad of prepari
on area. As B
n result in de
mplete testing
g Corp., 2002 002 Presentati
g Corp., 2000
("[I]n short, orica and the U
0 ("Mr. Shrak
entation to Sh
m Mining Cor) ("The Compigned to locatcific Rim Mints, Dec. 17, 20operations, an Pacific Rim
eralization.").
aim possible
Rim Mining
ake "extraord
efore it turne
trategy is to hance their vmpany to an
with Tom Shr
dor.225 As To
Rim deliber
ng the neces
Behre Dolbe
ecisions that
g and fieldw
Extraordinarion to Shareho
Annual Repo
over the past United States (
ke's expectatio
hareholders at
rp., News Relpany has adopte additional hning Corp., N003 (C-362) (nd with a seriewill concurre
79
e to sell off a
g Corp. is an
dinary profit
ed its attentio
acquire highvalue througestablished
rake's exper
om Shrake t
rately chose
ssary studies
ear describes
are not base
work, and poo
y General Meolders") at 1 (
ort at 2 (C-33
thirty years, h(many of them
ons extended
t 2 (C-218) (e
lease, Additiopted a deliberahigh-grade ch
News Release,("Cognizant oes of high quaently conduct
at extraordina
n exploration
ts."222 As Pa
on to El Salv
hly prospectgh exploratio
major minin
rience as a m
told sharehol
to focus its
s and materia
s, stretching
ed on a comp
or planning a
eeting, Presen(C-218).
8).
he has foundm in Nevada)
well beyond
emphasis adde
onal Drill Resate, systemati
hutes separate Pacific Rim
of the market ality vein targt additional ex
ary profits.
n company th
ac Rim expla
vador,
tive early on and sell thng company
mine-finder22
lders in 2002
time and res
als for a muc
resources to
plete underst
and allocatio
ntation to Sha
numerous sig).") (emphasis
the El Dorad
ed).
sults From Elic approach to
e from the knoMining Corppremiums af
gets on the Elxploration dri
As shown in
hat saw El
ained to its
he at
24 and the
2: "Profitabi
sources on
ch smaller, m
o cover mult
tanding of al
on of availab
areholders, Ap
gnificant mines added).
do Project.").
l Dorado Progo its current down resource p. Announces fforded to l Dorado projeilling in the se
n
ility
more
iple
ll
ble
pr.
eral
gram, drill in
ect earch
funds.228
areas "m
the requi
1
data nece
project,"2
March 20
targets."2
environm
Rim purs
goal of en
finalizing
drill prog
1
concessio
228 Behre 229 Behre 230 PacificResults, D231 PacificResults, M232 MemorStatementin 2004, "continuallexploracióvalor del p233 Memor
For Pac Rim
ade it less lik
rements of a
In acc68.
essary for a "
230 at the end
004 "to build
231 Thus, wi
mental impac
sued parallel
nlarging the
g its materia
gram at the n
The n69.
on, noting th
Dolbear Expe
Dolbear Expe
c Rim MiningDec. 17, 2003
c Rim MiningMar. 15, 2004
rial, para. 161t of Ericka Co"the companyly increasing ón en ningún proyecto.").
rial, para. 159
m, Behre Do
kely that Pac
an exploitatio
cordance wit
"preliminary
d of 2003, it
d on our El D
th very limit
ct study, as w
l tracks to bo
resource fur
ls for its con
newly discov
ext month, P
hat it would n
ert Report, pa
ert Report, pa
g Corp., News(C-362).
g Corp., News(C-365) (em
1 (citing Pacifolindres, Mar
y at no time wthe value of tmomento, ya
9.
olbear consid
cific Rim wo
on concessio
th its focus o
y economic a
nevertheless
Dorado resou
ted time left
well as gathe
oth apply for
rther."232 In
ncession app
vered South
Pac Rim sub
need more ti
ara. 76.
ara. 83.
s Release, Pac
s Release, Pacmphasis added)
fic Rim Minin. 22, 2013 ("C
wished to suspthe project"/ "a que los resu
80
ders that the
ould be able
on for Minita
on profits, alt
assessment (
s turned its "
urce by cont
to carry-out
er the materi
r the concess
n November
plication, Pac
Minita distri
bmitted the ap
ime and mon
cific Rim Min
cific Rim Min).
ng Corp. 200Colindres Witend the explo"la empresa nltados del mis
e strategy of
to complete
a."229
though Claim
('scoping stu
"focus for th
tinuing to sc
t the feasibil
als for its co
sion and con
2004, when
c Rim "comm
ict."233
application fo
ney to fully e
ning Corp. An
ning Corp. An
04 Annual Reptness Stateme
oration prograno quería suspsmo seguían
pursuing oth
e the extensiv
mant did not
udy') for the E
he immediate
out drill high
lity study an
oncession ap
ntinue explor
it should ha
menced a res
or an exploit
explore the a
nnounces Seco
nnounces Thir
port (C-29)). ent"), para. 59am since its repender el progcada vez más
her explorati
ve work to m
t have all the
El Dorado
e future" in
h priority ve
nd the
pplication, Pa
ration "with
ave been
source defin
tation
area: "Basic
ond Quarter
rd Quarter
See also Wit9 (explaining esults were grama de s aumentando
ion
meet
e
ein
ac
the
nition
ally,
tness that
o el
more yea
Pac Rim
been com
assessme
Claimant
the cost o
request o
the "right
made.237
234 Concesfinancieroforma sen["Limitativeins or identire area235 ConcesplanificadMinita Suplanificaddicho esorequeriráncomenzarconcessioincluded dincluded ithe Nuevabefore any236 Concesvetas Mindonde se ecomo áreaMinita 3 vgeologica237 Concesdesarrollaopinión secon relacimomento
ars are neede
insisted that
mpletely exp
ent.235 This
t's unilateral
of constructi
only the area
t" to develop
Pac Rim pe
ssion Applicaos no le han pncilla, se requions in the expdentified expla covered by
ssion Applicada y el área deur en el sur. Eda y por su po, se reconoce n un estudio dr en estas vetan area. The Ndue to their clin the operatioa Esperanza ay mining activ
ssion Applicanita y Minita 3encuentran vea de Concesióveins, plant anal zones identi
ssion Applicaar el distrito Ee basa en nueión a las Licencomo parte d
ed for a detai
t it should be
lored, and fo
approach wa
opinion of h
ing the mine
needed to m
p El Dorado
erhaps could
ation, § 2.2 (Rpermitido perfieren más añoploration metloration targethe Licenses.
ation, § 2.2 (Re procesamienEstas han sidootencial para s
que operaciode impacto amas.") ["The areNueva Esperalose proximityons plan in th
and/or Minita vity in these v
ation, § 2.3 (R3, área de la petas mineralizón") ["[W]e dnd tailings daified as havin
ation, § 2.3 (REl Dorado, a sstro fiel cumpncias El Dora
de este cumpl
iled assessm
e granted an
or which it h
as not based
how it could
and beginni
mine the Min
"to its maxi
d have filed a
R-2) ("Limitacforar cada vetos para evaluathod and finanets. Basically,"].
R-2) ("Se inclunto. Además,o incluidas deser incluidas eones mineros mbiental aprobea of the plananza vein to thy to the plann
he near futureSur veins wo
veins could b
R-2) ("[N]o noplanta y presazadas y zonasdo not think itam, but also ong potential as
R-2) ("Es la opsu potencial mplimiento conado Norte y Eimiento.") ["I
81
ment of the en
exploitation
had not subm
d on El Salva
d maximize i
ing operation
nita deposit.2
imum potent
a more comp
ciones en el mta encontrada ar detalladamncial resource more years a
uyó en el área, se incluyó labido a su cercen el plan ope(sic) en las vebado antes de
nned mine andhe north and tned operating. That being
ould require aegin."].
os parece razoa de colas, sins geológicamet reasonable toother nearby as the Concess
pinión de Pacmáximo, le pen las exigenciEl Dorado SurIt is Pacific R
ntire area co
n concession
mitted an env
ador's Minin
its benefits: P
ns, it would
236 In fact, P
tial" based o
plete applica
método de expo blanco de e
mente la totalides have not alare needed for
a de la concesa veta Nueva cana proximideracional en eetas Nueva Ee que cualquied the processithe Minita Su
g area and becsaid, we reco
an approved e
onable solicitno que tambiéente identificao request onlyareas containision area."].
cific Rim queertenece legalmas de la 'Ley r y basado en
Rim's opinion
overed by the
n covering ar
vironmental
ng Law, but r
Pac Rim arg
not be "reas
Pac Rim insi
on the investm
ation if it had
ploración y enexploración iddad del área dllowed it to dr a detailed as
sión el área dEsperanza aldad al área deel futuro cercasperanza y/o er actividad ming area wereur vein to the cause of their ognize that mienvironmental
tar solamente én las otras áreadas como zoy the areas ofng mineralize
e el derecho dmente a Pacifde Minería y las inversionthat the right
e Licenses."2
reas that had
impact
rather on
gued that due
sonable" to
isted that it h
ments it had
d focused on
n los recursosdentificado. de las Licenci
drill all discovssessment of
de la mina l norte y la vee operación ano. HabiendMinita Sur
minera pueda e included in t
south were alpotential to bining operatiol impact study
el área de laseas cercanas
onas con potenf the Minita aned veins and
de evaluar y fic Rim. Esta Sus Reforma
nes hechas hast to evaluate a
234
d not
e to
had
d
n
s En ias.")
vered the
eta
do
the lso be ons in y
s
ncial nd
as' sta el and
meeting t
"extraord
1
applicatio
the law a
activities
action by
start a 30
off—"thi
1
the law.
Articles 2
concessio
"be expan
undergro
1
Mining L
develop thbased on othe El Dothis comp238 Pac Ri239 Letter 240 Letter razones de
the requirem
dinary profit
It was70.
on open long
and allowed
s in the reque
y the Bureau
0-day clock,"
is buys us tim
As de71.
In 2005, the
24 and 37 to
on, based on
nded for pur
ound mines f
When72.
Law in 2007
he El Dorado our strict comrado Norte an
pliance."].
m Internal M
to Elí Valle w
to Elí Valle we protección"
ments for one
s."
b) It wsta
s to Pac Rim
g after it sho
Pac Rim to i
ested conces
of Mines re
" but because
me."238
scribed abov
e Minister of
o accommoda
n the size of t
rposes of pro
from the land
n the law was
. The propo
district to its
mpliance with nd El Dorado
Memo re Surfa
with Proposed
with Proposed).
e deposit, bu
was to Pac Ralled while it
m's benefit tha
ould have be
incorrectly i
ssion area. A
elated to the
e the Bureau
ve, the comp
f Economy c
ate the comp
the deposits
otecti[ng]" th
d authorizati
s not amende
osed new law
maximum pothe requiremSur Licenses
ace Owner Au
d Amendment
d Amendment
82
ut that would
Rim's benefitt tried to cha
at the Bureau
en rejected.
nsist that it c
As Fred Earn
items missin
u was "symp
pany support
considered am
pany.239 The
and the tech
he requested
ion or owner
ed, Claiman
w would rem
otential legall
ments of the "Ms and the inve
uthorization (C
ts to the Mini
ts to the Mini
d not have sa
t to have the ange the law
u of Mines k
This allowe
could contin
nest wrote to
ng from Pac
pathetic" to P
ted several e
mending the
e changes w
hnical justifi
d deposits an
rship require
nt supported
move the deci
ly belongs to Mining Law aestments made
C-291).
ing Law (R-3
ing Law (R-3
atisfied Claim
concession
kept the conc
ed time for e
nue some exp
o Tom Shrak
Rim's appli
Pac Rim, it w
efforts to cha
e Mining Law
ould allow t
ications of th
nd would spe
ement.240
a proposal to
ision-making
Pacific Rim.
and Its Reforme up to the m
5).
5) ("pudiéndo
mant's desire
application
cession
efforts to cha
ploration
ke in June 20
cation "wou
was holding
ange or repla
w to change
the area of th
he applicant,
ecifically exc
o replace the
g and regula
This opinion
ms" in relatiooment as part
ose ampliar p
e for
ange
005,
uld
ace
he
, to
clude
e
atory
n is on to t of
por
authority
represent
law, an a
explorati
concessio
Only afte
submit an
land on w
to reverse
including
applicatio
1
lessen the
obtaining
applicatio
below, co
no obliga
therefore
interprete
Tribunal
241 Propos242 Propos243 Propos
y from the Bu
tation from p
applicant wou
ion and explo
on applicatio
er completin
n environme
which it wou
e the normal
g an automat
on.243
Instea73.
e requiremen
g an exploita
on alive whi
ontinued una
ation to chan
e had to comp
ed by the Go
.
sed New Mini
sed New Mini
sed New Mini
ureau of Min
private indus
uld be able t
oitation, with
on (an enviro
ng an extende
ental permit,
uld locate mi
l administrat
tic right to a
ad of comply
nts and remo
ation concess
ile it pursued
authorized ex
nge its law fo
ply with the
overnment, c
ing Law (R-3
ing Law, Arts
ing Law, Art.
nes and inste
stry and the
to obtain a "M
hout submitt
onmental per
ed 16-year e
a feasibility
ining infrastr
tive presump
concession
ying with the
ove the Bure
sion. Pac Ri
d efforts to c
xploring in t
or Claimant
law in effec
contrary to th
36).
s. 34, 35, 38,
. 38 (R-36).
83
ead establish
mining indu
Mining Con
ting any of t
rmit, a feasib
exploration p
y study, and
ructure.242 I
ption of deni
in the event
e Mining Law
eau of Mines
im was using
change the la
the requested
and, in fact,
ct at all relev
he interpreta
52, 54 (R-36)
h a new Mini
ustry.241 Acc
ncession," wh
the documen
bility study,
phase, the ap
ownership o
In fact, the p
ial by silence
t there was n
w, Claimant
s and landow
g the Govern
aw and, in fa
d concession
the law was
vant times, w
ations that C
).
ing Authorit
cording to th
hich would i
nts lacking fr
and land do
pplicant wou
or authorizat
proposed law
e in Salvado
no response t
t tried to cha
wners from th
nment's goo
act, as will b
n area. The
s not change
which was co
laimant has
ty with
he proposed n
include both
rom Pac Rim
ocumentation
uld need to
tion for only
w went so far
oran law by
to the
ange the law
he process f
dwill to keep
e described
Governmen
ed. Claimant
onsistently
presented to
new
h
m's
n).
the
r as
to
for
p its
t had
t
o this
1
Dorado e
right to c
1
license te
produce e
Thus, on
license re
expired l
unless an
area.
1
Mining L
explorati
Rim spec
licenses c
prohibite
244 Ayala/otorgan y 245 Otto E246 Email 247 Miningsin la corrthis law w
5.
Pac R74.
exploration l
continue exp
Accor75.
erminates the
effects from
ce the final e
elinquishes a
icense can a
nd until such
Moreo76.
Law that tem
ion license ev
cifically requ
could not be
ed by Article
/Fratti de Veghasta el día e
xpert Report
from Fred Ea
g Law, Art. 1respondiente
without the co
Pac Rim dexplorationpending
Rim ran out o
licenses final
loring in the
rding to Min
e license. E
m the day on w
extension of
any rights to
apply for a co
h application
over, as min
mporarily pre
ven in the ca
uested more
e extended.24
e 16 of the M
ga Expert Repen que expiran
at 30.
arnest to Tom
6 (RL-7(bis))autorización…
orresponding a
did not have n licenses ex
of time to com
lly expired o
e 75 km2 area
ning Law Art
l Salvador's
which they a
f an explorat
o the license
oncession if
is granted th
ing law expe
eserves or sav
ase where a m
time to expl
46 As a resul
Mining Law.2
port at 34 ("lan.").
m Shrake, Nov
) ("Prohíbese …") ["It is forauthorization
84
a right to coxpired and it
mplete its ex
on January 1
a of the orig
ticle 27.d), e
administrati
are granted u
ion license h
area and the
it meets the
he holder of
ert James Ot
ves any righ
mining conc
lore and was
lt, continued
247
s licencias só
v. 8, 2004 (C-
realizar las acrbidden to car…"].
ontinue explots application
xploration go
, 2005. Afte
ginal licenses
expiration of
ive law expe
up until the d
has expired,
e deposits the
requiremen
f an expired l
tto finds: "Th
ht previously
cession appli
s "consistent
d exploration
ólo producen e
392).
ctividades mirry out the mi
oring after thn for the con
oals in El Do
er that date,
s.
f the term of
erts explain:
day on which
the holder o
erein. The h
nts to file the
license has n
here is no pr
y granted und
ication is pe
tly" told that
n was withou
efectos desde
ineras a que sining activitie
he original ncession was
orado: the E
Claimant ha
f the explorat
"licenses on
h they expir
of the expired
holder of the
e application
no rights to t
rovision in th
der an expire
nding."245 P
t its explorat
ut authorizat
e el día en que
se refiere estaes referred to
s
El
ad no
tion
nly
re."244
d
e
, but
the
he
ed
Pac
tion
tion,
e se
a ley, in
1
in explor
explorati
in the req
explorati
explained
if the Go
Bureau m
cannot gr
compens
1
in the are
any harm
248 Memor249 MiningReport at 250 The risreformingED Mininbegan to uresolved b251 Ayala/mediante manera.")
Never77.
ration activit
ion program
quested conc
ion, without
d by El Salv
vernment w
may grant an
rant one, and
ation from th
Thus, 78.
ea of the exp
m to Claiman
rial, para. 256
g Law, Art. 630.
sk Claimant ag the Amendeng Environmeunderstand thby through th
/Fratti de Vegun acto con e
).
rtheless, con
ties in El Sal
during 2005
cession area,
a valid explo
ador's admin
as informed
n exploration
d did not gra
he State for
Claimant di
pired El Dora
nt—it had no
6 (emphasis a
9 (RL-7(bis))
assumed was eed Mining Lawental Permit ahat the delay Pe technical as
ga Expert Repel contenido e
ntrary to the l
lvador, emba
5."248 Any e
, was a "serio
oration licen
nistrative law
of the ongo
n license by a
ant one, by o
its unauthor
id not ever h
ado licenses
o rights that c
added).
) ("Constituye
even greater gw continued tapplication or PRES faced wssessment, bu
port at 36 ("la establecido en
85
law, "Pac Ri
arking upon
exploration in
ous infringem
nse, was don
w experts, th
ing explorat
an act with t
other means."
rized explora
***
have the righ
. Any allege
could have b
en infraccione
given Claimathrough 2007 the Exploitat
with respect tout only throug
Dirección pun la ley pero n
im continued
an aggressiv
n El Dorado
ment" of Sal
ne at Claiman
here is no im
tion and did
the content e
"251 Claiman
ation activiti
ht to a conces
ed breach in
been affected
es … graves l
ant's admissio and no furthetion Concessio its Concessigh political me
uede otorgar lno puede otor
d to invest m
ve target-gen
o after Januar
lvadoran law
nt's own risk
mplied right t
not seek to e
established b
nt cannot no
ies.
ssion and ha
2008 could
d.
las siguientes
on "when the der progress wion applicatioion applicatioeans." Memo
la licencia de rgarlo, ni lo ot
millions of do
neration and
ry 1, 2005, e
w.249 Such
k.250 As
to explore, ev
end it: "the
by law, but it
ow seek
as no other ri
not have ca
s"); Otto Expe
discussion of was made on thon, the Compaon would not borial, para. 32
exploración torgó, de otra
ollars
d
even
ven
t
ights
aused
ert
fhe anies be
21.
a
B
1
companie
expired e
1
explorati
request n
prohibit f
license fo
extension
explorati
enforces
Mining L
license th
1
252 Mining253 Miningprórroga, la totalida254 Ayala/la Ley, pupueda vac
B. Pac Rlicens
1.
The M79.
es from appl
exploration l
Under80.
ion.252 The h
new explorat
former explo
or any part o
n has expired
ion license o
the time lim
Law would b
hrough a rela
As the81.
The rewithothe exthroug
g Law, Art. 1
g Regulationsel Titular no
ad o parte de l
/Fratti de Vegues sin contraciarse de cont
Rim did not ses included
Claimant dlicenses in
Mining Law a
lying for and
license areas
r the Salvado
holder of an
tion rights fo
oration right
of the origina
d, the Holde
ver all or pa
mit for explor
be rendered m
ated compan
e Salvadoran
egulations, but contradic
xtensions estgh the interv
9 (RL-7(bis))
s, Art. 17 (RLpodrá obtenelo que compre
ga Expert Repadecirla, prectenido por vía
have a righd in its claim
did not haven Guaco, Hua
and its Regu
d receiving n
s.
oran Mining
expired lice
or the same a
ts holders an
al license are
r may not ob
art of what th
ration; the ei
meaningless
ny.
n administrat
by so specifycting it, theyablished by
vention of a n
).
L-8(bis)) ("Cuer por sí, ni poendía la fenec
port at 37 ("Elcisa que el líma de interpone
86
ht to apply fms
a right to apacuco, and P
ulations proh
new explorat
g Law, there
ense is not al
area. The Sa
nd related ent
ea: "Once th
btain directly
he expired L
ight-year lim
if the comp
tive law exp
ying, are devy specify thatLaw cannot new legal en
umplido el plaor interpósita cida.").
l reglamento, mite máximo der una nueva e
for and rece
pply for and Pueblos
hibit Pac Rim
tion licenses
is an eight-y
llowed to con
alvadoran M
tities from o
he term of the
y, or through
License cover
mit establishe
pany could si
perts explain
veloping thet the maximu be rendered
ntity.254
azo de la Licepersona, otra
al hacer esta de las prórrogentidad jurídi
eive other ex
receive the
m and its affi
s covering an
year maximu
ntinue explo
Mining Regul
obtaining ano
e Exploratio
h another pe
red."253 Thi
ed in Article
imply start o
,
e Law, since,um limit of
d meaningles
encia de Exploa licencia de e
precisión, esgas que establica.") (empha
xploration
exploration
filiated
ny area of th
um term for
oring or to
lations explic
other explora
on License or
rson, anothe
s Regulation
e 19 of the
over with a n
,
ss
oración o de sexploración so
stá desarrollalece la Ley nosis in original
he
citly
ation
r its
er
n
new
su obre
ando o l).
1
had the r
Dorado N
2005. Th
applied f
substanti
explained
areas kno
Explorati
1
Salvador
administr
licenses,
of the Gu
licenses g
licenses a
based on
255 Memor256 Ayala/257 Otto Ein contradto grant) a
Thus, 82.
ight to obtai
Norte and El
his, however
for and receiv
ial parts of th
d by Claiman
own as Guac
ion Licenses
Claim83.
ran law from
rative law, e
the grant do
uaco, Huacu
granted to D
and the expi
deposits loc
rial, para. 209
/Fratti de Veg
xpert Report diction to this and such gran
neither PRE
in another ex
l Dorado Sur
r, is exactly w
ved, through
he expired E
nt: "On 26 A
co, Huacuco
s outside of t
mant had no r
m doing so. A
even if the Bu
oes not becom
co, and Pueb
DOREX wou
red licenses
cated in the o
9 (emphasis a
ga Expert Rep
at 32 ("In theprohibition,
nt would thus
ES nor DOR
xploration lic
r exploration
what Claima
h DOREX, in
El Dorado No
August 2005
, and Pueblo
the newly de
right to obtai
As explained
ureau of Min
me legal bec
blos explorat
uld be null an
held by PRE
overlapping
added).
port, § 7.3.2.b
e event that a such grant wobe considere
87
REX, both wh
cense for any
n licenses aft
ant sought to
n Guaco, Hu
orte and El D
, DOREX ap
os, covering
efined Conce
in those licen
d by El Salva
nes made a m
cause the Bu
tion licenses
nd void to th
ES.257 As a
areas.
.
Government ould be ultra d null and vo
holly owned
y of the 75 k
fter those lice
o do. The ex
uacuco, and
Dorado Sur e
pplied for Ex
the remaind
ession area."
nses and wa
ador's expert
mistake in g
ureau cannot
s was not leg
he extent of t
result, Pac R
officer shoulvires (i.e. bey
oid.").
d subsidiaries
km2 area cov
enses expire
xploration lic
Pueblos ove
exploration l
xploration L
der of the are
"255
as prohibited
ts on Salvad
granting the e
ignore the l
gal. Thus, th
the overlap b
Rim cannot m
ld grant an exyond the pow
s of Pac Rim
vered by the
d on January
censes Pac R
erlapped
license areas
Licenses for t
ea of the orig
d under
doran
exploration
aw.256 The
hese explora
between the
make any cla
xploration licewer of the offic
m,
El
y 1,
Rim
s. As
the
ginal
grant
ation
new
aims
ense cial
1
area that
Figure 4.
concessio
license an
1
km2 area
rights to
under Sa
Claimant
having ne
no legitim
explorati
licenses t
1
period, to
not seek
not meet
258 See Me159 (desc259 TechniAssociate
Claim84.
are outside t
.2 of a techn
on and the n
nd Nance Du
Claim85.
of El Dorad
Coyotera an
lvadoran law
t, therefore,
ever been gr
mate expecta
ion in an area
that were no
Claim86.
o choose an
an exploitati
the legal req
emorial, pararibing the dis
ical Report Ues Mar. 3, 200
a) ThHuexp
mant includes
the 12.75 km
ical report p
ew explorati
ulce is in the
mant had no l
do Sur and E
nd Nance Du
w, those righ
cannot ask th
ranted the en
ation to rece
a for which t
ot granted leg
mant had the
area, or area
ion concessi
quirements f
. 139 (describ
scovery of the
Update on the 08, at 15 (R-9
he two deposuacuco and Ppired license
s in its claim
m2 requested
prepared for C
ion licenses,
e Huacuco li
legitimate rig
El Dorado No
ulce ended w
hts could not
his internati
nvironmental
ive environm
the maximum
gally.
opportunity,
as, for which
ion for the C
for those are
bing Coyoterae Nance Dulce
El Dorado Pr).
88
sits included Pueblos werees
ms two depos
d concession
Claimant in
, indicating t
icense area.2
ght to these
orte expired
when the El D
t be extended
onal arbitral
l permits to
mental perm
m term of ex
, following t
h to seek an e
Coyotera or N
as: it had no
a as located we vein in the E
roject Gold an
as claims ine located in t
sits from the
area: Coyot
2008 shows
that Coyoter
259
deposits. Its
on January
Dorado explo
d for Pac Rim
l Tribunal to
continue exp
mits and be al
xploration ha
the maximum
exploitation
Nance Dulce
ot sufficiently
within the El DEl Dorado pr
nd Silver Reso
n this arbitratthe overlap a
original 75
tera and Nan
s the areas of
ra is included
s right to exp
1, 2005. An
oration licen
m or any rel
o award it dam
ploring these
llowed to con
ad expired, b
m eight-year
concession.
e deposits be
y studied the
Dorado Projecoject area in M
ources, Mine
tion located area with the
km2 explora
nce Dulce.258
f the request
d in the Pueb
plore in the 7
ny exploratio
nses expired,
ated entity.
mages for
e areas. The
ntinue
based on new
r exploration
Claimant d
ecause it cou
em. Thus,
ct area) and pMay 2004).
Developmen
in e
ation
8
ted
blos
75
on
, and
ere is
w
n
did
uld
para.
nt
following
an exploi
1
expire. P
then faile
by the M
1
affecting
was force
2007 bec
were susp
meeting w
were told
1
explorati
Claimant
260 Ayala/el día en qfrom the d261 Bureaulicense exJuly 20, 2262 Memor263 Memor264 Letter extension
g January 1,
itation conce
2.
Claim87.
PRES receiv
ed to request
Mining Law a
Prior t88.
g Claimant's
ed to suspen
cause of loca
pended, thro
with the Min
d that all min
Nothin89.
ion rights in
t wanted to c
/Fratti de Vegque se otorganday on which
u of Mines Rextensions and 2009 (R-23) (d
rial, para. 331
rial, para. 298
from Pacific of the Santa
2005, when
ession for th
Claimant d
mant has no r
ved the explo
t the renewal
and Regulatio
to the expira
exploration
nd its explora
al opposition
ough no fault
nisters of Ec
ning activity
ng that El Sa
the Santa Ri
continue exp
ga Expert Repn y hasta el d they are gran
esolution, Julythat the Santa
denying the re
1.
8.
Rim El SalvaRita explorat
n the explora
ese deposits
did not have
rights in Sant
oration licens
l of the expl
ons.261
ation of the l
rights. Inde
ation drilling
n.262 Thus, C
t of El Salva
conomy and
y in the count
alvador did o
ita license ar
ploring and r
port at 34 ("Enía en que expnted up until t
y 16, 2009 (Ra Rita licenseequested exte
ador to Bureaution license).
89
ation licenses
, Claimant h
a right to a
ta Rita, havi
se and the en
oration licen
license, there
eed, as Claim
g program at
Claimant's ea
ador, when C
Environmen
try would be
or did not do
rea. In 2009
requested an
n este sentidopiran.") ["In ththe day on wh
R-22) (noting e expired on Jension).
u of Mines, Ju
s expired and
had no rights
new explora
ing allowed t
nvironmenta
nse before th
e was no alle
mant explains
t Santa Rita f
arly explorat
Claimant atte
nt during wh
e halted unti
o in 2008 aff
9, the explora
extension o
o, las licenciashis regard, lichich they exp
the legal provJuly 14, 2009)
uly 17, 2009
d Claimant d
s to them.260
ation license
the explorat
al permit for
he term expir
eged breach
s in its Mem
from late 20
tion activitie
ended the M
hich the mini
l the EAE w
fected Claim
ation license
of the license
s sólo produccenses only prpire."].
visions releva); Bureau of M
(R-21) (reque
did not reque
e in Santa Ri
ion license t
this area, bu
red, as requi
or damage
morial, Claim
006 through l
es at Santa R
May 7, 2007
ing compani
was conducte
mant's early
e expired.
e.264 The
cen efectos deroduce effects
ant to exploraMines Resolu
esting an
est
ta
to
ut
ired
mant
late
Rita
ies
ed.263
esde s
ation ution,
Governm
Article 1
its other
Claimant
1
indirectly
Santa Rit
extension
holders f
was not g
response
license to
granted n
1
not have
265 Bureau266 Memor267 See Pa53) (mentexpired an268 Claimalegal imperefers to a"Cimarrón269 Mining
ment denied C
1 of the Min
Salvadoran
t tried to "re-
But as90.
y through rel
ta license ex
n. Pac Rim's
failed. The M
granted is in
would have
o expire, has
new rights to
There91.
any rights in
u of Mines Re
rial, para. 334
cific Rim Mintioning that, "nd was imme
ant submittedediment, this a request for an" license, an
g Regulations
Claimant's re
ning Regulat
subsidiary, D
-stake" its cl
s described a
lated entities
xpired on Jul
s attempt to
Ministry did
accordance
e been to den
s no rights to
o Santa Rita
fore, Claima
n Santa Rita
esolution, July
4.
ning Corp., ""[s]ubsequent diately re-stak
d a copy of theapplication w
a new explorand provides a
s, Art. 17 (RL
equest as no
tions. 265 Th
DOREX.266
laim to Santa
above, an ex
s, to seek a n
y 14, 2009.
use DOREX
not grant th
with Article
ny the applic
o Santa Rita
contrary to t
ant holds no
upon which
y 16, 2009 (R
Santa Rita," hto the end of
ked by the Co
e application would not supation license ctable of costs
L-8(bis)); Aya
90
t allowed by
en Claimant
Thus, long
a Rita throug
xploration rig
new explorat
Pac Rim sim
X to circumv
he license to
e 17 of the M
cation.269 Cl
and could ha
the Mining L
exploration
h to base any
R-22).
http://www.paf fiscal 2009, ompany's sub
without annexpport grantingcalled "Cimars for the "Seso
ala/Fratti de V
y Articles 27
t re-applied f
after the alle
gh both PRE
ghts holder i
tion license a
mply missed
vent the legal
DOREX.268
Mining Regu
laimant, havi
ave no legiti
Law provisio
license in S
y claims in th
acrim-miningthe Santa Rit
bsidiary DORE
xes with its eg the license inrrón," proposeori" license.
Vega Expert R
7 of the Mini
for the same
eged breach
ES and DOR
is not allowe
after its licen
d the deadlin
l limits on ex
The fact th
ulations, and
ing allowed
imate expect
ons.
Santa Rita, an
his arbitratio
g.com/s/ES_Sta exploration
REX.").
exhibit C-424n any case; thes an explora
Report, § 7.3.2
ing Law and
e license thro
in March 20
REX.267
ed, directly o
nse expires.
ne to request
xploration ri
hat the licens
the only law
its explorati
tation of bein
nd Claimant
on.
SantaRita.asp n licence [sic]
. Aside fromhe applicationation plan for
2.c.
d
ough
008,
or
The
an
ights
se
wful
ion
ng
t does
(R-
m the n the
1
demonstr
absolutel
1
Letter of
it "acquir
except to
environm
respect to
1
Company
Colorado
1
to Pac Ri
Bureau o
alleged d
1
payment
Rim tried
very clea 270 Memor271 Memor272 Pacific
3.
Pac R92.
ration of Cla
ly meritless.
In its 93.
f Intent to acq
red" the Cerr
o include the
mental permi
o these areas
In fac94.
y has not yet
o project area
The B95.
im. Pac Rim
of Mines, and
damages calc
Includ96.
for somethin
d to acquire t
ar: Pac Rim w
rial, para. 361
rial, para. 364
c Rim Mining
Claimant hZamora/C
Rim's claims
aimant's gree
Memorial, C
quire an inte
ro Colorado
m in damage
its for these a
s.
t, according
t received co
a have been
Bureau of Mi
m has no exp
d it never did
culations.
ding these ar
ng to which
these license
was trying to
1.
4.
g Corp., "Proj
has not estaberro Colorad
related to Za
ed and exagg
Claimant des
erest in the Z
project.271 C
es calculatio
areas or abou
to Pac Rim'
onfirmation t
formally gra
ines has no r
ploration righ
d. It is absu
reas is simply
it never had
es in 2006, th
o change the
ects: Zamora/
91
blished that ido
amora and C
gerated claim
scribes that "
Zamora gold
Claimant say
ons. Claiman
ut any action
's own descr
that the licen
anted."272
record of hav
hts to Zamor
rd that these
y the most b
d any right. T
he problems
e law and con
/Cerro Colora
it has or ever
Cerro Colora
ms against E
"in February
Project"270 a
ys nothing m
nt makes no
ns or omissi
ription of the
nces it stake
ving transfer
ra and Cerro
e areas have
blatant attem
The Tribuna
s with its exp
nvince Salva
ado, El Salva
r had any rig
ado may be t
l Salvador.
y 2006, Pac R
and that in S
more about th
allegations
ons by the G
ese areas on
d in the Zam
rred licenses
o Colorado re
been include
mpt by Pac R
al will recall
ploitation co
adorans that
dor" (C-425)
ghts in
the clearest
These claim
Rim signed a
September 20
hese areas,
about licens
Government
its website:
mora -- Cerro
s for these ar
ecognized by
ed in Claima
im to deman
that when P
oncession we
mining wou
.
ms are
a
006,
ses or
with
"The
o
reas
y the
ant's
nd
Pac
ere
uld
not hurt t
intensive
unique ge
Yet again
additiona
bear new
1
any harm
alleging t
obtain lic
related to
1
rights wo
above,275
nothing m
"constitu
concessio
273 Pacificin El Salv274 Pacificin El Salv275 See Se276 Memor277 Mining
the environm
e reconnaissa
eological kn
n, instead of
al ground," d
w opportuniti
There97.
m with respec
that it is enti
censes or get
o these areas
4.
Finall98.
ould not give
5 an explorat
more. Despi
ute real prope
on is a right
c Rim Miningvador, Sept. 2
c Rim Miningvador, Sept. 2
ction II.A.1.
rial, para. 471
g Law, Art. 1
ment. Even s
ance-style pr
nowledge and
f focusing on
describing ho
ies."274
is not even
ct to these ar
itled to dama
t to the point
s should be s
Even if Cl"real prope
ly, even if Cl
e rise to the c
tion license g
ite Claimant
erty rights."2
in rem.277 T
g Corp., News5, 2006 (C-25
g Corp., News5, 2006 (C-25
1.
0 (RL-7(bis))
so, Pac Rim
roject genera
d continue to
n complying
ow its "'first
an allegation
reas. Pac Ri
ages for area
t of applying
ummarily re
laimant had aerty rights in
laimant coul
claims Pac R
grants the rig
t's insistence
276 Under th
Therefore, C
s Release, Pac58).
s Release, Pac58).
).
92
thought that
ation initiativ
o build its po
with the law
to market' a
n of El Salva
im is cavalie
as where it tr
g for environ
ejected.
any valid exn a mineral e
ld establish t
Rim has pres
ght to explor
otherwise, a
he plain text
laimant is in
cific Rim Min
cific Rim Min
t was the op
ve within El
ortfolio of hi
w, Pac Rim w
advantage in
ador violatin
erly wasting
ried to stake
nmental perm
xploration licestate," as Pa
that it had an
sented in this
re and study
an exploratio
of the Minin
ncorrect to as
ning Acquires
ning Acquires
portune time
l Salvador to
igh-quality g
was focused
n El Salvador
ng any oblig
the Tribunal
ground, but
mits. Damag
censes, they ac Rim claim
ny exploratio
s arbitration
y a particular
on license do
ng Law, only
ssert that it i
s Cerro Color
s Cerro Color
e to "conduc
o capitalize o
gold projects
on "staking
r continues t
gations or cau
l's time by
t did not eve
ges calculati
would not bms
on rights, su
. As explain
r area and
oes not
y an exploita
is somehow
rado Gold Pro
rado Gold Pro
ct an
on its
s."273
to
using
en
ions
be
uch
ned
ation
oject
oject
entitled t
explorati
1
Huacuco
Claimant
legally ob
still be a
mine that
obtaining
apply for
2
first and
legitimat
any alleg
windfall
278 Memor279 Behre hundred" para. 60.
o the fair ma
ion licenses i
Claim99.
, Pueblos, S
t's failures w
btained the e
long way fro
t deposit, de
g the require
r and obtain
As a r00.
foremost be
te expectatio
ged explorati
of "extraord
rial, paras. 66
Dolbear highpreliminary e
arket value o
it claims.278
mant is unabl
anta Rita, an
with regard to
exploration l
om planning
emonstrating
d authorizat
a concession
result, in add
cause Claim
ons to receive
ion license w
dinary profits
62, 669.
hlights that "exexploration pr
of either the
e to make cl
nd Zamora/C
o each of the
licenses and
g a mine, dem
g the technica
tions from la
n.279
dition to the
mant has no e
e those right
would not co
s" it seeks in
xploration is rojects becom
93
mineral dep
laims based
Cerro Colora
ese license ar
environmen
monstrating
al and econo
andowners, e
fact that Cla
exploration r
ts under the M
onstitute prop
n this arbitrat
a high-risk buming producin
posits located
on explorati
ado. El Salv
reas. Moreo
ntal permits
its financial
omic feasibil
etc. that wou
aimant's expl
rights and co
Mining Law
perty rights t
tion.
usiness" with ng mines. Beh
d within or th
ion rights in
vador is not r
over, even if
for explorati
l and technic
lity of its mi
uld have been
loration licen
ould not have
w and Mining
that entitle P
h "fewer than hre Dolbear E
he area of th
Guaco,
responsible f
f Claimant ha
ion, that wou
cal ability to
ne plan,
n necessary
nse claims f
e had any
g Regulation
Pac Rim to th
one in one Expert Report
he
for
ad
uld
to
fail
ns,
he
t,
III. PE
2
Feasibilit
individua
has no cl
will brief
exploitat
Environm
metallic m
concerns
steps the
A
2
obligatio
280 See Se281 Constitgoce de la282 ConstitEl Estado283 Constitdiversidad
PAC RIM WEXPLOITAT
Claim01.
ty Study req
ally sufficien
laim with res
fly address th
ion concessi
ment's legitim
mining in th
about Pac R
Governmen
A. Realizfulfillenviro
El Sal02.
n is reflected
"it is tenjoym
"The hState a
"It is tintegr
ction II.A abo
tution, Art. 1 a libertad, la s
tution, Art. 65 y las persona
tution, Art. 1d e integridad
WAS NOT ETION
mant's failure
quirements—
nt to show th
spect to the E
he third, dist
ion: the envi
mate general
he country. E
Rim's propos
nt has taken t
zation by thl its obligationment
lvador has a
d in several
the obligatioment of liber
health of theand people a
the State's durity of the en
ove.
(RL-121) ("esalud, la cultu
5 (RL-121) ("as están oblig
17 (RL-121) d del medio am
ENTITLED
s to comply
—both necess
hat Claimant
El Dorado co
tinct item m
ironmental p
l concerns ab
El Salvador w
sed project.
to protect its
he Ministry ons to prote
responsibili
provisions o
on of the Statrty, health, c
e inhabitantsare obligated
uty to protecnvironment, t
es obligación ura, el bienest
"La salud de lgados a velar p
("Es deber dembiente, para
94
TO AN EN
with the lan
sary for an ex
t did not hav
oncession ap
issing from
permit. El Sa
bout its capa
will then me
Finally, El S
s people and
of Environmect the Salva
ity to protect
of the Salvad
te to secure fculture, econ
of the Repud to see to its
ct natural resto ensure sus
del Estado astar económico
los habitantespor su conser
el Estado prota garantizar el
NVIRONME
nd ownership
xploitation c
ve a right to a
pplication.280
Claimant's a
alvador will
acity to evalu
ention some
Salvador wil
d the environ
ment that itadoran pop
t its people a
doran Consti
for the inhabnomic well-b
ublic constitus conservatio
sources, as wstainable dev
segurar a los ho y la justicia
s de la Repúbrvación y rest
teger los recul desarrollo so
ENTAL PER
p or authoriz
concession a
a concession
0 Neverthel
application f
first explain
uate, monito
of the most
ll describe th
nment.
t lacked thepulation and
and the envir
itution:
bitants of thebeing and so
utes a publicon and restor
well as the divelopment."
habitantes de social").
blica constituyablecimiento
ursos naturaleostenible.").
RMIT FOR
zation and
application—
n and therefo
ess, El Salva
for an
n the Ministr
or, and super
significant
he reasonabl
e capacity tod the
ronment; thi
e Republic, ocial justice."
c good. The ration."282
iversity and "283
la República
ye un bien púb.").
s, así como la
R
—are
ore
ador
ry of
rvise
le
o
is
the "281
a, el
blico.
a
2
obligatio
responsib
environm
shall prev
evaluate
in line w
2
of Enviro
was the v
particular
project, t
country u
evaluate
norms du
Economy
"the Min
284 EnviroBook 339Book 374285 Enviro286 Enviroprincipio
The S03.
n under the
ble for carry
mental policy
vail in the m
environmen
ith the Preca
El Sal04.
onment was j
very first one
r. Around th
the Ministry
up for metall
proposed pr
uring operati
y regarding t
nistry of Envi
onmental Law9 of Apr. 5, 194 of Mar. 9, 20
onmental Law
onmental Lawde prevención
Salvadoran E
Constitution
ing out the n
y specifically
management o
ntal impact st
autionary Pri
lvador does n
just created
e the Ministr
he time that
of Environm
lic mineral e
rojects' impa
ions. Dr. Ma
the suitabilit
ironment is n
w of El Salvad998 amended 007 ("Environ
w, Art. 3 (CL-2
w, Art. 2.e) (Cn y precaució
Environmenta
n to protect t
national envi
y provides th
of environm
tudies and m
inciple, i.e.,
not have rec
in 1997 and
ry had to eva
it was consi
ment realized
exploitation.
acts and to m
anuel Pulgar
ty of mining
not equipped
dor, Legislativby Legislativ
nmental Law"
2).
L-2) ("En la gón.").
95
al Law confi
he environm
ironmental p
hat: "The pri
mental protec
make decision
it must err o
cent experien
d Pac Rim's E
aluate for me
dering Pac R
d that it lack
The Minist
monitor and e
r-Vidal, cont
exploitation
d to effectiv
ve Decree Nove Decree No"), Art. 1 (CL
gestión de pro
firms and fur
ment.284 The
policy.285 Th
inciple of pre
ction."286 Th
ns about wh
on the side o
nce with met
Environmen
etallic minin
Rim's EIA fo
ked the capac
try lacked th
enforce comp
tracted in 20
n in El Salva
ely assume a
o. 233, publish. 237, publish
L-2).
otección del m
rther details
e Ministry of
he Salvadora
evention and
hus, the Mini
hether or not
f caution.
tallic mining
ntal Impact S
ng in general
or its propos
city necessar
he resources
pliance with
006 to advise
ador, describ
a strong env
hed in Officiahed in Officia
medio ambien
the State's
f Environme
an national
d precaution
istry must
to grant per
g. The Minis
Study ("EIA"
l and gold in
sed exploitat
ry to open th
to sufficient
h environmen
e the Ministr
bed the view
vironmental
al Gazette Noal Gazette No
nte, prevalece
nt is
n
rmits
stry
")
n
ion
he
tly
ntal
ry of
that
o. 79, . 47,
erá el
policy re
and expe
2
insufficie
than 2,00
overwhel
with MA
Environm
in the cou
heightene
of Enviro
287 Manuesocial relaReport: StEconomy 130) ("Prollevar a caejemplo eactividad the compecase of Meffects."].288 Pulgar 289 Pulgar 290 Memor291 Pulgar
garding min
ertise on the
Dr. Pu05.
ent resources
00 environm
lmed and de
ARN "did not
mental Law w
untry for ma
ed concerns
onment, to p
the levare alssense what wimpacas min
el Pulgar-Vidaations, Aug. 1trategic Envirof El Salvad
ovocada princabo la labor den el caso espeeconómica quetent institutio
MARN, for tra
Final Report
Final Report
rial, para. 255
Final Report
ning activity.
subject, lack
ulgar, who c
s at the Mini
ental impact
aling with a
t seem partic
were "relativ
any years."29
among Salv
rotect the co
vels of citizeso high. Thethat the Minwould entailct studies as ning.291
al, Final Repo11, 2006 ("Puronmental Asor Foreign Cocipalmente po
de gestión, segecífico del Mue pueda provons to managcking the env
t at 13 (R-129
t at 47 (R-129
5.
t at 47-48 (R-
."287 Dr. Pul
k of sufficien
urrently serv
istry of Envi
t studies.289
new industr
cularly surpr
vely new" an
90 Dr. Pulgar
vadorans who
ommunities a
en distrust reere does not nistry of Envl making a dspecialized a
ort: Mining aculgar Final Ressessment of tooperation Unor las carenciaguimiento y f
MARN para el vocar esos efee, track and a
vironmental e
9).
9).
129).
96
lgar describe
nt personnel,
ves as Peru's
ironment had
Claimant, in
ry. Accordin
rising" becau
nd "[t]here h
r noted that
o depend on
and the envi
egarding the seem to be a
vironment is decision regaas those rele
ctivity, overveport") at 13 (the Metallic Mnit, Sept. 8, 2as que presen
fiscalización dseguimiento
fectos.") ["Primaudit metallic ffects of any
ed that this w
, and an insu
s Minister of
d already res
n fact, knew
ng to Claima
use both the
had been alm
the lack of r
n the Govern
ironment:
Ministry's cany credibiliin a position
arding enviroevant to an a
view of develo(Exhibit R-12Mining Sector2011 ("Tau Fintarían las instde la actividadde los efectomarily due tomining activeconomic act
was due to la
ufficient bud
f Environme
sulted in a ba
w the Ministry
ant, the delay
Mining Law
most no gold
resources and
nment, throug
capabilities ity in the n to undertakonmental activity such
opment, envir29). See alsor of El Salvadinal Report") tituciones comd minero mets ambientales
o the shortcomvity. For examtivity that cou
ack of experi
dget.288
ent, noted tha
acklog of mo
y was
ys it experie
w and the
mining activ
d delays
gh the Minis
ke
ronment, and , Tau Group, dor, Ministry at 65 (Exhibimpetentes partálica. Esto ess de cualquier
mings presentemple in the speuld cause said
ience
at the
ore
enced
vities
stry
Final of it R-ra s, por r ed by ecific
d
2
commun
2
gold extr
Group ha
Law wer
full envir
Commer
environm
negative
environm
with the u
292 Pulgar
In his 06.
ities, includi
"El Saof neain Lat
"the pinevit
"the pRiver more contam
"the cbeen d
Regar07.
raction was w
ad received a
e enacted, so
ronmental im
ce Group's p
mental measu
environmen
mental permi
unmitigated
AccordrainaLima able todown
Final Report
August 200
ing that:
alvador is a carly 7 milliontin America
population deably place th
potential of lobasin, the cothan a third mination neg
ountry's expdone irrespo
rding this las
with the Nor
an exploitati
o it was gran
mpact study
property reve
ures establish
ntal impacts.
its for Comm
harm cause
rding to the Lage in the miMunicipalityo document 30 years ago
t at 11-15 (R-
06 report, Dr
country mean inhabitantswith almost
ensity, acutehe country in
ocating miniountry's mosof the populgatively affe
perience shownsibly."292
st point, the o
rth American
ion concessio
ndfathered in
approval pro
ealed that Co
hed in its en
Therefore,
merce Group
d by Comme
Latin Ameriining cantony, and the deacid drainago. . . .
129).
97
. Pulgar desc
asuring 21,04s, resulting i350 people
e deforestation a situation
ing operationst important lation, createecting water
ws that the l
only other re
n company, C
on before th
nto the new s
ocess. In 20
ommerce Gr
nvironmental
in July 2006
p. Unfortuna
erce Group's
ican Water Tn of San Sebaepartment ofge coming ou
cribed the co
41 square kiin one of theper square k
on, and poorthat is movi
ns in the arewater sourc
es a risk thatquality leve
ittle activity
ecent experie
Commerce G
e new Minin
system with
005-2006, en
roup was not
l permits to p
6, the Minist
ately, the Go
s past operat
Tribunal, theastián, Santaf La Unión, ut of a mine
oncerns of th
lometers wite highest popkilometer;"
r use of wateing toward 'w
ea of influencce which supt could resultels;" and
y that has bee
ence in El S
Group Corp.
ng Law and
out having t
nvironmental
t complying
prevent and
try revoked t
overnment co
tions:
ere is acid a Rosa de and it was that shut
he Salvadora
th a populatipulation dens
er resources water stress;
ce of the Lempplies water ft in
en carried ou
alvador with
. Commerce
Environmen
to go through
l audits of
with the
mitigate
the
ontinues to d
an
ion sities
;'"
mpa for
ut has
h
e
ntal
h the
deal
2
report de
to it and
Sebastián
movemen
to be care
monitor m
environm
293 Tau Fiácido en eUnión, y paños. . . . específicaDique de muestreoslímites deresultaría agua ácida294 Pulgar ["the actio295 Pulgar country laprevent thasegurar qexcluya dMinister Benvironm
In 200of theComemost sthat alcoppepotablwater streamconsid
Thus, 08.
escribing the
2) was just b
n River by ea
nt against m
eful and it ha
metallic min
ment.295
nal Report at el cantón minpudo documeEn 2006, CEI
amente en tresLixiviación. Ls valores de me la norma de nociva para ea— y lejano a
Final Reportons in opposit
Final Reportacks the tools he operator froque este impa
del cumplimieBarrera "was ental damage
06 CEICOM San Sebasti
ercio Streamsignificant wll the sample
er, iron and ale water. In owas unsafe
ms was also vdered approp
in 2006, the
Ministry's i
beginning to
arlier gold e
mining was ga
ad legitimate
ning in such
47-48 (R-130ero de San Se
entarse un dreICOM impulss puntos estraLos datos má
metales pesadoagua potable
el consumo hua valores apto
t at 9 (R-129) tion to mining
t at 14 (R-129to ensure tha
om evading cacto ambientaento de sus obaware of his
e] and ensure
M sponsored aián River, sp, El Taladrón
water analysies contained aluminum—other words,for human cvery low—apriate for hum
e Ministry of
nsufficient c
o understand
xploitation a
aining mome
e concerns th
a way as to
0) ("Según elebastián, Munenaje ácido qusó un estudio atégicos del ríás relevantes dos —como m. Es decir, quumano. Ademos para el con
("las accioneg have been o
9) (noting, witat this environcompliance wl puede ser ad
bligaciones.")Ministry's limthat there wa
98
a technical specifically atn Stream andis data, showheavy meta
in excess of , with amounconsumptionacidic water—man consum
f Environme
capacity and
the extent o
and processi
entum in El
hat it was no
effectively s
Tribunal Latnicipio de Sanue salía de un
técnico de laío: Quebrada de los análisis
manganeso, coue con estas camás, el pH de nsumo human
es en oposicióongoing for li
th respect to Pnmental impa
with its obligatdecuadamente; Gavidia Wit
mitations to bes no damage
study of the wt three strated the leachin
wn in Table 1als—such as f the allowabnts of metals
n. Moreover,—and far fro
mption.293
ent 1) had rec
d resources to
of the unmiti
ing activities
Salvador.294
ot equipped t
safeguard the
tinoamericanonta Rosa de La mina que su
a calidad del aEl Comercios de agua . . . obre, hierro y antidades de mlas quebrada
no.").
ón a la mineríittle more than
Pacific Rim's ct can be apptions." / "el pae cubierte y ptness Statemee able to asseto the environ
water qualityegic points: Eng dike. The17, indicatedmanganese,
ble limits fors, the river , the pH of thom levels
ceived Dr. P
o take on the
igated harm t
s. In additio
4 The Minis
to evaluate,
e population
o del Agua, eLima, departamuspendió sus agua del río S, Quebrada Eindicarían enaluminio—pmetales, el ag
as sería asimis
ía tienen pocon a year"].
application, propriately deaaís carece de
para evitar quent, para. 9 (ness this type onment or to th
y El e d , r
he
Pulgar-Vidal
e tasks assign
to the San
n, the social
try knew it h
permit, and
n and the
xiste un drenmento de La labores hace
San Sebastián,El Taladrón y n todos los or encima de
gua de este ríosmo muy bajo
o más de 1 añ
the view that alt with and therramientase el operador
noting that of risk [of he life and he
l's
ned
l
had
aje
30 ,
los o o —
ño")
"the to s para r se
ealth
2
Minister
harm the
explained
2
the Minis
was comp
President
need to s
of the peolas limitachubiese dproyectos296 La PreEnvironmllegó a la minería mhabría dañmejorar el["Ministermining exthat there reason thagoing ahe297 La Pre298 El Diaconcederáun diagnómaintainscompanieyear."].
As a r09.
Barrera pub
environmen
d:
The MenviroCabañsignal
Almo10.
stry would n
pleted.298 A
t Saca "ask[e
tudy the pot
ople, particulaciones que tenaños al medio
s de explotació
ensa Gráfica, ment) (Exhibit
conclusión demetálica, ni otoño ambiental,l marco legal r Barrera con
xploration, or would be no
at we thoughtead with these
ensa Gráfica,
rio de Hoy, "án licencias dóstico sobre lo that exploita
es, until the co
result of thes
blicly explain
nt.296 The le
Ministry of Eonmental proñas and otherls a "no" to t
ost a year lat
not be grantin
And it was th
ed] for cauti
tential impac
arly for exploinía en su mino ambiente asón, que eran l
Enfoques, "At R-120(bis))e que no podíorgar el perm, y así lo dijo y las capacid
ncluded that hgrant Pacificenvironment
t about seekine activities."].
Enfoques, "A
Protesta contre explotaciónos efectos de lation licenses ountry comple
se concerns,
ned that the M
ead-in to the
Environment otection withr places. Rethe mining c
ter, in June 2
ng concessio
herefore no su
on regarding
cts of mining
itation projec
nisterio para psí como a la vlo que tenían
Adiós a Las M). See also Gaía seguir otorg
miso ambientapúblicamente
dades institucie could not co
c Rim the enval damage, an
ng to improve
Adiós a Las M
ra explotaciónn, algunas ya sla minería, mwill not be gretes a study o
99
in July 2006
Ministry wo
story under
does not hah gold exploecognizing thompanies.297
2007, his suc
ons until a st
urprise eight
g mining exp
g in the coun
cts, which carroder evaluar
vida y a la salumayors riesg
Minas," July 9avidia Witnesgando permisl a Pacific Rie a mediados ionales antes ontinue to appironmental pend he stated th the legal fram
Minas," July 9
n minera," Jusolicitadas po
mismo que podranted, some
of the effects o
6, in a spread
ould not auth
the title, "F
ave the capacitation projehe deficiency7
ccessor, Carl
tudy of the p
t months late
ploitation pr
ntry before d
ried greater rieste tipo de rud de las pers
gos.").
9, 2006 (Intervss Statement, sos ambientalm, mientras ndel año 2006de embarcarnprove environermit, as longhis publicallymework and i
9, 2006 (R-120
une 24, 2007 (or las empresadría tardar porof which havof mining, wh
d in a Salvad
horize any pr
Farewell to M
city to ensureects in y, the Minst
los Guerrero
potential effe
er, in March
rojects," and
deciding how
isks." / "estabriesgo y asegusonas, particu
view with Mipara. 10 ("El
les para la expno pudiera ase6. Por eso pennos en esas acnmental permg as he was uny in mid-2006institutional c
0(bis)).
(R-122) ("[S]as, hasta que r lo menos un
ve already beehich could tak
doran newsp
roject that w
Mining,"
e
ter
o, confirmed
ects of minin
h 2008, that t
reiterated th
w to go forwa
ba consciente urar de que noularmente para
inister of the l ministro Barploración de egurar de que
nsamos en busctividades.")
mits for metallnable to ensur6. It was for thcapacity prior
ostiene que nel país cuente
n año.") ["[H]en requested bke at least a
paper,
would
that
ng
then-
he
ard:
de
o a
rrera
e no scar
lic re his r to
no se e con ]e by
2
country,
considera
Cabañas.
B
2
general, t
Claimant
of Enviro
Economy
Ministry,
the Proje
asserted t
Project, a
gathering
299 Inverti(C-1). 300 Memor– El Dora301 Memor– El Dora
We wdisadvshownthe exthat ti
The in11.
both by the
ation of Pac
.
B. The Mpropo
In add12.
the Ministry
t did not ade
onment with
y. For exam
, Pac Rim sim
ect," and wou
that it would
and also duri
g data."301
ia, "Presidente
randum fromado EIA's Tea
randum fromado EIA's Tea
want to genervantages of mn proof that gxploitation peme, a law m
ncreased awa
Ministry of
Rim's applic
Ministry of Eosed project
dition to the
y had legitim
equately addr
h the same di
mple, right fro
mply told M
uld prepare t
d continue ex
ing the const
e de El Salva
m A. Juarez, Cam, Jan. 14, 2
m A. Juarez, Cam, Jan. 14, 2
rate a space tmining. Andgreen mininermits, whic
must be made
areness in 20
Environmen
cation for a 3
Environment specifically
serious conc
mate concerns
ress the Min
ismissive att
om the start
MARN offici
the engineer
xploration ac
truction and
dor pide caut
onsultoría y T004 (C-105).
onsultoría y T004 (C-105).
100
to reflect on d after we refg exists and
ch is what wee to make ev
005-2006 of
nt and the loc
30-year, 12.7
nt had legitiy
cerns about m
s about Claim
nistry's conce
itude that it
of the proce
als that it wo
ing designs
ctivities "dur
d operation p
tela ante proy
Tecnología A
Tecnología A
the benefitsflect on it, anthat it is pos
e have not gverything ver
f mining's po
cal commun
75 km2 expl
imate conce
metallic min
mant's El Do
erns, but inst
had for issue
ess, rather tha
ould "presen
"in a later st
ring the perm
phases of the
yectos de expl
Ambiental, S.A
Ambiental, S.A
s or nd we're ssible to gra
given them, ary clear.299
otential impa
nities, necess
loitation con
erns about P
ning in El Sa
orado permit
tead approac
es raised by
an seek guid
nt the concep
tage."300 Pac
mitting proc
Project, to c
lotación mine
A. to Pacific R
A. to Pacific R
ant at
acts in the
sarily impact
ncession in
Pac Rim's
alvador in
t application
ched the Min
the Ministry
dance from th
ptual design
c Rim furthe
ess for the
continue
era," Mar. 11,
Rim Mining C
Rim Mining C
ted
n.
nistry
y of
he
of
er
2008
Corp.
Corp.
2
present a
the Term
to the pro
detailed i
inter alia
2
Ministry
The obse
occupied
302 Email del proyecsensitive n303 Ministr(emphasis304 ObservFeb. 1, 20
The T13.
a "conceptua
ms of Referen
oject's sensit
information.
a:
"Descthe prprodu
"Charremov[and]
"Submwith tprotecetc.). Uobstru
"Submthe tuduring
Pac R14.
in February
ervations beg
d by the proje
exchange betcto, hemos tenature, we ha
ry of Environs in original).
vations from M005 (C-133).
Terms of Ref
l design" an
nce for the E
tive nature."3
. Among the
cribe and proroject's phaseuction proces
racterize andved during thmanagemen
mit a map indtheir respectiction of the cUnder no ciucted or alt
mit a geotechunnel, mine g the operati
Rim submitte
y 2005 show
gin by noting
ect nor ident
tween Fred Eanido algunos
ave had some
nment, Terms
MARN on the
ference show
d continue e
El Dorado EI
302 The Term
e 30 points f
ovide details es of implemsses to the cl
d estimate thehe implemennt and siting
dicating the ive minimumcourse and nircumstancetered by the
hnical assessand residueions and proj
ed its EIA in
that Pac Rim
g that Pac Ri
tified the vei
arnest and Luinconvenientproblems in t
of Reference
e Environmen
101
w that the Mi
exploring. T
IA, explainin
ms of Refere
for "Project D
concerning mentation, frolosure of ope
e volumes ontation and owith regard
direction of m engineerinnatural bankse shall the c
e project's im
sment (takinge dam area, ject impleme
September 2
m had not co
im had not a
ins to be exp
uis Trejo, Julytes en la prepthe preparatio
e for El Dorad
ntal Impact S
inistry did no
The Ministry
ng that they w
ence issued i
Description,
the activitieom site preperations and
f soil and unoperation phto final disp
f rainwater dng work to ps of rivers ancourse of rivmplementat
g into considsuch that th
entation pha
2004, and th
omplied with
accurately de
ploited.304 A
y 22, 2004 (Caración de lo
on of the ToR
do Exploitatio
tudy for the E
ot accept Pa
spent consid
were difficu
in July 2004
" Claimant w
es to be carriparation, con
rehabilitatio
nusable matease (especia
posal."
drainage and revent erosio
nd streams, avers or streation."
deration seisheir stability ases."303
he first obser
h the Terms
escribed the
Additional co
C-119) ("Debids TdR") ["Du
R"].
on Project, Ju
El Dorado exp
ac Rim's plan
derable time
ult to draft "d
4 require very
was asked to
ied out in eacnstruction, on."
erials to be ally for the m
discharge poon (channeliaccess pointsams be
smic factors)may be ensu
rvations from
of Reference
area to be
omments
do a lo delicaue to the proje
uly 2004 (C-1
ploitation pro
n to
e on
due
y
o,
ch of
mine),
oints ing, s,
) in ured
m the
e.
ado ect's
20)
oject,
requested
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requested
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detailed d
2
Claimant
its enviro
lacked a
Managem
Plan.308
granted a
305 ObservFeb. 1, 20306 Email 307 Enviro("A detailfinal desig308 2005 Edevelop ahandling fenvironmand good the designcyanide aMar. 2013developed
d significant
mental manag
sure plan.305
d informatio
he reviewers
designs are d
Thus, 15.
t never subm
onmental per
mine closure
ment Plan th
Thus, simila
an environm
vations from M005 (C-133).
from Fred Ea
onmental Impled reclamatiogns.").
EIA at 7-68 (Cand prepare a fuels, chemicental laws aninternational
ns are comples described in3 ("Hutchisond" as part of th
t additional i
gement plan
5 An interna
n to the Min
think that w
done" and pl
just like Cla
mitted the ma
rmit applicat
e plan.307 It
at would "be
ar to its appr
ental permit
MARN on the
arnest to Tom
act Assessmeon plan will b
C-8) ("As partSolid and Haal products and regulations practices. Ea
eted, approprin Section 7.3.n and Mudderhe comprehen
nformation,
n and propose
al e-mail reve
nistry. Rathe
we should be
lanned to arg
aimant ignor
aterials reque
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also listed s
e developed"
oach with th
t without pro
e Environmen
m Shrake, Feb.
ent "El Doradbe developed
t of the Projeazardous Mannd reagents. Tof El Salvad
ach plan is speate plans will6."). See also
r Expert Reponsive Environ
102
including ab
ed mitigation
eals that Pac
er, Pac Rim c
providing in
gue about 10
red the requi
ested by the
xample, the u
several comp
" at a later da
he Ministry o
oviding all of
ntal Impact S
. 3, 2005 (C-1
o Mine Projeduring the en
ct Environmeagement PlanThis plan willor, the enviroecific for the l be developedo Expert Repoort") at 18-19 nmental Mana
bout impacts
n measures,
c Rim did no
complained
nformation t
0% of the ob
irements for
Ministry of
updated EIA
ponents of th
ate, includin
of Economy
f the require
tudy for the E
132) (emphas
ect," Sept. 200ngineering pha
ental Managemn describing tl be establisheonmental guidproject site and. A separateort of Ian Hut(listing separ
agement Plan
s on water, t
cyanide tran
ot intend to p
that "[i]t see
that won't be
bservations.3
an exploitat
f Environmen
A submitted in
he Environm
ng the Cyani
, Pac Rim ex
ed informatio
El Dorado exp
sis added).
05 ("2005 EIAase of the Pro
ment Plan, Pathe general pred pursuant todelines of the nd individual
e plan will be utchison and Trate plans thatn).
the
nsport, and t
provide all o
ems that one
e available u
06
tion concess
nt with regar
n 2005 still
mental
de Managem
xpected to be
on.
ploitation pro
A") at 7-111 (oject and base
acific Rim wirocedures for o the World Bank/
l facilities. Ondeveloped fo
Terry Muddert "would be
the
f the
e or
until
ion,
rd to
ment
e
oject,
(C-8) ed on
ill
/IFC nce or r, 29
2
provided
identified
25 provid
complied
10 days.
2
experienc
visited M
conclude
countries
Dorado E
2
opposing
309 Enviro310 Pulgar 311 RobertEl Salvad312 Dr. Mo
1.
In Oct16.
d for in Artic
d as needing
des that the s
d with this re
There was n
Dr. Ro17.
ce in water q
MARN, the p
ed: "This EIA
s."311 He foc
EIA:
includ
lacked
presenwater,
insuffdetoxi
failed other
In its 18.
g the propose
onmental Law
Final Report
t E. Moran, Tdor, Oct. 2005
oran's Techni
Comments
tober 2005, t
le 25 of the
g improveme
study should
equirement b
no electronic
obert E. Mor
quality, hydr
proposed min
A would not
cused his det
ded incomple
d stream flow
nted no base, including a
ficiently addrification pro
to consider deposits nea
Memorial, C
ed El Dorado
w, Art. 25 (CL
t at 44 (R-129
echnical Rev5 ("Dr. Moran
cal Review at
s from the pu
the El Dorad
Environmen
ent is that the
d be made av
by having on
c copy and n
ran, a consu
rogeology, a
ne site, and n
be acceptab
tailed observ
ete water qu
w measurem
eline concentarsenic, merc
ressed the toocess; and
the cumulatar Minita.312
Claimant des
o project, sig
L-2).
9).
iew of the El n's Technical R
t 3, 4, 6, 8, 11
103
ublic consul
do EIA enter
ntal Law. On
e law require
vailable to th
ne copy avail
no one was a
ltant with m
and geochem
nearby comm
ble to regulat
vations on w
uantity and in
ments necessa
trations for ncury, nitrate,
oxic byprodu
tive impacts
scribes that t
gned by mor
Dorado MineReview") at v
1, and 13 (C-1
ltation were
red the perio
ne of the issu
es a very lim
he public for
lable at the M
allowed to m
more than 30
mistry work, r
munities in O
tory agencie
water issues a
nadequate w
ary to measu
numerous ch, and sulfate
ucts released
of Pac Rim'
the two sets
re than 200 p
e Project Envv, 15 (C-165)
165).
"difficult to
od of public
ues that has
mited review
r only 10 day
Ministry in S
make photoco
years of inte
reviewed Pa
October 2005
es in most de
and criticized
water quality
ure surface w
hemical cons;
d by the INC
's stated plan
of public co
people from
vironmental Im.
address"
consultation
since been
process. Ar
ys.309 Claim
San Salvado
opies.310
ernational
ac Rim's EIA
5. He
eveloped
d that the El
baseline dat
water;
stituents in th
CO cyanide
n to develop
mments
the local
mpact Assess
n as
rticle
mant
r for
A and
l
ta;
he
sment,
commun
Claimant
correspon
the publi
public co
President
had foun
especially
2
the annex
not to tra
the exper
for the pu
commun
opposed
313 Memor314 Email 315 MinuteExploitatiMinutes")providing316 Public 317 Public que la ONde la minepersonas qpendientewith interorganizatiagainst th
ities, cited D
t fails to high
ndence betw
c consultatio
omments wit
t of PRES, to
d that some
y with regar
At the19.
xes to the EI
anslate the at
rt."316 MAR
ublic to be a
ity organizat
to its projec
rial, para. 268
from Erwin H
es of Meetingion" and "San) at 2. Claima
g the exhibit w
Consultation
ConsultationNG ADES estería, y que estque han firma
es.") ["The prornational orgaion's business
he mining proj
Dr. Moran's r
hlight in the
ween Claiman
on "very stro
th Pac Rim a
old the MAR
of its observ
rd to analyzin
e meeting, M
IA were only
ttached techn
RN emphasiz
able to evalua
tion against
t.317
8.
Haas to Fred E
g between MAnta Rita Exploant submitted with translatio
n Meeting Min
n Meeting Miná ligada a orgta organizacióado el documoject represenanizations, ands is to lend moject are peopl
report as tech
Memorial is
nt's officers,
ong and diffi
at a meeting
RN officials
vations were
ng water qua
MARN menti
y available in
nical reports
zed that it wo
ate the mater
mining and
Earnest, Feb.
ARN and Pac oration" Projethese minute
on as Exhibit
nutes at 4 (R-
nutes at 4-5 (Rganizaciones ión tiene un trento en contr
ntative mentiod they have sponey and theyle who have l
104
hnical suppo
s that, accord
MARN offi
icult to overc
in March 20
that Pac Rim
e valid and sh
ality and qua
ioned the ob
n English. F
s in order to "
ould neverth
rial. Pac Rim
questioning
28, 2006 (C-
Rim Represeects, Mar. 29, s as C-163, buR-131.
-131).
R-131) ("El tiinternacionaleabajo de pres
ra del proyectoned that theyponsored twoy suspect thatoans pending
ort for their o
ding to cont
ficials consid
come."314 T
006. At that
m was evalu
hould be tak
antity.315
bservation fro
Fred Earnest
"preserve th
heless be imp
m responded
the motives
-159) (emphas
entatives rega2006 ("Publiut did not inc
itular del proyes, y que han
star dinero y tto son personay know that tho anti-mining t the people wg."].
opposition.3
temporaneou
dered the obs
The Ministry
t meeting, Fr
uating Dr. M
ken into cons
om the publi
t explained th
he clarity of t
portant to ha
d by disparag
s of the comm
sis added).
arding the "Elic Consultatioclude translati
yecto mencion auspiciado dtienen sospechas que tienen he NGO ADEmeetings and
who have sign
13 What
us
servations fr
y shared the
red Earnest,
oran's report
sideration,
ic that some
hat they cho
the language
ave translatio
ging the loca
munity mem
l Dorado on Meeting ion. El Salva
onó que ellos dos foros en cha que las préstamos
ES is associatd that the ned the docum
rom
t and
of
ose
e of
ons
al
mbers
ador is
saben ontra
ed
ment
2
Septemb
were that
would be
Thus, Cla
on how t
2
omission
required
Moran's r
after Dr.
presente
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6-38 of th
Dr. Mora
undergro
and woul
318 Public 319 Memor320 Responand the Suto Public 321 2005 E
2.
Pac R20.
er 2006. In
t 1) the proje
e a favorable
aimant shou
o proceed. T
In its 21.
ns, mentionin
from rainwa
report becau
Moran's rep
ed has been
Project (10.
he EIA, the
an), provides
ound wells."3
ld therefore
Consultation
rial, para. 286
nse Report toummary TablConsultation
EIA at 6-38 (C
Claimant's
Rim provided
March, it ha
ect could mo
e finding on t
uld have unde
The flippant
Memorial, C
ng "[f]or inst
ater collectio
use it was act
port: "it is cla
modified, si
8 liters/seco
document pr
s that the pro
321 Thus, the
have no neg
n Meeting Min
6.
the Technicale of the OpinObservations
C-8).
s dismissive
d its response
ad been infor
ove on to a p
the project;
erstood that
t tone of Clai
Claimant alle
tance" that P
on.319 This, h
tually a chan
arified that
ince 100% o
ond) would
resented for
oject will hav
e assertion th
gative impact
nutes at 6 (R-
al Review for nions and/or Os") at 8 (C-17
105
response
es to the pub
rmed that the
public consul
or 3) there w
its response
imant's respo
eges that Dr.
PRES promis
however, co
nge from the
the water su
of the total d
be supplied
public consu
ve two water
hat Pac Rim
t on water su
-131); Memor
the El DoradObservations 70) (emphasis
blic consulta
e three optio
ltation at the
would be an
was import
onse is there
. Moran's rep
sed to obtain
ould hardly b
e plan outlin
upply propos
demand for
d by the rain
ultation (i.e.
r sources: ra
could rely s
upply was ne
rial, para. 270
do Mining ProCreated by M in original).
ation observa
ons followin
e municipal l
unfavorable
tant to the M
efore surpris
port containe
n 100% of th
be an omissio
ed in the EIA
sal on page
r water by t
nwater harv
, the docum
ainwater and
solely on col
ew in late 20
0.
oject done byMARN, Sept.
See also id. a
ations in
g its respons
level; 2) ther
e finding.318
Ministry's dec
ing.
ed errors and
he water it
on in Dr.
A implemen
6-39 of the E
the El Dorad
vesting."320
ment reviewed
d "[w]ater fro
llected rainw
006. The ch
y Robert E. M2006 ("Respo
at 13, 67.
se
re
cision
d
nted
EIS
do
Page
d by
om
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hange
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2
metallic m
it conside
with disd
and acce
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the obser
environm
others, co
knowledg
response
retorted:
organism
2
EIA that
that "alm
avoid the
322 Email 323 Respon324 Respon325 Respon
oned in the re
Claim22.
mining and h
ered "very st
dain. Thus, i
ss to EIAs fo
Project is loc
rvation that m
mental impac
ommenting:
ge of the com
to observati
"The tailing
ms."325
Regar23.
the propose
most no one u
e impacts and
from Erwin H
nse to Public
nse to Public
nse to Public
esponse to th
mant, even kn
had commen
trong and di
in response t
or the public
cated in El S
many mining
ct, Claimant
"The numbe
mpany, none
ions about to
gs deposit ha
rding the obs
d project wo
understands t
d control the
Haas to Fred E
Consultation
Consultation
Consultation
he public co
nowing that t
nts from the
fficult to ove
to Dr. Moran
c consultatio
alvador, not
g projects ar
said it was "
er of similar
e of these are
oxic byprodu
as not been c
servation tha
ould have no
the technolo
e risks assoc
Earnest, Feb.
Observations
Observations
Observations
106
nsultation ob
the Ministry
local comm
ercome,"322
n's observati
n requireme
in the Unite
round the wo
"irresponsibl
r mines is les
e generating
ucts of the IN
considered or
at civil socie
o negative im
ogy available
iated with th
28, 2006 (C-
s at 10 (C-170
s at 12 (C-170
s at 71 (C-170
bservations w
y was consid
munity in opp
treated the o
ion that othe
ent, Claimant
ed States nor
orld do have
le" to compa
ss than 5, an
g negative im
NCO treatme
r envisioned
ety had doub
mpacts on wa
e and the pro
he activity" a
-159).
0).
0).
0).
without any
dering the fir
position to th
other technic
er countries a
t responded:
r Canada."32
some negat
are its propo
d according
mpacts."324 F
ent process,
d to be a sanc
ts about the
ater, Claiman
ocedures imp
and that "lac
new analysi
rst EIA for
he project wh
cal observati
allow more t
: "The El Do
3 In respons
tive
sed mine to
to the
Finally, in
Claimant
ctuary for aq
claims in th
nt complain
plemented to
ck of knowle
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hich
ions
time
orado
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the
quatic
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ed
o
edge
influence
one unde
the comp
2
that its re
mention
fact that
comment
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explorati
Ministry
once it go
cumulativ
Rim's stu
to the pro
assessme
2
Salvador 326 Respon327 PacificGrade Goemphasis the Compcalculatioexamine tof a minin328 Respon329 Behre
es the negativ
erstands how
pany's public
Claim24.
equested con
any potentia
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ted that "all
t, disingenuo
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needed to co
ot its permit
ve impacts o
udies do not
oposed curre
ent.
This o25.
r failed long
nse to Public
c Rim Miningold; Updated R
over the pastpany's Januaryn of a new re
the economicsng permit, the
nse to Public
Dolbear Expe
ve opinions
w the compan
c consultatio
mant likewise
ncession area
al cumulative
g to expand i
observations
ous. Claima
thin the area
onsider Clai
. As describ
of operating
provide suff
ent Project."3
once again h
before any a Consultation
g Corp., NewsResource Calct year and a hay 2005 pre-feaesource estimas of an expane commencem
Consultation
ert Report, pa
and lack of
ny will preve
n process ha
e refused to a
a included ar
e impacts if
its project to
s related to o
ant itself crea
requested fo
imant's expre
bed by minin
multiple pro
ficient inform
329 Ignoring
highlights the
alleged acts o
Observations
s Release, Souculation Initiaalf has been tasibility studyate for the El
nded operationment of underg
Observations
ara. 123.
107
trust."326 Of
ent and mitig
ad not been e
acknowledge
reas of explo
other mines
o include Sou
other project
ated the cum
or an exploit
ess plan to e
ng experts B
ojects concur
mation to est
g its expansio
e central reas
of the Gover
s at 22 (C-170
uth Minita Deated, Mar. 27to expand andy . . . . This sDorado proje
n at the Minitground ramp
s at 92 (C-170
f course, this
gate negative
effective.
e the problem
oration, but t
were eventu
uth Minita b
ts are illogic
mulative impa
tation conce
expand the m
ehre Dolbea
rrently are w
timate the ad
on plans resu
son why Cla
rnment in 20
0).
elineation Dri7, 2006 (C-256d develop the strategy will cect, the complta -- South Miconstruction.
0).
s response, c
e impacts, o
m observed
the EIA did
ually permitt
y 2006,327 C
cal."328 Claim
act issue by
ssion. Of co
mine or build
ar, "[t]he pot
wide-ranging
dditional cum
ults in an ina
aimant's inve
008: Claiman
illing Yields A6) ("Pacific REl Dorado m
continue throuletion of a feainita deposit, .").
claiming tha
nly confirms
by Dr. Mora
not consider
ted. Ignorin
Claimant
mant's respo
including
ourse the
d other mines
tential
g and . . . Pac
mulative imp
adequate imp
estment in E
nt was greed
Additional HRim's explorat
mine proposedugh 2006 withasibility studyand, upon rec
at no
s that
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r or
ng the
onse
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cific
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pact
El
dy. It
High tion
d in h the y to ceipt
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doing thi
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cover the
necessary
approve a
providing
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welfare o
2
improve
that the b
the quant
seismic a
translatio
EIA in re
2
Hutchiso 330 Respon331 Respon332 Respon
hased explor
wanted to ap
is was to imp
ion concessi
d a chance of
e expansion p
y to justify th
an environm
g the require
d the Salvado
of the Salvad
Claim26.
its submissi
baseline data
tity of water
activity, Clai
on of two of
esponse to D
3.
Claim27.
on and Mudd
nse to Public
nse to Public
nse to Public
ration rights
ppropriate fo
properly incl
ion, rather th
f completing
plans is anot
he 12.75 km
mental permit
ed technical
oran Ministri
doran people
mant did, how
on according
a was incomp
r.330 In respo
imant also pr
the EIA's an
Dr. Moran's o
Claimant's
mant has subm
der, asserting Consultation
Consultation
Consultation
in El Salvad
r itself a vas
lude explora
han request a
the required
ther clear sig
m2 concession
t and an app
information
ies to abdica
e.
wever, accep
gly. Claima
plete and sta
onse to Dr. M
rovided mor
nnexes and th
observations
s expert repo
mitted a shor
g that the EIA
Observations
Observations
Observations
108
dor when the
st area for fu
ation prospec
an exploitati
d technical w
gn that Claim
n for which i
plication for a
for the vast
ate their Con
pt some of D
ant recognize
ated that it w
Moran's com
re recent data
he seismic ri
.332
ort does not a
rt report from
A for the El
s at 17 (C-170
s at 48, 87 (C
s at 78, 87 (C
ey were near
uture explora
cts in the are
on concessio
work. The fa
mant simply
it had applie
an exploitati
majority of
nstitutional d
r. Moran's o
ed as "valid"
was gathering
mments on wa
a.331 In addi
isk evaluatio
address the M
m two U.S.-b
Dorado exp
0).
C-170).
C-170).
r their final t
ation. Part o
ea for which
on for an are
act that the E
had not don
ed. It asked
ion concessi
f the area req
duty to protec
observations
" Dr. Moran'
g and presen
ater quality
ition, Claima
on presented
Ministry's co
based expert
ploitation per
termination
of its strategy
it requested
ea for which
EIA did not
ne the work
El Salvador
ion without
quested. Clai
ct the health
and try to
s observatio
nting new dat
and risks du
ant provided
d in the origi
oncerns
ts, Drs.
rmit fully
date,
y for
d an
it at
to
imant
h and
on
ta on
ue to
d a
inal
complied
either the
Moran's
respond d
2
that was
requested
that the g
technical
to the Go
EIA, whi
1995 "Pr
listed am
2
admissio
INCO pr
accepted
than that
"sanctuar
333 Hutchi334 Hutchi335 Hutchi336 2005 E337 Hutchi338 Respon
d with Salvad
e standards o
October 200
directly to D
Drs. H28.
never provid
d in 2004, su
geological fin
l studies."335
overnment in
ich is alleged
refeasibility R
mong those re
Moreo29.
ns with no e
ocess, "cyan
that the pro
of cyanide"
ry for aquati
ison and Mud
ison and Mud
ison and Mud
EIA at 1-5 (C-
ison and Mud
nse to Public
doran and in
or the alleged
05 technical
Dr. Moran's c
Hutchison an
ded to the G
uch as the 20
ndings for th
In fact, as d
n support of
dly the subje
Report" and
eviewed by C
over, Claima
explanation o
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cess would h
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Consultation
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criticisms.
nd Mudder a
overnment i
008 MDA Re
his project ar
described ab
its request fo
ect of Claima
d a 1997 "Bas
Claimant's e
ant's experts
or discussion
formed into o
have some n
ed that the ta
s."338 The ex
Report at 22.
Report at 2.
Report at 13.
Report at 16.
Observations
109
standards.333
ce. Although
document th
apparently ba
n support of
eport,334 and
re based on
bove, PRES o
for an exploit
ant's expert r
seline Study
xperts.
make assert
n. For exam
other benign
non-benign b
ailings depos
xperts likewi
s at 71 (C-170
3 They do n
h Drs. Hutch
hey reviewed
ased their rep
f the El Dora
d are therefor
"two compre
only submitt
tation conce
report, actua
y."336 Neithe
tions contrad
mple, they ass
n constituent
byproducts (
sit should no
ise assert tha
0).
ot provide a
hison and Mu
d, their repor
port on upda
ado exploitat
re under the
ehensive fea
tted one pre-
ession. In ad
ally relies on
er of these do
dicting Claim
sert that as a
ts,"337 even t
"with toxicit
ot be expecte
at "[d]etailed
any details on
udder list Dr
rt does not
ated informa
tion concess
misconcept
asibility and
feasibility st
ddition, the 2
n data from a
ocuments is
mant's own
a result of the
though Claim
ty much low
ed to be a
d baseline w
n
r.
ation
sion
tion
tudy
2005
a
e
mant
wer
ater
quality an
the prepa
that the b
that the s
2
and impl
plan [tha
about the
managem
of the Pro
Cyanide
conclusio
339 Hutchi340 Respon341 Behre 342 Hutchicomplemeinvolving developed343 Hutchi
nd related en
aration of the
baseline data
sections of C
[T]he areas:availaincomand 3)conclureportmeasuundernot avIntern
Claim30.
emented" on
t] would be
ese yet to be
ment plans no
oject" and "[
Code."343 N
ons. Behre D
ison and Mud
nse to Public
Dolbear Expe
ison and Mudenting this plamanagement
d during the e
ison and Mud
nvironmenta
e EIA even t
a was incomp
Claimant's EI
EIA lacks s 1) no factua
ability are prmplete and/or) baseline stuudes that thet require supurement and ground wate
vailable, thisnational or Sa
mant's experts
nce the proje
developed."
developed p
ot only durin
[t]he propose
Not surprisin
Dolbear, on
dder Expert R
Consultation
ert Report, pa
dder Expert Ran, written det of the Projecengineering ph
dder Expert R
al studies we
though Claim
plete and ina
IA dealing w
ufficient datal estimates ovided by Pr is outdatedudies are note Hydrology plementary sample anal
er sources. C section of thalvadoran St
s also refer t
ect was unde
342 They the
plans, asserti
ng operation
ed cyanide m
ngly, they do
the other han
Report at 19.
Observations
ara. 113.
Report at 18. Setailed procedct's cyanide.")hase of the Pr
Report at 20-2
110
ere complete
mant itself ad
adequate wa
with water iss
ta on water iof water conRES; 2) mos
d (i.e., complt available. Band Hydroginformation lysis of strea
Considering the report wotandards.341
to several im
erway includ
en, however
ing that "[t]h
n but also dur
management
not get into
nd, notes tha
s at 17 (C-170
See also 2005dures will be e) and at 7-111roject and bas
1.
d over an ex
dmitted that
as "valid."340
sues were in
issues in at lensumption anst of the dataleted prior toBehre Dolbegeology sect based on acam, spring, wthat this infoould not mee
mportant plan
ding "a detail
r, inexplicabl
he EIA . . . e
ring the con
t plan fulfille
o details or ex
at Claimant's
0).
5 EIA at 7-33 established to1 ("A detailedsed on final d
xtended time
t Dr. Moran's
Behre Dolb
nsufficient:
east three nd abase is o year 2000)ear, thereforetions of the ctual well and ormation is et EP,
ns "that wou
led closure o
ly reach broa
established e
nstruction and
ed the requir
xplain the ba
s closure pla
(C-8) ("Witho include all thd reclamationdesigns.").
e period"339 f
s observation
bear confirm
; e,
uld be develo
or rehabilitat
ad conclusio
ffective
d closure ph
rements of th
ases for thes
an was
h the purpose he activities
n plan will be
for
n
ms
oped
tion
ons
hases
he
se
of
"concept
their sche
Dolbear c
comply w
2
about Pac
impacts o
who owe
was expr
proposed
of these i
standards
2
by denyin
long befo
submitted
In this ph
environm
344 Behre 345 Behre 346 Memor
ual" and wo
edule and th
concluded th
with the leve
Thus, 31.
c Rim's prop
on water, dis
ed money) or
ressly planni
d project's im
issues exist a
s.
4.
In this32.
ng El Salvad
ore any alleg
d with its M
hase, Claima
mental permi
Dolbear Expe
Dolbear Expe
rial, paras. 27
uld need to b
e decommis
hat "the curr
el of detail re
Claimant's e
posed projec
smissed the p
r resulting fr
ing to develo
mpacts. In thi
and baldly a
Pac Rim repolitical m
s arbitration,
dor's assertio
ged statemen
emorial in fa
ant has admit
it for exploit
ert Report, pa
ert Report, pa
73, 297-298.
be updated "
sioning of th
rent Closure
equired for a
expert repor
ct. In 2004-2
public's conc
rom a lack o
op other depo
is arbitration
ssert that the
esigned itselmeans
, Claimant su
on that any d
nt by Preside
act confirm t
tted that it k
tation in 200
ara. 133.
ara. 133.
111
"to include a
he mine and
and Reclam
a feasibility l
rt does not ad
2006, Claima
cerns as eith
f knowledge
osits in the a
n, Claimant's
e EIA met al
lf to getting
urvived the a
dispute betwe
ent Saca in 2
that its dispu
knew that the
6 (or by Ma
a manual of i
plant facilit
mation Plan su
level design.
ddress the M
ant inadequa
her dishonest
e, and refuse
area which w
s experts, un
ll Salvadoran
the environm
abuse of pro
een Pac Rim
2008. The m
ute with the
e Governmen
ay 7, 2007 at
internal and
ties."344 As a
ubmitted in
."345
Ministry's sig
ately conside
t (signatures
ed to address
would necess
nconvincingl
n and interna
mental perm
ocess objecti
m and El Salv
materials Clai
Governmen
nt was not g
t the latest)34
external rep
a result, Beh
the EIA doe
gnificant con
ered possible
s from peopl
s the fact tha
sarily affect
ly, deny that
ational
mit through
on to jurisdi
vador existe
imant has
nt existed ear
oing to issue
46 and that it
ports,
hre
es not
ncerns
e
e
at it
the
t any
iction
d
rlier.
e the
focused i
compared
"I was pathe Goverthere wasin 2006. Ifrom the with Salv2002 mer2008, offthe Salvaexpressedparticularus that thextractionbe forthcomeetings Salvador.
2
pursuing
environm
was lobb
347 First S348 Memorpara. 120.349 Memor350 Memor351 EmailsMARN anwill fight
its efforts on
d side-by-sid
Jurisdictioarticularly surrnment is nows a dispute beIn fact, nothicase. . . . Fro
vadoran officrger with Dayficials at the hadoran Goverd support for rly in 2007 ane permits necn activities atoming. I recaon my many
.347
In its n33.
political me
mental permi
bying both M
hrake Witnes
rial, para. 273.
rial, para. 297
rial, para. 298
s between Petnd the Ministrfor that.").
n seeking a p
de below:
on Phase rprised to leaw claiming t
etween the pang could be f
om my meetinials prior to tyton and welhighest levelsrnment repeaour project,
nd 2008, assucessary to cot El Dorado wall numerous y trips to El
new account
eans of puttin
it in spite of
Ministries: rel
ss Statement,
3 (emphasis a
7 (emphasis a
8 (emphasis a
te Neilans andry of Econom
political solu
arn that hat arties further ngs the ll into s in tedly and, ured
onduct would such
Jun"allMin earassiEvaMArespConthatmin Mawith"theactian Eindu
t of events, C
ng pressure
the Ministry
lying on "po
paras. 89-90
added); First W
added).
added).
d Ericka Colinmy are politica
112
ution. Claim
Inconsistenne 2006: a Ml mining projnister."348
rly 2007: "Msistance of Zaaluación AmbARN to makeponses that Pnsultation. At Minister Guning, includin
ay 7, 2007: Ph Minister Ge mining comivity in the coEvaluación Austry was con
Claimant als
on the Minis
y's concerns.
olitical consu
(emphasis ad
Witness State
ndres, Jan. 3, al . . . The pr
mant's contrad
nt informatMARN officia
jects were 'on
s. Colindres aida Osorio, hbiental . . . ine progress wiPRES had sub
At this time, Muerrero had ong exploratio
ac Rim repreGuerrero and Mmpanies wereountry wouldAmbiental Esnducted."350
so admits tha
stry of Envir
.351 Indeed,
ultants" rega
dded).
ement of Erick
2007 (C-193rincipal idea i
dictory statem
tion in the Mal told Erickan hold,' on th
went to MARhead of the Gn encouragingith the evaluabmitted after
Ms. Osorio toordered all peon, to be put
esentatives atMinister de Ge informed thd be halted ustratégica . .
at, long befo
ronment to g
as early as 2
arding the sur
ka Colindres,
3) ("I realize ts to get techn
ments are
Merits Phasa Colindres thhe orders of th
RN to requesGerencia de g Mr. Córdovation of the r the Public old Ms. Colinermits relatinon hold."349
ttended a meGavidia at what all mininguntil such tim
. of the minin
ore 2008, it w
get the
2005, Pac Ri
rface land is
, Mar. 22, 201
that this issuenical approval
e hat he
st the
va of
ndres ng to
eeting hich g
me as ng
was
im
ssue
13,
with l. I
with the
Galeas, w
2
mining a
Assessm
what hap
informati
Prelimi
"From Dethrough Dhowever,all officiawith the crespect tonotwithstthat Salvaclearly stiMARN mdefinitivesubmissiobusiness under exccircumstamaximumdays. Derequiremenot provinot proviany justifinexplicab
352 El DorShrake, N353 Respon354 Memor355 Memor356 Memor
Ministry of
with MARN
After 34.
ctivity woul
ent, Claiman
ppened after
ion it has pro
inary ObjecPhase
ecember 200December 20 MARN ceas
al communicacompany wito its applicatitanding the faadoran law ipulates that
must take e action on Eons within 60days, and eveceptional ances, withinm of 120 busiespite this ent, MARN dde, and still hded, PRES wfication for itble silence."3
rado Project R
Nov. 25, 2005
nse to Prelimi
rial, para. 260
rial, para. 296
rial, para. 298
Economy an
.352
mid-2007, w
ld be halted u
nt only incre
May 2007 w
ovided is ent
ction
6 008, sed ation th ion, act
IA 0 en
n a iness
did has
with ts 353
"ThrMAR MarGuerComtechn MayGuerwereuntilmini MayClaimand wenvir DeceSalvaSalva
Report, Month
(C-285).
inary Objecti
0.
6.
8 (emphasis a
nd an "image
when the min
until El Salv
eased the pol
with respect t
tirely incons
Inc
roughout 20RN on the iss
rch 7, 2007: "rrero, and the
mmission for tnical and env
y 7, 2007: Pacrrero and Mine informed th such time asng industry w
y 2007: "As Mmant was awwould therefronmental as
ember 2007 ador with Toadoran Gove
h Ending Aug
ons, para 49 (
added).
113
e consultant
ning compan
vador could c
litical pressu
to its environ
sistent with w
consistent in
06 and 2007sue of the ED
"Ms. Colindre Comisión Nthe Environmvironmental f
c Rim represnister de Gav
hat all minings an Evaluacwas conducte
Mr. Shrake anware that the dfore not be ressessment, bu
and Februaom Shrake anernment, inclu
gust 31, 2005
(emphasis add
who has ties
nies were tol
complete a S
ure. Claiman
nmental perm
what it initia
nformation
7 the CompanD Mining Env
res attended aNacional de Mment . . .), in features of th
sentatives attevidia at whicg activity in tión Ambientaed."356
nd Ms. Colindelay PRES fesolved by mut only throug
ary 2008: A Und met with "uding officia
(C-288); Em
ded).
s to Hugo B
ld without re
Strategic Env
nt provides l
rmit applicat
ally alleged:
since provi
nies continuevironmental
a meeting wiMedio Ambiewhich she pr
he El Dorado
ended a meeth "the mininthe country wal Estratégic
ndres affirm, faced at MAReans of techngh political m
U.S. lobbyist"various officals of MARN
mail from Fred
arrera," Mar
eservation th
vironmental
little detail o
ion, but the
ded
ed to engage Permit . . ."3
ith Minister ente (Nationaresented the Mine Projec
ting with Ming companieswould be haltca . . . of the
by this pointRN was polinical means."357
t traveled to Ecials of the
N."358
d Earnest to T
rvin
hat all
of
little
with 54
al
ct."355
nister s ted
t, the tical
El
Tom
2
push its a
Memoria
halting al
consultan
2007 sho
Chavez M
has also a
and Febr
officials
attended
officials
had enga
President
357 MemorWitness S358 Letter 359 Memor360 Email 361 Email 362 Letter 363 Letter 364 Letter
Thus, 35.
application t
al, one can se
ll mining act
nt, about an
ows that Clai
Mena, to wor
admitted tha
ruary 2008 to
of MARN."
a dinner wit
in San Salva
aged C&M C
t and CEO, t
We coremedI was
rial, para. 300
Statement"), p
from Claiman
rial, paras. 30
from Tom Sh
from Tom Sh
from Claiman
from Claiman
from Claiman
Claimant no
through MAR
ee that withi
tivity, Claim
"interesting"
imant was co
rk with Pres
at a U.S. lobb
o meet with
362 Ms. Mar
th Mr. Shrak
ador in Febru
Capitolink as
testified:
onsidered vadies to the sitlobbying. I w
0; Second Wipara. 128.
nt's counsel to
00-301.
hrake to Mark
hrake to sever
nt's counsel to
nt's counsel to
nt's counsel to
ow admits th
RN.359 From
in days of the
mant was com
" meeting wi
ounting on it
sident Saca's
byist travele
"various off
ry Anastasia
ke, Pac Rim's
uary 2008.36
s a lobbyist b
arious--at thituation. I mewas lobbyin
itness Stateme
o El Salvador
k Klugmann, M
ral recipients,
o El Salvador
o El Salvador
o El Salvador
114
hat, by 2007,
m the exhibit
e announcem
mmunicating
ith the Vice
ts "leading lo
cousin, Her
d to El Salva
ficials of the
a O'Grady, a
s U.S. lobby
63 Claimant
by October 2
s point we cean, I talked
ng in the Uni
ent of Thoma
r's counsel, Ap
May 18, 2007
Aug. 14, 200
r's counsel, Ap
r's counsel, Ap
r's counsel, Ap
, it resolved
ts provided b
ment to the m
g with Mark
President.360
obbyist and
rbert Saca, to
ador with M
Salvadoran
columnist fo
yist, and seve
confirmed d
2007.364 Tom
considered vad to counsel iited States to
as C. Shrake,
pr. 22, 2011 (
7 (C-306).
07 (C-307).
pr. 22, 2011 (
pr. 22, 2011 (
pr. 22, 2011 (
to use "polit
by Claimant
mining comp
Klugmann,
0 Another e
political stra
o move forw
Mr. Shrake in
Governmen
for the Wall S
eral Salvado
during this ar
m Shrake, Pa
arious in El Salvadoo pressuring
Mar. 21, 201
(R-128) (emp
(R-128).
(R-128).
(R-128).
tical means"
t with its
panies about
a political
email in Aug
ategist," Fide
ward.361 Clai
n December 2
nt, including
Street Journ
oran Governm
rbitration tha
ac Rim's
or
3 ("Second S
phasis added)
" to
t
gust
el
imant
2007
al,
ment
at it
hrake
.
2
from MA
applicatio
of 2007 a
pressure
concerns
with MA
submittin
Claimant
C
2
Dr. Pulga
2
it did not
submissi
365 Transc366 Memor367 Second368 Manueand social
El Salso yea
Thus, 36.
ARN, the trut
on and the g
and 2008 to
on the Salva
that had bee
ARN to ask fo
ng its Notice
t initiated thi
C. Pac R
As Cl37.
ar also highl
it is cucarry
This ldecisiown c
When38.
t accept the c
on:
cript of Hearin
rial, para. 302
d Shrake Witn
el Pulgar-Vidal relations, Au
lvador. I wasah.365
contrary to
th is that Cla
general conce
lobby both w
adoran Gove
en raised. A
for a status up
e of Intent."3
is arbitration
Rim did not
aimant recog
lighted that i
urrently not out its activi
icense is notion from the capacity to o
n Pac Rim's e
communities
ng on Objecti
2.
ness Statemen
al, Recommenug. 11, 2006 (
s doing num
Claimant's o
aimant was i
erns regardin
within El Sal
ernment to gr
According to
pdate (break
66 In other w
n as the next
earn the ne
gnizes, socia
it is essential
possible to tities without
t the result oauthority, bbtain it.368
efforts to ear
s' "no" to its
ions to Jurisdi
nt, para. 85.
ndations: Min("Pulgar Reco
115
merous--nume
original asse
informed of
ng metallic m
lvador and in
rant the envi
Claimant, it
king the alleg
words, when
step in putti
ecessary soc
al license to
l for compan
think that ant obtaining s
of an adminisut rather the
rn the approv
proposed pr
iction, May 3
ning activity, ommendation
erous things
ertion that it
both the tec
mining in El
n the United
ironmental p
t initiated the
ged silence)
n Claimant's
ing pressure
cial license t
operate is "o
nies to obtain
n operation wocial license
strative proce result of the
val of the co
rojects. As d
3, 2011, at 46
overview of ns") at 24 (Ex
at that poin
faced "inexp
chnical conce
l Salvador. C
d States to pu
permit despi
e late 2008 c
when it "wa
lobbying eff
e on the Gov
to operate
of paramoun
n social licen
will be able te.
cess, or of a e company's
ommunities f
described by
1:14-19.
developmentxhibit R-132)
nt,
plicable silen
erns about it
Claimant use
ut outside
te all the
corresponden
as on the ver
fforts failed,
ernment.
nt importanc
nse:
to
s
failed, howe
y the amici
t, environmen).
nce"
ts
ed all
nce
rge of
e."367
ver,
nt,
2
were aga
Pac Rim.
Claimant
lends mo
letter opp
protester
assumed
few doin
24
who curr
various lo
mining "h
impacted
369 AmicusMetálica d370 Amicus371 Public 372 Memor373 Pulgar
It is unSalvadaffectorganoppos2004, enginedrillinwas b
Accor39.
ainst allowin
."370 When p
t responded t
oney and Cla
posing their
s prevented
"we still had
g harm to th
In his 40.
rently serves
ocal groups
has historica
d the environ
s Curiae Submde El Salvado
s Curiae Subm
Consultation
rial, para. 331
Final Report
ncontrovertedor arose orged local comize and prote
sition were eas it ramped
eers trespassng exploratoroth "suspicio
rding to amic
g metals min
presented wi
that ADES,
aimant theref
project were
Claimant fro
d the social l
he majority."
report on th
as Peru's M
opposed to t
ally not only
nment throug
mission by Mor, May 20, 2
mission by La
n Meeting Min
1 (citing Seco
t at 6 (R-129)
ed that oppoganically fro
mmunities anect themselv
engendered bd up explorased on the prry wells withous and arro
ci, the oppos
ning in El Sa
ith the conce
the local As
fore suspecte
e "people wi
om realizing
license from
372
he situation i
Minister of En
the developm
y failed to ge
gh poor prac
Member Organ2011, at 3.
a Mesa at 4.
nutes at 4-5 (R
ond Shrake W
.
116
sition to Pacom the first-hnd their commves. Indeed, tby Pac Rim iatory drillingrivate properhout permissogant."369
sition grew a
alvador, desp
erns of the c
ssociation fo
ed that the m
th loans pen
g its explorat
m the local co
n El Salvado
nvironment,
ment of mini
enerate devel
tices."373 A
nizations of L
R-131).
Witness Statem
c Rim's planshand experiemendable efthe first stirritself when ig work, its terty of local rsion and in a
and "by late
pite the lobb
ommunities
r Economic
more than 20
nding."371 Li
tion program
ommunities
or in August
described th
ing activity"
lopment, but
s opposition
La Mesa Nacio
ment, para. 92
s for El ences of fforts to rings of in 2003 and echnicians anresidents, a manner tha
2007, 62.5%
bying campa
in March 20
and Social D
00 citizens w
ikewise, whe
m in Santa Ri
and saw this
t 2006, Manu
he "strong pr
" based on th
t has also sig
n grew in the
onal Frente a
2).
nd
at
% of Salvado
aign deploye
006, howeve
Developmen
who signed th
en anti-mini
ita, the comp
s as a case of
uel Pulgar-V
ressure by
he idea that
gnificantly
e communitie
a la Minería
orans
d by
er,
nt,
he
ng
pany
f a
Vidal,
es
around C
convince
Salvador
activities
24
Claimant
Tragicall
the murd
24
killed in
reported
be next:
374 Pacific$110,740 Indirect P(Exhibit RPersonnelProject CoThe total $1,129,39375 AmnesR-136).
Claimant's pr
e everyone to
ran Governm
s between 20
Claim41.
t's activities
ly, the situati
der of an env
Threaat leasexplorthis yefollow
A few42.
December 2
on the anti-m
The thCabañRiverarepres(Comiattack
c Rim El Salvon Public Re
Public RelatioR-134) (reporl, and $170,30osts, Aug. 21expenditures
95.
sty Internation
roposed proj
o accept its p
ment show th
007 and 2008
mant's actions
in Cabañas h
ion escalated
vironmental a
ats, attacks anst as early asration in the ear when act
wing the elec
w months late
2009 and the
mining camp
hreats followñas departmea on 20 Decesentative of tité Ambienta
k in which he
vador, S.A. deelations, $37,6ns); Pacific Rrting $66,90603 on Indirect, 2008 (Exhibon these thre
nal: Urgent A
ects, Claima
projects. Th
hat Claimant
8.374
s were not w
have becom
d in 2009. In
activist and d
nd intimidats May 2008 warea began
tivists denouctions.375
er, Amnesty
staff of Rad
paign, receiv
wed the killinent: Gustavoember. Ramthe NGO Caal de Cabañae was shot ei
e C.V., Guaco625 on Public
Rim El Salvad6 on Public Ret Public Relatbit R-135) (re
ee public relat
Action, Death
117
ant increased
e 2008 Annu
spent more
without conse
e highly pol
n August 20
described:
ion against awhen campaand have int
unced elector
issued anoth
dio Victoria,
ved threateni
ngs of two ano Marcelo Rimiro Rivera wabañas Enviras), and had ight times.
o Project Costc Relations Ador, S.A. de Celations, $22,tions; Pacific eporting $113tions costs acr
Threats for D
d its spendin
ual Reports t
than $1 mill
equence. Th
arized for an
009, Amnesty
activists repoaigning againtensified sinral irregular
her alert afte
a communit
ing message
nti-mining aivera in Junewas the legaronment Comsurvived an
ts, Aug. 21, 2dministrative
C.V., Huacuco,732 on PubliRim El Salva
3,047, $38,40ross the three
Demanding Ju
ng on "public
that Claiman
lion on publ
he communit
nd against m
y Internation
ortedly beganst mining ce January
rities
er two more
ty radio stati
es indicating
activists in e and Ramiroal mmittee n August
2008 (Exhibite Personnel, ao Project Cosic Relations Aador, S.A. de
09, and $287,7e licenses in o
ustice, Aug. 2
c relations" t
nt filed with
ic relations
ties around
mining.
nal reported
an
people were
ion that had
that they wo
o
t R-133) (repoand $281,880 sts, Aug. 21, 2Administrative C.V., Pueblo753, respectiv
one year was
27, 2009 (Exh
to
the
on
e
ould
orting on
2008 e os vely).
hibit
24
informed
insistenc
encourag
This failu
Claimant
the comm
24
negative
year min
environm
"purify"
376 AmnesR-137). 377 Memor378 Univerand PerceR-138). 379 Pulgar
On 26CommmonthwoundEnviro
El Sal43.
d anti-mining
e that all the
gement of ce
ure to ackno
t lacked the n
munities to b
80.8%very s
84.9%and
only 1
The S44.
impacts that
ing operatio
mental impac
water from i
sty Internation
rial, para. 332
rsidad Centroeptions of Min
Final Report
6 December,mittee was kihs pregnant, ded. Her huonment Com
lvador highli
g contingent
e anti-mining
rtain NGOs"
wledge that
necessary so
be impacted b
% thought thaserious;
% agreed with
18.9% consid
Salvadoran p
t metallic mi
n, so the dir
ct could last
its tailings p
nal: Urgent A
2 (citing Press
americana "Jning in Areas
t at 14 (R-129
another memilled. Dora Awas shot de
usband, José mmittee spok
ights these e
in the local
g people wer
"377 or peopl
the public h
ocial license
by mining in
at the impact
h the statem
dered El Sal
opulation wa
ining could h
ect benefits
much longer
ond, which w
Action, Two A
s Release, Sa
osé Simeon CAffected by
9).
118
mber of the Alicia Recinoad, and her tSantos Rodr
kesperson.376
events to sho
communitie
re either "bei
le with pend
had legitimat
to operate.
ndicated that
t of mining o
ment that min
vador an app
as justifiably
have on the
would be re
r.379 For exa
was not "con
Activists Kille
nta Rita Drill
Cañas" InstituMining in El
Cabañas Enos Sorto, whtwo-year-oldríguez, is the6
ow that there
es. In these c
ing imported
ding loans fro
te concerns i
Indeed, a 20
t:
on water pol
ning compan
propriate cou
y concerned
environmen
elatively shor
ample, Pac R
nsidered or e
ed, Others Th
l Program Up
ute on Public Salvador, No
nvironment ho was eightd child was e Cabañas
e is a large, p
circumstanc
d from outsi
om ADES is
is part of the
007 survey o
llution woul
ies harm the
untry for me
about the si
nt. Pac Rim
rt-lived, thou
Rim's comm
envisioned to
hreatened, Jan
pdate, Dec. 13
Opinion, Survov. 2007, at 2
t
passionate,
ces, Claiman
de areas at t
s not credible
e reason that
of Salvadora
d be serious
e environmen
etallic minin
ignificant
proposed a s
ugh the
mitment to
o be a sanctu
n. 4, 2010 (Ex
3, 2006 (C-26
vey on Know27, 39, 54 (Ex
t's
he
e.
ans in
or
nt;
ng.378
six-
uary
xhibit
63)).
wledge xhibit
for aquat
a tailings
devastati
24
would flo
necessary
D
24
issues reg
vision reg
about pot
protectio
environm
mechanis
result, he
380 Respon381 See, e.gRisk of D139) (listicontinue tThe consemany case382 See Be"fears thatwill be poundergrouand lack o383 Pulgar
tic organism
s dam spill, p
ing.381
In sho45.
ow from its p
y social licen
D. Strate
Dr. Pu46.
garding min
garding the p
tential envir
n of water q
mental and m
sms and regu
e considered
nse to Public
g., Report of angerous Occing several exto occur despequences of thes, human los
ehre Dolbear Et water used b
ollution of waund water, theof credibility
Recommend
s," before di
possibly as th
ort, Pac Rim
proposed Pro
nse to go for
egic Environ
ulgar, in his
ing activity
potential for
onmental im
quality and av
mining legisla
ulation of cit
that El Salv
Consultation
the ICOLD Ccurrences," Uxamples of taiite the availabhese failures hss.").
Expert Reporby the compaater by cyanide TSF may faof Pacific Rim
dations at 3-5
ischarge into
he result of a
never convi
oject were w
rward.
nmental Ev
report on the
in El Salvad
r developing
mpacts, there
vailability du
ation as well
tizen particip
vador was no
Observations
Committee onU.N.E.P. Bulleilings dam faible improved have been hea
rt, para. 125 (dany will diminde and metals ail, and that thm.").
(R-132).
119
o the San Fra
an earthquak
inced the com
worth the risk
valuation
e status of en
dor in 2006, f
the mining
was no wat
uring mining
l as institutio
pation in the
ot ready to m
s at 71-72 (C-
n Tailings Dametin 121 (200ilures) and 53technology f
avy economic
describing locnish their currdownstream,
here will be lim
ancisco Rive
ke. A tailing
mmunities th
ks.382 As a r
nvironmenta
found that th
sector, there
ter policy tha
g activities,
onal capacity
e decision-m
move forward
-170).
ms and Waste1), ISSN 053
3 (concluding for the designc losses, envi
cal inhabitantrent supply fo, that leakage mited new job
er,380 did not
gs dam spill
hat the limit
result, Pac R
al, social, an
he country la
e was a lack
at would ens
there were g
y, and there
making proce
d with minin
e Lagoons, "T4-8293, at 15
g "Failures of n, constructionironmental de
ts' concerns sor potable and
from the TSFbs for a short
t address fea
could be
ed benefits t
Rim lacked th
nd developm
acked a com
of informati
sure the
gaps in the
were inadeq
ess.383 As a
ng at that tim
Tailings Dam5-16 (Exhibittailings damsn and operatioegradation and
temming fromd other uses; tF will pollutet period of tim
ars of
that
he
ent
mmon
ion
quate
me:
s t R-s on. d, in
m there e me
24
evaluate
concerns
availabili
assessme
of discus
384 Pulgar relación aen condicfines polítalguna y mmás confltravés delmecanisminsuficienestá en ma("Dr. Pulgmetallic m2006, que385 Pulgar 386 Pulgar
[T]he the lawactivit
In respresponradicainsteapolarisituatishouldconsencredib
[T]he that thMininEcono
Dr. Pu47.
potential env
raised durin
ity and quali
ent."386 Follo
ssions based
Recommend
a la ley y la poiones de crecticos, poca inmás bien incidlictivas. Las e diálogo, la g
mos que genernte pensar queanos tan sólo gar concludedmining activite El Salvador
Recommend
Recommend
current situaw and policyty being carr
ponse to thisnds to politicalism of orgaad impact theization and wions. Internad be channelnsus-buildin
bility among
proposals shhe solution inng Law or thomy.384
ulgar recomm
vironmental
ng the Pac R
ity of water r
owing a Stra
on the infor
dations at 5 (Rolítica, puede iente conflictformación o edirá en las baexperiencias i
generación de ren credibilidae la solución pdel Ministeri
d in his reporty . . ." / "El Dno estaba list
dations at 9 (R
dations at 10 (
ation, with oy, can result ried out in an
s, to think orcal ends, limanizations we fundamentawill be reflecational experled through dng, and by in the parties.
hould be comnvolves noth
hat this task s
mended a St
l impacts of a
Rim public co
resources is
ategic Enviro
rmation gath
R-132) ("la sitgenerar que c
to. Frente a eeventual radic
ases de lo que internacionalespacios de c
ad entre las ppasa por tan sio de Economt, submitted to
Dr. Pulgar conto para la acti
R-132).
(R-132).
120
opposing viein any futurn environme
r attempt to cmited informawill not bring
al elements cted in even rience showdialogue, cre
ncorporating . . .
mprehensivehing more thshould fall o
trategic Envi
any mining p
onsultation, h
a central ele
onmental As
ered to 1) ad
tuación actualcualquier des
ello pensar o icalismo de lagenera la pol
es demuestranconstrucción dartes. . . . [L]
sólo modificarmía . . ."). Seeo me in Auguncluyó en su rvidad minera
ews not just ire performanent of growin
conclude thaation, or pos about a soluof what genemore conflic
ws that these peating forummechanism
e. It is not enhan amendinnly to the M
ironmental A
policy in El
he noted tha
ement for the
ssessment, D
ddress the cu
l, con posiciosarrollo de la aintentar interps organizaciolarización y sn que estas pode consensos]as propuestar la Ley de M
e also Gavidiaust 2006, that reporte, que ma metálica . . .
in relation tonce of the ng conflict.
at all of this ssible ution, and werates ctive positions
ms for ms that build
nough to thinng the 1995 Ministry of
Assessment t
Salvador.385
at the "situati
e strategic en
Dr. Pulgar en
urrent conflic
ones encontraactividad en epretar que todones, no generse reflejará enosiciones deb y la incorpor
as deben ser inMinería de 199a Witness StaEl Salvador w
me fue presen").
o
will
nk
to identify an
5 In line wit
ion regardin
nvironmenta
nvisioned a s
ct and oppos
das no sólo enel futuro se ha
do esto responrará solución
n situaciones aben canalizarsración de ntegrales. Es 95 o que esta atement, para.was not ready
ntado en agost
nd
th the
ng
al
series
sing
n aga
nde a
aun se a
tarea . 11 y for to del
views to
. determi
24
Strategic
President
was nece
mining in
suspensio
never, as
Rather, a
decision
mining (a
could dec
24
technical
was part
Economy
the Strate
was in th
he sudde
387 Pulgar that Dr. Pwhether toinstrumenminería m
begin buildi
ne whether c
Althou48.
Environmen
t Funes, who
essary and co
n El Salvado
on of proces
Claimant al
as Claimant a
to suspend t
a "moratoriu
cide how and
Dr. Ro49.
l director of
of a technic
y in 2010 to
egic Environ
he last step o
nly passed a
Recommendulgar recommo develop the
nto necesario pmetálica y si la
ing a consen
carrying out
ugh Presiden
ntal Assessm
o took office
ontracted the
or in 2010. T
sing of envir
lleges, a "ban
admits it wa
the review of
um") to take
d when to m
obert Goodla
the World B
al committee
review the w
nmental Eval
f finalizing a
away on Dec
dations at 12 (mended an EAe metallic minpara que El Sa respuesta er
nsus vision o
t mining acti
nt Saca's adm
ment, nothing
e in mid-200
e Tau Group
Throughout t
ronmental p
n" (denoting
s informed i
f application
the time to s
move forward
and, a World
Bank's indepe
e appointed
work of the i
luation study
an expert op
cember 28, 2
(R-132). See AE "as a necening industry,Salvador pudira afirmativa,
121
n mining an
vity falls wi
ministration
g was under
9, agreed tha
to study and
this period, E
ermit applic
g a permanen
in May 2007
ns for enviro
study the situ
d.
d Bank envir
endent Extra
by the Mini
international
y of metallic
pinion to sub
2013. We in
also Gavidia ssary instrum and if so, unera tomar unabajo cuáles c
nd 2) develop
ithin that vis
took some s
rway by the t
at a Strategi
d evaluate is
El Salvador
cations for m
nt prohibitio
7, El Salvado
onmental per
uation and th
ronmental ad
active Indust
stry of Envir
l consulting
c mining in E
bmit with thi
nclude the fin
Witness Statment for El Sander what cona decisión sobcondiciones.")
p "the countr
ion."387
steps toward
time he left o
c Environme
ssues related
reasonably
metallic minin
on) on metall
or made the r
rmits related
he potential
dvisor from
try Review f
ronment and
company hi
El Salvador.
s Counter-M
nal draft of h
tement, para. alvador to be anditions." / "cobre si desarro).
ry's vision an
d realizing th
office in 200
ental Assess
d to metallic
continued th
ng. There w
lic mining.
reasonable
d to metallic
impacts bef
1971-2001
from 2001-2
d Ministry of
red to carry
Dr. Goodla
Memorial wh
his expert
11 (describinable to decideomo un llar la industr
nd . .
he
09.
sment
he
was
fore it
and
2004,
f
out
and
hen
ng e on
ria de
opinion e
situation
precautio
2
Moran an
the water
environm
aggravati
Report in
conflict,
in additio
appears t
populatio
2
388 ExpertMining, Dopinion at389 Tau Fi390 Tau Fique la actambiental391 Tau Fi392 Tau Filas organi
explaining h
in El Salvad
onary step gi
The T50.
nd local com
r concerns an
mental aspect
ing the exist
ncludes a tab
health probl
on to the env
to be a const
on affected b
The T51.
El Salcountrto a hiwith iresourand of
t Opinion of RDec. 17, 2013t a time to be
nal Report at
nal Report at ividad pueda l y de baja cal
nal Report at
nal Report at izaciones com
is view, base
dor, that a m
iven the circu
Tau Group's F
mmunities an
nd risks of n
ts are the po
ting environm
ble of the arg
lems, and the
vironmental
tant in most o
by mining ac
Tau Report fo
lvador is a cory's environmigh populationstitutions frrces for effecften lacking
Robert Goodla
("Goodland specified by
6-10, 12-14 (
20 (R-130) (generar sobre
lidad del agua
21 (R-130).
27 (R-130) (munales y, de
ed on his ext
moratorium on
umstances in
Final Report
nd noted in D
natural disast
tential harm
mental vulne
guments rais
e fact that an
concerns.391
of the comm
ctivity."392
ound:
ountry facinmental vulneon density—
frequently hactively carryin credibilit
and on the GoExpert Opinithe Tribunal.
(R-130).
"los aspectose el medio ama.").
"La oposiciónforma genera
122
tensive expe
n metallic m
n El Salvado
t confirmed
Dr. Pulgar's 2
ter,389 and fo
m the activity
erability and
ed against m
ny employm
According
munity organ
ng significanterability is p
—the highest aving limitedying out theiry according
overnment ofon"). El Salv
ambientales mbiente, agrav
n a la mineríaal, en la pobla
erience and u
mining was a
or at the time
the concerns
2006 report.
ound that "th
y might cause
d poor water
metallic mini
ment benefits
g to this Repo
nizations and
t challengesparticularly e
in Central Ad capabilitier duties and to Salvador
f El Salvador'vador intends
que más preovando el prob
a parece ser uación afectada
unique know
a legitimate a
e.388
s previously
The Tau R
he most conc
e to the envi
quality issu
ing, which m
would be ve
ort, "Opposi
d generally a
. The elevated due America—s and priorities,
ran citizens,
s Moratoriumto file a corro
ocupan son loblema de la vu
una constante a por la activi
wledge of the
and reasonab
y raised by D
eport discus
cerning
ironment,
es."390 The
mentions soc
ery short-liv
tion to minin
among the
m on Metal oborating exp
os posibles daulnerabilidad
en la mayoríaidad minera."
e
ble
Dr.
sed
cial
ed,
ng
pert
años
a de ).
2
El Salvad
in the mi
met.394
E
2
Governm
noting th
respect fo
mining a
assured."
393 Tau Fi2010) ("Epoblacióncapacidadcredibilidparte de suterritorio especialmposibilidaimpactos económic394 Tau Fi395 Propos
with snaturapart odisast
Thesethe pometallrisks athe co
Accor52.
dor, "the mo
d to long-ter
E. Mora
In July53.
ment propose
hat "the Strat
or the precau
ctivity until
"395 Accordi
nal Report at
El Salvador esn—la mayor ddes y recursosad entre los sus recursos ncon riesgo ele
mente elevada.ad de que el pambientales y
co del país.").
nal Report at
sed Moratoriu
significant leal resources—f its territoryers . . . .
e conditions ossibility of tlic mining thand impacts,ountry's socia
rdingly, the T
ost advisable
rm, once cer
atorium law
y 2012, cons
ed a moratori
tegic Environ
utionary prin
compliance
ing to the pro
73 (R-130) (
s un país que ede un país cens para el desaralvadoreños, aturales—impevado de sufr. . . . Estas coaís pueda gary sociales, y e
79 (R-130) (
um Law, July
evels of pollu—also entaily subjected t
of vulnerabithe country bhrough contr, and in makal and econo
Tau Report r
option" from
rtain econom
w still pendin
sistent with t
ium until co
nmental Ass
nciple and to
with the rel
oposed law,
citing a reporenfrenta granntroamericanorrollo efectivocon niveles iplicando ademrir catástrofes ondiciones derantizar una men realizar un
"la opción má
17, 2012 ("P
123
ution and deling health rito a greater r
ility present being able torolling its en
king an overaomic develop
recommende
m an environ
mic, social, an
ng
the Strategic
mpliance wi
sessment adv
o that effect,
evant social
the morator
rt by the Unitdes retos. Co
o—,con instituo de sus funcimportantes dmás riesgos pnaturales, la
e vulnerabilidminería metálina contribució
ás aconsejabl
Proposed Mor
egradation inisks—and wrisk of suffer
a significanto guarantee environmentalall positive cpment.393
ed either pro
nmental stan
nd environm
c Environme
ith certain go
vises the utm
recommend
and environ
rium could e
ted Nations Dondicionado ptuciones muchiones y priori
de contaminacpara la salud—
vulnerabilidaad suponen uica eficaz en e
ón neta positiv
le").
ratorium Law
n most of its with a large
ring natural
t obstacle toeffective l and social contribution
ohibiting me
ndpoint, or a
mental guaran
ental Evaluat
oals could b
most caution
ds postponin
nmental guar
nd when var
Disaster and Cpor una elevadhas veces escidades, y a meción y degrada—y con una grad ambiental una barrera imel control de va al desarrol
") (Exhibit R
to
tallic mining
allowing min
ntees could b
tion Report,
e achieved,
and the grea
g any metall
rantees is
rious
Coordination tda densidad dasas de enudo faltas dación de granran parte de sdel país es
mportante a la sus riesgos e lo social y
R-140).
g in
ning
be
the
atest
lic
team, de
de n su
improvem
responsib
of the mi
and other
The decr
2
with rega
Goodland
2
ensured a
ensured,
Salvador
El Salvad
interests,
environm
396 Propos397 Goodla398 Tinetti
ments had be
ble for envir
ining regulat
r policy instr
ree is still pen
El Sal54.
ard to metall
d concluded
GivenEl SalsignifmeaniSuch cright"enviroenviroencoupermi
Until 55.
and there is n
the only rea
ran Constitut
dor is Consti
, including "
ment, as well
sed Moratoriu
and Expert Op
i Expert Repo
een made, in
onmental as
tory instituti
ruments that
nding before
lvador's actio
lic mining ar
d in his exper
n the high levlvador and thficant changeingful contrichanges willby focusing
onmental eduonmental decurage only thts.397
the necessar
no social lic
asonable cou
tional law ex
itutional bec
environment
l as the prote
um Law, Art.
pinion at 17.
ort, paras. 60-6
ncluding: "fa
sessment, co
ons;" and "d
t will guaran
e the Salvado
ons to seek a
re the best co
rt opinion:
vel of violenhe current laes are neededibution to sul take time. E
g on regionalucation of itcision-makin
he best actors
ry changes ar
ense to oper
urse of action
xpert Dr. Tin
cause it is a r
tal integrity
ection of the
4 (R-140).
61.
124
ar-reaching s
ontrol, and m
development
ntee a progre
oran legislat
an informed
ourse to prot
nce surroundack of institud before min
ustainable deEl Salvador l planning, ins citizens, anng. Such an s in the mini
re made, env
rate. And un
n would be to
netti, a morat
reasonable st
and every in
health of inh
strengthening
monitoring;"
t of taxation,
essive distrib
ture.
solution to t
tect its envir
ding the issueutional strengning could mevelopment ihas a chancenstitutional nd scientificapproach woing industry
vironmental
ntil environm
o not allow m
torium with
tep to protec
ndividual's ri
habitants of
g of the insti
"far-reachin
, financial, c
bution of min
the complex
ronment and
e of mining gth,
make a in the countre to "do it strengthenin
c rigor in ould to apply for
protection c
mental protec
mining. As
respect to m
ct important
ight to a hea
f the Republi
itutions
ng strengthen
compensatory
ning profits.
x issues it fac
citizens. A
in
ry.
ng,
r
cannot be
ction can be
explained by
metallic mini
collective
althy
ic."398
ning
y,
"396
ces
s Dr.
y
ing in
2
general a
Pac Rim'
independ
environm
admitted
Likewise
licenses b
damages
Howe56.
and Pac Rim
's application
dent requirem
mental permi
for consider
e, El Salvado
because Pac
.
ever, as alrea
's environme
n for an expl
ments under
it, its applica
ration witho
or's policy de
Rim did not
ady stated, E
ental permit
loitation con
the Mining L
ation for an e
ut the requir
ecision did n
t have a righ
125
El Salvador's
specifically
ncession faile
Law. Wheth
exploitation
red land docu
not affect any
ht to the expl
decisions re
y did not hav
ed to comply
her or not Pa
concession w
umentation
y rights with
loration licen
egarding met
ve any impac
y with two a
ac Rim recei
would not h
and feasibili
h regard to e
nses for whi
tallic mining
ct on Pac Rim
additional,
ived the
ave been
ity study.
exploration
ich it claims
g in
m.
IV. PW
2
exploitat
explorati
Therefor
of alleged
result, th
2
section th
A
2
under tw
decided i
proceed t
2
jurisdicti
were juri
establish
2
arbitratio
jurisdicti
escape th
PAC RIM'S WITHOUT M
El Sal57.
ion concessi
ion areas. W
e, Pac Rim's
d property ri
e Tribunal n
Howe58.
hat El Salvad
A. The TLaw
Claim59.
o separate in
in June 2012
to the merits
As fur60.
ion to decide
isdiction, the
ed by the Inv
Pac R61.
on are brough
ion to ICSID
he consequen
CLAIMS UMERIT
lvador alread
ion and did n
Without those
s claims in th
ights that Pa
need not go a
ever, for the
dor has not b
Tribunal's ju
mant initiated
nstruments: C
2 that there is
s on a finding
rther explain
e this particu
e Tribunal's j
vestment La
Rim admits in
ht under Art
D arbitration
nces of that c
UNDER EL
dy demonstr
not have a ri
e rights, Pac
his arbitratio
ac Rim never
any further to
sake of com
breached its
urisdiction
d this arbitrat
CAFTA and
s no jurisdic
g of jurisdict
ned in Sectio
ular dispute u
jurisdiction w
aw itself.
n paragraph
ticle 15 of th
under the In
choice.
126
SALVADO
rated that Pac
ght to the m
Rim's losses
on, which are
r had, would
o decide this
mpleteness, E
obligations
to decide th
tion in Marc
d the Investm
ction under C
tion under th
on VI below,
under the Inv
would have
401 of its M
he Investmen
nvestment La
OR'S INVES
c Rim did no
mineral depos
s cannot be a
e all grounde
d fail under a
s case in fav
El Salvador w
under the In
his dispute i
ch 2009 invo
ment Law of
CAFTA, but
he Investmen
, El Salvado
vestment La
to be exerci
Memorial that
nt Law of El
aw of El Salv
STMENT L
ot have a rig
sits located i
attributable t
ed on claims
any system o
or of El Salv
will also dem
nvestment La
is limited by
oking ICSID
f El Salvador
allowed the
nt Law of El
r maintains t
aw. Howeve
sed within th
t "[t]he claim
Salvador."
vador, Pac R
LAW ARE
ght to an
in other
to El Salvad
s of expropri
of law. As a
vador.
monstrate in t
aw.
y the Investm
jurisdiction
r. The Tribu
e arbitration t
l Salvador.
that there is
er, even if the
he strict limi
ms in this
Having invo
Rim cannot
dor.
iation
a
this
ment
n
unal
to
no
ere
its
oked
2
Investme
jurisdicti
Salvador
protectio
made sub
the explo
claims re
2
investors
recognize
"the Gov
(compen
"[d]eclar
Law."400
2
protectio
from the
CAFTA
customar
399 NOA, 400 NOA,
The m62.
ent Law of E
ion are claim
ran law is the
ns and deter
bject to a sig
oitation of th
elated to the
1.
The In63.
s. In its Noti
ed the specif
vernment's co
sation for ex
e that El Sal
Claim64.
ns under cus
Cayman Isla
were dismis
ry internation
para. 90 (emp
para. 128 (em
main consequ
El Salvador a
ms regarding
e applicable
rmine wheth
gnificant limi
he subsoil; an
application f
The only cInvestmenand protec
nvestment L
ice of Arbitr
fic claims it
onduct viola
xpropriation)
lvador has br
mant had orig
stomary inte
ands to the U
sed for lack
nal law claim
phasis added)
mphasis added
uences of the
are that: 1) th
the rights an
law to decid
her El Salvad
itation impo
nd 4) a three
for the El Do
claims that cnt Law of El ctions includ
Law of El Sal
ration filed w
could make
ates Articles
)."399 Accor
reached the t
ginally intend
ernational law
United State
of jurisdicti
ms in this arb
).
d).
127
e fact that th
he only claim
nd protection
de the conten
dor has breac
sed in the In
e-year statute
orado conce
can be made Salvador are
ded in the Inv
lvador includ
with the ICSI
under the In
5 (equal pro
rdingly, Pac
terms of CA
ded to benef
w included i
s in Decemb
ion, and Pac
bitration. In
his arbitration
ms over whic
ns included i
nt of those su
ched them; 3
nvestment La
e of limitatio
ession.
in an arbitrae claims regvestment Law
des substant
ID Secretari
nvestment L
otection), 6 (
Rim request
AFTA and of
fit primarily
in CAFTA b
ber 2007. Bu
Rim is there
nstead of acc
n proceeds o
ch the Tribu
in the Invest
ubstantive ri
3) Claimant's
aw on invest
ons applies to
ation under Agarding the suw
tive rights an
at in April 2
aw. Pac Rim
(non-discrim
ted that this
f the Salvado
from the rig
by changing i
ut Pac Rim's
efore unable
cepting the lo
only under th
unal can exer
tment Law; 2
ights and
s investment
tments relate
o Claimant's
Article 15 ofubstantive ri
nd protection
2009, Claima
m alleged th
mination), and
Tribunal
oran Investm
ghts and
its nationalit
s claims und
e to bring
oss of its
he
rcise
2)
t was
ed to
s
f the ights
ns for
ant
at
d 8
ment
ty
der
CAFTA
Memoria
relief and
Foreign I
2
substanti
claims in
to decide
Salvador
Investme
2
Rim alleg
Articles
expropria
includes
unnamed
is especia
anyone to
Law, cou
401 See, e.gprinciples402 MemorInvestmenmain sour
claims, Pac
al.401 As a si
d now reque
Investment L
But th65.
ive rights and
n this arbitrat
e this dispute
r has breache
ent Law.
The su66.
ged from the
5 (equality f
ation) of the
these specif
d causes of a
ally so given
o believe tha
uld be the ba
g., Memorial,s of economic
rial, para. 692nt Law" in itsrce of Pac Rim
Rim is now
ignal of this
sts this Tribu
Law (sic), th
his attempt to
d protection
tion are thos
e based on th
ed the substa
ubstantive ri
e beginning a
for all invest
e Investment
fic rights and
ction for rig
n that there i
at some addi
asis for claim
, paras. 614, 6
c freedom, leg
2 (emphasis as title becausem's mistake tr
trying to "in
repackaging
unal to "[d]e
he Constitutio
o expand the
s upon whic
se specificall
he Investmen
antive rights
ights and pro
as having be
tors), 6 (non
t Law. It is n
d protections
hts under cu
s not a singl
itional rights
ms under the
617, 620-622gal certainty,
added). The Ie it applies borying to intern
128
nternationali
g of its claim
eclare that R
on, and gene
e available so
h Pac Rim m
ly included i
nt Law must
and obligati
otections inc
een breached
n-discriminat
nonsensical t
s, but also all
ustomary inte
e provision i
s and protect
Investment
, 641 (attemplegality, legit
Investment Lath to domestinationalize th
ze" its rema
ms, Pac Rim
Respondent h
eral principle
ources for it
may attempt
in the Investm
t be limited t
ions specific
cluded in the
d by El Salva
tion), and 8
to suggest th
lows the imp
ernational la
in the Invest
tions, not spe
Law.
pting to includtimate expecta
aw of El Salvic as well as tohis law.
aining claims
has changed
has breached
es of interna
ts claims fail
to frame its
tment Law.
to deciding w
cally include
e Investment
ador are thos
(compensati
hat the Inves
portation of
aw (or any ot
tment Law th
ecifically inc
de claims regaations, etc.).
vador is not a o foreign inve
s in its
d its request
d the terms of
ational law."
ls. The only
remaining
Any jurisdic
whether El
ed in the
t Law that Pa
se included i
ion for
stment Law
a whole set
ther law). T
hat can lead
cluded in the
arding breach
"Foreign estors. This i
for
f the
402
y
ction
ac
in
of
This
d
e
hes of
is the
2
investors
domestic
establish
the "Inve
Law appl
equally, i
2
provides
have the
exception
other law
differentl
Investme
2
them, the
repatriate
internatio
403 Investmque éstos nacionale404 Investm
Indeed67.
s is limited to
c as well as t
ed by Articl
estment Law
lies to both d
is fatal to Pa
Articl68.
that: "Foreig
same rights
ns save for th
w of El Salva
ly than dome
ent Law will
When69.
ey expressly
e the proceed
onal arbitrati
If coninvestin El Sjustice
ment Law, Arparticipen, tes, sin más exc
ment Law, Ar
d, the text of
o those right
o foreign inv
e 5. The law
w of El Salva
domestic and
ac Rim's atte
le 5 of the In
gn investors
and obligati
hose set fort
ador creates
estic investo
be exactly t
n the legislato
included a p
ds of their in
ion. Article
ntroversies ortors and the Salvador, thee, in accorda
rt. 5 (RL-9(biendrán los miscepciones que
rt. 4 (RL-9(bi
f the Investm
ts and protec
vestors and i
w is not calle
dor." The d
d foreign inv
mpts to inter
nvestment La
and the com
ions as natio
th by law . .
a specific ex
ors, the rights
the same as t
ors intended
provision gra
nvestments.4
15 of the In
r differencesState, regarde parties mayance with leg
is)) ("Los invesmos derechoe las señalada
is)).
129
ment Law co
ctions it expr
includes a pr
ed the "Fore
ifference is
vestors, and
rnationalize
aw, under th
mmercial com
onal investor
. ."403 There
xception whe
s and obliga
the rights an
d to grant for
anting such
04 Another e
nvestment La
s arise betweding the invey resort to thgal procedur
ersionistas exos y obligacioas por la ley")
onfirms that t
ressly includ
rinciple of e
eign Investm
significant.
includes a c
El Salvador
he title "Equa
mpanies in w
rs and compa
efore, unless
ere foreign i
ations of fore
nd obligation
reign investo
exception. O
example is t
aw provides
een national estments theyhe competenres.
xtranjeros y laones que los in).
the protectio
des. The law
quality for a
ment Law of E
The fact tha
commitment
r's Investmen
ality for all i
which they p
anies, with n
s the Investm
investors wil
eign investor
ns of domest
ors certain ri
One exampl
the right to b
that:
or foreign y have made
nt courts of
as sociedades nversionistas
on afforded t
w applies to
all investors
El Salvador,
at the Investm
to treat them
nt Law.
nvestors"
participate sh
no other
ment Law or
ll be treated
rs under the
ic investors.
ghts specific
e is the right
bring dispute
e
mercantiles ey sociedades
to
," but
ment
m
hall
any
c to
t to
es to
en las s
2
under "ge
available
and prote
claims un
treatment
405 InvestminversioniSalvador, procedimireferentescontroverel objeto dsobre Arre(Convenioremoving therefore 406 The cuas such, toindicated required iThus, whestandard orights juriown, custrecognitioHuman R"Especiallgood grouconcernedthey will g
In casregardsubmi
a) To DisputhrougConveStates
This r70.
eneral princi
e to domestic
ections speci
nder "genera
t" under cus
ment Law, Aristas nacionallas partes po
ientos legaless a inversionesia: a) Al Cende resolver laeglo de Difero CIADI)…."the referencehas no effect
ustomary intero the nationalin its case lawn case of expere interferenof compensatiisprudence, womary interna
on of this diffRights in the Ja
ly as regards unds for drawd. To begin wgenerally hav
se of disputesding their invit the dispute
the Internatiutes (ICSID)gh mediationention on thes and Nation
right, howev
iples of Inter
c investors.
ifically inclu
al principles
tomary inter
rt. 15 (RL-9(bles o extranjerdrán acudir a
s. En el caso ds de aquellos ntro Internacia controversiarencias Relativ"). Article 15e to internatioon this arbitr
rnational law ls of the host w that the stanpropriation, dince with propeion will be as
whereas when ational law w
ference in treaJames and Oth
a taking of prwing a distinctwith, non-natiove played no p
s between fovestments me:
ional Centre, with the pun and arbitrae Settlementals of Other
er, does not
rnational Law
Domestic in
uded in the In
of Internatio
rnational law
bis)) ("En casros y el Estad
a los tribunalede controversefectuadas enonal de Arreg
a mediante convas a Inversio
5 of the Investonal arbitratioration.
rules and prinState. By wandard of proteiffers significaerty rights is assessed accordthe interferen
will provide thatment are refhers v. Unitedroperty effecttion between nonals are morpart in the ele
130
oreign investmade in El Sa
e for Settlemurpose of resation, in accot of InvestmeStates (ICSI
include a rig
w" or custom
nvestors can
nvestment L
onal Law" su
w.406 Accord
so que surgierdo, referentes es de justicia cias surgidas en El Salvadorglo de Diferennciliación y aones entre Esttment Law of
on. The amen
nciples pertaiay of exampleection for proantly dependiat the hands oding to the Conce is at the hhe standard. Tflected in the d Kingdom cated in the connationals and
re vulnerable tection or desig
tors and the alvador, the i
ment of Investsolving the dordance withent DisputesID Conventi
ght for foreig
mary interna
only make c
Law. Domes
uch as claim
ding to the S
ren controversa inversiones
competentes, entre inversior, los inversioncias Relativaarbitraje, de ctados y Naciof El Salvador ndment does n
ining to the tre, the Europeaoperty rights, ing upon the nof the claimanourt's rather d
hands of a statThe fundamenseminal decis
ase. As the Cntext of a socid non-nationalto domestic lgnation of its
State, investors ma
tment dispute h the s between ion) . . . .405
gn investors
ational law th
claims based
stic investors
ms for "fair an
Salvadoran C
sias o diferens de aquellos,de acuerdo a
onistas extranjonistas podránas a Inversiononformidad conales de otrowas amended
not apply retro
reatment of alan Court of Hincluding thenationality ofnt's own state deferential Eute other than tntal reasons psion of the Euourt stressed al reform, thels as far as coegislation: unauthors nor h
ay
s to make cla
hat are not
d on the righ
s cannot mak
nd equitable
Civil Code, th
ncias entre los, efectuadas ea los jeros y el Estan remitir la nes (CIADI), con el Convenos Estados d in July 2013oactively and
liens do not aHuman Rightse compensatiof the claimantof nationality
uropean humathe claimant's
prompting theuropean Courin that case:
ere may well bompensation inlike nationalhave been
aims
hts
ke
e
he
s en El
ado,
con nio
3, by d
apply, s has on t. y, the an s e rt of
be is s,
Investme
all its par
"equality
could ma
cannot m
2
would cr
Article 1
courts of
in the Inv
internatio
principle
another s
judge wo
lacuna in
lists the o
customar
consulted interest, dlegitimatenationals.Applicatio407 Civil CApr. 14, 117, 2004 (408 Civil a("Civil an
ent Law mus
rts and, there
y for all inve
ake claims un
make such cla
Furthe71.
reate inconsi
5 of the Inve
f El Salvador
vestment Law
onal law and
s of Internat
specific bind
ould not be a
n Salvadoran
only sources
ry internation
on its adopti
different consie reason for re" Case of Jamon No. 8793/7
Code of El Sa1860, amende("Civil Code"
and Commercnd Commercia
st be read and
efore, does n
stors" establ
nder "genera
aims, withou
ermore, allow
stent rulings
estment Law
r, which wou
w. El Salva
d the courts o
tional Law"
ding agreeme
able to resort
n law. Articl
s to which a
nal law is no
on. Secondlyiderations maequiring natiomes and Othe79, Judgment
lvador, Un-nued by Decree N"), Art. 22 (A
cial Procedureal Procedure C
d interpreted
not contradic
lished in Art
al principles
ut a specific
wing other t
s in the diffe
w. A foreign
uld only hear
ador's law do
of El Salvado
or customary
ent to apply
t to customar
le 19 of the S
Salvadoran j
ot included o
, although a t
ay apply to naonals to bear aers v. The Unt, Feb. 21, 198
umbered DecNo. 512, publuthority RL-
e Code of El SCode"), Art.
131
d in a way w
ct itself.407 I
ticle 5 of the
of Internatio
exception fo
ypes of claim
rent dispute
n investor can
r claims bas
oes not ackno
or cannot ad
y internation
such princip
ry internatio
Salvadoran C
judge can re
on that list.40
taking of propationals and na greater burdited Kingdom86, para. 63 (
cree, publishedlished in the O-123).
Salvador, Leg19 (Authorit
where the law
It would be c
e Investment
onal Law" w
or the differe
ms from out
settlement p
n choose to
ed on the rig
owledge the
djudicate cla
nal law in th
ples of Intern
onal law even
Civil and Co
esort in cases
08 Therefore
perty must alwnon-nationals den in the pubm, European C(Authority R
d in the OfficOfficial Gaze
gislative Decrty RL-124).
w is internall
contrary to th
Law, if fore
while domest
ent treatmen
tside the Inve
procedures p
submit its di
ghts and prot
direct effect
aims based on
he absence of
national Law
n when there
ommercial P
s of lacunae
e, there woul
ways be effecand there ma
blic interest thCourt of Hum
RL-122).
cial Gazette Nette No. 236, B
ree No. 712, S
y consistent
he principle
eign investor
tic investors
nt.
estment Law
provided for
ispute to the
tections incl
t of customa
n "general
f a treaty or
w. A Salvado
e is a vacuum
Procedure Co
in the law, a
ld not be a le
cted in the pubay well be han non-
man Rights,
No. 85, Book Book 365, De
Sept. 18, 2008
t in
of
rs
s
w
by
e
luded
ary
oran
m or
ode
and
egal
blic
8, ec.
8
basis to a
the dispu
2
Investme
tribunal t
claimant
rights and
attempt t
Salvador
2
arbitratio
grounds i
Centre on
situation
to any att
Investme
2
letter of s
409 See Ex("Tercerofor the meinternatioparidad lepresentar controver410 Inceysa2006, para411 Inceysa
allow differe
ute is filed be
This l72.
ent Law of E
that was pres
was attempt
d protection
o introduce
r.
The In73.
on jurisdictio
in said law."
nly to hear d
in the two c
tempts by a
ent Law.
Pac R74.
submission o
xpert Report o
Expert Repoere fact that anal tribunal, t
egal, no es dabsu reclamo bsia sería difer
a Vallisoletana. 333 (RL-30
a v. El Salvad
ent claims re
efore the cou
imitation on
El Salvador h
sented with t
ting to bring
s included in
claims from
nceysa tribun
on provided i
"410 The trib
disputes arisi
cases was dif
claimant to b
Rim alleges th
of the draft l
of José Robertort"), para. 40 a foreign investhe law applicble sostener qajo la Ley de rente.").
na S.L. v. Rep0) (emphasis
dor, para. 334
garding diff
urts of El Sal
n the jurisdic
has already b
this situation
g claims unde
n the Investm
m outside the
nal stated wi
in the Invest
bunal added t
ing from the
fferent, the g
bring in any
hat a referen
law by the M
to Tercero Za("In this situa
stor decides tcable to the dque por el solo
Inversiones a
public of El Saadded).
4 (RL-30) (em
132
ferent rights
lvador or in
ction of a trib
been upheld
n. In Inceysa
er the Invest
ment Law. E
Investment
ithout qualif
tment Law, t
that the Inve
application
general princ
y extraneous
nce to treatm
Minister of E
amora on the ation of legalo bring its claispute would o hecho de quante un tribun
alvador, ICSI
mphasis added
and protecti
an internatio
bunal decidin
in a unanim
a Vallisoleta
tment Law w
El Salvador r
Law, and th
fication that
there must b
estment Law
of the Law.
ciple enuncia
provisions a
ment that is "f
conomy, and
El Salvador Il equality, it isaim under thebe different."
ue un inversional internacio
ID Case No. A
d).
ions, depend
onal arbitrat
ng a dispute
mous award b
ana v. El Sal
which were o
rejected the
he tribunal ag
"in order to
be a claim wi
w "grants juri
"411 While t
ated by that
as claims of
fair and equi
d a reference
Investment Las not possiblee Investment L" / "Ante estaonista extranj
onal, el derech
ARB/03/26, A
ding on whet
tion.409
e under the
by the first IC
lvador, the
outside of th
claimant's
greed with E
invoke the
ith substanti
isdiction to t
the particula
tribunal app
breach of th
itable" in the
e to the "bes
aw, Dec. 9, 2e to maintain Law before a
a situación de ero decida
ho aplicable a
Award, Aug.
ther
CSID
he
El
ive
the
ar
plies
he
e
st
013 that
an
a la
2,
practices
Investme
treatment
under the
2
purpose,
extraneou
drafters.
the same
law allow
Law."
2
Rim fails
equitable
both dom
just forei
to attemp
invoking
first two
to be app
attemptin
412 Memor413 StatemRL-101(b
" recognized
ent Law, ope
t" and "the p
e Investment
First, 75.
cannot chan
us causes of
Article 5 of
rights unles
wing foreign
Secon76.
s to observe
e" treatment
mestic and fo
ign investors
pt to open th
g the Investm
lines in the p
plied to inves
ng to do. By
rial, paras. 40
ment of Purposbis)).
d in internati
en the door f
protection of
t Law.412 Pa
Pac Rim fai
nge the plain
f action not f
f the Investm
ss a specific
n investors to
nd, even the
that the para
in the Minis
oreign invest
s, but for all
e door to "ge
ment Law bef
paragraph fr
stments "in g
y failing to n
07-411.
se ("Exposició
ional investm
for it to bring
f foreign inv
ac Rim is mi
ls to underst
n meaning of
found in the p
ment Law is c
exception is
o make claim
documents c
agraph imme
ster's letter sp
tors.413 Thus
investors un
eneral princi
fore an inter
rom which it
general" and
note these im
ón de Motivo
133
ment include
g claims base
estors' legiti
staken.
tand that a le
f the text of t
provisions o
clear that do
s created by t
ms for breach
cited by Pac
ediately prec
pecifically re
s, the use of
nder this dom
iples of Inter
national trib
t quotes, stat
d not only to
mportant qual
s") of the Inv
ed in the Stat
ed on the "p
imate expect
etter from a m
the law. The
of the law sp
omestic and f
the law. An
hes of "gener
Rim fail to
ceding the re
efers to the l
the term "fa
mestic law. I
rnational La
bunal. Pac R
ting that the
foreign inve
lifications, P
vestment Law
tement of Pu
rinciple of f
tations" in an
minister, or
ese reference
pecifically in
foreign inve
nd there is no
ral principle
support its a
eference to "
law being m
air and equita
It cannot, th
aw" for just f
Rim also fails
principles o
estments, as
Pac Rim over
w of El Salvad
urpose of the
fair and equit
n arbitration
a statement
es do not im
ncluded by th
estors will ha
o exception i
es of Internat
allegation. P
fair and
meant to attra
able" is not f
erefore, be u
foreign inves
s to include
of protection
Pac Rim is
rlooks and f
dor at 5 (Auth
e
table
n
of
mport
he
ave
in the
tional
Pac
act
for
used
stors
the
are
fails
hority
to apply t
Investme
2
Statemen
is import
has a clea
investme
referring
unequivo
additiona
between
defeat the
domestic
on "gene
otherwise
regard to
414 Statem101(bis)) tratamientreglas en derecho."415 Tercerinterpretinframeworconstitutioproducir uextranjero416 Ad hocthat it hasVivendi U
the principle
ent Law itsel
With r77.
nt, after listin
tant to expre
ar and precis
ents and the g
to the neces
ocally limits
al protection
domestic an
e law's purpo
c.415 Conseq
ral principle
e would amo
o this dispute
ment of Purpos
("es importanto, de tal manlas que establ) (emphasis a
o Expert Repng the law "wrk containing onal protectioun 'marco lego la protección
c Committeess jurisdiction wUniversal SA v
e of equality
lf.
regard to the
ng the substa
ssly establis
se knowledg
guarantees th
ssity of expre
those guaran
s from other
nd foreign inv
ose of provid
quently, this
es of internat
ount to an an
e.416
se ("Exposiciónte establecernera, que el inlecerá y desaradded).
port, para. 57 (would be incon
clear and preon of his/her ral apropiado n constitucion
have held thwhen in fact jv. The Argent
y of treatmen
e Statement o
antive protec
sh the condit
ge of the rule
hat they are
essly includi
ntees to thos
r sources wo
vestors creat
ding clear an
Tribunal mu
tional law" th
nnullable exc
ón de Motivor en la ley de unversionista terrollará sus in
(describing thnsistent with cise rules' andright to legal que contenganal a su derec
at there may bjurisdiction istine Republic,
134
nt established
of Purpose,
ctions includ
ions afforde
es under whi
entitled to h
ing the prote
se specificall
ould not only
ted by Articl
nd precise ru
ust reject Pac
hrough a bac
cess of any j
s") of the Invuna manera eenga conocimnversiones, as
hat opening ththe intention d the intentiosecurity." / "s
a reglas clarascho a segurida
be an excess s lacking. See, ICSID Case
d in Article 5
it is also imp
ded in the Inv
ed to the prot
ich they coul
have."414 Th
ections affor
ly included i
y violate the
le 5 of the In
ules for all in
c Rim's attem
ck door that
jurisdiction t
vestment Lawexpresa las comiento de una sí como tambi
he door to extof producingn of providinsería incongrus y precisas' yad juridical.")
of powers if ae Compañia dNo. ARB/97
5 of the text
portant to no
vestment La
tections, so t
ld establish a
he Investmen
rded to inves
in the Law.
principle of
nvestment L
nvestment, f
mpts to bring
does not ex
the Tribunal
w of El Salvadondiciones del
manera claraién, las garan
trajudicial soug an 'appropriang the foreignuente con la iny la intención ).
a tribunal incde Aguas del A7/3, Decision
of the
ote that the
aw, states tha
that the inve
and develop
nt Law, by
stors,
Bringing in
f equality
Law, but also
foreign and
g in claims b
xist. To do
l might have
dor at 5 (RL-l referido
a y precisa lastías a las que
urces for ate legal er with the ntención de de dispensar
correctly concAconquija ASon Annulmen
at "it
estor
p their
n
o
based
with
s tiene
al
cludes S and nt,
2
breached
might ha
authority
the Gove
Constitut
such state
jurisdicti
2
dispute in
July 3, 20ICSID Caparas. 47,ICSID CaArgentineRepublic, Republic,Perú ("LuSept. 5, 20Republic o(Authorittribunal exNo. (ARBAward, OEmirates,Annulmen417 Constitla cual correglamentÓrgano Ejde esta Coresolve chcorpus, direasons m
Likew78.
d El Salvador
ve under the
y for an inter
ernment. Th
tional Cham
ement, Pac R
ion.
2.
Articl79.
n accordance
002, para. 86 (ase No. ARB/ 48, 67 (Auth
ase No. ARB/e Republic, Se
ICSID Case Sept. 1, 2009
ucchetti"), S.A005, para. 99 of Ecuador, Ity RL-130). xceeds the sc
B/81/2), DecisOct. 21, 1983,
ICSID Case nt of Mr. Sou
tution, Art. 17rresponderá ctos, los procejecutivo a quonstitución.")hallenges of uisputes betwe
mentioned in th
wise, Pac Rim
r's Constituti
e Investment
rnational arb
hat is an area
ber of the Su
Rim is also a
SalvadoranInvestmen
le 42(1) of th
e with such r
(Authority R/99/7, Decisiohority RL-12/01/8, Decisioept. 25, 2007,No. ARB/01/9, para. 45 (AA. v. The Repu
(Authority RICSID Case NCommittees hope of its jurision on the Appara. 4 (AuthNo. ARB/02/
ufraki, June 5,
74 (RL-121) conocer y resosos de ampare se refiere el
) ["The Supremunconstitutionen the Legislhe 7th power
m's request f
ion would ex
t Law. Now
itral tribunal
a reserved by
upreme Cou
asking the Tr
n law is the nt Law's subs
he ICSID Co
rules of law
RL-125); Mr. on on the App26); CMS Gason of the Ad H, para. 47 (Au/12, Decision
Authority RLublic of Peru,RL-129); M.CNo. ARB/03/6have also heldisdiction. Seepplication forhority RL-13/7, Decision o, 2007, para. 4
("La Corte Suolver las demo, el habeas cl Art. 138 y lame Court wil
nality of laws,ative and Exeof Article 18
135
for the Tribu
xceed the sc
where in the I
l to decide o
y Article 174
urt of El Salv
ribunal to co
applicable lastantive righ
onvention pr
as may be a
Patrick Mitch
plication for As TransmissioHoc Committuthority RL-n on the AppliL-128); Indust
ICSID Case C.I. Power Gr6, Decision ond that there coe Klöckner v. r Annulment 31); Hussein Nof the Ad Hoc42 (Authority
uprema de Jumandas de incocorpus, las coas causas menll have a Cons, decrees and ecutive Branc82 of this Con
unal to declar
cope of any j
Investment L
on the constit
4 of the Salv
vador.417 By
ommit an an
aw to decidehts and prote
rovides that "
agreed by the
hell v. The DeAnnulment ofon Company vtee on the App127); Azurix ication for Antria NacionalNo. ARB/03
roup L.C. andn Annulment,ould be an exThe RepublicSubmitted byNuaman Soufc Committee y RL-132).
usticia tendrá uonstitucionalintroversias en
ncionadas en stitutional Chregulations, a
ches referred tnstitution."].
re that El Sa
urisdiction t
Law is there
tutionality o
adoran Cons
y asking the T
nnullable exc
e the contentctions
"[t]he Tribun
e parties." B
emocratic Repf the Award, Nv. The Argentplication for ACorp. v. The
nnulment of thl de Alimentos/4, Decision od New Turbin, Oct. 19, 200
xcess of powec of Camerooy Klöckner Agfraki v. The Uon the Applic
una Sala de loidad de las leyntre el Órganla atribución
hamber, whichamparo proceto in Article 1
alvador has
the Tribunal
a grant of
of the actions
stitution to th
Tribunal to m
cess of its
t of the
nal shall dec
By invoking
public of ConNov. 1, 2006,tine Republic,Annulment oArgentine he Argentine s, S.A. and Inon Annulmen
ne, Inc. v. The09, para. 56 ers when the on, ICSID Casgainst the Arb
United Arab cation for
o Constitucioyes, decretos
no Legislativo7a. del Art. 1h shall hear anesses, habeas 138 and the
s of
he
make
cide a
ngo, , , f the
dalsa nt, e
se bitral
onal, a y
o y el 182 nd
jurisdicti
its disput
2
include a
internatio
is wrong
Article 2
2
procedur
applicabl
investor t
purposes
agreed to
under Ar
2
proceedin
foreign in
rules in th
Salvador
rights in
418 Tercer419 Memor420 As indSalvador h
ion under the
te.418
Pac R80.
a specific ref
onal arbitrati
because Art
2 of the Salv
This c81.
re initiated un
le law to dec
that invokes
of Article 4
o that choice
rticle 15.420
The m82.
ng under the
nvestors esta
he settlemen
r are subject
the subsoil a
o Expert Rep
rial, paras. 40
dicated above,has breached
e Investment
Rim, however
ference to wh
ion, there is
ticle 15 mus
vadoran Civi
contextual re
nder the Inv
cide the disp
jurisdiction
42 (first sente
of law as a
main reasons
e Investment
ablished in th
nt of dispute
to Salvadora
are expressly
port, paras. 26
02-404.
, in its Noticethe terms of
t Law, Claim
r, argues tha
hat the appli
no agreemen
t be viewed
il Code.
eading of Art
vestment Law
ute, to the ex
n under the In
ence) of the
condition to
that Salvado
t Law are: 1)
he Investme
s under the I
an law; and 4
y made subje
6-27.
of ArbitratioCAFTA and
136
mant agreed
at because A
icable law w
nt on the app
in context o
ticle 15 man
w of El Salva
xclusion of a
nvestment L
ICSID Conv
o perfect any
oran law mu
) the principl
nt Law; 2) th
Investment L
4) in particu
ect to Salvad
on Pac Rim reof the Salvad
to the applic
Article 15 of t
would be in a
plicable law
of the Investm
ndates that an
ador must ap
any other sy
Law is bound
vention and
y consent El
ust be the app
le of equality
he desire to
Law; 3) all in
ular, all inves
doran law.
equested that tdoran Investm
cation of Sal
the Investme
a dispute sub
.419 Pac Rim
ment Law, a
ny dispute se
pply Salvado
ystem of law.
d by that cho
must be pre
Salvador ma
plicable law
y between d
apply clear
nvestments l
stments relat
this Tribunal ment Law."
lvadoran law
ent Law doe
bmitted to
m's interpreta
as required b
ettlement
oran law as t
. Any foreig
oice of law fo
sumed to ha
ay have give
w in any
domestic and
and consiste
located in El
ted to minin
"[d]eclare th
w to
es not
ation
y
the
gn
or
ave
en
d
ent
l
g
at El
2
foreign in
between
provides
have the
exception
any other
than dom
as the rig
2
does not
from the
submittin
to interna
other han
2
the Salva
investor's
421 Articleinternatiowe will re422 ArticleConstitutiArt. 2 (RL
As sta83.
nvestors. In
domestic an
that: "Foreig
same rights
ns save for th
r law, create
mestic investo
ghts and obli
Befor84.
affect this c
rights of dom
ng a dispute
ational arbitr
nd, only has
In the85.
adoran court
s choice to ta
e 15 of the Invnal arbitration
efer to Article
e 2 of the Civiion, laws and L-124).
a) Thdem
ated earlier, E
n addition, A
nd foreign inv
gn investors
and obligati
hose set fort
s a specific e
ors, the right
igations of d
e the July 20
ase), one of
mestic inves
to the local
ration.421 A
one option:
case of a do
is bound to
ake the dispu
vestment Lawn. That amen
e 15 as the tex
il and Commeother norms
he principle omands that S
El Salvador'
rticle 5 of th
vestors. Un
and the com
ions as natio
th by law . .
exception w
ts and obliga
omestic inve
013 amendm
the exceptio
stors, was th
courts of El
domestic in
to resort to t
omestic inve
apply Salva
ute to intern
w was amendendment only axt stood when
ercial Procedof the juridic
137
of equality bSalvadoran l
s Investmen
he Investmen
nder the title
mmercial com
onal investor
. ." This me
where foreign
ations of for
estors.
ment of Artic
ons where th
at foreign in
Salvador, al
nvestor who h
the courts of
estor submitt
adoran law to
ational arbit
ed in July 201applies after in this arbitrati
ure Code manal order. See
between domaw must be
nt Law applie
nt Law estab
"Equality fo
mpanies in w
rs and compa
eans that, un
n investors w
eign investo
cle 15 of the
he rights of fo
nvestors, in a
lso had the o
has a dispute
f El Salvador
ting the dispu
o decide the
tration does n
13, by removiit entered intoon was initiat
ndates judgese Civil and Co
mestic and fothe applicab
es to both do
blishes a prin
or all investo
which they p
anies, with n
less the Inve
will be treate
ors will be ex
Investment
foreign inves
addition to th
option to sub
e with El Sa
r to resolve t
ute to a Salv
dispute.422
not change t
ing the refereo force. For eted.
s to rule accorommercial Pro
oreign investble law
omestic and
nciple of equ
ors," Article
participate sh
no other
estment Law
d differently
xactly the sa
Law (which
stors are diff
he option of
bmit the disp
alvador, on th
the dispute.
vadoran cour
A foreign
the applicabl
nce to ease of referen
rding to the ocedure Code
ors
uality
5
hall
w, or
y
ame
h
ferent
pute
he
rt,
le
nce,
e,
law to de
of forum
law in Ar
requires t
submit it
choose to
2
violated i
while a f
internatio
to the cou
2
El Salvad
to submit
to decide
2
submit it
ensure a
law must
the foreig
423 Tercer424 Civil a
ecide its disp
, not a choic
rticle 15, the
that the sam
s dispute to
o submit its d
The p86.
if a domestic
foreign inves
onal law if it
urts of El Sa
Articl87.
dor or to sub
t the dispute
e the dispute
The fo88.
s dispute to
predictable a
t be applied t
gn investor i
o Expert Rep
and Commerc
pute under th
ce of law. B
e principle of
e law must a
Salvadoran
dispute to Sa
rinciple of e
c investor co
stor would ha
t chose to ini
alvador.423
b) Ththe
le 15 gives a
bmit the disp
e to the court
.424
oreign invest
internationa
and consiste
to the same
is a domestic
port, paras. 32
cial Procedure
he Investmen
ecause there
f equality es
apply to a di
courts) as to
alvadoran co
equality betw
ould only hav
ave broader
itiate an inte
he objective oe applicable
a foreign inve
pute to intern
ts of El Salv
tor cannot ch
al arbitration
ent environm
dispute, no m
c court of law
2-36.
e Code, Art. 2
138
nt Law. Arti
e is no specif
stablished in
spute submi
o a dispute su
ourts or to in
ween domest
ve its disput
interpretatio
ernational arb
of consistenclaw
estor the cho
national arbit
ador, the dom
hange the ap
. Salvadoran
ment for inve
matter if the
w or an inter
2 (RL-124).
icle 15 gives
fic exception
Article 5 of
itted by a do
ubmitted by
nternational a
tic and foreig
te resolved a
ons and caus
bitration rath
cy also dema
oice to subm
tration. If th
mestic court
pplicable law
n law must s
estment in El
dispute sett
rnational arb
s foreign inv
n created for
f the Investm
mestic inves
a foreign in
arbitration).
gn investors
applying Salv
ses of action
her that to su
ands that Sa
mit its dispute
he foreign in
t must apply
w simply by
still apply to
l Salvador, th
tlement proc
bitration tribu
vestors a cho
r the applicab
ment Law
stor (who ha
nvestor (who
would be
vadoran law
available un
ubmit the dis
alvadoran law
e to the cour
nvestor choo
y Salvadoran
choosing to
o the dispute
he same bod
cedure chose
unal.
oice
ble
as to
can
w,
nder
spute
w be
rts of
ses
n law
. To
dy of
en by
2
Salvador
do not re
Salvador
investme
are subje
2
makes it
Law was
425 Civil C426 Tercerno deja dujurídico saal territorileyes, y ad427 Tercerconfirma parámetro
Articl89.
r are made su
side in El Sa
r, Pacific Rim
ent. Legal ex
ect to Salvad
The Ssubjecsystemmomestrictlyand th
Moreo90.
clear that th
s that all inve
the leglegislawith tsystemstandalaw. Cincorp
Code, Art. 22
o Expert Repuda de que loalvadoreño, eio de la Repúbdquirirán el d
o Expert Repque la intenci
os generales d
c) Alllaw
le 16 of the S
ubject to the
alvador.425 W
m voluntarily
xpert José R
doran law:
Salvadoran lect to the genem, in all wayent in which y obligated t
hey will acqu
over, Mr. Te
he unanimous
estments ma
gislative recator's intentithe general pm, in additioards of the SConcepts forporated.427
(RL-123).
port, para. 51 (s extranjeros
en todo lo queblica, estarán
derecho de ser
port, para. 53 (ión del legisla
de legalidad c
l investmentw
Salvadoran C
laws of El S
When Pacifi
y agreed to s
oberto Terce
egal system leral legality
ys it may be they arrive tto respect thuire the right
ercero explai
s understand
ade in El Salv
ord of the Inon has been
parameters on to the mor
Salvadoran coreign to Salv
(quoting Artiestán sujetos
e les fuere apln estrictamentr protegidos p
(emphasis adador ha sido qonfigurados p
139
ts located in
Civil Code p
Salvador, ev
c Rim decid
submit to Sa
ero confirms
leaves no doof the entireapplicable: "to the Repub
he authoritiest to be protec
ins that the l
ding of the le
vador would
nvestment Lathat foreignf legality setrals and goodommunity, p
vadoran regu
cle 96 of the a la legalidad
licable: 'Los ee obligados a
por ellas.'").
ded) ("el histoque las inverspor todo el or
El Salvador
provides that
en when the
ded to make
alvadoran law
s that foreign
oubt that foree Salvadoran"Foreigners,blic's territors and to obeycted by them
legislative hi
egislators tha
d be subject t
aw confirmsn investors ht up by the ed habits accoprotected un
ulations were
Constitution)d general de lextranjeros, da respetar a la
orial legislatisiones extranjrdenamiento j
r are subject
t all investme
e owners are
its investme
w in all aspe
n investors, l
eigners are n legal , from the ry, will be y the laws,
m."426
istory of the
at enacted th
to Salvadora
s that the ave to comp
entire legal ording to the
nder positive e not
) ("El sistemala totalidad de
desde el instanas autoridades
ivo de la Ley jeras tienen qujurídico, adem
to Salvadora
ents located
foreigners t
ent in El
ects of its
like Pacific R
Investment
he Investmen
an law:
ply
e
a legal salvadoel ordenamiennte en que llegs y a obedecer
de Inversioneue cumplir co
más de la mor
an
in El
that
Rim,
Law
nt
oreño nto garen r las
es on los ral y
2
agrees th
Law.428
2
the explo
applicabl
7 of the M
concessio
2
are no di
applicabl
foreigner
courts wi
sense to p
specifica
about tha
buenas coincorpora428 Tercer429 Tercerpara nacioMinería d
As a r91.
hat Salvadora
Articl92.
oitation of th
le secondary
Mining Law
ons, regardle
The d93.
fferent in thi
le laws are th
rs," and "any
ith jurisdicti
provide that
ally to investm
at investmen
ostumbres segron concepto
o Expert Rep
o Expert Reponales como pde que deban c
result, any in
an law will a
d) Allto
le 7.b) of the
he subsoil, an
y laws. In th
specifically
ess of their n
dispute settlem
is regard. Th
hose of the S
y claim from
on will be ju
Salvadoran
ments relate
nt.
gún la norma ds extraños a l
port, para. 29.
port, paras. 42para extranjerconocer los tr
nvestor choo
apply to its in
l investmentSalvadoran l
e Investment
nd makes the
his case, the a
y states that t
nationality, a
ment proced
hus, in accor
Salvadoran l
m a foreigner
udged on the
law applies
ed to mining
de la comunida normativida
2-43 ("las leyeros" y "cualquribunales com
140
osing to inves
nvestment an
ts related to mlaw
t Law provid
ese investme
applicable se
the holders o
are subject to
dures include
rdance with
egal system,
arising unde
e basis of Sal
to Pacific R
rights, and t
dad salvadoread salvadoreñ
es aplicables suier pretensió
mpetentes será
st and establ
nd its rights
mining right
des a limitati
ents subject t
econdary law
of exploratio
o the laws of
ed in Article
Article 7 of
, both for na
er the Minin
lvadoran law
Rim's investm
then apply a
eña, protegidaña.").
son las del orón de un extraá juzgada en b
lish rights in
under the In
ts in the sub
ion for inves
to the Const
w is the mini
on licenses or
f El Salvado
e 15 of the In
f the Mining
ationals as w
ng Law to be
w."429 It wou
ments in El S
a different law
as en la ley po
rdenamiento sanjero surgidabase al derech
n El Salvador
nvestment
soil are subj
stments relat
titution and
ing law. Art
r exploitatio
r.
nvestment La
Law, "the
well as for
e heard by th
uld make no
Salvador, and
w to a dispu
ositiva. No se
salvadoreño, ta bajo la Ley ho salvadoreñ
r
ect
ted to
ticle
on
aw
he
o
d
ute
e
tanto de
ño.").
2
exploitat
2
secondar
provision
establish
other leg
2
Investme
the holde
investme
2
Claimant
requirem
above, un
deposits,
in law. I
subsoil b
investme
that it ow
430 Tercer431 Tercer
3.
Artic94.
ion of the su
In the95.
ry law is the
ns of the Min
es that the M
al provision
As ex96.
ent Law imp
ers of explor
ent being pro
The fi97.
t cannot mak
ments of the M
nder the Min
and thus an
In addition, A
belongs to the
ent, and it is
wns the mine
o Expert Rep
o Expert Rep
The Investrelated to t
le 7.b) of the
ubsoil are lim
case of the
Mining Law
ning Law wi
Mining Law i
s.430
plained in th
oses an oblig
ration license
otected by th
irst effect of
ke any claim
Mining Law.
ning Law, Pa
ny claim for e
Article 7.b) o
e State." Th
therefore utt
eral deposits
port, paras. 76
port, paras. 63
tment Law imthe exploitat
e Investment
mited by the
exploitation
w. Article 4
ill apply pref
is the specia
he Expert Re
gation to com
es and explo
he Investmen
f Claimant's o
ms under the I
. In this part
ac Rim did n
expropriatio
of the Invest
hat article wa
terly disinge
that lay in th
6-77.
-69.
141
mposes a sigtion of the su
t Law provid
Constitution
n of the subso
of the Salva
ferentially, a
al law for the
eport of José
mply with th
oitation conc
nt Law.431
obligation to
Investment L
ticular case,
not and could
n of these de
tment Law is
as already in
enuous for Pa
he subsoil.
gnificant limubsoil
des that inve
n and applica
oil for miner
adoran Civil
and Article 7
e subject are
é Roberto Te
he requireme
essions as a
o comply wi
Law if it has
as amply de
d not have p
eposits is co
s very clear
n the law wh
ac Rim to co
mitation on in
estments reg
able seconda
ral rights, the
Code states
72 of the Min
a, and it prev
ercero, Artic
ents of the M
condition to
th the Minin
s not compli
emonstrated
property righ
ompletely wi
when it state
hen Pac Rim
ome to this T
nvestments
garding
ary laws.
e applicable
that the
ning Law its
vails over an
le 7 of the
Mining Law o
o their
ng Law is tha
ed with the
in Section I
hts over the
ithout any ba
es that "the
made its
Tribunal alle
self
ny
on
at
II
asis
eging
2
with the r
comply w
explorati
Rim cann
2
Law, in c
of jurisdi
concessio
3
3
under the
relation t
Investme
432 Miningextranjeroforma reccontratos mismos, r
The se98.
requirement
with the requ
ion licenses i
not base its c
The fi99.
combination
iction for dis
ons.
Artic00.
JURI
Art. 7nationof theclaimscontraapplicthey wSan S
There01.
e Investment
to a mining e
ent Law, and
g Law, Art. 7 os, quedan sujurrir a reclamrespectivos q
renuncian a su
econd effect
ts of the Min
uirements in
in Guaco, H
claims on the
inal, and per
with Article
sputes relate
le 7 of the M
ISDICTION
. The Mininnal or foreign Republic, as in the diploacts must estcation, interpwaive their dalvador.432
fore, as Mr.
t Law of El S
exploitation
d Article 7 of
(RL-7(bis)) (
jetos a las leymaciones por lque en todo lou domicilio y
t of these two
ning Law to o
the Mining
uacuco, Pue
ese allegatio
rhaps the mo
e 7 of the Mi
d to mining
Mining Law p
N
ng License orn, are subjec
and are absolomatic protetablish that inpretation, perdomicile and
Tercero con
Salvador in r
concession,
f the Mining
("Los titulareyes, Tribunalela vía de prote
o relativo a la se someten a
142
o articles is t
obtain a min
Law and in
eblos, Santa R
ons under the
ost important
ining Law, i
exploration
provides:
r Concessionct to the lawslutely precluection venuen everythingrformance o
d submit them
ncludes in hi
relation to a
that dispute
g Law, to the
s de Licenciaes y Autoridadección diplomaplicación, in
a los Tribunal
that, because
ning exploita
the Mining
Rita, and Za
e Investment
t effect of Ar
is that they p
licenses and
n Holders, bes, Courts anduded from re; and the resg related to tor terminationmselves to th
is report, to t
mining exp
e is referred t
e exclusive ju
as ó concesiondes de la Rep
mática; debiennterpretación,les de San Sal
e Pac Rim d
ation conces
Regulations
amora/Cerro
t Law.
rticle 7.b) of
provide a spe
d mining exp
e they d Authoritiesorting to
spective the n of same, he Courts of
the extent a
loration lice
through Arti
urisdiction o
nes Mineras, pública, no pundo establece, ejecución o lvador.").
did not comp
sion, and did
to obtain th
Colorado, P
f the Investm
ecific limitat
ploitation
s
f
dispute arise
ense, or in
icle 7.b) of th
of the courts
sean nacionaludiendo de ninerse en los terminación d
ply
d not
he
Pac
ment
tion
es
he
of
les ó nguna
de los
El Salvad
Investme
referred t
Salvador
of the Inv
3
Law of E
grant it a
limitation
ends if th
period ru
by the tim
Environm
exploitat
B
3
based on
mentions
Although
433 Tercer434 This coVI.B.1 be435 Civil C
dor.433 As a
ent Law to de
to in Article
ran courts to
vestment La
4.
Anoth02.
El Salvador i
an environme
ns in Salvad
he claimant d
uns from the
me Pac Rim
ment unlawfu
ion concessi
B. Pac Rsuppo
Claim03.
alleged viol
s in passing t
h Pac Rim m
o Expert Rep
onclusion is felow.
Code, Arts. 22
a consequenc
ecide this di
7.b) of the I
resolve min
w.434
A three-yethe applica
her conseque
is that Pac R
ental permit
oran law. Pu
does not init
date of the a
initiated this
fully failed to
ion was time
Rim has notort of a claim
mant has invo
lations of tha
the articles o
made a passin
port, paras. 70
further explain
231(2), 2253,
ce, the Tribu
spute, becau
Investment L
ning disputes
ear statute ofation for the
ence of the fa
Rim's claims r
for exploita
ursuant to S
iate its claim
alleged unlaw
s arbitration
o grant the e
e-barred.
t alleged anym of breach
oked the Salv
at law. In its
of the Investm
ng reference
0-82.
ned in the add
2083 (RL-12
143
unal lacks ju
use the Minin
Law) establis
s, thus overri
f limitations El Dorado c
fact that this
related to th
tion are time
alvadoran la
m within the
wful act.435
in April 200
nvironmenta
y facts and h of Articles
vadoran Inve
s 333-page m
ment Law th
to a breach
ditional objec
23) .
urisdiction un
ng Law (the
shes the exc
iding the gen
applies to Cconcession
case proceed
he Ministry o
e-barred und
aw, a claiman
applicable s
As describe
09, its claim
al permit nec
has not mas 5 or 6 of th
estment Law
memorial, ho
hat it alleges
of Articles 5
ction to jurisd
nder Article
e relevant sec
clusive jurisd
neral provisi
Claimant's cl
ds only unde
of Environm
der the releva
nt's right to
statute of lim
ed in Section
m that the Min
cessary for i
de any arguhe Investme
w and must m
owever, Pac
s El Salvador
5 (equality fo
diction include
15 of the
condary law
diction of the
ions of Artic
aims related
er the Invest
ent's failure
ant statute o
initiate an ac
mitations, and
n VI.B.2 belo
nistry of
t to obtain th
uments in ent Law
make its clai
Rim only
r has breach
for all investo
ed in subsecti
e
cle 15
d to
tment
to
f
ction
d the
ow,
he
ms
hed.
ors)
ion
and 6 (no
argument
discrimin
3
opposite.
complete
requirem
Therefor
Investme
C
3
for a lega
experts e
away.438
make a c
3
them and
regard to
436 Memor437 TinettiConstitucderecho")require a cReport, Se438 Ayala/
on-discrimin
t that it has b
nated upon b
And it04.
. Salvadoran
e its applicat
ment it could
e, Pac Rim c
ent Law, and
C. The fathe In
Under05.
ally justified
explain, for a
Pac Rim wa
laim for exp
First, 06.
d El Salvado
o alleged min
rial, para. 659
i Expert Repoión . . . implic
) ["expropriaticoercive deprection 10.1.a.
/Fratti de Veg
nation),436 Pa
been treated
based on nati
t could not b
n Governme
ion. They ev
not meet, an
cannot possi
d any purport
facts allegednvestment L
r Salvadoran
d reason with
an expropriat
as not depriv
propriation u
with regard
r has not dep
ning rights, A
9.
ort, para. 38 ("ca privar coacion in accordrivation of the.
ga Expert Rep
ac Rim has n
less prefere
ionality, resi
be any other
nt officials w
ven sought a
nd waited wh
bly make an
ted claim un
d by Pac RimLaw
n law, exprop
h payment of
tion to take p
ved of any p
under Article
to the prope
prived Pac R
Article 10 of
"expropriacióctivamente a ance with whe ownership o
port, Section 1
144
not presented
ntially than
idence, race,
way. In fac
went out of t
a change in t
hile Pac Rim
n argument o
nder these tw
m cannot su
priation is th
f fair compen
place, a spec
property righ
e 8 of the Inv
erties that Pa
Rim of its titl
f the Mining
ón de conformuna persona d
hat the term mof property or
10.1.a.
d any eviden
domestic inv
, gender, or r
ct, the record
their way to
the law to as
m tried to com
of breach of A
wo articles m
upport a clai
he taking of a
nsation.437 A
cific property
hts by El Salv
vestment Law
ac Rim does
le to those p
g Law clearly
midad a lo quede la titularid
means under or of a right"];
nce and has n
vestors, or th
religion.
d demonstrat
try to help P
ssist Pac Rim
mplete other
Articles 5 or
must be dismi
im of breac
a property ri
As El Salvad
ty right must
vador and th
w.
own, Pac Ri
properties. S
y states that
e se entiende pdad de un bienour Constitutio
Ayala/Fratti
not made any
hat it has bee
tes the exact
Pac Rim
m with one
r requiremen
r 6 of the
issed.
ch of Article
ight by the S
dor's legal
t be taken
herefore cann
im still owns
Second, with
only mining
por ésta nuesn o de un on . . . would de Vega Exp
y
en
t
nts.
e 8 of
State
not
s
g
tra
ert
exploitat
concessio
somethin
expert, D
applicatio
Administ
the Minin
considera
Salvador
establish
cannot as
Salvador
Salvador
3
does not,
439 Miningentre vivoserver comby an inteof being a440 Tercerpodría suscomo tal, otorguen esperanzaPRES hadparametercompensa441 Tinetti442 Section
ion concessi
on, or even a
ng that can b
Dr. Tinetti, if
on, it should
trative Litiga
ng Law to ha
ation.442 Pac
r when said a
rights and p
sk this intern
r to compens
ran law to a c
Finall07.
, and never d
g Law, Art. 1os, previa automo garantía eer vivos act, wa security for
o Expert Repstentarse la exsino una simpcerteza de gan
as.") ["Much ld no right perrs to ensure thate simple hop
i Expert Repo
n II.A above.
ions are real
a "vested rig
e expropriat
f Pac Rim dis
d have broug
ation Jurisdi
ave its appli
c Rim then c
application w
protect its int
national arbit
sate it for an
concession.
ly, because th
did, have pro
0 (RL-7(bis))orización del n operacione
with the prior mining opera
port, para. 21. xigencia de luple esperanzanancias futuraless can a demr se, but a merhe certainty opes."].
ort, paras. 42-4
property rig
ght" to a conc
ted.440 More
sagreed with
ght its claim t
iction.441 Pa
cation for an
chose not to
was not adm
terests under
tration Tribu
alleged expr
he mineral d
operty rights
) ("la concesióMinisterio; ps mineras.") [authorization
ations."].
See also Ayaucro cesante, pa de obtener laas no concret
mand for lost re hope of obtf future earni
44.
145
ghts.439 Pac
cession. A h
eover, as exp
h the Ministr
to the Salvad
ac Rim first f
n exploitatio
fix its applic
itted. It did
r the laws of
unal constitu
ropriation of
deposits in th
to the mine
ón es un derepor consiguien["a concessionn of the Minis
ala/Fratti de Vpues como sea concesión, ntadas. Es claroprofits be sustaining the congs not yet at
Rim did not
hope to obta
plained by Sa
ry's processi
doran Supre
failed to com
on concession
cation and no
not take the
f El Salvador
uted under th
f its (non-ex
he subsoil be
ral deposits
cho real e inmnte, la aludidan is a real protry; conseque
Vega Expert Re ha enfatizadno contando co que no puedstained, sinceoncession, witttained. It is c
t have an exp
ain a concess
alvadoran C
ing of its con
eme Court un
mply with the
n even admi
ot to seek re
e appropriate
r. As a resu
he Investmen
xistent) "righ
elong to the
it claims. T
mueble transfa concesión eoperty right thently, said con
Report, § 10.3do PRES no tecon parámetrden indemniz, as has been thout having clear that one
ploitation
sion is not
Constitutiona
ncession
nder the Law
e requiremen
itted for
ecourse in El
e steps to
ult, Pac Rim
nt Law of El
ht" under
State, Pac R
The Constitut
ferible por acts susceptible
hat is transferrncession is ca
3.c ("menos aenía un derechros objetivos qzarse las simp
emphasized, met the objeccannot
al law
w of
nts of
l
l
Rim
tion
to de rable
apable
aún ho que
ples
ctive
of El Salv
before Pa
in the sub
provides
exploitat
with the p
limited in
grant con
mineral d
and phys
experts c
susceptib
3
the subso
Article 1
deposits
443 Constitpara su ex444 InvestmRepúblicasiguientesexplotació445 Miningen el subs446 Ayala/susceptibl
vador, Artic
ac Rim made
bsoil belong
that "[t]he s
ion."443 Acc
provisions o
n the followi
ncessions for
deposits exis
sical state, ar
confirm: "Th
ble to private
Thus, 08.
oil as an exp
0 of the Min
but not own
tution, Art. 10
xplotación.").
ment Law, Ara y en las leyes: . . . b) El suón").
g Law, Art. 2 suelo del terri
/Fratti de Vegle de propieda
cle 7.b) of the
e its investm
exclusively
subsoil belon
cordingly, A
of the Consti
ing activities
r its exploita
sting in the s
re the proper
he deposit is
e ownership.
Pac Rim's a
lorer is man
ning Law on
ership) to th
03 (RL-121)
rt. 7 (RL-9(bies secundariasubsuelo perten
(RL-7(bis)) (torio de la Re
ga Expert Repad privada.").
e Investmen
ment in El Sa
y to the State
ngs to the Sta
Article 7 of th
tution of the
s and terms
ation."444 An
subsoil of the
rty of the Sta
a good in th
."446
argument tha
ifestly contr
ly grants a r
he holder of a
("El subsuelo
is)) ("De confs, serán limitanece al Estado
("Son bienes epública, cual
port at 18 ("El.
146
nt Law, and A
alvador, all d
. Article 10
ate, which m
he Investmen
e Republic an
… b) the sub
nd Article 2
e territory of
ate . . . ."445
he public dom
at it somehow
rary to Salva
eal property
an exploitati
o pertenece al
formidad a lo adas las invero, el cual pod
del Estado, tolesquiera que
l yacimiento e
Article 2 of t
declare that t
03 of the Con
may grant co
nt Law prov
nd secondary
bsoil belong
of the Minin
f the Republ
The Salvado
main, belong
w obtained p
adoran law.
y right (the ri
ion concessi
l Estado el cu
establecido ersiones en las
drá otorgar con
odos los yacimsea su origen
es bien de dom
the Mining L
the mineral d
nstitution of
ncessions fo
ides that "[i]
ry laws, inve
gs to the Stat
ng Law prov
lic, regardles
oran adminis
ging to the S
property righ
As already d
ight to explo
on, and an e
ual podrá otorg
en la Constitu actividades yncesiones par
mientos minen, forma y est
minio público
Law, all in e
deposits loca
El Salvador
or its
]n accordanc
estments will
e, which ma
vides that "[a
ss of origin,
strative law
tate, not
hts to deposi
described,
oit mineral
explorer only
gar concesion
ución de la y términos ra su
erales que existado físico").
o del Estado,
effect
ated
r
ce
l be
ay
a]ll
form
its in
y has
nes
sten
no
a right to
Consequ
subsoil.
3
importan
there is n
property
Article 8
Because
mineral d
Law.
3
Law.
D
3
assessed
El Salvad
Investme
violation
expropria
447 See SeExpert Re448 Tinetti449 Tinetti
o apply for a
ently, Pac R
Althou09.
nt to note tha
no concept o
right, there
of the Inves
Pac Rim did
deposits it cl
As a r10.
D. Pac Rintern
As ex11.
pursuant to
dor and there
ent Law is th
ns of that law
ation under c
ction II.A.1.a
eport at 10.
i Expert Repo
i Expert Repo
concession.
Rim cannot m
ugh Pac Rim
at, as Salvado
f indirect ex
can be no ex
stment Law m
d not have a
laims, it cann
result, Pac R
Rim would nnational law
plained in S
Salvadoran
e is no relev
he only sourc
w, and not on
customary in
a above; Ayal
ort, paras. 33-4
ort, para. 38.
447 Pac Rim
make any cla
m has no clai
oran Constit
xpropriation i
xpropriation
must be base
concession,
not support a
Rim has no re
not have beew in any eve
ection IV.A
law because
ant bilateral
ce of jurisdic
n other sourc
nternational
la/Fratti de Ve
40.
147
m never held
aim for expro
ims of expro
tutional law
in Salvadora
under Salva
ed on proper
a right to a
a claim of br
ecognizable
en able to sunt
, Pac Rim's c
e the case is b
or multilate
ction, Claim
ces. But even
law, such a
ega Expert Re
anything mo
opriation for
opriation, dir
expert Dr. T
an law.448 W
adoran law.44
rty rights hav
concession,
reach of Arti
claims unde
ustain a clai
claims in thi
based solely
eral investme
mant's claims
n if Pac Rim
claim would
eport, § 3; Tin
ore than exp
r deposits loc
rect or indire
Tinetti explai
Without a dep
49 Thus, a c
aving been ta
or a propert
icle 8 of the
er the Salvad
im for expr
is arbitration
y on the Inve
ent treaty. B
must be bas
m could bring
d also fail.
netti Expert R
ploration lice
cated in the
ect, it is also
ins in his Re
privation of
laim under
aken away.
ty right to th
Investment
doran Investm
opriation un
n must be
estment Law
Because the
sed on allege
g a claim for
Report, § 2.2;
enses.
eport,
a
e
ment
nder
w of
ed
r
Otto
3
law is to
cannot be
Thus, the
concerns
rights du
occurred
3
proprieta
Professor
are about
by the mu
450 BayindARB/03/2Ukraine, Ian expropthe legal mcase"); SwARB/09/1these circuexpropriasuch that 451 Genera452 Genera453 ZacharDugan et a vested pmay, at le
1.
The fi12.
"identify the
e an expropr
e distinguish
interference
uly held by th
."452
Under13.
ary rights cla
r Zachary D
t property, an
unicipal law
dir Insaat Tur29, Award, AICSID Case N
priation unlessmaterialisatiowisslion DOO16, Award, Juumstances thetion case is bthe court's fai
ation Ukraine
ation Ukraine
ry Douglas, Tal., Investor-S
property right east in the firs
Pac Rim hinternation
irst step in as
e assets alleg
riation of som
hed Generati
e in rights in
he Claimant
r internation
aimed by a cl
ouglas expla
nd property
w of the host
rizm Ticaret Vug. 27, 2009,No. ARB/00/9s the complai
on of the ClaimO Skopje v. Thuly 6, 2012, pe Claimant haased, i.e., thailure to so ord
e v. Ukraine,
e v. Ukraine,
The InternatioState Arbitrator a legitima
st instance, tur
had no valid nal law
ssessing the
gedly exprop
mething to w
ion Ukraine
n property, it
at the partic
nal law, this "
laimant is go
ains: "[i]nves
is about spe
state. Gener
Ve Sanayi A.S para. 442 (A9, Award, Sepnant demonstmant's allegedhe Former Yugara. 320 (Autas not provent it had a cleader constitute
para. 22.1 (C
para. 6.2 (CL
nal Law of Intion 441 (200ate expectationrn on the lega
148
mining right
existence of
priated."450
which the Cl
v. Ukraine t
t is importan
cular momen
"meticulous"
overned by t
stment dispu
ecific rights o
ral internatio
S. v. Islamic RAuthority RL
pt. 16, 2003, ptrates the exisd investment goslav Repubthority RL-1
n the juridical ar right to recod an expropri
L-193).
L-193) (emph
nvestment Cla8) (Authorityn regarding aal status of tha
ts capable of
f an expropr
Indeed, it is
aimant neve
tribunal held
nt to be metic
nt when alleg
" assessment
the municipa
utes are abou
over tangible
onal law cont
Republic of PaL-133). See al
para. 8.8 (CLstence of propis a fundamen
blic of Maced134) ("the Trib
fact on whichover the purciation.").
hasis added).
aims, para. 10y RL-135) ("
a particular rigat property un
f being expr
riation under
axiomatic th
er had a legit
d that "[s]inc
culous in ide
gedly exprop
t of the exist
al law of the
ut investmen
es and intang
tains no sub
akistan, ICSIDlso Generatio
L-193) ("Sinceprietary rightsntal aspect of
donia, ICSID Cbunal is of thh the second hase price in
01 (2009) (RL"Whether an ight (contractunder national
ropriated und
r internationa
hat "[t]here
timate claim
ce expropriat
entifying the
priatory acts
tence of
e host state.45
nts, investme
gibles cogni
stantive rule
D Case No. on Ukraine Ine there cannos in the first pf the merits inCase No.
he view that, inlimb of its that proceedi
L-25); Christoinvestor posseual or otherwilaw.").
der
al
m."451
tion
e
53 As
ents
izable
es of
nc. v. ot be place, n this
n
ing
opher esses ise)
property
rights com
municipa
3
ban" alle
and silve
rights. In
a hodgep
concessio
discovery
laws dati
As expla
cannot ha
because C
of Salvad
3
mineral d
Claimant
Huacuco
Claimant
454 Dougla455 Dougla456 Memor457 Memor458 Memor
law."454 Co
mprising the
al law of pro
Here, 14.
gedly impos
er exploitatio
nstead, Claim
podge of reas
on; its prior
y of mineabl
ing back to 1
ined at lengt
ave expropri
Claimant ha
doran law.
As als15.
deposits thro
t could not a
, and Pueblo
t also held no
as, para. 101
as, para. 102
rial, para. 633
rial, para. 449
rial, paras. 45
onsequently,
e investment
operty."455
Claimant fa
sed by El Sa
on concessio
mant tries to
sons, includi
exploration
le ore deposi
1881 and 192
th in Section
iated Claima
s failed to sh
so explained
ough explora
acquire new e
os after the o
o right to ex
(RL-25).
(RL-25).
3 and Section
9.
57-468.
"[w]heneve
t, or to whom
ails to show t
lvador const
n.456 But Cl
concoct a "r
ing the fact t
in the area f
its.457 Claim
22 in arguing
n II above, no
ant's right to
how a legitim
d in Section I
ation licenses
exploration r
original El D
xplore in San
n IV.
149
r there is a d
m such rights
this sine qua
titutes an unl
laimant can p
right" to the
that it submi
for which it s
mant even att
g that it had
one of these
the exploita
mate right to
II, Claimant
s. Pursuant
rights to are
Dorado explo
nta Rita beca
dispute abou
s belong, the
a non. It arg
lawful expro
point to no c
exploitation
itted an appl
seeks the exp
tempts to res
a right to th
e arguments a
ation concess
o the exploita
did not acqu
to Article 19
as of the exp
oration licens
ause its origin
ut the scope o
ere must be a
gues that a "d
opriation of
concession g
n concession
ication for th
ploitation co
suscitate rep
he exploitatio
are availing.
sion under in
ation conces
uire any vali
9 of the Min
pired license
ses expired i
nal explorat
of the proper
a reference t
de facto min
its right to a
granting it su
n on the basi
he exploitati
oncession; an
pealed minin
on concessio
. El Salvado
nternational
ssion on the b
id rights to th
ning Law,
es in Guaco,
in January 2
ion license
rty
to a
ing
a gold
uch
s of
ion
nd its
ng
on.458
or
law
basis
he
005.
expired i
in accord
Regulatio
Cerro Co
somehow
the basis
constitute
3
Governm
constitute
constitute
regulator
under int
State acti
internatio
459 Section460 The nasection, Ehas been acould not about thesregarding 461 See Ian(explainin
n July 2009
dance with A
ons. It was a
olorado beca
w managed to
of an exprop
e property ri
2.
Even 16.
ment's morato
e expropriati
es an exprop
ry action am
ternational la
ion.461 Since
onal law is th
n II.B.4 above
ature and reasEl Salvador citan expropriateven show a
se cases' findiissues other t
n Brownlie, Png that exprop
and it failed
Article 27 of
also impossi
ause it never
o show that
priation clai
ights in mine
Pac Rim hconstitutes
if Claimant
orium in the
ion under in
priation, Clai
ounts to an i
aw refers to
e the only di
hat there is n
e.
ons for El Sates cases for tion under intebreach under
ings on the cothan those sp
Principles of Ppriation conno
d to submit a
the Mining
ible for Claim
even applied
it had acquir
m under inte
eral deposits
has failed to s expropriati
had acquired
issuance of
nternational l
imant asks th
indirect expr
the fundame
ifference bet
no formal tra
alvador's moratheir discussioernational lawr such standarontent of a Staecifically refe
Public Internaotes deprivati
150
a timely appl
Law and Ar
mant to acqu
d for those r
red valid exp
ernational la
s under Salva
establish thaion under int
d valid right
f environmen
law.460 By a
he Tribunal
ropriation. I
ental depriva
tween direct
ansfer of title
atorium are exon of the fact
w. El Salvadords. El Salvadate's obligatioerred to in thi
ational Law 50ion of a perso
lication for t
rticles 11 and
uire explorat
rights. In an
ploration lic
aw because e
adoran minin
at El Salvadoternational la
ts to mineral
ntal permits f
asserting that
to consider w
Indirect or re
ation of a pro
t and indirect
e or control
xplained abovtors used to deor does this ondor, howeverons under cusis section.
08-09 (6th edon's use and en
the extension
d 17 of the M
tion rights in
ny case, even
enses, these
exploration l
ng law.459
or's regulatoaw
deposits in
for metallic
t El Salvado
whether this
egulatory ex
operty's use
t expropriati
in the prope
ve in Section etermine whenly to show th
r, does not expstomary intern
d. 2003) (Autnjoyment of h
n of those rig
Mining
n Zamora an
n if Claimant
could not fo
licenses do n
ry conduct
El Salvador
mining does
or's moratoriu
s governmen
xpropriation
as a result o
ion under
erty under an
III. In the prether or not thhat Claimant press any viewnational law
thority RL-13his property).
ghts
d
t had
orm
not
, the
s not
um
ntal
of
n
resent here
ws
36) .
indirect e
reduces t
3
whether r
considers
extent of
investor;
considera
of Claim
3
asks to w
CMS Gas
whether t
can show
462 See Pa(1985) (A463 Vaugh(AuthoritInternatio139). 464 See CM12, 2005, UNCITRA
expropriation
the value of
Intern17.
regulatory c
s (a) the econ
f the measure
and (c) the
ations demon
ant's rights.
The fi18.
what degree t
s Transmissi
the enjoyme
w that the Sta
mela B. Gann
Authority RL
han Lowe, Regty RL-138); Sonal Investme
MS Gas Transpara. 262 (A
AL, Final Aw
n, an exercis
an investme
national arbit
onduct cons
nomic impac
e's interferen
character of
nstrates that
a) Thinv
irst inquiry i
the investme
ion v. Argen
ent of the pro
ate's regulati
n, The U.S. Bi
L-137).
gulation or ExSuzanne A. Snt Agreement
smission Comuthority RL-
ward, Sept. 3,
se of legitim
nt is not an e
tration tribun
titutes indire
ct on the inv
nce with the
f the measure
El Salvador
he moratoriumvestment
nto whether
ent's econom
ntina tribunal
operty has be
on destroyed
ilateral Inves
xpropriation?pears, The Quts, 13(4) J. of
mpany v. Arge-140); Ronald2001 (CL-16
151
ate non-disc
expropriator
nals have set
ect expropria
vestor of the
"reasonable
e. As shown
r's moratoriu
m did not de
government
mic value was
l put it, the e
een effective
d or radically
stment Treaty
? 55(1) Curreuest for Policf Int'l Econom
entine Republd S. Lauder (U68).
criminatory p
ry act.462
t out three co
ation.463 Th
allegedly ex
e investment-
n below, an a
um does not
estroy the ec
t regulation
s diminished
essential que
ely neutraliz
y diminished
Program, 21
ent Legal Probcy Space in a mic L. 1037, 1
lic, ICSID CaUnited States)
police power
onsideration
e fact-specif
xpropriatory
-backed exp
assessment o
constitute an
conomic valu
amounts to
d by the regu
estion is "to e
zed."464 Unle
d the econom
1 Stan. J. Int'l
blems 447, 46New Generat
1051 (2010) (A
ase No. ARB/) v. The Czec
r that merely
ns for assessi
fic inquiry
measure; (b
ectations" o
of these thre
n expropriat
ue of Claima
expropriatio
ulation. As t
establish
ess a claiman
mic value of
L. 373, 399
61 (2002) tion of Authority RL
01/8, Award,ch Republic,
y
ing
b) the
f the
e
ion
ant's
on
the
nt
f its
L-
May
investme
indirect e
3
in finding
mining p
step in as
deprived
thereto…
that exce
this signi
complain
effect an
3
"radically
control o
OceanaG
a share sw
465 Pope &(AuthoritUNCITRAAmerica, 466 Glamis467 Glamis468 Glamis469 See Du470 Oceanaand Pacifi
ent to such an
expropriation
The G19.
g that a serie
project in the
ssessing a cl
of the econo
…had ceased
eeded $20 mi
ificantly pos
ned of measu
expropriatio
Here, 20.
y" diminishe
of its investm
Gold acquired
wap equival
& Talbot Inc. ty RL-141); GAL, Final AwUNCITRAL,
s Gold v. USA
s Gold v. USA
s Gold v. USA
ugan et al. at 4
aGold, Pacifiic Rim Minin
n extent that
n can be fou
Glamis v. Un
es of governm
e United Stat
aim for indir
omical use a
to exist."467
illion after th
itive valuati
ures did not c
on of Claima
Claimant ha
ed the value
ment during E
d the 80% of
ent to a sum
v. The Gover
GAMI Investmward, Nov. 15, Award, May
A, paras. 357,
A, para. 357 (R
A, para. 536 (R
457 (RL-135)
c Rim Miningng Corp., Med
t it, for all pr
und.465
ited States tr
mental delay
tes were not
rect expropr
and enjoyme
After findin
he permit de
on…the firs
cause a suffi
ant's investm
as offered no
of its investm
El Salvador's
f Claimant's
m of C$10.2 m
rnment of Canments, Inc. v. , 2004, para.
y 14, 2009, pa
360 (RL-142
RL-142).
RL-142).
).
g Acquisitiondia Release, "
152
ractical purp
ribunal, for e
ys and denia
expropriator
riation analyz
nt of its inve
ng that the c
elays and den
st factor in an
icient econo
ment."468
o indication t
ment in El S
s moratorium
shares it did
million.470 T
nada, NAFTAThe Governm126 (RL-40);
aras. 357, 360
2).
n PresentationOceanaGold
poses, confisc
example, de
als of environ
ry.466 In the
zes whether
estments, as
claimant's pro
nial, the tribu
ny expropria
mic impact t
that the mor
Salvador. C
m.469 This is
d not already
The correspo
A, Interim Awment of the Un; Glamis Gold0 (Authority
n, Oct. 2013 (Eand Pacific R
cated the pro
eemed this fa
nmental perm
e tribunal's o
"the Claima
if the rights
oject had ret
unal held tha
ation analysi
to the Imper
ratorium des
Claimant has
s evident fro
y own in No
onding amou
ward, June 26United Mexican
d, Ltd. v. UniRL-142).
Exhibit R-14Rim Mining C
operty, no
actor disposi
mits for a go
opinion, the i
ant was radic
s related
tained a valu
at "[i]n light
is is not met
rial Project t
troyed or
retained ful
om the fact th
vember 201
unt in US do
6, 2000, para. n States, ted States of
41); OceanaGComplete Plan
itive
old
initial
cally
ue
t of
: the
o
l
hat
3 in
ollars
102
Gold n of
was US$
million fo
as "an es
exciting e
into an un
Director
3
Novembe
land prop
concessio
investme
3
claimant'
Arrangem142). 471 Oceana472 Oceana
9.6 million o
for 100% of t
tablished hig
exploration t
nderexplore
& CEO of O
I am vemplodeveloPhilipjourneCompminessustainstakehthat ex
Clearl21.
er 2013. W
perty rights i
on in the futu
ent, the claim
The se22.
's reasonable
ment," Nov. 27
aGold and Pa
aGold and Pa
on Nov. 27,
the shares. O
gh grade gol
targets in El
d but geolog
OceanaGold
very pleasedoyees to Oceoped over th
ppines providey with the mpany has a los in partnershnable manneholders in Elxists at El D
ly, Pac Rim'
When it entere
it had acquir
ure. Becaus
m that it amo
b) Claexpmin
econd factor
e investment
7, 2013 ("Oce
ac Rim Comp
ac Rim Comp
2013 (for 80
On that occa
ld-silver reso
l Salvador pr
gically highly
noted in par
d to welcomeeanaGold. I bhe past twentdes for a stromany stakehong and succhip with locaer and we lol Salvador toorado for th
s investment
ed into the a
red and the h
se the morato
unted to exp
aimant had npect that El Sning laws
r at issue in a
t-backed exp
eanaGold and
lete Plan of A
lete Plan of A
153
0% of the sh
asion, Ocean
ource," whic
rovides Ocea
y prospectiv
rticular:
e Pacific Rimbelieve that oty-three yearong platformolder groups
cessful track al communitok forward t
o unlock the e people of E
t in El Salva
greement wi
hope of being
orium did no
propriation f
no investmenSalvador wo
an alleged in
pectation tha
d Pac Rim Co
Arrangement (
Arrangement (
hares), which
naGold descr
ch along with
anaGold wit
ve region."47
m shareholdeour companyrs in New Ze
m to begin thes in El Salvarecord of op
ties in a safeto working wsignificant oEl Salvador.
ador still had
ith OceanaG
g able to obt
ot destroy th
fails as a mat
nt-backed reould not refo
ndirect expro
at its investm
mplete Plan o
(R-142).
(R-142).
h implies a v
ribed the El
h "Pacific Ri
th a first-mov
1 Mick Wilk
ers and y strengths ealand and the successful ador. Our perating golde and with our keyopportunity .472
d value as rec
Gold, Pac Rim
tain an explo
e value of C
tter of law.
easonable exorm its enviro
opriation per
ment would n
of Arrangeme
value of US$
Dorado Proj
im's stable o
ver advantag
kes, Managi
he
d
y
cently as
m still had th
oitation
Claimant's
xpectation to onmental an
rtains to a
not be disturb
ent") (Exhibi
$12.0
ject
of
ge
ing
he
nd
bed
t R-
as a resul
specific a
3
of genera
compens
governm
refrain fr
3
grounds t
promises
described
misleadin
character
assured t
of.475
3
stabilizat
473 See, e.gAward, A474 MethanChapter D475 See MaAward, Dsimilarly administraand KonyARB/02/5
lt of the Stat
assurances to
In Me23.
al internation
atory nor co
ment to the th
rom such reg
The F24.
that the claim
s of the Mexi
d Mexico's r
ng, perhaps
rize them as
he claimant
For th25.
tion agreeme
g. Metalclad
Aug. 30, 2000
nex CorporatD, para. 7 (RL
arvin Roy FelDec.16, 2002,
strict standardation on whic
ya Ilgin Elektr5, Award, Jan
te's regulator
o that effect
ethanex v. Un
nal law, a no
ompensable "
en putative i
gulation."474
Feldman v. M
mant had fai
ican governm
egulatory ac
intentionally
expropriator
that it would
he Total S.A.
ent was dispo
Corporation (Authority R
tion v. UnitedL-20) (emphas
ldman Karpa paras. 132-13d, holding thach the Claimarik Üretim ve n. 2007, para.
ry actions.473
has proven d
nited States,
on-discrimin
"unless spec
investor con
Mexico tribun
iled to show
ment that we
ctions as "arb
y so in some
ry under inte
d not institut
v. Argentina
ositive in its
v. The UnitedRL-143).
d States of Amsis added).
v. The United33, 149 (Authat "legitimate ants rely to assTicaret Limit241 (CL-86)
154
3 Whether o
dispositive f
for example
atory regula
ific commitm
ntemplating i
nal dismissed
that he had
ere subseque
bitrary, " "in
e instances,"
ernational la
te the regula
a tribunal, th
s holding tha
d Mexican Sta
merica, NAFT
d Mexican Stahority RL-14expectations sert a right thted Širketi v. R.
or not a State
for several tr
e, the tribuna
ation for a pu
ments had b
investment th
d an indirect
made his inv
ently breache
nconsistent,
and without
aw because M
atory measur
he fact that A
at the regulat
ates, ICSID C
TA, Final Awa
ates, ICSID C44). The PSE by definition
hat needs to beRepublic of T
e has furnish
ribunals.
al establishe
ublic purpose
een given by
hat the gove
t expropriati
vestment in
ed. Even tho
" "ambiguou
t "transparen
Mexico had n
res that claim
Argentina ha
tory action c
Case No. ARB
ard, Aug. 3, 2
Case No. ARBEG v. Turkey tn require a proe observed."
Turkey, ICSID
hed promises
ed that as a m
e is neither
y the regulat
ernment wou
ion claim on
reliance on
ough the trib
us and
ncy," it did n
not specifica
mant compla
ad not signed
complained o
B(AF)/97/1,
2005, Part IV,
B(AF)/99/01,tribunal appliomise of the PSEG Globa
D Case No.
s or
matter
ting
uld
n the
bunal
not
ally
ained
d a
of
,
, ed a
al Inc
did not am
certain re
expectati
3
backed e
concessio
change it
expropria
3
state has
complain
between
typically
explained
476 Total S2010, para477 See Du478 MethanSaluka Inv(RL-74); LUNCITRAMedioambMay 29, 2Partial Aw
mount to an
egulatory con
ions that law
In this26.
xpectation –
on. Claiman
ts laws to ac
ation under i
The fi27.
indirectly ex
ned of, includ
the protectio
not conside
d, "[p]ropert
S.A. v. The Ara. 197 (Autho
ugan et al. at 4
nex Corp. v. Uvestments BVLauder v. CzeAL, Partial Abientales Tec2003, para. 11ward, Sept. 13
expropriatio
nduct milita
ws or regulati
s case, this fa
– and much l
nt did not hav
commodate
international
c) Thfin
inal factor th
xpropriated
ding whethe
on of foreign
red to consti
ty is a social
rgentine Repuority RL-145
440 (RL-135)
USA, Part IV,V v. The Czechech Republic,
Award on the Mcmed S.A. v. T19 (CL-197); 3, 2001, para.
on. 476 The a
ates against th
ions would n
factor is even
less a right –
ve a legal rig
Pac Rim's a
l law.
he regulatorynding of no in
hat internatio
an investor's
er it featured
n investment
itute expropr
institution t
ublic, ICSID C5).
).
, Chapter D, ph Republic, U, para. 198 (CMerits, Nov.
The United MeCME Czech R 603 (Author
155
absence of su
he finding th
not change o
n stronger. C
– to an enviro
ght to deman
application.
y nature of Endirect expro
onal tribunal
s rights is the
physical for
ts and domes
riation. As P
that serves so
Case No. ARB
para. 7 (RL-2UNCITRAL, PCL-168); S.D. 13, 2000, parexican States,Republic B.Vrity RL-146)
uch an agree
hat a claiman
or be more st
Claimant had
onmental pe
nd that El Sa
The morator
El Salvador's opriation
ls have consi
e character o
rce.478 Give
stic public w
Professor An
ocial functio
B/04/01, Dec
20); Feldman Partial Award Myers, Inc. v
ra. 281 (CL-2, ICSID Case
V. v. The Czec).
ement promi
nt had legitim
tringently ap
d no reasona
ermit and an
alvador igno
rium is thus
moratorium
idered in ass
or nature of t
en the necess
welfare, regu
ndrew Newc
ons" and thus
cision on Liab
v. Mexico, pad, Mar. 17, 20v. Governmen30); Tecnicas
e No. ARB(AFh Republic, U
ising to main
mate
pplied.477
able investm
exploitation
ore its laws o
not an
m supports a
sessing whet
the conduct
sary balance
ulatory policy
combe has
s cannot be u
bility, Dec. 27
ara. 106 (RL-006, para. 255nt of Canada,s F)/00/2, Awa
UNCITRAL,
ntain
ment-
n
or
ther a
y is
used
7,
144); 5
ard,
in a mann
interfere
3
power in
Tecmed v
its sovere
those sub
whatsoev
3
in interna
the norm
fide regu
Republic
3
Salvador
expropria
Second, a
479 AndrewDispute M480 See, e.gLauder v. Mexico, pMuthucum(Authoritnon-comp481 Tecmed482 Saluka483 Lauder
ner detrimen
and regulate
Intern28.
a bona fide
v. Mexico tri
eign powers
bject to its po
ver."481
Simila29.
ational law t
mal exercise o
lations that a
c tribunal.483
Claim30.
r would repre
atory. First,
any mining r
w Newcombe
Management,
g., Feldman vCzech Repub
para. 119 (CLmaraswamy Sty RL-148) ("pensable.").
d v. Mexico, p
a v. Czech Rep
r v. Czech Rep
ntal to public
e such behav
national tribu
and non-dis
ibunal, for ex
within the f
owers as adm
arly, the Salu
that States ar
of their regul
are aimed at
mant has faile
esent the rar
Claimant ha
rights Claim
e, The BoundaJuly 2007, at
v. Mexico, parblic, para. 198-197); CME v
Sornarajah, Th"The starting
para. 119 (CL
public, para. 2
public, para.
c order and s
vior.479
unals have re
scriminatory
xample, held
framework o
ministrator w
uka v. Czech
re not liable
latory power
t the general
ed to demons
e circumstan
ad no rights
mant obtained
aries of Regu13 (Authorit
ra. 106 (RL-18 (CL-168); Sv. Czech Repuhe Internationpoint must al
L-197) (emph
255 (RL-74).
198 (CL-168
156
safety withou
efused to fin
manner exp
d that it is "u
f its police p
without entitl
h Republic tr
to pay comp
rs, they adop
welfare."482
strate that a
nces in whic
that could h
d or hoped to
latory Expropty RL-147).
144); Saluka vS.D. Myers v. ublic, Partial Anal Law on Folways be that
hasis added).
).
ut the possib
d that a Stat
propriated an
undisputable
power may c
ling them to
ribunal held
pensation to
pt in a non-d
2 So, too, did
moratorium
ch regulatory
have been aff
o obtain in E
priation in In
v. Czech RepuCanada, paraAward, para. oreign Investmthe regulator
bility that the
te executing
n investor's r
e" that "the S
cause econom
o any compen
that "[i]t is n
a foreign inv
discriminator
d the Lauder
m on metallic
y conduct sho
fected by a m
El Salvador w
nternational L
ublic, para. 25a. 281 (CL-23 603 (RL-146ment 385 (2dry interferenc
e State woul
regulatory
rights.480 Th
State's exerci
mic damage
nsation
now establis
vestor when
ry manner b
r v. Czech
mining in E
ould be deem
moratorium.
were to be
Law, Transnat
55 (RL-74); 30); Tecmed v6). See also d ed. 2004) e is presumpt
ld
he
ise of
to
shed
n, in
ona
El
med
tional
v.
tively
exercised
Section I
obligatio
health, cu
"the State
environm
3
activities
discussed
assess an
this conte
power un
El Salvad
potential
internatio
3
investme
their busi
Managem
for the fa
484 Constitgoce de la485 Constitdiversidad
d in accordan
III above, the
n of the Stat
ulture, econo
e's duty to pr
ment, to guar
As Cl31.
s in particula
d in Section
nd manage th
ext, El Salva
ndertaken ou
dor and the C
harm arisin
onal law.
In con32.
ent arbitratio
iness ventur
ment v. Mexi
ailure of an i
tution, Art. 1 a libertad, la s
tution, Art. 1d e integridad
nce with the
e very first a
te to secure f
omic well-be
rotect natura
rantee sustain
aimant was
ar were a sou
III, there wa
he environm
ador's morato
ut of a bona f
Constitution
g from such
nclusion, we
ns are not in
es or to bail
ico tribunal,
nvestor's fla
(RL-121) ("e
salud, la cultu
17 (RL-121) d del medio am
State's envi
article of the
for the inhab
eing and soc
al resources,
nable develo
well aware,
urce of great
as concern th
ental havoc
orium was a
fide concern
al requireme
activities. I
note that int
ntended to pr
out an inves
for example
awed busines
es obligación ura, el bienest
("Es deber dembiente, para
157
ronmental la
Salvadoran
bitants of the
cial justice."4
as well as th
opment."485
concerns ab
controversy
hat the Minis
that gold mi
an appropriat
n regarding th
ent that the G
It does not, t
ternational t
rotect invest
stor from its
e, refused to
ss plan:
del Estado astar económico
el Estado prota garantizar el
aws and regu
Constitution
e Republic, t
484 The Con
he diversity
bout metallic
y and social t
stry of Envir
ining activiti
te, non-discr
he impact of
Government
therefore, co
tribunals hav
tors from com
poor judgm
make the re
segurar a los ho y la justicia
teger los recul desarrollo so
ulations. As
n establishes
the enjoymen
nstitution also
and integrity
c mining in g
tension in E
ronment was
ies were like
riminatory, e
f metallic mi
minimize an
onstitute expr
ve repeatedly
mmercial ris
ment. The Wa
espondent sta
habitantes de social").
ursos naturaleostenible.").
s discussed in
s that "it is th
nt of liberty,
o notes that
y of the
general and i
l Salvador.
s ill-equippe
ely to wreak
exercise of p
ining activiti
nd mitigate
ropriation un
y held that
sk inherent in
Waste
ate compens
la República
s, así como la
n
he
,
it is
its
As
ed to
. In
police
ies in
any
nder
n
sate
a, el
a
3
realize it
regulator
could hav
calculate
with the
accommo
rights req
expropria
486 Waste 2004, paraARB/97/7insurance Republic oan insuranconsequen
it is noreflectof a focompecircumfor itsuptake
Here t33.
s El Dorado
ry conduct, a
ve been affe
d risk to exp
limits of Sal
odate Claima
quired to dev
ation even if
Managementa. 177 (RL-767, Award, Nopolicies agai
of Chile, ICSnce against bunces of their o
ot the functited in Articloreign investensating for mstances, fous success on e and contra
too, El Salva
Project. Th
as demonstra
cted by the m
pand the scop
lvadoran law
ant, Claiman
velop its proj
f this Tribun
t, Inc. v. Unite6). See also Ev. 13, 2000, pinst bad businID Case No. usiness risk anown actions a
on of the intle 1110 to elitor, or to plathe failure ounded on toounsustainab
actual perform
ador should
his is so not o
ated in Sectio
moratorium,
pe of its proj
w in the hope
nt alone mus
ject. Claima
al were aske
ed Mexican SEmilio Agustínpara. 64 (Autness judgmentARB/01/7, And the Tribunas experienced
158
ternational laiminate the n
ace on Mexicof a businesso narrow a cle assumptiomance.486
not be made
only because
on III, but al
, as demonst
ject beyond
es that El Sal
st bear the co
ant would no
ed to decide
States, ICSID n Maffezini v.hority RL-14ts."); MTD Eq
Award, May 2nal considers td businessme
aw of expropnormal commco the burdens plan whichclient base anons about cu
e to compens
e the morato
lso because
trated in Sec
its ability to
lvador woul
onsequences
ot be able to
such a claim
Case No. AR The Kingdom49) ("Bilateraquity Sdn. Bh
25, 2004, parathat the Claim
en.").
priation as mercial riskn of
h was, in the nd dependen
ustomer
sate Pac Rim
orium was le
Pac Rim had
tion II. Hav
o develop it i
d change its
s of its failur
support a cl
m under inter
RB/AF/00/3, Am of Spain, ICal Investment hd. and MTD a. 178 (RL-46mants should
s
nt
m for its failu
gitimate
d no rights th
ving taken th
in accordanc
laws to
re to obtain t
laim of
rnational law
Award, Apr. 3CSID Case Nt Treaties are Chile S.A. v.
6) ("BITs are nbear the
ure to
hat
he
ce
the
w.
30, No.
not
not
V. D
A
3
asks for d
Rim had
failed to
establish
investme
that El Sa
latter of w
compens
sake of c
right to c
3
show a c
the applic
(3) the va
implemen
interest.
3
Claimant
even if th
DAMAGES
A. Pac R
Despi34.
damages in e
no right to a
meet the req
ed that the m
ent after Mar
alvador brea
which is inap
ation. Whil
ompleteness
compensation
In the35.
ausal link be
cable law in
aluation met
nted in a ser
1.
As El 36.
t's attempt to
hese rules we
Rim is not en
ite the inhere
excess of $3
an exploitati
quirements u
moratorium d
rch 2008. A
ached its obli
pplicable to
e it is unnec
s El Salvado
n under Salv
sections tha
etween any u
this arbitrat
thods used b
riously flawe
There is noRim, and tthis arbitra
Salvador ha
o invoke inap
ere applicab
ntitled to co
ent factual an
00 million.
on concessio
under the Mi
destroyed or
s a matter of
igations und
this matter).
cessary to pro
r will set for
vadoran law
at follow, El
unlawful con
tion is Salva
y Pac Rim's
ed manner; a
o causal linktherefore Pacation
as explained,
pplicable gen
le, they wou
159
ompensation
nd legal wea
Factually, E
on or to the e
ning Law. A
r radically di
f law, Claim
der domestic
. It follows
oceed any fu
rth further re
or general p
Salvador wi
nduct by El S
doran law w
valuation ex
and (4) Claim
k between Elc Rim canno
, these proce
neral princip
uld not provi
n
aknesses in P
El Salvador h
exploration
Accordingly
iminished th
mant has com
law or rules
that Claiman
urther under
easons why C
principles of
ill show that
Salvador and
which provid
xperts are in
mant is not e
l Salvador's ot be compen
eedings are g
ples of intern
ide a basis fo
Pac Rim's ca
has already s
areas it claim
y, Claimant h
e value of C
mpletely faile
s of internati
nt is not enti
these circum
Claimant do
f internationa
t: (1) Claima
d any harm t
des a basis fo
ncorrect and
entitled to pr
conduct andnsated for an
governed by
national law
or its claim f
ase, Claiman
shown that P
ms because i
has not
Claimant's
ed to establis
ional law (th
itled to any
mstances, for
oes not have
al law.
ant has failed
to Pac Rim;
or compensat
have been
re-judgment
d any harm tony damages
y Salvadoran
must fail. B
for
nt
Pac
it
sh
he
r the
any
d to
(2)
tion;
o Pac in
law.
But
compens
for dama
3
link has b
unlawful
3
factual an
caused it
487 Articleprinciple: the internthe subjecrather thanInternatioStates for U.N. Doc79(bis)). Tribunals damages w488 Memor489 Borzu 171-172 (Internatio490 See e.gTrade Ban(1987) (Aenjoymeninactive cis not conconduct aJudgmentwere sevemight havtowards in
ation. Unde
ages caused b
Claim37.
been met.488
l acts of El S
The d38.
nalysis in tha
s damages.49
e 31(1) of the
"The responsationally wroct matter of ren any and all
onal Law ComInternational. A/56/10 (20See also Bin 253 (2006) (
which are leg
rial, para. 664
Sabahi, Com(2011) (Authonal Investmen
g., Otis Elevatnk of Iran), A
Authority RLnt of its properompany and t
nvinced that thattributable to t of 20 July, 1eral causes actve been one onsolvency; wh
er internation
by an interna
mant appears
However, C
Salvador.
determination
at a claiman
90 While fac
ILC's Draft A
sible State is ongful act." Teparation is, gconsequence
mmission on thlly Wrongful 001) ("ILC Dr
Cheng, GeneAuthority R
gally regarded
4.
mpensation andority RL-151nt Law 135-1
tor CompanyAward No. 304L-153) ("the T
rty rights in Ithe changed che Claimant hIran…"). Se989 I.C.J. Reting together f the factors ihich state of a
nal law, a St
ationally wro
to assume (w
Claimant ha
n of causatio
t must estab
ctual proxim
Articles on thunder an obli
The Commentglobally, the ines flowing frohe work of itsActs, with coraft Articles")eral Principles
RL-150) ("… td as the conse
d Restitution 1). See also S136 (2008) (A
. v. The Islam4-284-2, 14 I
Tribunal holdsran Elevator, circumstanceshas establisheee also Case Ceports 15, parathat led to the
involved. Buaffairs it seem
160
ate is only u
ongful act.48
without any
s not proven
on is both a f
lish that the
mity is necess
e Responsibiligation to maktary explains tnjury resultinm an internats fifty-third seommentaries"), Comment (s of Internatiothe duty to mquences of an
in Investor-SSergey RipinsAuthority RL
mic Republic oran-US Claim
s that a multipamong them
s of the Iraniad that the infr
Concerning Ela. 101 (Authoe disaster to E
ut the underlyims to have atta
under an obli
87
explanation
n that its alle
factual and a
respondent'
sary, it is not
lity of States ke full reparathat "[t]his ph
ng from and ationally wronession, "Draft U.N. GAOR
(9) to Article onal Law as A
make reparation unlawful ac
tate Arbitratisky and Kevin
L-152).
of Iran and Bams Tribunal Rplicity of facto
m its position aan elevator mfringement of lettronica Sicority RL-154ELSI. No douing cause wasained even pr
igation to ma
n) that the req
eged damage
a legal inquir
s unlawful a
t sufficient t
contemplatesation for the inhrase is used ascribable to tngful act." Rept Articles on R
R, 56th Sess., 31, at 92 (Au
Applied by Con extends onl
ct.").
on: Principlesn Williams, D
ank Mellat (foRep. 283 (198ors affected tas a minority
market. Howethese rights w
cula S.p.A. (U4) (concludinubt the effect s ELSI's headrior to the req
ake reparatio
quisite causa
es were cause
ry.489 It is a
act actually
to meet the
s this fundamenjury caused bto make clear
the wrongful eport of the ResponsibilitySupp. No. 10
uthority RL-ourts and ly to those
s and PracticeDamages in
formerly Fore87) , para. 47 the Claimant'sshareholder iver, the Tribuwas caused by
USA v. Italy), g that "[t]here
t of the requisdlong course quisition.").
on
al
ed by
ental by r that act,
y of 0,
e
eign
s in an unal y
e sition
requirem
injury is
3
engaging
published
Nordzuck
the secon
failing to
by not "c
pre-contr
arising fr
and its "l
491 HofflanRep. 41 (1evidence aHoffland'shave occuCanada, U492 The Ro(Authoritinternatioof Tanzanfor any viof the BIT493 Nordzu(Authorit494 Nordzu
ment of causa
considered t
Accor39.
g an obligatio
d decision of
ker's failure
nd Partial Aw
o finalize the
communicat[
ractual phase
rom a "set-ba
loss of the op
Such pNordzinfringand Szany ev
nd Honey Co1983), at 2 (1attached theres loss only in
urred. The saUNCITRAL,
ompetrol Groty RL-156) ("nal wrong giv
nia, ICSID Caiolation of theT and the loss
ucker v. The Rty RL-157).
ucker v. Polan
ation. The le
too unforese
rdingly, a Sta
on to pay co
f Nordzucke
to acquire tw
ward, the trib
e sales "withi
[ing] transpa
e" of the sale
ack of at lea
pportunity."4
presentationzucker wouldgement of thzczecin Grouvent and that
. v. National I983) (Authoreto that proxithe sense tha
les were thus Second Parti
up N.V. v. Ro"there is no gving rise to Stase No. ARB/e BIT…will os sustained by
Republic of P
nd, para. 39 (
egal aspect o
eeable, indire
ate may be i
mpensation
r v. Poland i
wo Polish su
bunal decide
in a reasonab
arently with t
es procedure
st half of a y
494 The tribu
n of Norduckd have acquihe BIT. It alup to Nordzut no event, o
Iranian Oil Crity RL-155)mate cause h
at had there bea 'cause, but
ial Award, Oc
omania, ICSIDeneral rule retate responsib/05/22, Awardonly be due if y BGT.").
Poland, UNCI
RL-157).
161
of causation i
ect, or remot
international
due to the ab
illustrates su
ugar compan
ed that Polan
ble time and
the candidat
e.493 Nordzu
year," "costs
unal rejected
ker's damageired the two lso assumes ucker would
other than the
Co., Award No) ("we think itas not been aleen no oil, annot the proxi
ct. 21, 2002, p
D Case No. Aequiring damability."). See d, July 24, 20
f there is a suf
TRAL, Third
imposes lim
te from the h
lly responsib
absence of ca
uch a situatio
nies through
nd violated th
d uselessly pr
te investor d
ucker claime
for the usel
d the entire c
es assumes thGroups but that the sale
d have gone e breach of t
o. 22-495-2, 2t is clear fromlleged. The s
nd thus no cheimate cause.'"para. 140 (CL
ARB/06/3, Awage as a constalso Biwater
008, paras 779fficient causal
d Partial and F
mits on damag
harm.491
ble without n
ausation.492
on. The disp
a privatizati
he Germany
rotracting [th
during the las
ed damages o
less follow-u
claim, stating
hat for Poland's
e of Gdańsk through in the BIT whic
2 Iran-US Clam the pleadingsales of oil weemicals, the lo"). See also SL-236).
ward, May 6, tituent elemenGauff Ltd v.
9, 787 (RL-35l link between
Final Award,
ges where th
necessarily
The recently
pute arose ou
ion process.
y-Poland BIT
he process]"
st period of t
of €153.7 mi
up of the pro
g:
s
ch
aims Tribunags and the ere a 'cause' ooss would no
SD Myers Inc.
2013, para. 1nt of an United Repub
5) ("Compensn the actual b
Nov. 23, 200
he
y
ut of
In
T by
" and
the
illion
ocess"
al
of t . v.
89
blic sation
breach
09
34
to prove
had incre
to sell the
having be
of those i
34
the breac
Bahloul c
to ensure
Neverthe
breaches
495 Nordzu496 Nordzu497 Mohampara. 96 (A498 Al-Bah
the Arcaused
These
The re40.
it would hav
eased the pri
ese Groups t
een no inves
investments.
Simila41.
ch committed
case, the trib
e the issuanc
eless, no com
and the alle
Claimhave bno defupon eprobabcompawouldno pro
ucker v. Polan
ucker v. Polan
mmad AmmarAuthority RL
hloul v. Tajiki
rbitral Tribud the sale to
e assumption
equisite caus
ve acquired t
ce of its offe
to it and was
stment in the
."496
arly, too man
d by the Stat
bunal had fou
e of licenses
mpensation w
eged damage
mant asks thebeen able to finite offer oexploration hbilities wereany seems tod have been aoven experie
nd, paras. 48-
nd, para. 60 (
r Al-Bahloul vL-158).
istan, para. 95
unal found PoNordzucker
ns are inaccu
sal connectio
the compani
er. The tribu
s free to refu
ese two Grou
ny unsubstan
te and the lo
und Tajikist
s pursuant to
was found to
es:
e Tribunal to acquire fina
of financing,he would ha
e low and theo have foundable to explo
ence in this f
-49 (RL-157)
RL-157).
v. Tajikistan,
5 (RL-158) (e
162
oland to havr to fail.
urate...495
on was missi
es in the abs
unal conclud
use its consen
ups, Nordzuc
ntiated assum
ss of the alle
an liable und
o four hydroc
o be owing du
accept the aancing for th just express
ave found hyere is no evidd hydrocarbooit and sell tfield.)498
.
SCC Case No
emphasis in or
ve committed
ing in that ca
sence of Pola
ded that "Pol
nt to the sale
cker cannot
mptions "des
eged future c
der the Ener
carbon explo
due to insuffi
assumption the exploratiosions of interydrocarbons dence that anons so far) anthe oil (altho
o. 064/2008,
riginal).
d, could have
ase. Nordzu
and's breach
land had no
e or to the in
claim damag
stroys the ca
cash flows."
rgy Charter T
oration agree
icient ties be
that he woulon (but he harest), that (although thny other
and that he ough he had
Final Award,
e
ucker was un
h if for exam
legal obligat
nvestment. T
ges for the lo
ausality betw
497 In the Al
Treaty for fa
ements.
etween the
d ad
he
, June 8, 2010
nable
mple it
tion
There
oss
ween
l-
ailing
0,
34
mineral d
El Salvad
no factua
wrongful
by Presid
between
Claimant
principle
necessari
acts prior
to the pre
mining ri
the explo
with at le
acquire a
other dep
Claimant
deposit.
discovere
further ex
explorati
explorati
As de42.
deposits and
dor. But eve
al causation b
l act compla
dent Saca in
President Sa
t now admits
on May 7, 2
ily predates
r to March 2
ess in March
ights to all th
oitation conc
east two requ
an environme
posits in the
t's applicatio
The other de
ed or sufficie
xplore in the
ion. Second
ion licenses t
scribed in Se
two early ex
en if for the
between Pac
ined of by C
March of 20
aca's press st
s that it was
2007 and thu
Claimant's s
2008. More
h 2008, the u
he deposits f
cession appli
uirements co
ental permit
concession a
on, the Pre-F
eposits (Bals
ently drilled
e application
, the Coyote
that had exp
ection II, no
xploration ar
sake of argu
c Rim's alleg
Claimant is th
008. Claima
tatement and
specifically
us admits tha
self-imposed
fundamental
unapproved E
for reasons u
ication had n
ontained in A
. Thus, Clai
application a
Feasibility St
samo, South
d to be includ
n area and no
era and Nanc
ired on Janu
163
one of the los
reas can be t
ument El Salv
ged damages
he alleged an
ant has not an
d any injury
told of the m
at any allege
d prohibition
lly, regardle
EIA, and the
unrelated to a
not been gran
Article 37.2 o
imant had no
area. In add
tudy only pu
h Minita and
ded in the ap
o right to any
ce Dulce dep
uary 1, 2005
sses Pac Rim
traced back t
vador comm
s and any act
nnouncemen
nd cannot es
to Claimant
moratorium
ed injury from
n on making
ss of Preside
e moratorium
any alleged
nted due to C
of the Minin
o rights to th
dition to the i
urported to ju
Nueva Espe
pplication. C
y deposits di
posits were w
and therefor
m claims in r
to any unlaw
mitted a wron
t of El Salva
nt of a morat
stablish any
t. It must be
based on the
m that mora
any claims f
ent Saca's al
m, Pac Rim s
act by El Sa
Claimant's fa
ng Law as w
he Minita dep
incomplete n
ustify mining
eranza) had e
Claimant had
iscovered thr
within the are
re neither Pa
relation to th
wful conduct
ngful act, the
ador. The all
torium on m
causal link
e recalled tha
e precaution
atorium
for damages
lleged statem
still lacked v
alvador. Firs
ailure to com
ell as failing
posit or any
nature of
g the Minita
either not be
d no right to
rough illega
ea of the ori
ac Rim nor a
he six
t of
ere is
leged
mining
at
ary
for
ment
valid
st,
mply
g to
een
l
ginal
an
affiliated
Mining L
without r
Simply p
34
never po
Salvador
Mining L
State.499
property
exploitat
any kind
exploitat
Because
the subso
cannot be
legally ow
34
causal lin
the Tribu
Salvador
to have e
499 Otto Epara. 68; A
d company co
Law. Third,
renewing it.
put, El Salva
In add43.
ssessed a co
ran law. Acc
Law and Reg
The conces
right to extr
ion concessi
related to th
ion concessi
Claimant's c
oil, El Salvad
e compensat
wn.
Pac R44.
nk between t
unal would h
ran law or to
explored, com
xpert Report Ayala/Fratti d
ould legally
Claimant al
Fourth, Pac
dor cannot h
dition to the
mpensable r
cording to E
gulations pro
sion holder,
ract minerals
ion to begin
he mineral de
ion, Pac Rim
claims to inju
dor could no
ted for the al
Rim's failure
the alleged h
have to make
actual even
mpleted a Fe
at 8-9. See a
de Vega Expe
acquire exp
lowed its ex
c Rim never
have caused
complete lac
real property
l Salvador's
ovide that ow
as distingui
s from the un
the extractio
eposits in El
m would still
ury are base
ot have cause
lleged loss o
to establish
harm and the
e several unr
ts that have
easibility Stu
also Tinetti Exert Report at 9
164
loration lice
xploration lic
acquired any
damage to r
ck of mining
y right in the
mining law
wnership of m
shed from th
nderground d
on of minera
l Salvador. B
not own the
d on an alleg
ed the damag
of property th
a legal right
e damages cl
reasonable as
transpired.
udy, acquired
xpert Report, 9, 33.
enses coverin
cense to Sant
y rights to Z
rights Pac Ri
g title, Claim
mineral dep
expert, Jam
minerals in t
he holder of
deposits. Pa
als and thus n
But even if C
e mineral dep
ged property
ge claimed b
hat it did not
t to the depo
laimed. To a
ssumptions t
For example
d the surface
paras. 8, 21,
ng the same
ta Rita to lap
Zamora/Cerro
im did not po
mant, as a ma
posits accord
mes Otto, the
the ground r
an explorati
ac Rim never
never had pr
Claimant hel
posit in the s
y right to min
by Pac Rim.
t own or that
sits severs a
award dama
that are eithe
e, Claimant w
e rights over
31-32; Terce
areas under
pse in 2009
o Colorado.
ossess.
atter of law,
ding to
Constitution
remain with t
ion license, h
r obtained an
roperty right
ld a valid
subsoil.
neral deposi
Claimant
t it could nev
any possible
ages to Claim
er contrary t
would have
r the requeste
ro Expert Rep
the
n,
the
has a
n
ts of
its in
ver
mant,
to
had
ed
port,
concessio
even clai
deposits.
this hypo
sought (w
there are
have any
procure b
infrastruc
to apply
would sti
Coyotera
January 2
clock to l
legally ac
found aft
associate
tribunal d
basis of a
34
claims. C
500 Pac Ri
on area and c
im a property
Even then,
othetical wor
which at the
still a large
y rights to mi
bids and hire
cture as well
for renewals
ill not have c
a and Nance
2005 would
legally acqu
cquired, ther
ter exploring
ed with Pac R
determines a
a speculative
In sum45.
Claimant has
m Internal M
completed th
y right to exp
Pac Rim's r
rld Pac Rim
time its offi
number of s
inerals. To b
e contractors
l as obtain pe
s for Santa R
conferred an
Dulce depos
violate Salv
uire rights to
re is no guar
g those areas
Rim's claim.
a breach of a
e claim.
m, the lack o
s no valid rig
Memo re Surfa
he necessary
ploit the Min
rights would
had actually
cers stated w
speculative e
begin extrac
s, order mach
ermits by the
Rita within th
ny property r
sits after the
vadoran law.
Zamora/Cer
rantee that ec
s. There are
As the Nor
a legal obliga
of factual cau
ghts to the d
ace Owner Au
165
y studies to r
nita, South M
have been l
y met the req
was "nearly (
events that w
tion, Pac Rim
hinery, and c
e Governme
he appropria
rights. Furth
e expiration o
Claimant w
rro Colorado
conomically
simply too m
rdzucker and
ation has occ
usation warra
deposits and
uthorization (C
remedy the d
Minita, Bals
limited to the
quirements to
(if not totally
would have h
m would hav
construct the
ent. Similarl
ate time to ex
hermore, assu
of the origin
would also ha
o. And even
y mineable m
many unsub
d Al-Bahloul
curred, it can
ants the reje
has failed to
C-291).
deficiencies
amo, and Nu
e minerals ex
o obtain the
y) [an] impo
had to occur
ve had to sec
e plant and s
ly, Claimant
xplore the ar
uming any r
nal exploratio
ave had to w
n if these lice
minerals wou
stantiated as
l cases recog
nnot award d
ection of Pac
o allege any w
in its EIA to
ueva Esperan
xploited. If
concession
ossible task")
for Claiman
cure financin
surrounding
t would have
rea but this
right to the
on licenses i
wind back th
enses had be
uld have been
ssumptions
gnize, even i
damages on
c Rim's dama
wrongdoing
o
nza
f in
it
),500
nt to
ng,
e had
n
e
een
n
f a
the
ages
g by
El Salvad
legal cau
B
34
based cla
Salvador
Instead, C
guise of c
Investme
unconvin
34
claims th
wrong, a
with Clai
neverthel
Conventi
applicatio
Rim claim
any even
501 Memor502 Memor503 Memor
dor. Natural
usation. With
B. The a
1.
In an 46.
aims in their
r's Investmen
Claimant has
customary in
ent Law. Pac
ncing, contra
To est47.
hat the partie
s El Salvado
imant's asser
less attempts
ion which pr
on of domes
ms that the r
nt.503
rial, paras. 64
rial, paras. 64
rial, paras. 64
lly, having fa
hout causatio
applicable la
Salvadoran
earlier phase
entirety. Al
nt Law, Claim
s focused its
nternational
c Rim's justi
adictory, and
tablish the ap
es have not a
or has alread
rtion that thi
s to derive su
rovides for, i
stic laws and
remedies for
42-643.
42-643.
43, 654-655.
failed to prov
on, there can
aw on dama
n law is the
e of these pr
lthough the T
mant has squ
s efforts on r
law that can
ifications for
d without any
pplicability
agreed on the
dy explained
is arbitration
upport for it
in the absenc
d internationa
r damages un
166
ve factual ca
n be no entit
ages
applicable la
oceedings, t
Tribunal kep
uandered thi
re-introducin
nnot apply to
r importing p
y basis.
of internatio
e application
above in Se
n is governed
s tenuous po
ce of an agre
al law as ma
nder domesti
ausation, Cla
tlement to da
aw in this ar
the Tribunal
pt the door o
is opportunit
ng its failed t
o this case th
principles of
onal law in th
n of a substan
ection IV.A,
d by Salvado
osition from
eement betw
ay be applica
ic and intern
aimant has fa
amages.
rbitration
rejected Pac
open to claim
ty to continu
treaty claims
hat proceeds
f internation
his arbitratio
ntive law. N
but it is also
oran law.501
Article 42(1
ween the part
able.502 Des
national law
ailed to estab
c Rim's CAF
ms under El
ue with its ca
s through the
only under t
nal law are
on, Pac Rim
Not only is th
o inconsisten
Claimant
1) of the ICS
ties, the
spite this, Pa
are consiste
blish
FTA-
ase.
e
the
his
nt
SID
ac
nt in
34
Salvador
Salvador
34
Law, the
Investme
claiming
mining th
Pac Rim
no time d
3
de Vega,
under Sa
504 Memor505 ParagrInvestmendiscriminabothered tResponde506 Memor507 Ayala/derecho q
As de48.
ran law is the
r, including l
2.
Pac R49.
Constitution
ent Law, Cla
that Preside
hat effective
admits that
does Claiman
As ex50.
the need to
lvadoran law
Thereis advState'sand thcontemcompe
rial, para. 692
aph 659 of Cnt Law and thation) and 8 (to explain how
ent's Breaches
rial, para. 639
/Fratti de Vegque se ve afec
monstrated i
e applicable
legal princip
Salvadoranlosses
Rim seeks dam
n, and gener
aimant articu
ent Saca's sta
ly prevented
Salvadoran
nt suggest th
plained by E
provide for
w:
fore, expropversely affects decision bahe prior existmplated in thensation.507
2.
laimant's Memhe Constitutio(compensationw El Salvados.
9.
ga Expert Repctado por la in
in Section IV
law in this a
les on dama
n law provid
mages due t
ral principles
ulates a singl
atements rep
d the compan
law establish
hat Salvador
El Salvador's
fair compen
priation presuted by the goased on groutence (or subhe Constituti
morial states on of El Salvan for expropr
or has allegedl
port at 47 ("Pontervención es
167
V.A above, i
arbitration, th
ages.
des a basis fo
o alleged bre
s of internati
le breach on
ported in the
ny and its su
hes an oblig
an laws prov
s administrat
nsation in the
upposes the overnment inunds contempbsequent in tion and in th
"Respondent ador, includingriation)." Desly violated th
or tanto, la exstatal, la deci
in light of th
he Tribunal
or compensa
eaches unde
ional law."50
the grounds
press allege
ubsidiaries fr
gation to com
vide inadequ
tive law exp
e event of an
e existence ofntervention,
mplated by ththose cases ehe Law) of fa
t has acted in g under: Articspite this baldose standards
xpropiación prsión adoptada
he parties' ag
must apply
ation for Cla
er "the Foreig
04 With resp
s of expropri
edly announc
rom enjoying
mpensate an i
uate compen
perts, Ayala M
n expropriati
of a right thathat is, the e legal systeexpressly fair
a manner concle 5 (equal p
d assertion, Cls. See Memor
resupone la ea por el Estad
greement that
the laws of E
aimant's alleg
gn Investme
pect to the
iation,505
ced a ban on
g their rights
injured party
nsation.
Muñoz and F
ion is recogn
at
em
ntrary to the protection), 6 laimant has nrial, Section V
existencia de do con fundam
t
El
ged
nt
n
s.506
y. At
Fratti
nized
(non-not V:
un mento
Jurisprud
integralid
maximum
other wo
expropria
such loss
razonabl
3
have any
failed to
this cann
expropria
Salvador
3
been exp
damages
valuation
mineral d
would be
en una cauexpresamoriginal). 508 Ayala/509 Ayala/510 Ayala/511 Otto E
dence establi
dad"). For a
m amount of
rds, the law
ated property
ses must be f
le").509 Com
Howe51.
y rights capab
acquire any
not be equate
ated.510 The
r.
Even 52.
propriated, it
based on th
n goes agains
deposits in th
e entitled to
usa prevista pente previstos
/Fratti de Veg
/Fratti de Veg
/Fratti de Veg
xpert Report,
ishes that co
an expropria
f compensati
provides for
y. Damages
foreseeable a
mpensation is
ever, El Salv
ble of being
property rig
ed with being
erefore, Pac R
assuming th
s damages c
e estimated
st a basic ten
he subsoil.51
125% of the
por el ordenams en la Consti
ga Expert Rep
ga Expert Rep
ga Expert Rep
, Question 1.
mpensation
ation based o
ion at 125%
r compensati
s for lost pro
and reasonab
s, however, l
ador's admin
expropriated
ghts. All tha
g granted a c
Rim is not en
hat Claimant
laim is still f
amount of m
net of the Co
1 If its inves
e declared va
miento jurídicitución y en la
port at 51.
port at 48.
port at 50.
168
must be fair
on a public u
of the value
ion at a 25%
fits, as Claim
bly certain ("
limited to the
nistrative law
d. In the abs
at existed wa
concession.
ntitled to com
had acquire
fundamental
minerals cont
onstitution w
stment had b
alue of the ex
co y la existena Ley) de una
r, current and
utility, the Ex
e declared to
% premium o
mant notes, a
"previsible c
e maximum
w experts no
sence of a co
as the hope o
That is, a m
mpensation
ed a concessi
lly flawed. P
tained in the
which declare
been expropr
xpropriated p
ncia previa (oa justa indemn
d full ("justi
xpropriation
o the tax auth
over the decl
are also avai
con un grado
125% of de
oted that Pac
oncession, P
of obtaining a
mere hope can
under the la
ion and the c
Pac Rim has
e subsoil. Cl
es that the St
riated, at mo
property, bu
o posterior en nización.") (e
icia, actualid
Law sets a
horities.508 I
lared value o
ilable; howe
o de certeza
eclared tax va
c Rim did no
Pac Rim had
a concession
nnot be
aws of El
concession h
s quantified
laimant's
tate owns
ost Pac Rim
ut not the val
los casos
emphasis in
dad e
In
of the
ver,
alue.
ot
n but
had
its
lue of
the miner
compens
quantifia
Pac Rim
could pro
pursuant
3
expropria
internatio
capable o
3
dispute.
events. T
establish
sources, h
proceedin
3
apply to
states:
512 Ayala/513 Tercer514 Memor
ral resources
ation for los
able with a re
would only
ove and that
to Article 17
Thus, 53.
ation. There
onal law. Bu
of being exp
3.
Princi54.
But Claiman
These princip
State respon
however, are
ngs, they wo
First, 55.
disputes betw
/Fratti de Veg
o Expert Rep
rial, para. 649
s. Furthermo
st profits wou
easonable de
have been a
were registe
7 of the Inve
the laws of
e is no legal j
ut Claimant
ropriated. T
Claimant wof internat
iples of custo
nt's recourse
ples, embod
nsibility to m
e not applica
ould not give
Claimant's r
ween States
ga Expert Rep
port, para. 62.
9.
ore, without
uld not be av
egree of certa
able to recov
ered as inves
estment Law
El Salvador
justification
simply has n
This fact rem
would not betional law
omary intern
e to these pri
died in the IL
make full rep
able to this a
e Claimant th
reliance on th
. For examp
port, § 10.3.c.
169
t an operating
vailable beca
ainty, and w
ver the amoun
stments with
w.513
provide ade
n or need to r
no right to co
mains unchan
e entitled to
national law
inciples to su
LC Draft Art
paration for a
arbitration an
he remedy it
hese legal au
ple, Article 3
g mine or a
ause such lo
would be pure
unts legitimat
h the Nationa
equate comp
resort to gen
ompensation
nged under in
compensatio
have no role
ustain its dam
ticles and the
an internatio
nd even if th
t seeks.
uthorities is
33(1) of the I
record of pr
osses are not
ely speculati
tely invested
al Investmen
pensation for
neral principl
n because it
nternational
on under gen
e to play in d
mages claim
e Chorzów F
onally wrong
hey were rele
misplaced b
ILC Draft A
oduction,
foreseeable
ive.512 Rath
d that Pac Ri
nt Office (ON
r an
les of
has no right
law.
neral princip
deciding this
m is futile in a
Factory case
gful act.514 B
evant to thes
because they
Articles expre
or
her,
im
NI)
ples
s
all
e,
Both
se
essly
3
suffered
the violat
to a Stat
noted tha
individua
Thus, Cla
follows t
3
internatio
standard
only one
515 ILC DrState actobilateral owhether aaccount. 516 Case CJudgment517 Factor518 El SalvheightenePoland's ceven again519 Memor
The oowed command cocircum
Simila56.
by a State an
tion of whic
te, which rig
at the harm s
al is never th
aimant incor
hat Claiman
Secon57.
onal law with
of compens
decision for
raft Articles,
or invoking Stor regional invand to what ex
Concerning tht (Sept. 13) at
ry at Chorzów
vador submitsed damages foconduct was nnst compensa
rial, paras. 65
bligations ofto another S
munity as a wontent of themstances of t
arly, the PCI
nd a private
h rights caus
hts may also
suffered by S
herefore iden
rrectly relies
nt is not entit
nd, Claimant
hout regard
ation under A
r its extraord
Art. 33, at 94tate responsibvestment protxtent non-Stat
he Factory at 28 (CL-225)
w (Germany v
s that the Choor an unlawfunot an expropation. See Fa
58-660. Claim
f the responsState, to sevewhole, depene internationathe breach.51
IJ in the Cho
entity. The
ses damages
o be infringe
States and in
ntical in kind
s on rules go
tled to comp
t suggests tha
to domestic
Articles 5, 6
dinary propo
4 (RL-79(bis))bility on its owtection agreemte entities are
Chorzów (Ge) (emphasis ad
v. Poland) at 2
orzów Factoryul expropriatiopriation but rctory at Chor
mant has inco
170
sible State seeral States, onding in partial obligation15
orzów Factor
PCIJ observ
s are always
ed by the sam
ndividuals is
d with that w
verning the
ensation on
at the Tribun
laws, or in t
6, and 8 of th
osition to app
). Subparagrawn account unments. Howee entitled to in
ermany v. Poldded).
28 (CL-225).
y case is also on. Memorialather a seizurrzów (German
orrectly cited t
et out in thisor to the intericular on then and on the
ry case disti
ved: "Rights
in a differen
me act."516 T
different: "T
which will be
relations bet
the basis of
nal apply gen
the alternativ
he Investmen
ply internatio
aph (2) recognder, for examever, those prinvoke State re
land), 1928 P
inapplicable l, para. 647. re of propertyny v. Poland)
to Article 9, i
s Part may bernational e character
inguished be
or interests
nt plane to r
The Court, in
The damage
e suffered by
tween States
f these legal a
neral princip
ve, due to a l
nt Law.519 C
onal law dire
gnizes the posmple, a humaimary rules wesponsibility o
P.C.I.J (Series
to support PaThe PCIJ em
y that could no) at 46 (CL-22
instead of Art
e
etween injuri
of an indivi
rights belon
n particular,
suffered by
y a State."517
s. It clearly
authorities.5
ples of
lacuna in the
Claimant cite
ectly withou
ssibility of a nan rights treatywill determineon their own
s A) No. 17,
ac Rim's claimmphasized that
ot be expropr25).
ticle 8.
ies
dual,
nging
an
7
18
e
es to
ut
non-y or e
m for t riated
reference
erroneou
Furtherm
Claimant
omission
unlawful
3
these inte
law is ap
in the po
would no
concessio
requirem
so. The F
lacked cr
520 In Wenbrought utreatment on the groapplicablemade a chConventioArticle 42Committeequates trthat whenalien to thapplying tARB/98/4521 Ayala/522 Memor
e to Salvador
us approach w
more, assumin
t has not stat
n that would
l expropriatio
In any58.
ernational la
plied, the Tr
sition it wou
ot as of Marc
on regardles
ments for an e
Feasibility S
rucial studies
na Hotels v. Eunder the UK-
provision andounds that intee law which inhoice on the aon. The Com2(1) but was oee decided thereaties with don a tribunal aphe domestic sythe investmen4, Decision on
/Fratti de Veg
rial, para. 655
ran law. Un
would also o
ng a lacuna
ted a claim u
impose an o
on.521
y event, Pac
aw principles
ribunal must
uld have enjo
ch 2008 (mu
s of Presiden
exploitation
Study remain
s, and Pac R
Egypt, the resp-Egypt BIT. Ed for committer alia the tribn its view wa
applicable lawmmittee made only tasked we tribunal hadomestic law. pplies the law ystem of this nt treaty. Seen Annulment,
ga Expert Rep
5.
nsurprisingly
offend the ag
exists, the T
under Article
obligation on
Rim would
s. According
t compensate
oyed but for
uch less some
nt Saca's alle
concession a
ned stalled an
Rim did not h
pondent brougEgypt had beeting an exprobunal had ma
as Egyptian law so it was com
clear that it wwith deciding id not exceeded
As the Commembodied in country." Th Wena Hotels, Feb. 5, 2002
port at 54.
171
y, Claimant h
greement of t
Tribunal need
es 5 or 6 and
n El Salvado
not be entitl
g to Claiman
e Pac Rim fo
El Salvador
e later date)
eged stateme
and did not h
nd unfinishe
have ownersh
ght an applicaen found liabpriation. Egy
anifestly exceaw. The ad hompelled to in
was not elaborif the tribunald its powers bmittee stated, a treaty to w
hus, the tribuns Ltd. v. Arab2, paras. 37-46
has misinterp
the parties to
d not resort t
d there was n
r to compen
led to damag
nt, whether S
or the damag
r's wrongful
have obtain
ent. Pac Rim
have any rea
ed, the Envir
hip rights ov
ation to annulble for breachiypt argued thaeeded its poweoc Committee
nterpret Articlrating precisel had manifesby applying th"[t]his treaty
which Egypt isnal had given
b Republic of E6 (Authority
preted this c
o apply Salv
to internation
no illegitima
nsate Claiman
ges even on t
Salvadoran o
ges it suffere
acts.522 How
ned an exploi
m had not m
asonable pro
ronmental Im
ver the land
l the award. ing the fair anat the award ser by failing te found that tle 42(1) of thee conclusions stly exceeded he BIT becau
y law and pracs a party it is nn effect to EgyEgypt, ICSID
y RL-159).
ase.520 Such
vadoran law.
nal law beca
ate act or
nt for an
the applicati
or internation
ed by placing
wever, Claim
itation
et the legal
ospect of doi
mpact Study
above its
The case wasnd equitable should be annto apply the the parties hade ICSID on the meaniits powers. T
use Egyptian lctice evidencenot applying ryptian laws byD Case No.
h an
ause
ion of
nal
g it
mant
ng
s
nulled
d not
ing of The law es rules y
proposed
areas (na
explorati
outcome
allowed t
under gen
C
3
Consultin
methods
errors Cl
submits t
as a basis
3
("FTI") t
breaches
claim of
3
analysis.
assumpti
523 Expert2013 (Am
d concession
amely Huacu
ion licenses.
of Claimant
to lapse or it
neral princip
C. Pac R
In this59.
ng used to qu
selected by
aimant's exp
that these err
s for awardin
1.
Claim60.
o provide a
by El Salva
$301 million
The a61.
Claimant in
ons:
In Cla"El D
t Report of Ho
mended Aug.
. Nor could
uco, Guaco a
Finally, non
t's careless m
ts failure to a
ples of intern
Rim's quant
s section, El
uantify Claim
Claimant's d
perts have m
rors render C
ng compensa
Valuation
mant has enga
quantificatio
ador. FTI ha
n.
ssumptions u
nstructed its
aimant's but-orado Projec
oward N. Ros16, 2013) ("F
d Claimant ha
and Pueblos)
ne of El Salv
management
acquire mini
national law,
um analysis
Salvador wi
mant's minin
damages exp
made in the im
Claimant's va
ation.
methods and
aged Howard
on of damag
as applied thr
underlying F
damages ex
-for scenarioct" and relate
sen and JenniFTI Expert Re
172
ave been leg
) that overlap
vador's alleg
of the Santa
ing rights to
, Claimant w
s is seriously
ill explain: (
ng interests i
perts are with
mplementatio
aluation enti
d assumption
d Rosen and
es sustained
ree methodo
FTI's calcula
xperts to prov
o, Pac Rim wed mineral e
fer Vanderhaeport"), para. 3
gally permitt
pped with th
ged bad acts
a Rita explor
Zamora/Cer
would not be
y flawed
(1) what valu
in El Salvad
hout legal ba
on of these m
irely useless
ns used by C
d Jennifer Va
d by Claiman
ologies result
ations are rea
vide a valua
would have dexploration l
art, FTI Consu3.6. See also
ted to hold n
he original ex
would have
ration licens
rro Colorado
e entitled to c
uation metho
dor; (2) why
asis; and (3)
methods. El
s such that it
Claimant's ex
anderhart of
nt as a result
ting in an am
ason enough
ation based o
developed anicenses.523 H
ulting, on Damo Memorial, p
new licenses
xpired
changed the
e that was
o. Thus, eve
compensatio
ods FTI
the valuation
what signifi
l Salvador
cannot be u
xperts
f FTI Consul
of the allege
mended total
h to reject its
on three fault
nd operated tHowever, it
mages, Mar. 2para. 662.
over
e
en
on.
n
ficant
used
lting
ed
l
s
ty
the is
28,
524 For exaMinita deFeasibilityClaimant 525 Expert("Navigan526 FTI Ex527 See Me528 MemorThe TribuknowledgTribunal tthat it woufrom seek
improhave cPac Rgranteexplorand Nit thenhave ealso cbeforethe apscenarexploirequirwith nconcluClaim
The vstateman earcorporagreesClaimacknothat thexploicondu
ample, the Feposit and, accy Study did nlacked surfac
t Report of Brnt Expert Rep
xpert Report,
emorial, para
rial, para. 298unal will recalge of the allegto survive theuld not seek c
king damages
oper to assumcommenced
Rim had not med an Exploiration licens
Nance Dulce n allowed to enabled it toontrary to Ce March 11, pproval of thrio, there is nitation concerements of Ano allegationudes "a reaso
mant's interes
aluation datement by Presrlier date worate nationals that an earl
mant, the corrowledged thahe processingitation would
ucted).528
easibility Studcording to Cla
not cover the Nce rights to th
rent C. Kaczmport"), para. 9
para. 2.1.
s. 665-666.
8. Claimant nll that in the j
ged measures e abuse of procompensationfor measures
me that as of immediately
met (and waitation Conceses, Claimandeposits), haexpire (Sant apply for a
Claimant's ass2008 because EIA that ono moratoriuession applic
Article 37.2 an of Governmonably inforsts in the Min
e is the day iident Saca.52
ould have beelity) when itlier date shorect date wouat the Ministg of environd be halted u
dy had been paimant, the SoNueva Esperae entire area o
marek and Kir3 (emphasis a
now admits thurisdictional until March 2
ocess objection for measuress implemented
173
f the valuatioy. This assus unlikely toession for Elt could not lad not explota Rita) or nlicense (Zamsertion that ise it capture
occurred prioum on metalcation is refuand Claimanment interferrmed buyer ineral Deposi
immediately26 This dateen appropriat requested auld be used.uld be May ters of Econonmental permuntil the Stra
put on hold inouth Minita aanza, Coyoterof the request
ran P. Sequeiradded).
hat it was infophase of this
2008. It is clen. To avoid hs taken prior d before that
on date constumption is fao meet) the lel Dorado.524
legally posseored another never acquiremora/Cerro Cit is not seeks losses arisi
or to this datllic mining, tused for nonnt's only validrence. Undeis unlikely toits."525
y preceding te is wrong. Eate such as 2an environme. Even using7, 2007 (i.e.omy and the
mits for metaategic Enviro
ndefinitely andand Balsamo dra or Nance Dted concessio
ra, Navigant
ormed of the marbitration, C
ear now that Chaving its clato March 200date.
truction of thactually incoegal requirem With respe
ess certain lilicense area
ed mining rigColorado). Tking damageing from the
te. Under thethe EIA is un
n-complianced exploratioer this scenaro ascribe any
the March 1Even Claima2004 (prior toental permitg the events ., when Claim Environmen
allic mining onmental As
d would havedeposits. But
Dulce depositson.
Consulting In
moratorium oClaimant profClaimant hid
aim dismissed08. Thus, Cla
he mine couorrect becausments to be
ect to the icenses (Coya it did hold tghts that woThis scenari
es for breache alleged dele correct butnder reviewe with the legn license exprio, Navigany value to
1, 2008 ant implies tho its change .527 El Salvaas describedmant nt announceexploration ssessment w
e only coveredt the incompls. Further,
nc., Jan. 10, 2
on May 7, 200fessed to havethis fact from
d, Claimant staimant is barr
uld se
yotera that uld o is
hes ay in t-for , the gal pires
nt
hat of
ador d by
ed and
was
d the lete
2014
07. e no
m the tated red
3
assumpti
First, it u
reserves
variants o
South Mi
comparab
approach
propertie
following
529 FTI Ex530 Ayala/531 Memor532 The Monly inclu533 FTI Ex534 FTI Ex
The stto assuarbitrathis arcompe
Claim62.
ons. FTI ap
uses the Disc
for the Mini
of market-ba
inita, Nance
ble public co
h to estimate
es which hav
g section, the
xpert Report,
/Fratti de Veg
rial, para. 669
Minita deposit ude resources
xpert Report,
xpert Report,
tandard of coume that FMations. Claimrbitration is bensation is li
mant's experts
pplies an Inco
counted Cash
ita deposit re
ased method
Dulce, Coy
ompanies an
the value of
ve no provab
ese approach
para. 2.1.
ga Expert Rep
9.
is the only de.
para. 6.24.
para. 6.25.
ompensationMV is the relmant's intellbeing conduimited to 12
s proceed to
ome-based a
h Flow (DCF
eported in th
ds to estimate
yotera and Nu
nd transaction
f the Santa R
le mineral re
hes are not a
port at 51.
eposit that con
174
n is fair markevant standaectual shortc
ucted under t5% of the va
calculate da
approach and
F) method (a
he Pre-Feasib
e the value o
ueva Espera
ns.533 FTI a
Rita and Zam
esources.534
appropriate i
ntains both re
ket value ("Fard because icut is erronethe laws of Ealue declared
amages base
d two Marke
an income-b
bility Study.5
of the resour
anza deposits
also uses the
mora/Cerro C
However, a
n this case.
eserves and re
FMV").529 Cit has been u
eous becauseEl Salvador. d to tax auth
ed on these e
et-based app
ased approa
532 Second,
rces in the M
s on the basi
comparable
Colorado exp
as will be ex
esources. The
Claimant appused in othere it ignores th As such,
horities.530
erroneous
proaches.531
ach) to value
FTI applies
Minita, Balsam
is of allegedl
e transactions
ploration
xplained in th
e other depos
pears r hat
the
two
mo,
ly
s
he
its
3
concern:5
approach
3
approach
more on
Rosen an
because t
date may
reasoning
3
Valuation
Petroleum
dependin
standards
value exp
classifica
535 El Salvturned int536 FTI Ex537 FTI Ex538 FTI Ex
2.
In its r63.
535 (1) Incom
h. However,
The co64.
h determines
an asset than
nd Vanderha
the costs inc
y not reflect t
g goes again
In its r65.
n of Mineral
m ("CIMVA
ng on the stag
s, on page 24
ploration, an
ation of the B
vador notes thto an operatin
xpert Report,
xpert Report,
xpert Report,
Pac Rim ucase
a) FT
report, FTI e
me-based app
it only emp
ost approach
value "base
n it would co
art, a cost-ba
curred by Pac
the business'
nst the valuat
report, FTI s
l Properties p
AL").538 The
ge of develo
4 of the FTI
nd in some ca
Balsamo, So
hat valuation ng mine.
para. 6.18(iii
para. 6.15.
para. 6.20.
used the wron
TI's analysis i
explains that
proach, (2) M
ploys the firs
h is a kind of
ed on the prin
ost them to c
sed approach
c Rim to adv
' ability to ge
tion standard
states that it
produced by
CIMVAL s
opment. The
report clearl
ases, minera
outh Minita, N
of a going co
).
175
ng valuation
ignores a thi
t there are th
Market-based
t two approa
f asset-based
nciple that a
construct the
h might prod
vance the Mi
enerate futur
ds FTI purpo
has referred
y the Canadia
standards rec
e summary c
ly indicates
al resource p
Nance Dulc
ncern is a fal
n methods to
ird valuation
hree main ap
d approach,
aches.
d approach.
a notional pu
e asset thems
duce a less re
ineral Prope
re cash flow
orts to have f
d to the Stand
an Institute o
commend va
chart, replica
that the cost
roperties. D
e, Coyotera
se premise sin
o calculate da
n method
pproaches to
and (3) Cos
As FTI exp
urchaser wou
selves."536 A
eliable resul
erties before
ws.537 Howev
followed.
dards and Gu
of Mining, M
aluation appr
ated from the
t approach sh
Despite FTI's
and Nueva E
nce none of th
amages in th
value a goin
st-based
lains, the co
uld not spend
According to
lt in this case
the valuatio
ver, this
uidelines for
Metallurgy a
roaches
e CIMVAL
hould be use
s own
Esperanza
he deposits w
his
ng
st
d
o
e
n
r
and
ed to
were
deposits
as "explo
mining in
3
of Navig
compens
which ha
"most oft
a comme
these dep
3
amounts
explained
tax autho
if there is
to the tax
FTI's fail
539 El Salvmerely poagree with540 See Na541 Naviga542 Naviga543 Ayala/
as "mineral
oration prope
nterests.539
By co66.
ant Consulti
ation, the co
ave no define
ften sold or p
ercial discov
posits is a sig
Simila67.
invested, the
d, the Expro
orities in assi
s no tax decl
x authorities.
lure to apply
vador is not suoints out the inh FTI's classif
avigant Exper
ant Expert Re
ant Expert Re
/Fratti de Veg
resource pro
erties" under
ontrast, El Sa
ing ("Naviga
ost-approach
ed resources
purchased for
ery is ultima
gnificant fac
arly, by prov
e cost appro
priation Law
igning the am
laration). Th
.543 Given th
y this third m
uggesting thanconsistency fication of the
rt Report, para
eport, para. 16
eport, para. 17
ga Expert Rep
operties" and
r CIMVAL,
alvador's valu
ant"), have c
h would be b
.540 Navigan
r no upfront
ately made."
ctor affecting
viding comp
ach is thereb
w uses the ow
mount of com
he property h
hat Salvador
method of val
at the CIMVAin Claimant's
e deposits and
a. 161. See a
61, n.166.
7.
port at 51.
176
d Santa Rita
FTI fails to
uation exper
oncluded tha
etter suited i
nt observes t
consideratio
541 This is b
g their value
ensation for
by endorsed
wner's estim
mpensation
holder is enti
ran law is the
luation is a m
AL Standards s valuation apd properties.
also Ripinsky
and Zamora
apply the co
rts, Brent Ka
at should Cl
in this case f
that early ex
on, but rathe
because "[t]h
."542
r an expropri
under Salva
mate of the pr
due (or the o
itled to up to
e applicable
major error.
should be apppproach. Nor
& Williams a
a/Cerro Colo
ost approach
aczmarek an
laimant be en
for the explo
xploration pr
er contingent
he early, unc
iated investm
adoran law.
roperty's valu
original cost
o 125% of th
law in these
plied in this ar does El Salv
at 135-136 (R
orado proper
h to any of its
nd Kiran Seq
ntitled to
oration prope
roperties are
t considerati
certain stage
ment based o
As previous
ue presented
t of the prope
he value decl
e proceeding
arbitration butvador necessa
RL-152).
rties
s
queira
erties
ion if
of
on the
sly
d to
erty
lared
gs,
t rily
3
applies to
mineral r
As the ap
including
premised
establish
principle
3
cash flow
sum of fu
the prese
assumpti
and risks
of the DC
544 Ripinsk545 ILC Dr
The D68.
o value the M
reserves and
pplicable law
g the amount
d on a differe
the amount
s of internat
Incom69.
ws expected
uture cash fl
ent value by u
ons and subj
s (e.g., techn
CF approach
difficuestablanalyzwhichrates, intereadopt althouthere h
ky & William
raft Articles,
b) Th
Discounted C
Minita depos
comparable
w in this arbi
t of compens
ent standard
of compens
tional law wh
me-based app
to be genera
ows projecte
using a disco
jective judgm
ical, financia
h:
ulties can arilish capital vzes a wide rah have a signcurrency flust rates and oa cautious a
ugh income-bhas been a d
ms at 195 (RL
Comment (26
he basis of FT
Cash Flow (D
sit. FTI uses
es approache
itration, Salv
sation. Thus
of compens
ation in this
hich Pac Rim
proaches, suc
ated in the fu
ed to a speci
ount rate.544
ments must b
al and geopo
ise in the appvalue in the cange of inhenificant impauctuations, inother comm
approach to tbased metho
decided prefe
L-152).
6) to Article 3
177
TI's DCF cal
DCF) Appro
s the DCF m
es to calculat
vadoran law
s, the applica
ation (i.e., fa
arbitration.
m incorrectly
ch as the DC
uture. Simpl
ific period of
As a forwa
be made abo
olitical). Th
plication of compensatiorently specu
act upon the nflation figurercial risks).the use of thods have beeerence for as
36, at 103-104
lculation lac
ach is one o
method to qua
te the minera
determines
ation of these
air market va
FTI's propo
y claims are
CF method, r
ly stated, the
f time and th
ard-looking v
out future rev
e ILC Draft
the DCF meon context. Tulative elemeoutcome (e.
ures, commod. This has le
he method. Hen accepted isset-based m
4 (RL-79(bis)
cks foundatio
f the two me
antify the va
al resources
all aspects o
e methods, w
alue), is inap
osed method
relevant in t
reflect the pr
e DCF metho
hen discount
valuation too
venues, mar
Articles rec
ethod to The method ents, some o.g. discount dity prices, ed tribunals Hence, in principle,
methods.545
)) (emphasis
on
ethods FTI
alue of the
in the depos
of this case,
which are
ppropriate to
ds also fail un
this case.
resent worth
od calculates
ts them back
ol, a number
rket conditio
ognize the li
f
to
added).
sit.
o
nder
h of
s the
k to
r of
ons
imits
A valuati
and may
tribunal m
3
earnings
generated
must be a
Contrary
valuing "
has been
3
interferen 546 See e.g255, at 25certainty, America),cessans mFinance vrules of thdamages c("Tribunaelements.547 See als548 Memor549 World Committe6(i) (Authproven reexplains: income-prowner is aparticular greatly exis not applegitimate
ion based on
be considere
must not awa
Tribun70.
potential.547
d by the DCF
a going conc
y to Claimant
"both going c
endorsed by
In Me71.
nces by loca
g., Rudloff Ca58 (Authority
and cannot b, PCA Case II
must be the dirv. Iran, Awardhe law of intercan be award
als have been ").
so Ripinsky &
rial, para. 670
Bank, Legal ee and Guidelhority RL-16cord of profit"This methodroducing capaa function of tcaution shou
xaggerate theipropriate for spely accrue und
n numerous u
ed overly sp
ard compens
nals have tre
7 Without a
F approach a
cern to estab
t's assertion,
concerns and
y the World
etalclad v. M
al governmen
ase (Merits), Uy RL-160) ("Dbe recovered fI U.N.R.I.A.Arect fruit of thd, July 14, 19rnational resped."); ILC Drreluctant to p
& Williams at
0 (emphasis a
Framework flines on the Tr62) (stating thtability, on thd is regarded aacity becausethe cash that
uld be observeir claims of copeculative or der the laws a
unsupported
peculative. It
sation for sp
eated historic
record of pa
are much too
lish future p
the DCF m
d greenfield
Bank FDI G
Mexico, for ex
nts with the c
US-VenezuelaDamages to bfor an uncertaA. 1079, Awahe contract an987, 15 Iran-Uponsibility of raft Articles, Cprovide compe
t 211 (RL-152
added).
for the TreatmTreatment of Fhat compensate basis of the as appropriate
e it recognizesthe enterpriseed in applyingompensation indeterminat
and regulation
178
d assumption
t is well esta
peculative da
cal profits as
ast performan
o speculative
profits with a
ethod is not
investments
Guidelines549
xample, the t
claimant's ef
a Mixed Claimbe recoverableain loss."); Shard, July 24, 1nd not too remUS CTR 189,
States is that Comment (27ensation for c
2).
ment of ForeigForeign Direction may be ddiscounted c
e for valuing s that the econe can be expeg this methodfor lost futurete damage, orns of the host
ns lacks the r
ablished in in
amages.546
s the best ev
nce or curren
e and uncert
any reasonab
widely acce
s."548 This n
9 and interna
tribunal foun
fforts to esta
ms Commisse must be shoufeldt claim (
1930, at 1099 mote or specul
para. 238 (CLt no reparation7) to Article 3claims with in
gn Investmenct Investment:determined "focash flow valu
enterprises wnomic value octed to produ
d as experience profits. Comr for alleged pcountry."
requisite leve
nternational
vidence of a b
nt performan
tain. Accord
ble degree of
epted in inter
notion of a "g
ational jurisp
nd the Respo
ablish a haza
ion, (1903-5)own with a rea(Guatemala, (Authority R
lative."); AmoL-228) ("Onen for speculat36, at 98 (RL-nherently spec
nt, Report to th: Volume II (1for a going coue"). Page 26with a firmly eof such an ent
uce in future. ce shows that mpensation uprofits which
el of certaint
law that a
business' fut
nce, the resu
dingly, a bus
f certainty.
rnational law
going concer
prudence.
ondent liable
ardous waste
) IX U.N.R.I.Aasonable degrUnited StatesRL-161) ("lucoco Internatioe of the best stive or uncert-79(bis)) culative
he Developm1992) at 42, pncern with a
6 of the Reporestablished terprise to itsHowever, investors ten
under this metcannot
ty
ture
ults
iness
w for
rn"
e for
e
A.A. ree of s of crum onal ettled
tain
ent para.
rt
nd to thod
landfill.
analysis o
tribunal u
lost profi
never ope
3
a going c
market v
method o
taking."5
the future
report pro
economic
the time
tribunal c
3
Moldova
because i
not appro
revenues
550 Metalc551 BilounUNCITRA
The tribuna
of future pro
ultimately aw
its. It conclu
erative and a
Likew72.
concern, the
alue, which
of valuation
51 However
e profits of t
ojecting exp
c forecast of
of the expro
concluded th
Most 73.
case. The tr
it never open
opriate for a
has not bee
clad v. Mexico
e and MarineAL, Award on
l considered
ofits and (2)
warded dama
uded that the
any award ba
wise, the Bilo
most accura
in its nature
is often used
r, the panel d
the company
pected profits
f profits but r
priation, the
here was no b
recently, thi
ribunal in tha
ned or gener
business tha
n demonstra
o, para. 121 (R
e Drive Compn Compensat
d alternative
the value of
ages based o
e DCF analy
ased on futu
oune tribuna
ate measure o
e takes into a
d to calculate
determined th
y." The claim
s of the inve
rather a proj
e project rem
basis to calc
s notion of a
at case rejec
rated any rev
at never oper
ated. Use of
RL-143).
plex Ltd. v. Ghtion and Costs
179
methods of c
f Metalclad's
on the amoun
ysis was not a
ure profits wo
l noted that
of value of th
account futur
e the worth o
hat the claim
mant had sub
estment. The
ection inten
mained uncom
culate future
a going conc
cted a DCF c
venue. The p
rated and wh
f the DCF me
hana Investms, June 30, 19
compensatio
s actual inve
nts invested
appropriate b
ould be who
"[n]ormally,
he expropria
re profits. T
of the enterp
mant had not
bmitted a co
e tribunal did
nded to encou
mpleted and
profits.
cern was con
calculation to
panel stated:
here a satisfa
ethodology i
ments Centre a990, at 228 (A
on based on:
stments in th
in the proje
because "the
olly speculati
, in cases of
ated property
The discounte
prise at the ti
t provided "r
ontemporane
d not consid
urage invest
inoperative
nfirmed in th
o value an ai
: "the DCF m
actory basis
in these circ
and the GoverAuthority RL
: (1) a DCF
he landfill. T
ct rather tha
e landfill wa
ive."550
f expropriatio
y is its fair
ed cash flow
ime of the
realistic proo
ous financia
der the report
ors. Further
. Therefore,
he Arif v.
irport store
methodology
for its proje
umstances g
rnment of GhL-163).
The
an for
as
on of
w
of of
al
t an
r, at
, the
y is
cted
gives
ana,
an excess
damages
3
other min
Dolbear,
mines or
or operat
3
exploitat
practical
world:
552 Mr. Frpara. 576 553 Behre 554 Behre 555 Behre 556 Behre
sively specu
on a wasted
It is w74.
ning project
observe tha
advanced an
ting phases.5
In fac75.
ion concessi
standpoint,
There
No pr
Neitheeven b
The paccura
The mnot ye
Contr
Enviro
ranck Charles(Authority R
Dolbear Expe
Dolbear Expe
Dolbear Expe
Dolbear Expe
ulative outcom
d cost basis.
without dispu
for that mat
t during the
ny project to
553
t, the El Dor
ion, without
the project w
was no infr
re-operationa
er the procesbegun to be b
roposed minacy;554
mine plan waet been starte
act bids had
onmental ris
s Arif v. RepuRL-164).
ert Report, pa
ert Report, pa
ert Report, pa
ert Report, pa
me."552 Con
ute that Pac R
tter, into ope
relevant per
o the comple
rado project
a Feasibility
was not even
rastructure (e
al work had b
ssing plant nbuilt;
ning process
as still at the ed;555
not been pro
sks had not b
blic of Moldo
ara. 89.
aras. 32-33.
aras. 32-33.
aras. 32-33.
180
nsequently, t
Rim never b
eration. El S
riod (or any t
etion of a fea
was nowher
y Study, and
n fully devel
e.g. roads, br
been comple
nor project in
and costs w
pre-feasibili
ocured;556
been adequat
ova, ICSID C
the tribunal c
rought the E
Salvador's M
time since),
asibility stud
re near opera
d without sur
loped on pap
ridges, camp
eted (e.g. rem
nfrastructure
were not stud
ity level and
tely studied;
ase No. ARB
calculated th
El Dorado pr
Mining expert
Pac Rim nev
dy, let alone t
ational witho
rface area rig
per, much les
p) on the site
moval of ove
e (e.g. tailing
died to a high
d detailed en
;557 and
B/11/23, Awar
he claimant's
roject, or any
ts, Behre
ver operated
the construc
out a valid
ghts. From a
ss in the real
e;
erburden);
gs ponds) ha
h degree of
ngineering ha
rd, Apr. 8, 20
s
y
d any
ction
a
l
ad
ad
013
Thus, not
of develo
certainty
3
based on
with esta
future pro
with a re
no record
in SPP v.
in its infa
the SPP a
DCF met
insufficie
tribunal f
557 Behre 558 Behre 559 Asian AJune 27, 1560 SoutheAward on561 Wena H(Authorit
Claim
t only did Pa
opment that l
.
Tribun76.
inadequate
ablishing this
ofitability of
asonable deg
ds of profits,
. Egypt deem
ancy and had
and Metalcla
thod on the g
ent basis to e
further quest
Dolbear Expe
Dolbear Expe
Agricultural P1990, para. 10
ern Pacific Prn the Merits, M
Hotels Limitety RL-167).
mant had not
ac Rim have
lost profits c
nals have dis
economic da
s proposition
f the shrimp
gree of certa
, but also inc
med the DCF
d very little h
ad decisions
grounds that
establish lost
tioned wheth
ert Report, § 7
ert Report, pa
Products Ltd.03 (Authority
roperties (MidMay 20, 1992
ed v. Arab Rep
finalized fin
e no record o
cannot be pro
splayed a sim
ata and unpe
n. In AAPL,
farm could
ainty because
curring losse
F method ina
history on w
s, the tribuna
t the claiman
t profits and
her Wena ha
7.
ara. 91.
. v. Republic oy RL-165).
ddle East) Lim2, para. 188 (A
public of Egyp
181
nancing arran
of earnings, b
ojected unde
milar relucta
erformed wo
the tribunal
be establishe
e the compan
es and under-
appropriate b
which to base
al in the Wen
nt's 18-month
the claiman
ad sufficient
of Sri Lanka,
mited v. Arab Authority RL
ypt, ICSID Ca
ngements.558
but the proje
er the DCF m
ance to order
ork. AAPL v
l held that ne
ed under the
ny was "not
-capitalized.
because the h
e its projecte
na Hotels cas
h period of o
nt had not co
funds to fina
ICSID Case
Republic of EL-166).
ase No. ARB/
8
ect was at su
method with
r damages fo
v. Sri Lanka
either the go
e claimant's D
only newly
."559 Similar
hotel develo
ed revenues.5
se561 decline
operations pr
ompleted ren
ance this wo
No. ARB/87/
Egypt, Case N
/98/4, Award,
uch an early s
h any degree
or lost profit
is often cred
odwill nor th
DCF project
formed and
rly, the tribu
opment was s
560 Followin
ed to apply th
rovided an
novations. T
ork.
/3, Final Awa
No. ARB/84/3
, Dec. 8, 2000
stage
of
ts
dited
he
tion
with
unal
still
ng
he
The
ard,
3,
0
3
damages
for lost p
financial
standards
required
sharehold
purpose o
award lo
3
implemen
Study ("P
amended
economic
sufficient
engineeri
valuation
using SR
562 AutopiARB/00/5563 Behre
The A77.
for lost prof
profits, the cl
plan of the
s for awardin
adjustments
der flows. F
of the agreem
st profits in t
Becau78.
nts the DCF
PFS") compl
d estimated v
c analyses re
t economic b
ing study,563
n uncertain a
RK's Pre-Fea
we woprojecof accindicaexperttypica
ista Concesion5, Award, Sep
Dolbear Expe
Autopista cas
fits that cann
laimant subm
concession a
ng lost profit
s if certain ev
Further, the c
ment which
the absence
use Pac Rim
approach ba
leted by SRK
value of $67.
ejected in the
basis to appl
3 to estimate
and inherentl
sibility Stud
ould note thactions. For ecuracy of theating a broadt report, Behally have an
nada de Venept. 23, 2003 (A
ert Report, pa
se provides a
not be justifi
mitted projec
agreement.
ts under Ven
vents occurre
claimant had
was to const
of a sufficie
never mana
ased on the f
K Consulting
.5-80.6 milli
e Biloune an
ly the DCF m
the present
ly speculativ
dy:
at it adds conexample, SReir capital cod range of pohre Dolbear aestimation a
ezuela, C.A. vAuthority RL
aras. 21-23.
182
a further exa
ied by econo
ctions of cas
The tribunal
nezuelan law
ed and could
d no record o
truct a bridg
ent degree of
aged to bring
financial mo
g in January
ion for the M
nd Autopista
method. The
value of futu
ve. Indeed, N
nsiderable unRK notes in thost estimate iotential valuealso notes thaccuracy of +
v. Bolivarian RL-168).
ample of a tri
omic projecti
sh flows incl
l found this e
w and interna
d not guaran
of profits and
ge. Therefor
f certainty.
g the mine in
odel containe
y 2005. Usin
Minita reserv
cases, the P
e use of the P
ure cash flow
Navigant exp
ncertainty totheir report this +/- 25 perces for the Rehat pre-feasib+/- 25 to 30 p
Republic of V
ibunal unwil
ions.562 To
luded in the
evidence fai
ational law b
ntee projected
d had not com
re, the tribun
nto operation
ed in the Pre
ng the PFS, F
ves. Howeve
PFS does not
PFS, in the n
ws renders C
plains the in
o the hat the levelcent, eserves. In ibility studiespercent.
Venezuela, IC
lling to awar
support its c
economic-
iled to meet t
because it
d amounts o
mpleted the
nal declined t
n, FTI
e-Feasibility
FTI arrives a
er, like the
t provide a
nature of a b
Claimant's
nherent limits
l
its s
SID Case No
rd
claim
the
of
main
to
at its
basic
s of
o.
Thus, the
through t
3
where a l
Tecmed,
million) a
the inves
return on
incongru
(approxim
the large
than US$
of FTI's c
3
Navigant
valuation
564 Naviga565 Tecmed566 Wena v567 See NOMoreoverClaimant.MINEC R
Givenfeasibthan thfeasib
e Pre-feasibi
the DCF met
Invest79.
large dispari
the tribunal
and the sum
stor's estimat
n the Claiman
uence betwee
mately US$8
difference b
$300 million
calculations.
Navig80.
t performed
n of the Mini
ant Expert Re
d v. Mexico, p
v. Egypt, Awa
OA, para. 128r, less than $3 See e.g., pag
Resolutions N
n the uncertability study, Fhe DCF valu
bility studies
lity Study pr
thod.
tment tribun
ity exists bet
viewed the v
s sought bas
te was "likel
nt's investme
en the amoun
8.8 million)
between the
n claimed in
.
gant's analys
a reasonable
ita reserves.
eport, para. 16
para. 186 (CL
ard at 918-91
8(2). Howeve34 million wage 4 of exhibi
No. 368-MR (J
ainty of the pFTI's DCF vuation of othhave been c
rovides a les
nals have also
tween the am
vast differen
sed on its DC
y to be incon
ent."565 Sim
nt requested
as one of the
US$77 milli
damages rai
is casts furth
eness check
Applying F
64.
L-197).
9 (RL-167).
er, Claimant hs registered wit C-12 showiJuly 30, 2008
183
projections cvaluation is inher gold mincompleted.56
ss certain eco
o viewed wit
mounts inves
nce in the am
CF calculatio
nsistent with
milarly, in We
(GB£ 45.7 m
e reasons to
ion allegedly
ises legitima
her doubt as
of FTI's DC
FTI's 12% co
has not providwith El Salvading total amou
8) and No. 387
ontained in tnherently lees for which
64
onomic basi
th skepticism
sted and prof
mount invest
on (US$52 m
h the legitim
Wena Hotels th
million) and
deny an awa
y invested by
ate concerns
to the reliab
CF calculatio
ost of capital
ded any evidedor's Nationalunts registere7-MR (Aug.
the pre-ss reliable
h detailed
s to generate
m claims for
fits allegedly
ted by the cla
million) as an
mate and genu
he tribunal r
d Wena's stat
ard of lost pr
y Claimant56
as to the spe
bility of FTI'
n by compar
l to discount
ence to suppol Investment ed as of Septe13, 2008) (C-
e lost profits
r lost profits
y foregone.
aimant (US$
n indication
uine estimat
referred to th
ted investme
rofits.566 He
67 and the m
eculative nat
's DCF valua
ring it to SR
t SRK's net
ort this assertiOffice (ONI)
ember 5, 2008-12).
s
In
$4
that
es on
he
ent
ere
more
ture
ation.
RK's
on. by
8.
present v
values th
This expo
Navigant
valuation
3
its damag
basis is c
3
Rim's oth
publicly
(using th
value the
concessio
deposits
568 Naviga569 After aNavigant companie570 Naviga
value of $ 16
he Minita res
accordbetweMarchtime pReservmarke
onential incr
t concludes t
n conclusion
In the81.
ges, Pac Rim
contrary not
As pre82.
her mining in
traded price
e price of a r
e resources in
on applicatio
in the new e
ant Expert Re
analyzing the finds that the
es increased b
ant Expert Re
6.9 million, r
serves within
ding to FTI, een 676 perch 2008 even period. Thusves has increet changes.56
rease in valu
that there is
."570
absence of
m's claim for
only to Salv
c) FTval
eviously men
nterests: (1)
of a compar
recently pur
n the Minita
on area (the B
exploration li
eport, para. 16
increase in ve index of goldy just 99%.
eport, para. 16
results in an
n a range of $
the value ofcent and 826
though the ps, according eased seven f
68
ue is not expl
no "realistic
a history of
lost profits
vadoran law b
TI's market-blue
ntioned, FTI
the Compar
rable compa
chased comp
a deposit, the
Balsamo, So
icense areas
67.
alue of publicd companies
69.
184
implied valu
$ 67.5 millio
f the Minita R6 percent betwproject had nto FTI, the vfold in a per
lained by inc
c market fact
earnings or
is not reason
but also inte
based method
I employs tw
rable Trading
any) and the
parable com
e late-discov
outh Minita a
that overlap
cly traded golincreased 124
ue of $ 8.7 m
on to $ 80.6
Reserves haween Januarnot advancedvalue of the riod of 3 yea
creased gold
tors which ca
credible eco
nably certain
ernational law
ds do not pro
wo market-b
g Multiples A
Comparable
mpany). FTI
ered deposit
and Nueva E
pped with th
ld companies 4% while the
million. By c
million. Na
as increased ry 2005 and d during thisMinita
ars due to
d prices.569 T
an explain F
onomic analy
n. To award
w.
ovide accura
ased approac
Approach (u
e Transaction
uses both ap
ts located in
Esperanza de
e expired lic
over the samindex of gold
contrast, FTI
avigant obser
s
Therefore,
FTI's inflated
yses to suppo
d damages on
ate estimates
ches to valu
using the
ns Approach
pproaches to
the exploita
eposits), and
cense areas (
me period, d and silver
I
rves:
d
ort
n this
s of
e Pac
h
o
ation
d the
(the
Nance D
companie
propertie
3
similar b
In some c
transactio
comparab
flows, bo
approxim
3
multiple
resource
Esperanz
company
gold equi
Colorado
basis.
571 RipinskCompensato Internaindicationownership572 Ripinsk573 Ripinsk
ulce and Co
es, FTI uses
es (Santa Rit
Marke83.
usinesses, bu
circumstanc
ons approach
ble assets, st
ook value or
mation of val
In this84.
based on a t
deposits (th
za deposits).
y to value the
ivalent resou
o), it identifie
ky & Williamation Standar
ational Glossan … by using p interests, se
ky & William
ky & William
yotera depos
the Compar
a and Zamor
et-based app
usiness own
es, the multi
hes) can be u
tandardized t
revenues."57
lue since no
s case, FTI id
transaction p
e Minita, Na
Under the C
e resources f
urces. For th
ed seven com
ms at 193 (RLrds, Valuationary of Busines
one or more mcurities, or in
ms at 213 (RL
ms at 214 (RL
sits). Unabl
rable Transa
ra/Cerro Col
proaches dete
nership intere
iples method
used to estim
through the
72 However
two busines
dentified sev
price per oun
ance Dulce,
Comparable
for each depo
he exploratio
mpanies and
L-152). See aln Methods andss Valuation Tmethods that
ntangible asse
L-152).
L-152).
185
e to identify
ctions Appro
lorado) whic
ermine the v
ests, or secur
d (such as th
mate the valu
use of a com
r, the multipl
sses are ident
ven compara
nce of gold e
Coyotera, B
Trading Mu
osit on the b
on properties
d applied a m
lso Mark Kand Expert EvidTerms ("[a] gcompare the
ets that have b
y any compar
oach alone t
ch lack prov
value of a bu
rities that are
e comparabl
ue of a busin
mmon variab
les method p
tical.573
able transact
equivalent re
Balsamo, Sou
ultiples Appr
basis of an en
s (Santa Rita
multiple base
ntor, Valuatiodence 10 (200general way of
subject to simbeen sold.").
rable publicl
to value the e
en resources
usiness by co
e sold on the
le trading an
ness from the
ble such as e
provides only
tions and has
esources for t
uth Minita an
roach, FTI f
nterprise val
a and Zamor
ed on a price
on for Arbitra08) (Authoritf determiningmilar business
ly traded
exploration
s.
omparing it t
e open mark
nd comparab
e "prices of
arnings, cash
y an
s determined
the mineral
nd Nueva
found one
lue per ounc
ra/Cerro
e per hectare
ation: ty RL-169) cig a value ses, business
to
ket.571
ble
h
d a
e of
iting
3
sufficient
of differe
mineral p
structure
crucial to
3
State Res
3
approach
574 KantorWilliams that no twConsequeshe wishe575 ILC Dr576 ThomaInvestmen
Valua85.
tly similar to
ences in char
projects or p
and timing.
o the reliabil
This l86.
sponsibility:
WheretradedWhereare nodeterm
Schol87.
hes:
First, uniquSecontransainvolvcompaintereinstabthe tim
r at 119 (RL-1note "that mu
wo firms are idently, a biasedes to arrive at.
raft Articles,
as W. Wälde ant Law, Trans
ation based o
o the assets u
racteristics a
roperties suc
Indeed, "th
ity of the me
imitation ha
e the propertd on an opene the propertot the subjectmination of v
arly commen
almost all ofe assets for w
ndly, for the actions in othving compararable; adjusst premium,
bility makes tming of the e
169). Citing tultiples are eadentical, decidd analyst can c." Ripinsky &
Comment (22
and Borzu Sanational Disp
on comparab
used as comp
among the as
ch as differe
he choice of
ethod."574
as been expla
ty in question market, valty interests it of frequentvalue is mor
ntary is equa
f the recent awhich there same reason
her countriesrable assets astment for quand risk arethe market vexpropriator
to the observaasy to misuse ding which fichoose a grou
& Williams at
2) to Art. 36,
abahi, Compenpute Managem
186
bles is only re
parables and
ssets. Sever
ent markets, g
the compara
ained in the c
on or comparlue is more rin question at or recent me difficult.57
ally cautious
and prospectis no establi
n, proxies fors by other coare never likuality, time, e inevitable. value dependy events…"5
ations of Profor manipulat
irms are compup of comparat 214-215 (RL
at 103 (RL-7
nsation, Damment, Feb. 10
eliable if the
d if it is feasi
al factors ca
geographic l
able compan
commentary
rable propertreadily determare unique or
market transa75
s about mark
tive takings ished comper market val
ompanies at kely to be ful
location, str Thirdly, ma
dent to a larg576
fessor Aswathte when compparable involvable firms thaL-152).
79(bis)).
mages and Val, 2007, at 16
e asset being
ible to adjus
an affect the
location, siz
ny and the 'm
y to the ILC D
ty is freely rmined…. r unusual…o
action, the
ket-based va
involve etitive markelue, such as other times lly rategic arket ge extent upo
h Damordaranparable firms ves a degree oat support a v
luation in Int(Authority R
g valued is
st for the effe
comparabili
e, capital
market multip
Draft Article
or
luation
et.
on
n, Ripinsky aare used. Givof subjectivity
valuation that
ternational RL-170).
ects
ity of
ple' is
es on
and ven y. he or
3
based val
Claims T
for the pu
submitted
based on
companie
performa
rejected t
same ind
3
accepted
rejected b
found tha
or any pu
comparab
that it "[h
conseque
due to CM
577 PhelpsNo. 217-9578 CMS v579 CMS v
Intern88.
luations to e
Tribunal ("IU
urpose of ma
d forecasts o
comparison
es. It also co
ance with the
this evidence
dustry was no
Simila89.
by tribunals
both the com
at the shares
ublic market
ble. With re
has] not been
ently, "it wou
MS on that b
s Dodge Corp99-2, 10 Iran-
v. Argentina, A
v. Argentina, A
national tribu
establish com
USCT") had
anufacturing
of the busine
ns with the ac
omputed an
e performanc
e, implicitly
ot sufficientl
arly, the com
s in investme
mparable stoc
of the busin
) and the com
espect to the
n provided w
uld be a mos
basis."579
p. and OverseUS Claims T
Award, paras
Award, para.
unals have de
mpensation. F
to evaluate d
g and selling
ess' projected
ctual perform
earnings mu
ce of a group
recognizing
ly comparab
mparable sale
ent treaty ca
ck prices and
ness at issue
mpany propo
comparable
with any sign
st speculativ
as Private InvTribunal Rep.
. 411-417 (RL
414 (RL-140
187
eclined on a
For example
damages cla
various wir
d earnings w
mance of thr
ultiplier by c
p of U.S. pub
g that the per
ble to the clai
es transactio
ses. For ins
d comparabl
(which was
osed for stoc
e sales transa
nificant evid
ve enterprise
vestment Corp121 (1986), p
L-140).
0).
number of o
e, in Phelps D
aimed for a b
re and cable
which it deter
ree non-Irani
comparing th
blicly traded
rformance of
imant's busin
on approach
tance, in CM
le sales price
not publicly
ck price com
action approa
dence of such
to try and d
rp. v. The Islaparas. 29-30 (
occasions to
Dodge v. Ira
business esta
products.577
rmined to be
ian wire and
he business' p
d corporation
f foreign com
ness in Iran.
has not been
MS v. Argent
e approaches
y traded on a
mparison wer
ach, the tribu
h transaction
determine the
amic Republic(Authority R
o use market-
an the Iran-U
ablished in Ir
The claima
e reasonable
d cable
projected
ns. The IUS
mpanies in t
.
n widely
tina the tribu
s.578 The pan
a stock excha
re not
unal determi
ns" and
e compensat
c of Iran, AwaRL-171).
-
U.S.
ran
ant
SCT
the
unal
nel
ange
ined
ion
ard
3
Republic
tribunal r
adequate
"[c]ondit
comparab
which the
disapprov
the Kyrg
approach
a spot pri
discussed
3
comparab
seven tra
property
because o
propertie
3
the probl 580 Sistem Award, Se581 Sistem 582 OccideThe Repub173).
The co90.
c. The disput
rejected the c
basis for the
tions in the K
ble with the
e claimant's
vingly to the
yzstan mark
h involves a l
ice and gold
d in the next
Finall91.
ble sales app
ansactions id
presents a u
of its expres
es which like
In sum92.
lem with app Mühendislik
ept. 9, 2009, p
v. Kyrgyz, pa
ental Petroleublic of Ecuad
omparable tr
te arose from
comparables
e application
Kyrgyz hotel
comparators
expert repor
e 30% discou
ket stating th
large measur
d grade adjus
t section, ove
ly, the Occid
proach which
dentified by t
unique set of
s recognition
e mining proj
m, market-ba
plying a com
k Inşaat Sanaypara. 162 (Au
ara. 162 (RL-
um Corporatidor, ICSID Ca
ransaction ap
m a joint ven
s valuation s
n of the 'mul
l sector in th
s in Ireland,
rt made refer
unt applied t
at this "reinf
re of specula
stment in its
erstates the v
dental tribun
h it found to
the responde
f value param
n that the co
jects are sub
ased method
mparative-bas
yi ve Ticaret Authority RL-
172).
ion and Occidase No. ARB/
188
pproach was
nture to build
stating that it
ltiple deals' a
he period in q
Sweden, the
rence.580 Sp
to the multip
forces the vi
ation."581 Li
comparable
value of the
al declined t
o be unreliab
ent were of "
meters."582 T
omparables m
bject to diffe
dologies suff
sed valuation
A.Ş. v. Kyrgyz-172).
dental Explora/06/11, Award
s also rejecte
d and operat
t was "not pe
approach." I
question are
e UK, the US
pecifically, th
ples in order
iew that the v
ike the exper
transaction
deposits.
to award com
le. The tribu
"no assistanc
This decision
method was
erent "value p
fer from the s
n in this case
z Republic, IC
ration and Prod, Oct.5 2012
ed in Sistem
te a hotel in B
ersuaded tha
It explained
not so obvio
SA, and the
he tribunal p
to account f
valuation ba
rts in Sistem
approach w
mpensation b
unal conclud
ce" because "
n is particula
less practica
parameters."
same shortco
e is that no t
CSID Case N
oduction Com2, para. 787 (A
v. Kyrgyz
Bishkek. Th
at there is an
that
ously
other States
pointed
for condition
ased on this
m, FTI has ap
which, as will
based on the
ded that the
"each oil and
arly notewor
al for oil and
"
oming. Tha
two mining
o. ARB(AF)/
mpany (OPECAuthority RL
he
n
s" to
ns in
pplied
l be
e
d gas
rthy
d gas
at is,
/06/1,
C) v. L-
propertie
exercise
structure
basis of c
3
legal and
riddled w
3
Claimant
Transacti
mineral r
areas. FT
explorati
Brent Ka
report an
mistakes
report for
583 See Kacentral chcomparabcomparabbut, in thecompany
es are the sam
because each
, risks, regul
comparables
Thus, 93.
d practical po
with errors.
3.
As the94.
t's mining in
ion and the C
resource dep
TI concludes
ion areas is $
aczmarek and
nd have ident
have been b
r a fuller acc
antor at 121-1hallenge for arble company ability exists ine real world oat the heart o
me. Basing c
h project has
latory enviro
s extremely d
the use of th
oint of view.
Pac Rim amanner
e Tribunal m
nterests: the D
Comparable
posits, and th
s that the ove
$ 284.9 milli
d Kiran Sequ
tified serious
briefly summ
count of thes
122 (RL-169) rbitrators – finas a basis for n the hypothetof arbitration, of the dispute.
comparisons
s unique feat
onment, loca
difficult if no
he DCF and
. As shall be
applied the w
may recall, FT
DCF method
Trading Mu
he comparab
erall value o
ion (amende
ueira of Nav
s errors in th
marized in th
se errors.
("The very tinding sufficiearriving at thtical world pano other ente").
189
s on other go
tures, in term
ation, manag
ot impossibl
other metho
e seen below
wrong valuati
TI utilizes th
d to value the
ultiple Appro
le transactio
of the minera
d mid-point
vigant Consu
heir valuation
his section, th
itles of these ment comparabe value of the
age of theoretierprise likely w
old mining p
ms of the siz
gement, etc.
le.583
ods in this ca
w, FTI's appl
tion methods
hree valuatio
e Minita res
oaches to va
on approach
al resource d
range). El S
ulting ("Navi
n calculation
he Tribunal i
methods for vbility to justifye business beiical economiswill be precis
projects is no
ze of resourc
This makes
ase is questio
lication of th
s in a serious
on methods t
erves, the C
alue the resou
to value the
deposits and
Salvador's v
igant"), have
ns. While th
is directed to
valuing businy employing ting appraisedsts and universely comparab
ot a useful
ces, capital
s valuation o
onable from
hese methods
sly flawed
to value
omparable
urces in the
exploration
the early
valuation exp
e reviewed F
hese various
o the Naviga
nesses disclosthe value of th
d. Perhaps idenrsity professoble with the
n the
a
s is
six
perts,
FTI's
ant
e the he ntical
ors
3
the basis
model,584
costs, op
the value
revised to
related to
3
substanti
slightly i
584 FTI Ex585 FTI hareal modeFTI correcmillion re586 Navigatook three587 Naviga
FTI u95.
for its DCF
4 FTI adjust
erating costs
e of the Mini
o between $6
o their projec
Navig96.
ially overstat
ncreased its
First, doing error cCorrebetwe
Seconcommadditifeasibcommresults$10.1
xpert Report,
ad incorrectly el (i.e., revenucted this error
eduction in FT
ant Expert Ree years to com
ant Expert Re
a) FTis e
sed the finan
calculation.
ted the mode
s) as of the v
ita reserves w
67.5 million
ction of gold
gant identifie
te the value
value):
FTI deducteso, FTI trea
caused FTI tcting for this
een $10.4 mi
nd, the modemenced as of
onal time Pability study, tmence mine d
s in a reductmillion (or
para. 6.27.
applied nomiue and costs ar by using rea
TI's valuation
eport, para. 17mplete the det
eport, para. 17
TI's implemenerror-ridden
ncial model c
. After revi
el to reflect m
valuation dat
was between
n and $80.6 m
d prices.585
ed five errors
of the Minit
ed depreciatiated depreciato dramaticas error aloneillion and $1
el unrealisticf the valuatioac Rim woulto obtain an developmenttion in value about 13%).
inal gold and are projected nal gold and silconclusion.
71. Navigant tailed feasibili
72.
190
ntation of th
contained in
ewing and c
market cond
te. After app
n $79.7 milli
million in Au
s or unsound
a reserves (a
ion from incoation as a taxally overstatee reduces the2 million (o
ally assumeson date and dld have needexploitationt. Conservatof the Minit
.587
silver prices net of inflatiolver prices. T
notes that theity study and
he DCF appr
n SRK's 2005
conducting a
ditions (e.g. m
plying the m
ion and $92.
ugust 2013 a
d assumption
and one erro
ome taxes inx credit rathee the value oe value of theor 13-18%).5
s that mine ddoes not conded to compln concessiontively adjustta reserves o
in the DCF mon) so nominaThe result of t
e reduction incommence d
roach for the
5 Pre-Feasib
a due diligen
metals prices
model, FTI de
8 million. T
after FTI dis
ns that cause
or that would
nstead of preer than a tax
of the Minitae Minita res86
developmentnsider the siglete a detaile, and to secuting for a 12 of between $
model. The Dal prices shouthis correction
n value woulddevelopment.
e Minita rese
bility Study a
ce of the
s, developme
etermined th
This sum wa
scovered an e
e FTI to
d have actual
e-tax incomex deduction. a reserves. erves by
t could havegnificant ed (bankableure contracto
month delay$8.7 million
DCF model is uld not be usedn was a $12
d be greater if
erves
as
ent
hat
as
error
lly
e. By This
e
e) ors to y and
a d.
f it
3
reliability
588 Naviga589 Appen590 Navigabecause thmore unceconsidereadded). 591 Naviga592 Naviga593 Naviga
Third,Capita40 basmilliothe bacapitaFeasibmillio
Fourthfuturemillio
Fifth, originDoublcorrec$2.5 m
Sixth,projecUS comininunderreserv
The to97.
y of FTI's D
ant Expert Re
ndix 4 to FTI E
ant Expert Rehey reflect prertain, Navigad to account f
ant Expert Re
ant Expert Re
ant Expert Re
, FTI makes al (WACC):sis points wh
on (or 3%).58
asis of a hybral structure, wbility Study,on and $8.3 m
h, FTI overses contract pron.591
despite condnal SRK Conle counting wcted this erromillion.592
, FTI makes cts the futureonsumer pricng costs increstates minin
ves.593
otality of the
CF analysis.
eport, para. 17
Expert Repor
eport, para. 17ojections in thant recommenfor the greate
eport, para. 17
eport, para. 17
eport, para. 17
at least two (1) FTI withich wrongly88 (2) FTI unrid debt and which FTI ad589 the valuemillion.590
tated gold prrice. The im
ducting a dunsulting finanworking capor, the value
unsound asse capital andce index (CPease at rates g costs and t
ese errors and
. Moreover,
73, n.185.
rt.
75. Navigant he Pre-Feasibnds "an additi
er level of unc
76.
77.
79.
191
errors in calthout explany increases tnderstated thequity invesdmits is app
e of the Mini
rices in the pmpact of this
ue diligence, ncial model.
pital decreaseof the Minit
sumptions red operating cPI) of 2.5% e
much highethereby over
d incorrect a
, FTI relies e
notes that thebility Study. Bional project-certainty in FT
lculating thenation roundthe value of he WACC bystment. If n
propriate for ita reserves d
projection byerror is a re
FTI fails to . Working ces the value ta reserves w
egarding inflosts for the m
even though er than the Crstates the va
assumptions
exclusively o
e discount ratBecause these-specific risk TI's cash flow
e Weighted As the discounthe Minita ry including do debt is incprojects witdecreases by
y relying on eduction in v
detect an ercapital is couof the projec
would have i
lation. FTI umine to growhistoric evidPI. FTI's usalue of the M
completely
on the DCF a
te would still e cash flow ppremium wou
w projections"
Average Cosnt rate down
reserves by $debt financincluded in thethout a Banky between $7
the wrong value of $3
rror in the unted twice. ct. Had FTIincreased by
unreasonablyw at the longdence showsse of the CPIMinita
undermine t
approach an
be understateprojections areuld need to be" (emphasis
st of n by $2 ng on
e kable 7.9
I y
y g-run s that I
the
nd
ed e e
does not
respectfu
3
subject c
transactio
America
3
Transacti
projects/p
prices on
on its ass
grade pro
4
results in
narrowin
more com
of other f
594 Naviga595 Naviga596 Naviga597 Naviga
test or valid
ully submits
The p98.
ompany can
ons over a fo
was deemed
Navig99.
ions Approa
properties;59
n the date of
sumption tha
ojects.597
First, 00.
n non-compa
ng the search
mparable tran
factors such
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
date their resu
that the Trib
b) FTflawres
urchase pric
n be used to e
our-year peri
d comparabl
gant identifie
ach: (1) FTI's
95 (2) FTI in
the transacti
at high grade
FTI's flawed
arable projec
h parameters
nsactions. I
as mining c
eport, paras. 1
eport, paras. 1
eport, para. 13
eport, paras. 1
ults with ano
bunal should
TI's implemenwed and sig
source depos
ce of a recent
estimate the
iod (2004-20
e to the min
es three main
s poorly-reas
ncorrectly ca
ion;596 (3) FT
e gold depos
d implement
cts/properties
to transactio
nstead, Claim
onstruction c
46-149.
46-149.
32.
29, 139.
192
other valuati
d disregard F
ntation of thnificantly ov
sits
tly acquired
value of the
008) where t
eral resource
n errors in FT
soned search
alculates a "P
TI increased
its command
tation of FTI
s. FTI appli
ons in Latin
mant should
costs, cash o
ion method.5
FTI's DCF va
he Comparabverstates the
company th
e subject com
the project o
es in the six
TI's implem
h parameters
Price Ratio"
d the valuatio
d a higher pr
I's Comparab
es an overly
America, th
d have filtere
operating co
594 Therefor
aluation calc
ble Transactie value of the
hat is compar
mpany. FTI
or property a
mineral reso
mentation of t
s yielded non
" to adjust fo
on multiple b
remium than
ble Transact
y-restrictive a
hereby exclu
ed transactio
sts, permittin
re, El Salvad
culation.
ions Approae mineral
rable to the
identified se
acquired in L
ource deposi
the Compara
n-comparabl
or different sp
by 300% bas
n lower gold
tion Approac
approach
ding potenti
ons for a vari
ng/licensing
dor
ach is
even
Latin
its.
able
le
pot
sed
d
ch
ially
iety
g
process,
and reser
resources
mineral r
and Nanc
FTI's imp
transactio
4
the value
stage pro
refuted b
value of
companie
out that t
uncertain
environm
Lastly, it
comparab
price.
598 Naviga599 Naviga600 Naviga601 Naviga
and environm
rves. This po
s) have been
resources in
ce Dulce) to
plementation
ons based on
Secon01.
e of the mine
ojects increas
by its own ev
gold compan
es increase b
the value of j
nty of minera
mental conce
t bears menti
ble transacti
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
mental cons
osition is, ho
n proven to b
six deposits
compare it t
n of this met
n their degre
nd, the "Price
eral resource
se at the sam
vidence.600 N
nies increase
by only 0.29
junior minin
al recovery,
erns, securing
ioning that h
ons, there w
eport, para. 14
eport, paras. 1
eport, paras. 1
eport, para. 13
iderations.59
owever, misi
be economica
(Minita, Ba
to projects/p
thodology is
ee of compar
e Ratio" adju
es. The adju
me rate as inc
Navigant furt
e at a lower r
% for every
ng companie
technical ba
g project fin
had FTI chos
would have b
47.
32-138.
32-134.
37.
193
98 Further, F
informed be
ally viable.
alsamo, Sout
properties wi
its failure to
rability with
ustment lack
stment assum
creases in go
ther confirm
rate than gol
1% increase
s will be mo
arriers to dev
nance, and co
sen a shorter
een no need
FTI did not d
ecause miner
It would ov
th Minita, Nu
ith defined r
o assign wei
the six mine
ks support an
mes that the
old prices.599
ms through sta
ld prices; sp
e in gold pri
ore affected b
velopment, p
onstruction d
r time frame
d to apply an
distinguish b
ral reserves (
erstate the v
ueva Espera
eserves. A f
ghts to the c
eral resource
nd significan
value of late
9 But Claim
atistical anal
ecifically, th
ces. Naviga
by other fact
permitting de
delays) than
for its searc
adjustment
between reso
(unlike mine
value of the
anza, Coyote
further flaw
comparable
e deposits.
ntly overstate
e-exploratio
ant's assertio
lysis that the
he value of g
ant also poin
tors (includi
elays,
by spot pric
ch for
for the spot
ources
eral
era
in
es
n
on is
e
gold
nts
ing
ces.601
4
mineral r
Claimant
Unfortun
selected,
price rati
transactio
4
overall ef
analysis
4
traded co
the value
to the six
the multi
Compara
4
disregard
602 Naviga603 Navigatransactioprice ratiovaluation than to Pi
Third,02.
resource dep
t increases th
nately, Claim
the two tran
ios but the tr
ons.602 Henc
In sum03.
ffect of over
should be di
The co04.
ompany appr
e of the subje
x mineral res
iple for Cerro
able Transac
Navig05.
ded for four r
ant Expert Re
ant Expert Ren has a gold g
o. FTI does nmultiple nor nos Altos.
, FTI's high
posits. Unab
he valuation
mant's assum
nsactions wit
ransaction w
ce, FTI's exo
m, Claimant'
rstating the v
ismissed.
c) FTout
omparable tr
roach, uses t
ect company
source depos
o Negro is ro
tion Approa
gant shows th
reasons:
eport, para. 14
eport, para. 15grade of 4.17
not, as Navigadoes it demon
gold grade a
ble to identify
multiple of
mption is not
th the highes
with the lowe
orbitant gold
s illogical se
valuation mu
TI's Comparatlier that infl
rading multi
the publicly t
y. FTI only i
sits: Andean
oughly twice
ach.603
hat the multi
42.
52. Althoughg/t, the price
ant points outnstrate that th
194
adjustment fu
fy any projec
the lower gr
borne out by
st gold grade
st gold grade
d grade prem
earch parame
ultiples of tra
able Tradinglates the valu
iples method
traded price
identified on
Resource's C
e as high as
iple derived
h the Pinos Ale ratio for Cer, explain whyhe six mineral
further distor
cts with a com
rade projects
y its own evi
e had the low
e had the hig
mium lacks ri
eters and inf
ansactions.
g Multiples Aue of the min
d, as known
of a compar
ne publicly tr
Cerro Negro
the highest m
by FTI is an
ltos project serro Negro is 1y Cerro Negrol deposits are
rts the value
mparable go
s by a factor
idence. Of t
west valuatio
ghest price r
igorous anal
flated adjust
Accordingly
Approach relneral resourc
as the comp
rable compa
raded compa
o project in A
multiple calc
n outlier and
elected by FT1,850% higheo has such a me more similar
of the six
old grade,
r of 300%.
the transactio
on multiple a
ratio of all th
lysis.
tments have
y, Claimant's
lies on a singce deposits
arable publi
any to estima
any compara
Argentina. Y
culated in FT
d should be
TI as a comparr than Pino A
massively higr to Cerro Neg
ons
and
he
the
s
gle
cly
ate
able
Yet
TI's
rable Altos' gher gro
4
companie
companie
ounce, si
4
10% wei
weightin
of betwee
such, the
outlier.
604 Naviga605 Naviga606 Naviga607 Naviga608 Naviga609 Naviga
First, gold d
Seconvaluatwould
Third,only cdepos
Fourthalreadsynergand ha
Furthe06.
es. Navigan
es. This inv
ignificantly b
FTI im07.
ghting to the
g of the com
en $194.8 m
Tribunal sh
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
at the date odeposit.604
nd, Cerro Netion date, And nearly doub
, Cerro Negrcompleted a its.606
h, FTI incorrdy inflated vagies.607 Howas been debu
ermore, FTI'
nt's conducte
vestigation re
below FTI's
mplicitly rec
e comparabl
mparable tran
million and $2
hould attribut
eport, para. 15
eport, para. 15
eport, para. 15
eport, para. 15
eport, paras. 1
eport, para. 15
of the valuati
egro's valuatindean Resouble the comp
ro had a pre-pre-feasibili
rectly appliealue) to acco
wever, Navigunked.608
's multiple is
ed a prelimin
esulted in va
multiple of
cognizes the
e publicly tr
nsaction appr
223.2 millio
te no weight
52.
55.
56.
57.
09-113.
59.
195
ion, the Cerr
ion multiple urces announpany's total r
-feasibility sity study for
ed a 30% conount for contgant explains
s out of line
nary search o
aluation mult
$378 per oun
unreliability
raded compa
roach) in arr
on for the min
t to FTI's cal
ro Negro pro
is skewed bnced results oresources.605
study in progone of the s
ntrol premiutrol, liquiditys that this ec
with more c
of potentially
tiples in the
unce.609
y of this meth
any approach
riving at an o
neral resour
lculation wh
oject was not
because just of a drilling 5
gress. By cosix mineral r
um to the muy and post-aconomic theo
comparable p
y comparabl
range of $25
hodology by
h (compared
overall valua
rces in the six
hich is based
t a high grad
prior to the program tha
ontrast, Pac Rresource
ultiple (over acquisition ory is outdat
publicly trad
le publicly tr
5 to $44 per
y applying a
d to a 90%
ation conclu
x deposits. A
d on a single
de
at
Rim
this
ted
ded
raded
low
usion
As
4
areas. It
calculate
and Zam
4
opinion,
explorati
may be c
speculati
results sh
over 2,00
4
appropria
explorati
the Mine
assess the
4
parties fo
610 Naviga611 Naviga
FTI im08.
identifies se
s a transacti
ora/Cerro C
Navig09.
a price per h
ion propertie
confined to a
ive to award
how the enor
00%! Even a
Conse10.
ate method t
ion expenditu
eral Property
e value of th
When11.
or the shares
ant Expert Re
ant Expert Re
d) FTexp
mplements th
even transact
on value per
olorado had
gant disagree
hectare valua
es. This is es
a narrow or l
compensatio
rmous range
after outliers
equently, Na
to value the e
ures for a giv
y.611 Because
hese properti
e) Othsub
n based on fu
or assets of
eport, para. 16
eport, para. 16
TI utilizes theploration are
he Comparab
tions of early
r hectare. Ba
a value of $
es with the v
ation multipl
specially so
imited portio
on on the ba
e of price per
s are exclude
avigant deter
early explora
ven property
e this inform
ies.
her valuationbstantially ov
ull informatio
f the subject
61.
61.
196
e wrong valueas
ble Transact
y stage explo
ased on this
$1.795 millio
valuation met
le is not a re
for undergro
on of the sur
asis of the siz
r hectare from
ed, the range
rmines that th
ation areas.
y for their co
mation was n
n evidence dverstated
on, arms-len
company ca
uation metho
tion Approac
oration prop
multiple, FT
on as of 10 M
thod selecte
eliable indica
ound mines w
rface area.610
ze of the exp
m $68 to $1
e is still clos
the Cost App
The Cost A
ontribution to
not available,
demonstrates
ngth transact
an provide an
od to value t
ch for the ea
perties in Lat
TI determine
March 2008.
d by FTI. In
ator of value
where the en
0 It would b
ploration are
,507, reflect
se to 100%.
proach would
Approach ana
o the explor
, Navigant w
s that FTI's v
tions or offer
n objective a
the early
arly explorat
tin America
ed that Santa
n Navigant's
e for early
ntire resourc
be entirely
eas. FTI's ow
ting a spread
d be a more
alyzes the
ation potent
was unable to
valuation is
rs made by t
and reliable
tion
and
a Rita
s
ce
wn
d of
ial of
o
third
indication
and the e
parent co
Second, P
(the mon
additiona
Capital.
4
valuation
reserves
valuable
the capita
in line w
reasonab
4
informati
Pac Rim'
greater th
premium
4
value of
612 Naviga613 Naviga614 Naviga
n of value.61
early explora
ompany, in th
PRMC cond
nth before the
al valuation e
Navig12.
n of PRMC c
yet FTI has
mineral reso
al expenditu
ith its develo
le.613
Navig13.
ion about the
's mining int
han the value
m that FTI sug
While14.
a business, t
ant Expert Re
ant Expert Re
ant Expert Re
12 There ar
ation areas. F
he 30 days le
ducted a priv
e valuation d
evidence and
gant shows th
conducted by
applied the m
ources; (2) th
ures for the p
opment peer
gant contend
e market's as
terests in El
e ascribed by
ggests to acc
e these mark
these values
eport, para. 23
eport, paras. 1
eport, para. 10
re two source
First, the adj
eading up to
vate placeme
date) that ind
d instead rel
here are thre
y Scotia Cap
multiple imp
he valuation
project; and (
rs" which ind
ds that the sh
ssessment of
Salvador. T
y the market
count for lac
et sources of
are less relia
3.
19-122.
08.
197
es of evidenc
justed public
o the valuatio
ent of new PR
dicated a val
ies on an ina
ee flaws in th
pital: (1) the
plied by that
n was based o
(3) the valua
dicates that t
are price and
f the value o
These indicia
t. This prem
ck of control
f information
able in this c
ce of the val
cly traded pr
on date was
RMC comm
lue of $86.7
apposite valu
he FTI's relia
valuation w
t valuation to
on lower ope
ation indicate
the publicly
d private pla
of PRMC, an
a show that F
mium is even
l.614
n are norma
case. Naviga
lue of the mi
rice of PRM
approximate
mon shares in
million. FT
uation condu
ance on the O
was based on
o the less eco
erating costs
ed that Pac R
traded value
acement prov
nd by extensi
FTI's valuati
n out-of-step
ally useful in
ant posits th
ineral depos
MC, Pac Rim'
ely $88 milli
n February 2
TI rejects this
ucted by Sco
October 200
the Minita
onomically
s and unders
Rim was "tra
e of PRMC w
vide useful
ion the value
ion is 325%
with the 30%
n evaluating t
hat these mar
its
's
ion.
008
s
otia
07
tated
ading
was
e of
%
the
rket
sources l
public wa
not appea
improper
for an ex
announce
a concess
shares of
this misin
4
deposits
Deposits
D
4
fully com
law."619
the award
and comp
615 Naviga616 Naviga617 Naviga618 Naviga619 Memor620 FTI Ex
ikely oversta
as not inform
ar that it was
rly obtained
xploitation co
e publicly th
sion.616 As s
f PRMC and
nformation."
Navig15.
and explorat
s to be next
D. Claimcomp
Pac R16.
mpensate the
Claimant se
d at the 12-m
pounding co
ant Expert Re
ant Expert Re
ant Expert Re
ant Expert Re
rial, para. 688
xpert Report,
ate the value
med about th
s public know
by a related
oncession wa
he results of d
such, Naviga
d the private p
"617
gant conclud
tion areas, "
to nil and th
mant is not eensation
Rim claims th
m for Respo
eeks interest
month LIBO
onvention sw
eport, para. 18
eport, para. 18
eport, para. 10
eport, para. 19
8.
paras. 6.137-
e of the mine
he legal statu
wledge that
company or
as irreparabl
drilling cond
ant posits th
placement o
des that based
we would e
he Early Ex
entitled to p
hat it "is enti
ondents' wro
on the amou
R rate comp
wells Pac Rim
86.
87.
03.
92 (emphasis
6.138.
198
eral deposits
us of Pac Rim
the explorat
r had not bee
ly deficient.6
ducted on th
at "the mark
overstate the
d on the lega
xpect the fa
xploration A
prejudgment
itled to an ad
ngful breach
unt claimed f
pounded on a
m's damages
added).
s and explora
m's mining i
tion licenses
en obtained
615 Rather, P
he properties
ket value imp
value of the
al and factua
air market v
Areas to be d
t interest be
dditional awa
hes of its dom
from the val
an annual ba
claim by $1
ation propert
nterest. In p
s had expired
at all, or tha
Pac Rim con
that lacked
plied by the
e Mineral De
al issues faci
value of the
de minimis.
ecause it is n
ard of intere
mestic laws
luation date u
asis.620 This
16.2 million.
ties because
particular, it
d, had been
at the applica
ntinued to
valid license
publicly trad
eposits due t
ing the mine
Mineral
."618
not entitled
est in order to
and internat
until the dat
rate of inter
. Claimant
the
does
ation
es or
ded
to
eral
to
o
tional
te of
rest
however,
establish
4
Draft Art
these ina
which as
automati
entitleme
when nec
that "[i]n
compens
decisions
injured S
depends
necessary
where it
4
courts an
special re
interest.6
621 ILC Dr622 ILC Dr623 ILC Dr624 See e.g174); Nor
, has not esta
ed any entitl
In fac17.
ticles for its
pplicable ru
discussed a
c entitlemen
ent to interes
cessary in or
nterest is not
ation in ever
s and practic
State has no a
on the circum
y in order to
is deemed n
Furthe18.
nd tribunals h
easons justif
25
raft Articles,
raft Articles,
raft Articles,
g., Case of therwegian Shipo
ablished any
lement to co
t, Claimant s
entitlement
les of intern
above govern
nt to interest.
st: "Interest o
rder to ensur
an autonom
ry case."622
ce is towards
automatic en
mstances of
ensure full r
ecessary by
ermore, in ci
have traditio
fying it.624 S
Article 38, at
Comment (1)
Comment (7)
e S.S. Wimbleowners' Claim
y entitlement
ompensation)
starts from a
to interest.
ational law.
ns the relatio
. However, e
on any princ
re full repara
mous form of
It goes on to
s greater ava
ntitlement to
f each case; i
reparation."6
the Tribunal
ircumstance
onally declin
Similarly, inv
t 107 (RL-79(
) to Article 38
) to Article 38
edon, 1923 P.Cms (Norway v
199
t to interest (
).
a flawed prem
Claimant's p
The ILC Dr
ons between
even under t
ciple sum due
ation."621 Th
f reparation,
o explain tha
ilability of in
the paymen
n particular,
623 Therefor
l to give full
s when inter
ned to award
vestment trib
(bis)) (empha
8, at 107 (RL-
8, at 108 (RL-
C.I.J. (Series . United State
(nor, as expl
mise. It cite
position is, h
raft Articles
States, make
these rules th
e under this
he Comment
nor is it a ne
at: "Although
nterest as an
nt of interest
, on whether
re, interest w
l reparation t
rest has been
compound i
bunals have
asis added).
-79(bis)) (em
-79(bis)) (em
A) No. 1 (Aues of America
lained above
es to Article
however, unf
s on State Re
es clear that
here is no au
chapter shal
tary to this A
ecessary part
h the trend o
n aspect of fu
t. The award
r an award of
will only be a
to the injure
n awarded, in
interest in th
also awarde
mphasis added
mphasis added
ug. 17) at 32 (a), PCA Case
e, has Claima
38 of the IL
founded und
esponsibility
there is no
utomatic
ll be payable
Article clarifi
t of
of internation
ull reparation
ding of intere
f interest is
awarded in c
d party.
nternational
he absence o
ed simple
d).
d).
(Authority RI U.N.R.I.A.
ant
LC
der
y,
e
fies
nal
n, an
est
cases
f any
RL-A.
4
compoun
internatio
interest, i
307, Awa(Spain v. 176); StarGovernme314-24-1,Company,Bank MarRL-178); 180-64-1,awarded cRepublic oRep. 181 Republic oITL 65-16InternatioCompany,(1990), pa625 Arif v. rate); RosI2010, paraLIBOR); June 30, 2per annumNo. ARB/the simpleICSID Casimple intThe Unite(AuthoritExploratioFinal Awaat 2.75% CME Cze2003, paraFeldman vMexican Tsimple int(RL-166) developm626 Memor
Indeed19.
nding interes
onal law, it c
in the absenc
ard, Oct. 13, 1United Kingdrrett Housingent of the Isla, 16 Iran-US C, Inc. v. The Mrkazi, Award Sylvania Tec
, 8 Iran-US Ccompound intof Iran and Ir(1984) at 8 (Aof Iran and th67-3, 13 Iran-onal Systems &, the Islamic Rara. 123 (Aut
Moldova, parInvestCo UK a. 692 (AuthoSAIPEM S.p.
2009, para. 21m); Duke Ener/04/19, Aware active rate oase No. ARB/terest of 5%);ed Mexican Stty RL-187) (ton and Produard, July 1, 20and simple poch Republic Ba. 647 (Authov. Mexico, paTreasury Certterest on the a(the tribunal
ment costs).
rial, para. 689
d, Claimant'
st is misplace
cannot be sai
ce of special
922, at 341 (A
dom), PCA Cag Corporationamic RepublicClaims TribunMinistry of PoNo. 225-89-3
chnical Systemlaims Tribunaterest"); R.J. Rranian TobacAuthority RLhe National Ir-US Claims T& Controls CRepublic of Irthority RL-18
ra. 633(h) (RLK Ltd. v. The R
ority RL-183A. v. The Peo
12 (Authoritrgy Electroqud, Aug. 18, 2
of the Ecuado/05/17, Award; Archer Danitates, ICSID Ctribunal awaruction Compa004, para. 217ost-judgment B.V. (The Netority RL-189
ara. 211 (RL-1tificates); Autaverage lendinawarded sim
9.
s reliance on
ed.626 The C
id that an inj
l circumstan
Authority RLase II U.N.R.I
n, Starrett Sysc of Iran, Bannal Rep. 112 ost, Telegraph3, 11 Iran-USms Inc. v. Theal Rep. 298 (Reynolds Tob
cco Company L-180); Anacranian Coppe
Tribunal Rep. Corporation v.ran, Award N82).
L-164) (tribunRussian Feder3) (tribunal orople's Republity RL-184) (tuil Partners a008, para. 49
orian Central Bd, Feb. 6, 200iels Midland Case No. ARded simple in
any (OPEC) v7 (Authorityinterest 4% c
therlands) v. T9) (the tribuna144) (tribunaltopista v. Venng rate of five
mple interest at
200
n the ILC Dr
Commentary
jured State h
nces which ju
L-175); BritisI.A.A. 615, Atems, Inc., Sta
nk Markazi Ira(1987), para. h and TelephoClaims Tribu
e Government1985) at 15 (A
bacco Compan(ITC), Awardonda-Iran Incer Industries C199 (1986), p. National Ira
No. 464-494-3
nal awarded iration, SCC Crdered the resic of Bangladthe tribunal awand Electroqu1 (AuthorityBank); Deser08, para. 298 (Company and
RB(AF)/04/05nterest rate forv. The Republ RL-188) (tri
commencing The Czech Real awarded siml ordered the rnezuela, parase principle Bat the rate of 5
raft Articles
y explains: "g
has any entit
ustify some e
sh Claims in
Award, May 1arrett Housinan, Bank Omr 370 (Authorone, The Natiunal Rep. 3 (1t of the IslamiAuthority RLny v. The Govd No. 145-35c. v. The GovCompany, Intpara. 142 (Auanian Gas Co3, 24 Iran-US
interest on a sCase No. 079/spondent to padesh, ICSID Cwarded simpluil S.A. v. Repy RL-185) (thrt Line LLC v.(Authority Rd Tate & Lyle, Award, Novr U.S. Treasulic of Ecuadoribunal awarde30 days after
epublic, UNCmple interest respondent to
s. 396-397 (Ranks in the co
5% on the Cla
for support
given the pre
tlement to co
element of c
the Spanish Z
1, 1925, at 65ng Internationran, Bank Merity RL-177)ional Iranian1986), para. 1ic Republic ofL-179) ("the vernment of t-3, 7 Iran-US
vernment of thterlocutory Authority RL-ompany, NatioS Claims Tribu
simple basis a/2005, Final Aay simple inte
Case No. ARBle interest at apublic of Ecuahe tribunal app. The Republi
RL-186) (the e Ingredients v. 21, 2007, pury bills); Occr, LCIA Caseed simple prethe award un
CITRAL, Finaon the fixed
o pay simple iRL-168) (the trountry); SPP aimant's capita
for
esent state o
ompound
compounding
Zone of Moro0 (Authority
nal, Inc. v. Thellat, Award N; McCollough Oil Company
114 (Authoriof Iran, AwardTribunal has
the Islamic S Claims Tribuhe Islamic
Award, Award181); onal Iranian Ounal Rep. 47
at the EURIBAward, Sept. erest on the aB/05/7, Awara rate of 3.375ador, ICSID Cplied interest ic of Yemen, tribunal awarAmericas Inc
para. 300 cidental e No. UN 346e-judgment intntil payment);al Award, Marate of 10%);interest on ribunal orderev. Egypt, paraal invested an
f
g as
occo y RL-he No. h & y and
ity d No. never
unal
d No.
Oil
BOR 12, ctual
rd, 5% Case at
rded c. v.
67, terest ;
ar. 14, ;
ed a. 257 nd
an aspect
Claimant
could jus
4
compens
627 ILC Dr
t of full repa
t does not pr
stify compou
El Sal20.
ation or the
raft Articles,
aration."627 H
rovide the sli
und interest i
lvador theref
payment of
Comment (9)
Having focu
ightest scinti
in this case.
fore respectf
interest.
) to Article 38
201
sed on its 'en
illa of eviden
fully submits
8, at 109 (RL-
ntitlement' to
nce as to any
s that Claim
-79(bis)).
o compound
y special cir
mant is not en
d interest,
cumstances
ntitled to
that
VI. J
A
4
However
maintain
reserves
Centre ha
Investme
4
arbitratio
the waive
Internatio
and the p
causes of
demonstr
proceedin
finds itse
Investme
Claimant
that Claim 628 Claima
URISDICT
A. Reser
El Sal21.
r, El Salvado
ing that this
its rights und
as jurisdictio
ent Law of E
In par22.
on proceedin
er required b
its rigcourt settlemallegeconsti
onal arbitrati
proceeding u
f action but b
rated by the
ng under the
elf in exactly
ent Law proc
t's decision t
mant has sub
ant's Consent
TIONAL ISS
rvation of ri
lvador has fu
or would like
Tribunal lac
der the ICSI
on and that th
El Salvador.
rticular, El S
ng under the
by CAFTA.
ht to initiateunder the lawment proceded in PRC's Nitute a breach
ion is a "disp
under the Inv
based on the
simple fact t
e Investment
y the same ci
ceeding befo
to bring both
bjected El Sa and Waiver,
SUES
ights with re
ull confidenc
e to emphasi
cks jurisdicti
ID Conventio
he Tribunal
alvador mai
Investment L
In its waive
e or continuew of any Par
dures, any proNotice of Arh referred to
pute settlem
vestment Law
e same measu
that the CAF
t Law contin
ircumstances
ore one tribun
h proceeding
alvador to tw
Updated Exh
202
egard to jur
ce that it wil
ize that it file
ion to decide
on with rega
has compete
ntains that P
Law of El S
er, Pac Rim r
e before any rty to CAFToceeding wirbitration, dao in Article 1
ent procedur
w were two d
ures. The ex
FTA proceed
nues unaffect
s that would
nal and its C
gs before the
wo proceedin
hibit 1 to Noti
risdictional
ll prevail on
es this Coun
e this dispute
ard to the Tri
ence to decid
Pac Rim wai
alvador whe
renounced
administratiTA, or other ith respect toated April 3010.16 of CAF
re," and the
distinct proc
xistence of tw
ding was dis
ted by that d
d have existe
CAFTA proc
same tribun
ngs in violat
ice of Arbitra
issues alrea
the merits o
nter-Memori
e. Accordin
ibunal's find
de this dispu
ived its right
en it signed a
ive tribunal odispute
o any measur0, 2009, to FTA.628
proceeding u
ceedings, inv
wo separate
smissed in it
dismissal. El
d if Claiman
ceeding befo
nal does not
tion of the w
ation, June 4,
ady decided
of this disput
al while
ngly, El Salv
ding that the
ute under the
t to initiate a
and submitte
or
re
under CAFT
volving diffe
proceedings
s entirety an
l Salvador n
nt had filed i
ore another.
change the f
waiver.
2009 (R-1).
d
te.
vador
e
an
ed
TA
erent
s is
nd the
now
its
fact
4
Canadian
number,
Conventi
the Denia
is betwee
became a
Salvador
under the
4
Tribunal,
cannot be
rights un
Tribunal
B
4
property
stated in
explorati
related to
notwithst
courts of
In add23.
n investor us
no physical
ion. El Salv
al of Benefit
en a Canadia
a Contracting
r and a nation
e ICSID Con
There24.
, El Salvado
e interpreted
der the Conv
.
B. Addit
1.
In its 25.
rights over m
its Memoria
ion licenses.
o property rig
tanding Arti
f El Salvador
dition, El Sal
sing a shell c
address, and
vador believe
ts provision
an investor a
g State to the
nal of anothe
nvention.
fore, althoug
r would like
d as an explic
vention with
tional objec
Jurisdictioreserved to
Memorial on
mineral depo
al are directly
As indicate
ghts alleged
cle 15 of the
r.
lvador does
company wit
d not even a
es that the ve
under CAFT
and El Salvad
e ICSID Con
er Contractin
gh El Salvad
e to emphasiz
cit or implic
h regard to th
tions to juri
on for Pac Rio Salvadoran
n the Merits
osits discove
y related to t
ed in subsect
ly acquired u
e Investment
203
not see how
th no employ
desk in its n
ery same fac
TA inevitabl
dor. This di
nvention and
ng State. As
dor will not r
ze that its co
it acceptanc
he objections
isdiction
im's claims rn courts
, Pac Rim ha
ered during e
the rights it h
tion IV.A.3 a
under the rel
t Law, those
w a dispute in
yees, no ban
name, is bein
cts that led to
ly lead to the
ispute was in
d therefore w
s such, this d
raise these is
ontinued app
e of jurisdic
s to jurisdict
related to mi
as stated its
exploration.
had or did n
above, to the
levant explo
claims can
nitiated in 20
nk account, n
ng arbitrated
o the success
e conclusion
nitiated long
was not a dis
dispute does
ssues again b
pearance in th
ction, or as a
tion already
ining rights i
claims in ter
Thus, Pac R
not have unde
e extent Pac
oration licens
only be mad
009 by a
no telephone
d under the IC
sful invocati
n that this dis
before Cana
spute betwee
not belong
before this
his proceedi
waiver of it
submitted to
is exclusivel
rms of allege
Rim's claims
er the releva
Rim's claim
ses, and
de before the
e
CSID
ion of
spute
ada
en El
ing
ts
o the
ly
ed
s as
ant
ms are
e
4
Article 1
with the
submittin
subject to
of El Salv
exploitat
laws. W
is the Mi
4
4
the exten
license o
629 Investm630 Miningextranjeroforma reccontratos mismos, r
This a26.
5 of the Inve
State to the c
ng their dispu
o specific lim
vador.629 Ar
ion of the su
ith regard to
ining Law.
Under27.
The MforeigRepubthe dipestablinterptheir dSalvad
Thus, 28.
nt a dispute a
r exploitatio
ment Law, Ar
g Law, Art. 7 os, quedan sujurrir a reclamrespectivos q
renuncian a su
arbitration pr
estment Law
courts of El
utes to intern
mitations in a
rticle 7.b) of
ubsoil is one
o exploitation
r the heading
Mining Licengn, are subjecblic, and are plomatic prolish that in evretation, per
domicile anddor.630
as Salvador
arises under t
on concession
rt. 7 (RL-9(bi
(RL-7(bis)) (jetos a las ley
maciones por lque en todo lou domicilio y
roceeds only
w, both dome
Salvador an
national arbi
accordance w
f the Investm
such area lim
n of the subs
g "Jurisdictio
nse or Concect to the lawabsolutely p
otection venuverything rerformance ord submit them
ran law expe
the Investme
n related to m
is)).
("Los titulareyes, Tribunalela vía de prote
o relativo a la se someten a
204
y under the I
estic and fore
nd foreign inv
itration. Som
with the Con
ment Law pro
mited by the
soil for mine
on," Article
ession Holdews, Courts anprecluded froue; and the rlated to the ar terminationmselves to th
ert José Robe
ent Law of E
mining, that
s de Licenciaes y Autoridadección diplomaplicación, in
a los Tribunal
nvestment L
eign investo
vestors are g
me areas of i
nstitution an
ovides that i
e Constitutio
eral rights, th
7 of the Min
ers, be they nnd Authoritieom resortingrespective coapplication, n of same, thhe Courts of
erto Tercero
El Salvador i
t dispute is re
as ó concesiondes de la Rep
mática; debiennterpretación,les de San Sal
Law of El Sa
ors may subm
given the add
investment,
nd applicable
investments
on and applic
he applicable
ning Law pro
national or es of the g to claims inontracts mus
hey waive f San
concludes i
in relation to
eferred throu
nes Mineras, pública, no pundo establece, ejecución o lvador.")
alvador. Und
mit their disp
ditional opti
however, ar
e secondary
regarding
cable second
e secondary
ovides:
n st
n his report,
o an explorat
ugh Article 7
sean nacionaludiendo de ninerse en los terminación d
der
putes
ion of
re
laws
dary
law
, to
tion
7.b)
les ó nguna
de los
of the Inv
courts of
4
licenses a
and trum
related to
Law will
Law is th
provision
On the co
exploitat
as explai
with the r
concessio
4
Law take
of the pre
applies b
limitation
631 Tercer632 Tercer633 Tercer634 Tercer
vestment La
f El Salvador
This p29.
and exploita
mps the provi
o mining. A
l apply prefe
he special law
ns.633 The In
ontrary, Arti
ion of the su
ned by Mr. T
requirement
ons as a limi
This s30.
es precedenc
eferential ap
by operation
n in its text.
o Expert Rep
o Expert Rep
o Expert Rep
o Expert Rep
w, and Artic
r.631
provision in
ation concess
sions of Arti
rticle 4 of th
erentially.632
w for the sub
nvestment La
icle 7 of the
ubsoil to the
Tercero, Art
ts of the Min
itation on the
specific limit
ce over the g
pplication of
of law and i
But in any e
port, paras. 70
port, para. 76.
port, para. 77.
port, paras. 63
cle 7 of the M
the Mining L
sions must b
icle 15 of th
he Salvadora
Article 72 o
bject area of
aw does not
Investment L
terms of the
ticle 7 of the
ning Law on
eir investme
tation on jur
eneral provi
the provisio
it is not nece
event, Articl
0-82.
-69.
205
Mining Law,
Law mandat
e heard by th
e Investmen
an Civil Cod
of the Minin
f mining, and
include any
Law specific
e Constitutio
e Investment
the holders
ents.634
risdiction in
isions of Art
ons of the Mi
essary for Ar
le 7 of the In
, to the exclu
ting that disp
he courts of
nt Law, in sit
de states that
ng Law itself
d that it prev
y such provis
cally limits i
on and applic
Law impose
of exploratio
disputes rela
ticle 15 of th
ining Law.
rticle 15 to e
nvestment L
usive jurisdi
putes related
f El Salvador
tuations whe
the provisio
f confirms th
vails over any
sion making
investments
cable second
es an obligat
on licenses a
ated to minin
he Investmen
Therefore, th
expressly ack
aw expressly
ction of the
d to explorati
r prevails ov
ere the dispu
ons of the M
hat the Minin
y other legal
it a special
related to th
dary laws. T
tion to comp
and exploita
ng in the Mi
nt Law by vi
he limitation
knowledge th
y limits
ion
ver
ute is
ining
ng
l
law.
he
Thus,
ply
ation
ining
rtue
n
his
investme
secondar
4
Article 7
Investme
Article 2
foundatio
of arbitra
the host S
4
jurisdicti
Investme
Mining L
Salvador
consent C
El Salvad
which Cl
with rega
consent,
635 See, e.gDisputes bConventioof the Cen636 Christo830, 831 (
ents regardin
ry laws, whic
Mr. T31.
the Mining
ent Law in th
5 of the ICS
on for arbitra
ation, investm
State and by
Here, 32.
ion. Claiman
ent Law of E
Law and the
r established
Claimant alle
dor with resp
laimant mad
ard to being
the Tribunal
g., Report of between Stateon, Regulationtre.").
oph Schreuer,(P. Muchlinsk
ng exploitatio
ch in this cas
Tercero's dete
Law preclud
he present di
SID Convent
al jurisdictio
ment arbitrat
y the investor
there is no s
nt purports to
El Salvador.
Civil Code,
would be re
eges under th
pect to dispu
de its investm
able to resol
l lacks jurisd
the Executivees and Nationn and Rules,
, Consent to Aki et al. eds., 2
on of the sub
se is the Min
ermination th
de the exerci
ispute has co
tion. It is un
on.635 As exp
tion is alway
r is an indisp
showing that
o bring this c
But as is ev
the dispute
esolved in Sa
he Article 15
utes related t
ment, Claima
lve its disput
diction ration
e Directors onnals of other Spara. 23 ("Co
Arbitration, in2d ed. 2009)
206
bsoil to the te
ning Law.
hat the terms
ise of intern
onsequences
niversally rec
plained by D
ys based on a
pensable req
t El Salvado
case before t
vident from t
plainly falls
alvadoran co
5 of the Inve
to mining. B
ant has no ba
te before an
ne materiae
n the ConventStates, Mar. 1onsent of the p
n The Oxford(CL-40) (emp
erms of the C
s of Article 7
ational arbit
for the cons
cognized tha
Dr. Christoph
an agreemen
quirement for
r consented
the Tribunal
the Investme
within a cat
ourts only. T
estment Law
Because this
asis for claim
internationa
to hear this
tion of the Se8, 1965, reprparties is the
d Handbook omphasis added)
Constitution
7.b the Inves
tration jurisd
sent requirem
at party cons
h Schreuer, "
nt. Consent t
r a tribunal's
to the Tribu
on the basis
ent Law itsel
tegory of ma
Therefore, th
w is specifica
was the lega
ming any rig
al tribunal. I
case.
ettlement of Inoduced in thecornerstone o
of Internationa).
n and applica
stment Law
diction under
ment include
ent provides
"[l]ike any f
to arbitration
s jurisdiction
unal's
s of the
lf, as well as
atters that El
he general
ally withheld
al framework
ht or expecta
In the absenc
nvestment e ICSID of the jurisdic
al Investment
able
and
r the
ed in
s the
form
n by
n."636
s the
l
d by
k in
ation
ce of
ction
t Law
4
explorati
State. Th
refer to th
State. Pa
because P
during th
Mining L
4
claimant
statute of
responsib
breach; a
make a c
arbitratio
provides
or fraud a
637 Mining638 Civil Cprescriptioand rightsbeen exerlapso de t639 Civil C
El Sal33.
ion licenses a
he "contracts
he concessio
ac Rim neve
Pac Rim is a
he life of tho
Law applies:
2.
Pursu34.
does not ini
f limitations
bility in Salv
and b) extra-
ase for expr
on are for ext
that, for ext
are time-bar
g Law, Art. 7
Code , Art. 22on). See alsos of others reqrcised." / "[l]aiempo, duran
Code, Art. 208
lvador notes
and an appli
s" referred to
on contract th
r obtained a
a holder of ex
se licenses, t
Pac Rim is
Pac Rim's concession
ant to Salvad
itiate its claim
depends on
vadoran law:
contractual r
opriation wh
tra-contractu
tra-contractu
rred after thre
(RL-7(bis)) (
231(2) (establo Civil Code, quires only tha prescripciónnte el cual no
83 (RL-123).
that because
ication for a
o in the seco
hat a conces
concession
xploration li
the jurisdicti
"subject to t
claims relatn are time-ba
doran law, a
m within the
the type of c
: a) responsib
responsibilit
here there is
ual responsib
ual responsib
ee years, cou
("sujet[o] a la
ishing that anArt. 2253 (pr
hat a certain pen que extinguese hayan ejer
207
e Claimant d
concession,
ond part of A
ssion holder
and therefor
icenses maki
ional provisi
the laws, Co
ted to its apparred
a claimant's r
e applicable
claims. The
bility genera
ty. Setting a
none, the cl
bility. Articl
bility, "the ac
unted from t
as leyes, Tribu
n action is timroviding that "eriod of time e las accionescido dichas a
did not have
there were n
Article 7 of th
would sign w
re never sign
ing claims o
ion in the fir
ourts and Aut
plication for
right to initia
statute of lim
ere are only t
ated as a con
aside the fact
laims Pac Ri
le 2083 of th
ctions grante
the day of pe
unales y Auto
me-barred whe"[t]he prescrielapse during
s y derechos aacciones. ") (R
a concessio
no written co
he Mining L
with the repr
ned such con
over rights al
rst part of Ar
thorities of t
the El Dorad
ate an action
mitations.638
two types of
nsequence of
t that Pac Ri
im has allege
he Salvadora
ed by this tit
erpetration o
oridades de la
en it is extingiption that extg which such ajenos exige sRL-123).
on, but only
ontracts with
Law appear t
resentative o
ntract. Howe
llegedly acqu
rticle 7 of th
the Republic
do exploitati
n ends if the
The applic
f civil
f a contractu
im is trying t
ed in this
an Civil Cod
le for damag
of the act."639
a República…
guished by tinguishes actactions have
solamente cie
h the
o
of the
ever,
uired
he
c."637
ion
able
ual
to
de
ges
9
…").
tions not
erto
4
law does
of the Civ
initiate a
affected p
dispute a
4
Environm
exploitat
languishe
inexperie
argues th
its "prim
Permittin
from obta
4
time limi
Environm
had failed
640 Civil C641 Memor642 Memor643 Memor644 Memor
The ti35.
not require
vil Code pro
claim was b
party.640 Th
are irrelevant
In this36.
ment never ru
ion concessi
ed due to per
ence of the te
hat the other
ary focus rem
ng process th
aining the ex
Even 37.
it to run, the
ment had 60
d to do so.64
Code, Art. 225
rial, para 9.
rial, para. 199
rial, para. 320
rial, para. 179
ime limit sta
actual know
ovides that th
born and not
hus, under Sa
t. The three
s arbitration,
uled on its a
ion. Pac Rim
rsistent pers
echnical staf
issues with
mained on sh
hrough MAR
xploitation c
though actua
record show
business day
4 Pac Rim w
53 (RL-123).
9.
0.
9.
arts from the
wledge of the
he time limit
from the tim
alvadoran law
years run fr
, Pac Rim's c
application fo
m complains
onnel chang
ff charged w
its concessio
hepherding t
RN."642 Acc
concession w
al knowledg
ws that Pac R
ys to issue a
wrote to the
208
occurrence
e alleged bre
t is to be calc
me when the
w, Claimant
rom the date
claims are ba
or an environ
s that its "app
ges within th
with evaluatin
on applicatio
the slow-mo
ording to Cl
was the lackin
ge of the alle
Rim knew in
a decision reg
Minister of E
of the allege
each by the a
culated from
e alleged wro
t's arguments
of the allege
ased on its c
nmental perm
plication for
e Ministry, u
ng the permi
on would hav
oving ED Mi
laimant, the
ng environm
ged wrongd
n December 2
garding the e
Environmen
ed wrongful
affected party
m the time th
ongful act w
s about when
ed unlawful
complaint tha
mit for the E
r an environm
understaffing
it application
ve easily bee
ining Enviro
only thing th
mental permi
doing is not r
2004 that th
environment
nt:
act. Salvad
y. Article 22
hat the right t
as known by
n it knew it h
act.
at the Minist
El Dorado
mental perm
g, and
ns."641 Claim
en resolved,
onmental
hat prevente
it.643
required for t
e Ministry o
tal permit an
doran
253
to
y the
had a
try of
mit . . .
mant
but
ed it
the
of
nd
4
reiteratin
4
environm
Rim, ther
permit fo
to initiate
Decembe
Salvador
44
claim for
the time p
645 Letter 646 Memor(C-139)).
On SeStudyreferehave aevaluaMinisdelay,
In July38.
ng its compla
GivenEIA eexpedBarrerEnviroand deprojec
Thus, 39.
mental permi
refore, had a
or its propose
e a legal acti
er 2007. By
r's alleged un
Pursu40.
r damages. C
prescribed b
from PRES to
rial, para. 221
eptember 8, ty for the "EL
nced Ministalready passation. Howevtry. Our com, given that i
y 2005, Pac
aint that the d
n that more thevaluation prdite the EIA ara, the long Eonmental Peelaying the ict.646
the act that
it within the
a right to init
ed exploitati
ion under Sa
April 2009,
nlawful act w
ant to Articl
Claimant's fa
by the law ex
o MARN, De
1 (quoting Le
two thousanL DORADO"try. At presened since the ver, no decis
mpany wouldit is causing
Rim wrote t
delay was ca
han ten monrocess, I respapproval proEIA evaluatiermit for the investment in
allegedly ha
period estab
tiate a claim
ion project s
alvadoran law
, when Pac R
were time-ba
le 2083 of th
ailure to exe
xtinguished s
ec. 15, 2004 (R
etter from Fred
209
nd four, the E" Project wasnt, more thandate it was s
sion has beed like to knous harm at p
to the Minist
ausing it har
nths have paspectfully reqocess. As I hion process El Dorado Mn, and the de
armed Claim
blished by la
based on th
ince Decemb
w started run
Rim initiated
arred under S
he Civil Code
ercise the rig
such right th
R-55).
d Earnest to M
Environments submitted
an sixty businsubmitted fo
en issued to uow the reasonpresent.645
ter of Econo
rm:
ssed since thquest your ashave told Minand the granMine Projectevelopment
mant, i.e., the
aw, had occu
he lack of iss
ber 2004. T
nning in Dec
d this arbitrat
Salvadoran L
e, Pac Rim h
ghts afforded
hrough presc
Minister Yola
tal Impact to the aboveness days or your us by the ns for the
omy, request
he start of thessistance to nister Hugo
nting of the t is harming of, the
e non-issuanc
urred in Dece
suance of the
The three yea
cember 2004
tion, claims
Law.
had three yea
d by Salvado
cription. The
anda de Gavid
e-
ting her help
e
ce of the
ember 2004.
e environmen
ars for Pac R
4 and ended
based on El
ars to initiate
oran law with
erefore, Pac
dia, July 19, 2
p and
. Pac
ntal
Rim
in
l
e a
hin
Rim
2005
could not
initiated
44
objection
filing of t
were dec
additiona
with the
time."647
agreemen
reviewin
44
request th
prelimina
concurren
647 The Re
t bring claim
the present a
3.
In acc41.
ns "as early a
the counter-
cided by the
al objections
case, El Salv
It was not u
nt on the app
g the subject
Takin42.
hat the Tribu
ary matter. I
ntly with the
epublic of El
ms related to
arbitration pr
Conclusion
cordance wit
as possible"
memorial."
Tribunal in J
s to jurisdicti
vador reserv
until Claima
plicable law,
t of applicab
ng into accou
unal suspend
Instead, El S
e merits.
Salvador's M
the non-issu
roceedings.
n on additio
th ICSID Arb
and "no late
El Salvador
June 2012. A
ion, stating t
ves the right t
ant filed its M
, that these n
ble law.
unt the advan
d the proceed
Salvador pro
Memorial on O
210
uance of the
nal objection
bitration Rul
er than the ex
r raised obje
At the time,
that "to the e
to raise addi
Memorial on
new objectio
nced stage of
ding on the m
oposes that th
Objections to J
environmen
ns to jurisdic
le 41(1), El
xpiration of t
ctions to jur
El Salvador
extent the Tr
itional objec
n the Merits,
ons to jurisdi
f the arbitrat
merits to dec
he Tribunal c
Jurisdiction, O
ntal permit b
ction
Salvador is r
the time lim
risdiction in
r reserved th
ribunal decid
ctions at the a
alleging tha
iction were i
tion, El Salv
cide these ob
consider the
Oct. 15, 2010
y the time it
raising these
mit fixed for t
2010, which
he right to ra
des to contin
appropriate
at there was n
dentified wh
vador does no
bjections as a
ese objection
0, para. 467.
t
e
the
h
ise
nue
no
hile
ot
a
ns
VII. C
44
Law and
44
and actio
44
Claimant
Claimant
Dorado—
failed to
an exploi
prevent C
ownershi
Claimant
(somethin
not receiv
choice to
environm
exploitat
concessio
claim to
Claimant
648 Pac Ri
CONCLUSI
El Sal43.
is not entitle
In Sec44.
ons, has no m
First, 45.
t has still not
t's principal
—is utterly w
comply with
itation conce
Claimant fro
ip or authori
t admitted w
ng Claimant
ve the reque
o ignore the r
mental permi
ion concessi
on. Since C
injury relate
t's claims rel
m Internal M
ON
lvador has sh
ed to any co
ction II, El S
mining rights
following up
t refuted, El
claim—it's a
without merit
h two additio
ession admit
m obtaining
ization for th
was "nearly (i
t admits it be
ested exploita
requirements
it, Claimant w
ion under the
laimant had
ed to resourc
lated to the o
Memo re Surfa
hown that Cl
mpensation.
Salvador dem
s on which to
p on the argu
Salvador ha
alleged entitl
t. Notwithst
onal requirem
tted for cons
g an exploitat
he land in the
if not totally
egan to prep
ation conces
s of the Min
would not h
e law and th
no concessi
es in the req
one deposit f
ace Owner Au
211
laimant has
.
monstrated th
o base its cla
uments raise
as proven, an
lement to a
tanding the m
ments of the
ideration. E
tion concess
e entire requ
y) impossible
are in 2006
ssion. El Sal
ning Law. Th
ave been abl
erefore does
on and no ri
quested conc
for which it r
uthorization (C
no valid clai
hat Pac Rim,
aims.
ed in the Pre
nd confirmed
12.75 km2 ex
missing envi
Mining Law
Each failure w
sion. In othe
uested conce
e"648 to obtai
and abandon
lvador is not
hus, even if
le to meet th
s not have, a
ight to receiv
cession area.
requested an
C-291).
ims under th
, due to its o
liminary Ob
d with exper
xploitation c
ironmental p
w to have its
was alone su
er words, wit
ssion area (s
in); or 2) a f
ned in 2009)
t to blame fo
Claimant ha
he requireme
and never had
ve a concess
These facts
n exploration
he Investmen
own decision
bjections whi
rt testimony,
concession a
permit, Claim
s application
ufficient to
thout either
something
feasibility stu
), Claimant c
or Claimant's
ad acquired a
ents for an
d, a right to
sion, it has n
s dispose of
n concession
nt
ns
ich
, that
at El
mant
n for
1)
udy
could
s
an
a
o
n
(Minita)
resources
44
lacking le
2005, Cla
It had no
applicatio
concessio
Esperan
Claimant
all or par
area of th
old licen
44
allegation
precludes
expire. F
rights in
to substa
44
conclusiv
Counter-
. They also
s in the area
Secon46.
egal merit. F
aimant had n
authorizatio
on. Thus, an
on must fail
za, South M
t and its subs
rt of the area
he original li
ses expired (
Claim47.
n that the Go
s Claimant a
Finally, El S
the Zamora
antiate claims
Thus, 48.
vely showing
Memorial de
demonstrate
of the reque
nd, El Salva
Following th
no continuin
on to continu
ny claims rel
for this addi
Minita, and B
sidiaries wer
a of the expir
icenses for w
(Coyotera a
mant allowed
overnment h
and its subsid
alvador has
a/Cerro Col
s for any of t
in Section I
g that Pac R
emonstrated
e that Claima
ested conces
dor has show
he expiration
ng rights rela
ue exploring
lated to the u
itional reaso
Balsamo dep
re precluded
red licenses.
which Claima
and Nance D
d its Santa R
had impeded
diaries from
confirmed th
orado explo
these early e
II, El Salvado
im had no ri
d that Claima
212
ant could ha
sion.
wn that Claim
n of the origi
ated to the de
g under the g
unauthorized
on. This incl
posits. Addi
d from obtain
Therefore,
ant sought to
Dulce) must a
Rita explorati
its explorati
obtaining a
hat there is n
oration licens
exploration a
or provided
ights on whi
ant's claims f
ave no rights
mant's additi
inal explorat
eposits in the
guise of havin
d exploration
ludes claims
itionally, un
ning new exp
any claims r
o obtain new
also fail.
ion license t
ion activities
new license
no evidence
se areas. Cl
areas.
evidence an
ch to base it
fail for multi
s with respec
ional claims
tion licenses
e expired ex
ng a pending
n in the area
related to th
nder the Mini
ploration lic
related to de
w exploration
to expire in 2
s. The Mini
e after letting
of Claimant
laimant, ther
nd expert test
ts claims. Th
iple addition
ct to any othe
s are similarl
s on January
xploration are
g concession
a of the reque
he Nueva
ing Law,
enses coveri
eposits in the
n rights after
2009 with no
ing Law
g the first lic
t ever having
refore, has fa
timony
he rest of the
nal reasons:
er
ly
y 1,
eas.
n
ested
ing
e
r the
o
cense
g any
ailed
e
44
starting w
"formalit
Governm
requirem
not resolv
local com
though it
nationalit
649 Memorthe reason
In SecmoratfurtheThus, in anybecausuch a
In SecInvestto supClaimits claobtainnot codo anygoodwwas ca
In Secin anycompeapplicdeposto a va
From 49.
with its actio
ty" with whi
ment grant it
ments or even
ved environm
mmunities. I
t 1) misled th
ty; and 2) in
rial, para. 454nable understa
ction III, El Storium was aer showed th
Claimant wy event, the duse, as mentioa decision.
ction IV, El tment Law.
pport a claimmant has not aim under Arning a conceompensable. ything possibwill towards aused by its
ction V, El Sy event, its qensated for acation. Nor cits in the subalid exploita
every angle
ons in El Salv
ch it should
a huge conc
n submitted t
mental conc
In this arbitr
he Tribunal r
nsisted on a m
4 ("Pac Rim fanding that th
Salvador shoa legitimate eat the Minist
was not entitldecision to soned above,
Salvador shoClaimant ha
m under Articshown that trticle 8, for ession regard Likewise, Cble to help, ithe companown bad de
Salvador shoquantum calca concessioncan it be combsoil, becausation concess
, Claimant's
vador, Claim
not have to
cession even
the required
erns about it
ation, Claim
regarding its
merits proce
filed its Concehe application
213
owed that, gexercise of ttry had unreed to an envuspend mini Pac Rim ha
owed that itas not allegecles 5 or 6 ofthe Governmexpropriationdless of its faClaimant's aincluding ch
ny, is not comcisions, and
owed that Claculation is sen it failed to mpensated fose these belosion.
claims have
mant has sho
comply.649
though it 1)
documentat
ts project or
mant demand
s knowledge
eding to pro
ession Applicn procedure w
iven circumthe precautioesolved concvironmental ping activitiesad no rights t
did not breaed any facts of the Investm
ment depriven, must fail.
ailure to comassumption thhanging its lampensable. A
not by El Sa
aimant has neriously flawobtain becauor alleged prong to the St
e no basis in
own that it co
In El Salvad
) had not me
tion under th
gained socia
ds that the Tr
e of a dispute
ovide evidenc
cation with Mwas a formality
mstances in Eonary principcerns about Ppermit for exs did not impthat could be
ach its obligaor presentedment Law. Ined it of any p
Claimant's mply with thehat the Goveaws, becauseAny loss Claalvador.
no right to cowed. Claimause of its defroperty righttate until ext
the facts or
onsiders the
dor, it deman
et the substan
he Mining La
al license to
ribunal comp
e at the time
ce and exper
MINEC in Decy") (emphasis
l Salvador, aple. El SalvaPac Rim's EIxploitation. pact Pac Rime affected by
ations under d any argumen addition,
property righhope of
e Mining Lawernment woue of previousaimant suffe
ompensationant cannot beficient ts over minetracted pursu
the law. Ind
law a mere
nded that the
ntive
aw; and 2) h
operate in th
pensate it ev
it changed i
rt testimony
cember 2004 s added).
a ador IA. But,
m y
the ents
ht, so
w is uld s
ered
n and, e
ral uant
deed,
e
had
he
ven
its
with
showing
changed
unreason
4
in its 333
interest o
had no ri
under the
lack of sp
that asser
4
"extraord
and could
Investme
in their e
650 Pac Ri
its complian
its argument
nable.
El Sal50.
3-page Mem
of brevity, El
ights on whic
e Investment
pecific refere
rtion or argu
Claim51.
dinary profit
d not possibl
ent Law. Cla
ntirety.
m 2002 Prese
nce with the
t to assert th
lvador notes
orial and acc
l Salvador h
ch to base it
t Law, and E
ence to any
ument, and E
mant's gamble
s"650—failed
ly show, tha
aimant's clai
entation to Sh
Mining Law
hat it did not
that Claima
companying
as limited its
s claims, El
El Salvador i
allegation or
El Salvador r
e in El Salva
d because of
at El Salvado
ims under th
hareholders at
214
w but provide
have to com
ant makes ma
g witness stat
s response to
Salvador did
is not respon
r argument, h
reserves all o
ador—its att
f its own bad
or violated an
he Investmen
t 1 (C-218).
ed nothing o
mply. Claim
any unfound
tements and
o conclusive
d not breach
nsible for Cla
however, do
of its rights i
tempt to stak
d decisions.
ny obligation
nt Law of El
of the sort; b
ant's demand
ded assertion
d expert repo
ely showing
h obligations
aimant's alle
oes not imply
in this regard
ke large claim
Claimant ha
ns to Claima
Salvador mu
but rather
ds are
ns and argum
rts. In the
that Claiman
s to Claimant
eged losses.
y acceptance
d.
ms and make
as not shown
ant under the
ust be dismi
ments
nt
t
The
e of
e
n,
e
issed
VIII. C
4
El Salvad
Salvador
for its cla
Claimant
Salvador
been initi
4
in this arb
Salvador
Claimant
A
4
exploitat
concessio
showed t
been gran
back up i
how, and
concessio
651 NOA,
COSTS
Claim52.
dor into gran
r. Even so, C
aims. But C
t initiated thi
r has been fo
iated nor gon
This T53.
bitration bec
r will highlig
t has relied o
A. Claim
Claim54.
ion concessi
on."651 In th
that Claiman
nted a conce
its original a
d when it fulf
on.
paras. 2, 65, 9
mant initiated
nting a conce
Claimant wa
laimant's ev
is arbitration
orced to spen
ne forward.
Tribunal sho
cause Claima
ght just a few
on to get to t
mant's "perf
mant began th
ion for El Do
he Preliminar
nt was not en
ession due to
assertions, C
filled the leg
96.
d this arbitrat
ession Claim
s obligated t
ver-changing
n without reg
nd its limited
ould order Cl
ant brought
w examples o
this point in
fected right
his arbitratio
orado and ha
ry Objection
ntitled to a m
o its failure to
laimant has
gal requirem
215
tion because
mant knew it
to know and
g arguments,
gard for the b
d resources in
laimant to re
and insisted
of the misrep
the arbitratio
" to a conce
on claiming t
ad "met all o
n phase of th
mining conce
o comply wi
changed its
ments for an a
e it thought i
did not qual
d understand
both factual
bases of its c
n proceeding
eimburse El
d on continui
presentation
on.
ession
that it had a
of the require
his arbitration
ession and in
ith the legal
story, contra
application f
it could intim
lify for unde
the factual a
l and legal, s
claims. As a
gs that shoul
Salvador for
ing its meritl
s and incons
"perfected r
ements to re
n, however,
n fact could n
requirement
adicting itse
for a mining
midate and co
er the laws o
and legal bas
show that
a result, El
ld never hav
r all of its co
less claims.
sistencies tha
ight" to an
ceive the
El Salvador
not have law
ts. Unable t
lf on whethe
exploitation
oerce
of El
ses
ve
osts
El
at
r
wfully
to
er,
n
4
evidence
the conce
4
factual al
the requi
requested
Claimant
comply w
applicatio
requested
652 Rejoinwill produthat are ne653 Transc654 In its Mland owneRim Inter655 Rejoin
Claim55.
and expert t
ession.652 A
WhenprudenconfidpresenTom Senvirofeasibor maidenti
But C56.
llegations. O
rement to pr
d concession
t knew the re
with them.655
on requirem
d exploitatio
nder (Preliminuce evidence ecessary to es
cript of Hearin
Memorial, Claers" was one rnal Memo re
nder (Prelimin
mant survived
testimony pr
At the hearing
n we get to thnt for us to gdent that we nted to you. Shrake, fromonmental expbility studieske a site visify precisely
Claimant did
On the contr
rovide owner
n.654 Its own
equirements
5 Because C
ents, it shou
on concession
nary Objection– including establish its cla
ng on Prelimi
aimant introduof the "main tSurface Own
nary Objection
d the Prelimi
roving its co
g, Claimant a
he merits, anget to the mewill be ableWe will do t
m Pacific Rimperts, from e. In fact, we it to figure othe trajector
not fulfil thi
ary, Claiman
rship or auth
n documents
for an explo
Claimant is s
uld never hav
n.
ns), para. 132expert evidencaims.").
inary Objectio
uced an internthings . . . lac
ner Authoriza
ns), para. 49.
216
inary Object
ompliance wi
asserted:
nd we do belerits of this c to rebut all this throughm engineers,experts in mimight even
out where thery or the line
is promise. I
nt now admi
horization fo
confirm the
oitation conc
olely respon
ve pursued c
2 ("At the appce – to demon
ons, May 31,
nal memo in cking in our reation (C-291).
tion phase by
ith the legal
lieve it is appcase, we inteof the factua
h fact testimo, from Pacifiining, from ewant to take
e mine is ande of the mine
It has not reb
its that it kne
or the surface
e facts presen
cession and s
nsible for its
laims asserti
propriate timenstrate the pro
2010, at 153:
which it admequest for the.
y promising
requiremen
propriate andend to and aral allegationony from Mric Rim experts in e a site visit d perhaps e shaft.653
butted any o
ew it had no
e land in the
nted by El S
simply "cho
failure to m
ing that it w
e in this arbitropositions of
:13-154:3 (em
mitted that "aue exploitation
to provide
nts to apply f
d re
ns r.
of El Salvado
t complied w
e area of the
alvador:
se" not to
meet the
was entitled to
ration, ClaimaSalvadoran la
mphasis added
thorization ofn concession."
for
or's
with
o the
ant aw
d).
f the " Pac
B
4
right, but
knew of
4
showing
hide the r
Decembe
identifica
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even fore
Claimant
the Unite
have the
4
656 See NOMinisterioinvestmenResponde("Pac Rimmining, w657 It shouAbuse of InvestmenJurisdictio658 Counteresulting iMarch 20manifestediscrete m659 Letter
B. Claim
Claim57.
t also manag
a possible di
In the58.
that the disp
real reason w
er 2007, Clai
ation of the "
Memorial on
eseeable any
t was forced
ed States,659
impact it sh
Havin59.
OA, para. 7 (so de Medio Amnts" in 2004-2ent's Objectionm Cayman haswhich Presiden
uld be noted thProcess undent Law based onal Objectio
er-Memorial (in loss or dam08. To the ex
ed by the earlimeasure in bre
from Claiman
mant's acces
mant not only
ged to keep t
ispute with E
jurisdiction
pute existed
why it chang
imant relied
"measure at
n jurisdiction
y earlier than
to admit tha
that admissi
ould have.
ng gotten to t
stating that Clmbiente y Rec2006); Claimans to Jurisdics maintained nt Saca first a
hat the Tribuner CAFTA and
on these misrns, June 1, 20
(Jurisdiction)mage is Respoxtent that ban ier failures to each of CAFT
nt's counsel to
ss to ICSID
y insisted on
this arbitratio
El Salvador.
n phase, Claim
before its ch
ged nationali
on a tactica
issue"656 and
n, Claimant
n March 2008
at by late 200
ion came too
the merits, C
laimant's claimcursos Naturaant Pac Rim Ction, Dec. 31consistently t
announced in
nal decided nd did not evenrepresentation012, paras. 2.
, para. 376 ("ondent's de famay have preact, those fai
TA obligation
o El Salvador
217
arbitration
pursuing an
on going bas
mant could n
hange of nati
ity from the
al shifting of
d its explana
insisted that
8, after the c
07 it had hir
o late and am
Claimant now
ms were baseales ('MARNCayman LLC, 2010 ("Counthat the measuMarch 2008.
ot to grant Eln consider thins by Claima110–2.111.
The act suppocto ban on me-dated the Milures only bens with the ann
r's counsel, Ap
n
n arbitration
sed on misre
not contest t
ionality in D
Cayman Isla
f positions, re
ation of when
t a dispute b
change of na
red internatio
mid too many
w freely con
ed on "measurN') and MINECC's Counter-M
nter-Memoriaure at issue is.").
l Salvador's juis objection u
ant. Decision
orting Pac Rimining as annoMarch 2008 anecame recogninouncement.
pr. 22, 2011,
based on a n
epresentation
the overwhel
December 20
ands to the U
epeatedly ch
n the dispute
between the p
ationality.658
onal arbitrati
y inconsisten
ntradicts its p
res taken . . . C, against Cla
Memorial in Ral (Jurisdictios El Salvador'
urisdictional ounder the Salv
on the Respo
im Cayman's ounced by Prennouncement izable as appl").
at 1 (R-128).
non-existent
ns about whe
lming eviden
007. To try t
United States
hanging its
e arose.657 I
parties was n
Even thoug
ion counsel
nt statements
prior testimo
through the aimant's esponse to
on)"), para. 40's de facto ban
objection on vadoran ondent's
claims of breesident Saca iand been lications of a
.
en it
nce
to
s in
In its
not
gh
in
s to
ny:
02 n on
each in
"I was paGovernmbetween tfurther frSalvadoraDayton anlevels in texpressed2007 andto conducbe forthcomy many"Only aftwe had bereasons –ever get tdispute wthat momit did not financingstatement
4
admits th
metallic m
Salvador
Salvador
at least se
4
after adm
660 First S661 Memor662 Witnes663 Memor
Jurisarticularly sur
ment is now clthe parties inom the case. an officials pnd well into the Salvadord support for
d 2008, assurect extraction oming. I reca
y trips to El Ster we recogneen facing w
– and that, forthe permits –
with El Salvadment. I can say
occur until ag and Presidet."662
Contr60.
hat it has bee
mining expl
r conducted a
r's assertions
even months
Never61.
mitting that it
hrake Witnes
rial, para. 298
ss Statement o
rial, para. 300
sdiction Pharprised to lealaiming that
n 2006. In fac. . . From my
prior to the 202008, officiaan Governmour project,
ed us that theactivities at Eall numerous
Salvador."660 nized that the
were due purer political rea
– did we concdor. I cannot y with certainafter the Febrnt Saca's Ma
ary to Claim
en aware, sin
oration and
a Strategic E
in the jurisd
s before its c
rtheless, Cla
t had been ex
ss Statement,
8 (emphasis a
of Catherine M
0.
ase arn that the there was a d
ct, nothing coy meetings w002 merger wals at the highent repeatedland, particul
e permits necEl Dorado wsuch meetin
e regulatory dly to politica
asons, we miclude that we
precisely identy, howeverruary 2008 arch 2008
mant's prior te
nce May 200
exploitation
Environment
dictional stag
change of na
imant contin
xpressly told
paras. 89-90.
added).
McLeod-Seltz
218
dispute ould be with with hest ly larly in cessary
would ngs on
"[Owhcommeandde comactisucEstAsswa
delays al ght not had a entify r, that
"Asby awawaresoenvpol
estimony to
07 at the late
would be pr
tal Evaluatio
ge: Claimant
ationality in D
nues to contr
d in 2007 tha
zer, Dec. 31,
O]n 7 May 20hich representmpanies in theeting was cod also the MiGavidia. At
mpanies wereivity in the c
ch time as an tratégica (Strsessment or 's conducted.s Mr. Shrakethis point [Mare that the ds political anolved by meavironmental alitical means
this Tribuna
st, that no en
rocessed for
on. Thus, Cl
t knew it had
December o
radict itself i
at all mining
2010, para. 3
Merits Pha007, a meetintatives of all he country weonvened by Minister of Ecothis meeting
e informed thcountry would Evaluación rategic Envir'EAE') of the"661
e and Ms. CoMay 2007], thdelay PRES fnd would therans of techniassessment, b."663
al, Claimant
nvironmenta
r anyone unti
laimant now
d a dispute w
f 2007.
in its Memor
g activities w
38 (emphasis
ase ng was held tthe mining ere invited. T
Minister Gueronomy, Yolang, the mininghat all miningd be halted uAmbiental
ronmental e mining indu
olindres affirmhe Claimant wfaced at MARrefore not beical but only thro
now openly
al permits fo
il after El
confirms El
with El Salva
rial. Shortly
were being ha
added).
to
The rrero nda g
until
ustry
m, was RN
e
ough
y
r
l
ador
y
alted
until a St
from earl
resolved
Claimant
4
had a dis
before Cl
nationalit
statemen
saving th
C
4
presented
dispute a
presentin
4
reaching
of 1881 a
refers to
664 Memor665 Memor666 Decisio667 Memor
trategic Envi
lier phases o
based on "ex
t's bald asser
If Cla62.
pute with El
laimant hire
ty from the C
nt of March 2
he time and e
C. New f
El Sal63.
d an inaccura
actually arose
ng new and f
For in64.
such a conc
and 1922 to
as mere "for
rial, para. 298
rial, para. 322
on on the Res
rial, paras. 49
ironmental A
of this procee
xpress assur
rtion contrad
imant had no
l Salvador (w
d internation
Cayman Isla
2008), this ar
expenses tha
frivolous ar
lvador is bei
ate account o
e. In this ph
frivolous arg
nstance, Clai
clusion by ex
interpret the
rmalities").66
8.
2.
spondent's Jur
99-503.
Assessment c
eding that it
rances" from
dicting its ow
ot misrepres
which it now
nal arbitratio
ands to the U
rbitration co
at will be spe
rguments on
ng forced to
of the facts r
hase, Claima
guments.
mant asserts
xtrapolating
e requiremen
67 El Salvad
risdictional O
219
could be con
thought the
m the Govern
wn admission
sented to the
w admits was
on counsel, s
United States
ould have bee
ent on the me
n the merits
o argue the m
regarding its
ant is again in
s that mere d
and linking p
nts in Article
dor has alrea
Objections, Jun
nducted,664 C
problems w
nment "throu
ns cannot ch
Tribunal th
s May 2007
seven month
s, and ten mo
en resolved
erits phase.6
merits of this
s rights in El
ncreasing th
discovery of
provisions in
e 37 of the 19
ady explained
une 1, 2012, p
Claimant rep
with its applic
ughout 2007.
hange reality
he actual date
at the latest,
hs before it ch
onths before
in the jurisd
666
s case only b
l Salvador an
he costs for a
deposits con
n the revoke
995 Mining
d that the old
aras. 2.96-2.1
peats its claim
cation would
."665 But
y.
e when it kne
, five months
hanged
e President S
diction phase
because Claim
nd the time t
all involved b
nfers rights,
ed mining co
Law (which
d mining cod
100.
m
d be
ew it
s
Saca's
e,
mant
the
by
odes
h it
des
are irrele
in force w
4
land own
metallic m
and "or"
the conse
provision
authoriza
metallic,
4
submitted
working
D
4
should be
the legal
4
incurred
mining e
nationalit
668 Memor
evant and the
when Claima
Equal65.
nership requi
minerals."668
means "and
equences of
ns of the Min
ation require
undergroun
These66.
d was actual
on the Feasi
D. Concl
Notwi67.
e paid hundr
requirement
Claim68.
in this arbitr
xploitation c
ty to gain ju
rial, paras. 56
ey were purp
ant made its
lly surprising
irement] is n
8 According
." There is n
its failure to
ning Law, as
ement applie
nd, or open-p
e arguments,
lly the requir
ibility Study
lusion on co
ithstanding i
reds of millio
ts to have th
mant must be
ration becau
concession it
urisdiction un
60-564.
posefully rev
investment
gly, Claiman
not an applic
g to Claiman
no basis for t
o comply wit
s confirmed
s to all appli
pit).
as well as C
red Feasibili
y until 2009,
osts
its utter failu
ons of dollar
e rights it cl
ordered to r
se Claimant
t knew it did
nder CAFTA
220
voked by the
in El Salvad
nt argues in i
cable require
nt and its exp
this nonsens
th the applic
by El Salvad
ications for e
Claimant's as
ity Study, ev
are frivolou
ure to suppor
rs in spite of
aims to have
reimburse El
1) initiated
d not have a
A for a pre-ex
e new Mining
dor.
its Memorial
ement for exp
pert John Wi
se. It is simp
ation require
dor's experts
exploitation
ssertion that
ven though it
us.
rt its claims,
f the fact tha
e in El Salva
l Salvador fo
and continu
right to rece
xisting dispu
g Law of 19
l that "Articl
ploitation co
illiams, "and
ply a last dit
ements. Und
s, the land ow
concessions
the Pre-Fea
t admittedly
, Claimant in
at it has neve
ador.
or all the cos
ued this arbitr
eive; 2) chan
ute; 3) hid fa
95, the only
le 37(2)(b) [
oncessions fo
d" means "or
ch effort to a
der the clear
wnership or
s (metallic, n
sibility Stud
was still
nsists that it
er complied w
sts and expen
ration about
nged its
acts from the
y law
[the
or
r"
avoid
r
non-
dy it
with
nses
t a
e
Tribunal
frivolous
4
needed th
much mo
complica
concessio
grant Cla
4
Arbitratio
reimburs
to otherw
669 El Salvwell as th
to avoid a fi
s arguments
All of69.
hroughout th
ore expensiv
ate the simpl
on and its su
aimant the co
El Sal70.
on Rules and
e El Salvado
wise cover al
vador will pree consideratio
finding of Ab
in an attemp
f this, along w
his proceedin
ve than it nee
le issue of its
ubsequent fai
oncession to
lvador theref
d Article 61(
or's legal fee
ll the costs an
esent a detaileons regarding
buse of Proc
pt to keep thi
with Claima
ng, have unn
eded to be. C
s failure to m
ilure to conv
o which it wa
fore requests
(2) of the IC
es and disbur
nd expenses
ed descriptiong interest, at th
221
ess; and 4) o
is arbitration
ant's propens
necessarily p
Claimant's st
meet the requ
vince the Go
as not entitle
s that, in acc
CSID Conven
rsements, tog
s of this proc
n of the costs he end of the
once caught
n alive.
sity to chang
prolonged thi
trategy from
uirements to
overnment to
ed.
cordance wit
ntion, the Tr
gether with i
ceeding.669
and legal feemerits phase
red-handed,
ge its accoun
is arbitration
m the beginni
obtain an ex
o change or i
th Article 28
ribunal order
interest, and
s incurred in .
, continues to
nt of the facts
n, making it
ing has been
xploitation
ignore its law
8(1) of the IC
r Claimant to
d order Claim
this arbitratio
o add
s as
n to
ws to
CSID
o
mant
on, as
IX. REQUEST FOR RELIEF
4 71. El Salvador respectfully requests that the Tribunal:
• Issue an Award stating that it lacks jurisdiction under the Investment Law of El Salvador and dismissing all claims for lack of jurisdiction;
• Should the Tribunal find that it has jurisdiction over any claim, for the reasons stated above, issue an A ward dismissing all claims for lack of factual and legal merit;
• Order Claimant to pay all costs and expenses of all phases of this arbitration, and reimburse El Salvador for its legal and expert fees and costs for all phases ofthis arbitration, plus interest from the time of the Award until payment is made, in an amount and at a rate to be established at the appropriate time; and
• Grant El Salvador any other remedy that the Tribunal considers appropriate.
Dated: January 10, 2014
Lie. Luis Antonio Martinez Gonzalez Fiscal General
Lie. Benjamin Pleites Mazzini Secretario General
Fiscalia General de Ia Republica de El Salvador
Respectfully submitted,
Derek C. Smith Luis A. Parada Erin Argueta Christina L. Beharry Tafadzwa Pasipanodya Constantinos Salonidis Gisela Paris Foley Hoag LLP
Mario Enrique Saenz Humberto Saenz Marinero Geraldina Mendoza Parker Manuela de la Helguera Saenz & Asociados, El Salvador
ATTORNEYS FOR THE REPUBLIC OF EL SALVADOR
222