Case Summary No. 5

GlamisGold

The ISDS blog continues with another case which reflects the interplay between international investment law and environmental protection. This was a central issue in our fifth case, Glamis Gold Ltd. v. the United States of America. The summary is prepared based on the facts as described in the award rendered in June 2009.

The investor was planning to mine gold in California through open-pit mining techniques. California adopted several measures, among others requiring the investor to conduct complete backfilling of the pits for environmental protection reasons.

The new measure did not impede the development of the mining project, however, according to the investor, it impacted the level of anticipated profits. The investor claimed, among others, that the measure constituted an expropriation of its investment.

After conducting a thorough analysis, the tribunal found that the project still had a great value even after the extra costs caused by California’s backfilling requirements. Therefore, in the tribunal’s view, the measure did not cause a sufficient economic impact to constitute an expropriation. The tribunal dismissed all claims by the investor and ordered the investor to pay two-third of the arbitration costs.

The tribunal accepted at least three amicus curiae in this case, one by a coalition of non-governmental organization, one by a business association and one by the locally-based tribe whose sacred sites were affected by the proposed mining project.