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World Bank tribunal dismisses mining firm's $250m claim against El Salvador

Date published:
Claire Provost, Matt Kennard

At the end of a seven years long lawsuit, an international tribunal has finally dismissed a $250m claim by the multinational gold mining company OceanaGold against El Salvador. OceanaGold had demanded back in 2009 that the Latin American country pays this sum as a compensation for its refusal to permit the company to dig for gold near the central Salvadoran department of Cabañas. The company claimed that it suffered a considerable loss in potential profits because the government had encouraged it to undertake mineral exploration activities in the region. However, according to El Salvador, OceanaGold failed to meet the regulatory requirements in order to receive the necessary permits for the activities. The tribunal now dismissed the claim and ordered the mining company to pay $8m out of the 12$m that the Salvadoran government spend on legal defence throughout the process - a decision that leaves the company disappointed but the Salvadoran civil society groups in celebration.

According to the Latin American program coordinator at MineWatch Canada, the case against El Salvador is just one of hundreds where corporations have filed a suit against governments under the investor-state dispute settlement system, a mechanism sponsored by the World Bank. The protracted lawsuits pose a huge financial burden on countries with many economic difficulties such as El Salvador. It is therefore hoped that the case at hand serves as a cautionary tale for other corporations.


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