Yesterday morning (June 13), a small group of anti-mining activists held a peaceful protest and press conference on the sidewalk in front of the Canadian Embassy. The protest was the culmination of a two-week effort by anti-mining activists to hand-deliver a letter to the Canadian Embassy asking them to end their support for Pacific Rim’s lawsuit against El Salvador. (For background on the lawsuit and Pacific Rim’s efforts, click here and here).
One highlight from the event was when two Canadian law students (Erica and Leah) who are interning for Voices on the Border and FESPAD this summer, tried to enter the embassy to deliver the letter, and talk to Embassy officials about the case. The Embassy turned them away without explanation. Yesterday afternoon, Erica wrote:
“This is outrageous treatment. Any citizen of any country is allowed to enter their embassy while traveling abroad – that’s what embassies are for. Your political affiliations don’t affect this basic right, nor do your stances on controversial issues. The embassy is Canadian territory. As citizens, we have the right to enter our embassy. They do not have the right to refuse entry to law-abiding Canadians.”
When they pressed the issue with security guards, they received word from Embassy officials that one of them could enter if they had document problems, otherwise they could not enter. That’s true solidarity! Erica and Leah experienced the kind of exclusion that Salvadorans and impoverished people around the world experience every day as they try to defend their environment, protect their economic security, and build a healthy life for their children.
Yesterday’s events came almost two weeks after the International Center for Settlement of Investor Disputes (ICSID) tribunal announced their decision on preliminary objections in Pacific Rim’s lawsuit against El Salvador. This round of objections focused on jurisdiction – determining whether ICSID had the authority to hear Pacific Rim’s claim against El Salvador. In their lawsuit, Pacific Rim argues that El Salvador violated rights protected under the Central American Free Trade Agreement (CAFTA) and El Salvador’s investment law. The tribunal decided it did not have jurisdiction to hear the CAFTA claims (Pacific Rim is a Canadian firm and Canada is not a CAFTA signatory), but that it would hear the claims under El Salvador’s investment law.
Following the decision, Gus Van Harten, Associate Professor of Law at Osgoode Hall Law School, said,
“The case will now be one of the rare ones that proceeds under the host state’s domestic law on investment, but it is no less threatening than the treaty cases because of this. The arbitrators retain essentially the same wide-ranging powers, including to decide what a regulatory expropriation is, what is fair or unfair regulation, etc…. and to award damages or make affirmative orders against the government. Their award will also be widely enforceable in the manner of any treaty case.”
The Salvadoran Attorney General has tried to spin the decision as a victory, and that CAFTA works, but few agree. Pacific Rim’s lawsuit is still alive and a victory under Salvadoran law is just as enforceable as a victory under CAFTA.
What happens next remains a little unclear. It could be that Pacific Rim and El Salvador proceed to the next phase of the trial. Pacific Rim will present their complaint and EL Salvador will present their defense. Then the tribunal will hand down their decision. Or it could be that Pacific Rim and El Salvador negotiate a settlement; though El Salvador has yet to indicate they’d even consider doing so.
There is another, more extreme option worth mentioning, if for no other reason than highlighting El Salvador’s more serious problem – the fact they give corporations the right to sue them in the first place.
Historically, individuals and corporations did not have the right to sue a country – only a country could sue another country. That began to change when the U.S., Mexico, and Canada signed the North American Free Trade Agreement, which gave corporations the right to seek arbitration if a signatory country appropriated an investment. International law still dictates that a country has to submit to jurisdiction, and unless they have, individuals and corporations cannot sue. By signing CAFTA, the U.S., Mexico, and Canada all agreed that they would give international courts jurisdiction to arbitrate any disputes with investors.
El Salvador first submitted to jurisdiction in 1999 when the Flores Administration and ARENA-controlled Legislative Assembly passed the Foreign Investment Act – the law Pacific Rim is using now. The also agreed to give international tribunals jurisdiction to arbitrate disputes when they signed CAFTA and other trade agreements.
Professor Van Harten suggested after the recent ruling that one way El Salvador could get out of the Pacific Rim suit would be to repeal part or all of the 1999 Investment Law and no longer submit to jurisdiction. The Legislative Assembly would have to explicitly state that the law is retroactive and apply to any current actions. While that would likely be a popular move at home, it probably wouldn’t go over well with the U.S. and other international bodies, and it seems unlikely that the Salvadoran government would put those relationships at risk without careful consideration.
Withdrawing from jurisdiction may be something El Salvador wants to do anyway. Pacific Rim is only one of many mining companies that have applied for but not received exploitation permits from the Salvadoran government. If Pacific Rim is successful in their lawsuit, many others will likely follow. If El Salvador is unsuccessful in defending itself, it may end up granting more than 30 mining permits or face defending itself against an equal number of very large lawsuits.
Another reason to withdraw jurisdiction from international arbitration panels like ICSID is because future trade agreements may grant investors even more protection and rights than NAFTA and CAFTA.
Just yesterday, Public Citizen published a report on the investor protection provisions in the Trans Pacific Partnership (TPP) – a trade agreement being negotiated by Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the U.S. According Public Citizen’s analysis, some of the most outrageous provisions would:
- Limit how countries can regulate foreign firms operating within their jurisdiction, with requirements to provide them with greater rights than domestic firms;
- Establish a two-track legal system that gives foreign corporations to avoid domestic courts and laws, and sue States in foreign tribunals; and
- Grant foreign corporations the right to demand compensation for financial, health, environmental and land use regulations they claim undermine their TPP privileges, and demand compensation for costs of complying with financial or environmental regulations that apply equally to domestic and foreign firms.
El Salvador is not a signatory to the TPP, and the agreement has not even been signed or ratified, but the pendulum seems to be swinging very far in favor of these kinds of pro-investor rights. Once that is the standard, any efforts to protect local environments and resources are subject to the desires of international corporations… until countries organize and push the pendulum back to protect their interests.
Corporations and the U.S. have worked hard to keep concerned citizens and civil society groups from influencing negotiations of these trade agreements. Public Citizen’s account of how hard the U.S. has worked to keep the TPP negotiations sounds a lot like the CAFTA negotiations eight and nine years ago. While Corporations and business interests have a say in the process, concerned citizens and civil society organizations are left on the sidewalk to protest.
In that context, it’s not really surprising that the Canadian Embassy denied Erica and Leah (the Canadian law students interning in El Salvador) entry to the Embassy – they were hanging out with the wrong crowd. Perhaps if they were interning for Pacific Rim or any other international corporation they would have had a different experience.
Voices on the Border 
While the whole issue of foreign companies conducting business in El Salvador, or anywhere else in the world, is an extremely complex and difficult subject, fraught with poltical, social and economic quagmires, a couple of thoughts spring to mind. 1. “Any citizen of any country is allowed to enter their embassy while traveling abroad.” Your report quotes a source saying this as if it’s a fact, a given. Does this strike anyone else but me as odd? Is this a universal law of some sort? My thoughts: I dare you to walk up to the US Embassy in Antiguo Cuscatlan here in SS and flip them your US passport and when asked what your business is at embassy, tell them, I’m a US Citizen, I just want to come in. They will tell you to get lost. At least here in El Salvador, entry to your own country’s embassy is NOT a given, ever, at least as far as our North American neighbors are concerned. It’s a matter of security, not politics. 2. The article makes it sound as if Pacific Rim is a big bad company that’s just plain wrong and El Salvador is a small naive little country that got stepped all over because it’s, well, naive and unable to manage its own affairs and got sucked into a bad deal. I think both characterizations are quite misguided.
As a general matter of international law, a sovereign nation is immune to suit by anyone, individual or corporation or other nation, unless and until it affirmatively cedes some of that sovereignty. Typically this happens via some type of a treaty. Most nations of the world have done so to a degree by signing on as member of the United Nations, for example. Another common way nations do so is via a bi-lateral or multi-lateral trade agreement, of which there are hundreds, if not thousands, across the globe. Nations don’t enter into such agreements lightly. They do so to gain access to new markets, to attract investment, to improve the economic prospects of their citizens. “No man is an island.” Nations, governments, sign onto trade agreements because they perceive that the BENEFITS conferred under the agreement outweigh the COSTS of ceding some of their sovereignty. In this case, El Salvador via its own laws and the treaties to which it is a signatory, has indeed chosen to do so, and it is under that framework of law that Pacific Rim has invested in El Salvador. Invested heavily I gather.
Countries have every right to hold individuals and corporations, domestic and foreign, to compliance with any and all applicable laws and regulations, as they should. That being said, it would seem that in this particular case, El Salvador, rather than working to develop a mutually beneficial solution to this problem for the benefit of all the parties, has chosen to ignore its own laws and simply shut the operations down. And, as you might expect, Pacific Rim finds itself an aggrieved party that has every right to avail itself of any and all remedies available. El Salvador, being a nation of laws, has conferred that right upon Pacific Rim.
Perhaps it would be much more constructive to all involved to strip the controversy down to the essential elements and discuss them constructively and in earnest. For example, the mine should be held accountable to all environmental laws and regulations. Any local residents who are adversely affected should be accomodated, compensated, and fairly so. The mine should reimburse the government for costs involved. The government, on the other hand, should reimburse the company for costs for all actions in contravention of existing laws that have resulted in additonal unforeseen costs. And, if the mine demonstrates it’s in compliance with all applicable laws and regulations, then it should be permitted and allowed to operate, with government protection from interference. Again, as long as it is in compliance. It must be held accountable. This could be a starting point to develop something constructive out of this mess, and to stop the bickering.
As for existing bi-lateral and multi-lateral trade agreements that put lesser-developed nations at a competitive disadvantage, favor foreign companies over domestics, or which contain onerous or specious provisions, I suggest that nations so affected have access to competent counsel just about anywhere in the world with whom they should contract to analyze their rights and liabilities, and, if necessary, act on their behalf to rescind their participation in such agreements unless and until they (the disadvantaged countries) are able to renegotiate to gain more advantageous provisions in such treaties.
Or we can continue to do the same thing over and over again, somehow expecting a different result…..