This morning Pacific Rim Mining Co. announced that yesterday the ICSID (International Center for Settlement of Investment Disputes) tribunal denied the Government of El Salvador’s preliminary objections that sought to dismiss most of the mining company’s claims.
In April 2009, Pacific Rim filed international arbitration proceedings against the government of El Salvador claiming that their denial of mining exploitation permits violated their rights under the Central American Free Trade Agreement and Salvadoran Investment Law. In January of this year, the government filed preliminary objections requesting that the tribunal throw out most of Pacific Rim’s claims. They argued that even if all alleged facts are accepted as true, the tribunal still does not have a legal basis on which to decide in Pacific Rim’s favor. (Click here for a summary of the oral arguments). The tribunal heard oral arguments over these preliminary objections on May 31 and June 1, 2010, and yesterday released its decision denying the government’s request.
The tribunal’s decision does not mean that Pacific Rim is necessarily any closer to securing mining permits – only that their ICSID claims will live to see another day. In Pacific Rim’s press release, the company’s President and CEO states “We are very pleased with ICSID’s decision on the Preliminary Objection.” He continues, “[t]his is a positive and crucial step in the CAFTA process for PacRim. We are, however, reticent to celebrate, as we believe a more productive outcome is possible for both the Salvadoran people and foreign investors. With this phase of the arbitration now completed, we hope to resume a mutually beneficial dialogue with the GOES to resolve the impasse on the El Dorado project.”
In filing their claim, Pacific Rim is seeking to recover the $77 million they have invested in exploring their El Dorado site in Cabañas, El Salvador, as well as damages. In his statement, however, Tom Shrake seems to indicate that in trying to negotiate a settlement they are still working to secure exploitation permits. At this point, however, it seems very unlikely that Pacific Rim or any company buys their Pacific Rim El Salvador subsidiary will be able to mine for gold anytime soon. Public support for mining in Cabañas is so low that even Mayor Bautista (once a Pacific Rim promoter) from San Isidro, the municipality where the El Dorado site is located, has expressed his opposition to their efforts.
Investors are apparently not too impressed with the ICSID decision. Pacific Rim’s stock closed at $0.17 a share yesterday and is currently selling for $0.16.
While Pacific Rim’s ICSID claim may live to see another day, the likelihood that they will be resuming their activities in the region are slight.