ICSID finds against Peru on Santa Ana
10 December 2017
A long-awaited finding has been reached by the International Center for the Settlement of Investment Disputes (ICSID) in the case of the Santa Ana silver project in the Chucuito province of Puno. The arbitrators have found against Peru and in favour of the Canadian company Bear Creek Mining Corporation. The award is US$30.4 million plus interest and arbitration costs.
The case goes back to the protests over the proposal to develop the mine back in 2011. Local communities argued that the mine would contaminate Lake Titicaca, while the company argued that the mine was in a separate drainage basin and was based on a zero-discharge design. The dispute became violent in June of that year when a 60-year old woman died when hit by a tear gas canister. On 24 June, several protesters marching on Juliaca airport were killed by police. In a dangerous situation of mounting tension, the García government withdrew the company's licence on 25 June.
The company has argued through numerous hearings that this amounted to indirect expropriation with a serious effect on its earnings. The Peruvian state's case has been based on the company's failure to consult adequately with the communities affected. The company has argued that it has complied with all legal requirements regarding its outreach activities.
The good news for Peru in this is that the award is far below what the company claimed. Peru's counsel, Marinn Carlson, of Sidley Austin LLP, noted that the court awarded just 3% of the sum originally claimed. "While Peru had looked for a different outcome, it seems clear that the tribunal recognised that Peru was responding to a very serious situation and it declined to give Bear Creek a windfall for a project that might never have progressed at all," Carlson said.