Las Crucitas gold mine case will be very expensive here

Now that the Las Crucitas situation looks like international arbitration is forthcoming, I feel that the people of Costa Rica deserve to know the true costs of such a high profile litigation.

The following is from the International Centre for Settlement of Investment Disputes Web site case no. ARB(AF)/04/06 Vannessa Ventures

The Tribunal notes that both parties employed outside counsel and experts. It notes further that the total costs exceeded U.S. $20 million and that claimant’s costs were under one-half of respondent’s costs. While it understands the magnitude of the issues at stake, and that each party took its own decisions on how best to protect its interests, the tribunal considers it regrettable that the costs of what should be an efficient and reasonably expeditious procedure are so high.

In this case, Claimant was in effect the winner of the jurisdiction phase and the loser of the merits phase of this case. Given the logistics of case preparation and the extent to which issues are intertwined, it is practically impossible to separate out the costs of the two phases. Taking account of the extent to which each side has prevailed, and the respective expenditures of each party, the tribunal has decided that each side should bear its own costs and one-half of the costs of the tribunal and of ICSID.

The figures can be verified on the ICSID Web site

Instead of reaping the benefits of royalty payments and taxation revenue from the gold mine project of Las Crucitas, the people of Costa Rica are now facing the reality that its government could be ordered to pay compensation to Infinito gold for violating the terms of its bilateral trade agreement with Canada. What should have produced a positive future for the local people at Las Crucitas in the form of investment in local education, jobs and infrastructure has resulted in a situation that foreign investment now views Costa Rica as a risky location in which to pursue business ventures.

Infinito will win its case, of that I have no doubt, as the case will be adjudicated solely on contract and trade agreement law and will be tried by an “Independent” tribunal at the International Centre for Investment Disputes under the auspices of the World Bank, far away from Costa Rica’s indecisive and conflicting political/judicial system.

The ICSID, based in Washington D.C., deals only with international disputes which have resulted through contract cancellations, breach of contract, nationalization of projects etc. Petty political arguments are not tolerated at this venue.
Infinito had/has all the necessary permits, a bankable feasibility report, stated government support, proven capital investment and constitutional court approval.

Additionally, the Costa Rican vice president has already stated compensation will have to be paid if the government cancels the project. What troubles me now is the financial cost to the Costa Rican people in the form of compensation and legal costs. All of which could have been avoided if the Sala 1V’s ruling had been respected.

Infinito (formally Vannessa Ventures) was unsuccessful in a recent ICSID case against Venezuela. The details of the case bare no comparison to Las Crucitas whatsoever, but what is of great interest are the legal costs. Each party had to pay its own legal costs. Although winning its case, Venezuela’s legal costs exceeded US $15,000,000 or 7.500,000,000 Colon

Stewart Hay
British Columbia, Canada

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