Infinito case is a legacy left for the new president

An unintended legacy of  President Laura Chinchilla is the international arbitration case lodged by Infinito Gold Ltd.

Infinito is the firm that wanted to process gold from an open pit mine in northern Costa Rica. The company struggled for years from one court to another to win permission to proceed on the contract it had signed with the Costa Rican government.

Although some have raised environmental arguments about the project, the key issue is the validity of contracts. And that, basically is what the argument will be before a panel of the International Centre for Settlement of Investment Disputes. The Ministerio de Comercio Exterior is the lead agency to fight for Costa Rica.

The case will be argued and considered under an investment treaty between Costa Rica and Canada, where Infinito is located.

Regardless of the outcome, the case is another black eye for Costa Rica for foreign investment. The disputes center designates the case No. ARB/14/5).

Luis Guillermo Solís and his minister-designate for Commercio Exterior, Alexánder Mora Delgado, are at the forefront of the defense of the country. Mora is a banker and the founder of tech companies. He has a master’s in business administration and worked with Banco de Costa Rica in its investment and insurance arms.

The Canadian firm of Torys LLP, headquartered in Toronto, will represent Infinito. The firm is one of the so-called Seven Sisters, law firms identified as the top seven in Canada.

Solís has not spoken publicly about the dispute center’s case, but it is likely that he will seek some form of negotiated settlement.

Infinito has cut its demand to $95 million, which it says is the estimated amount it has spent in Costa Rica. Originally it sought $1 billion, which represented expense here and estimated lost profit from gold mining.

Generally such cases take a long time. Goldmine opponents here have suggested that Costa Rica ignore the dispute center case.

In a March forum at the Universidad de Costa Rica mine opponents suggested that Costa Rica not participate in the international arbitration. The center is a subsidiary of the World Bank. A lawyer at the same session said that this would not be a good idea. The opponents also said  Costa Rica should void its trade agreement with Canada.

If Costa Rica ignores the case, the proceedings will continue anyway with a likely outcome favorable to Infinito. There always is the possibility that Infinito will reinstate its demand for $1 billion. That would be a budget buster for Costa Rica.

Infinito began working here in 1993 through a local subsidiary. Since then the price of gold has skyrocketed. The firm also has been the victim of politics. In his first press conference as president, Abel Pacheco said he was ordering a moratorium on open pit mining. He said that even though Infinito had a valid contract. Eventually the courts backed the gold mining company.

Mining opponents in Canada also launched campaigns against the company. A coalition of opponents said on a Web site that “Infinito Gold, a Canadian mining company, just threatened to slap Costa Rica with a $1 billion lawsuit because the nation decided to protect its rain forests rather than host an open-pit gold mine.”

In fact, the mining activity would affect just 190 hectares, some 470 acres. The company had promised to repair the damage and plant many more new trees after the gold was extracted.

President Óscar Arias Sánchez strongly supported the project and declared it in the public interest. The firm also won a series of Sala IV victories. However, it was the Tribunal Contencioso Administrativo that ordered the mining permit to be invalidated. It even called for prosecution against Arias and the then-environmental minister.

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