Copper Mesa Mining Corporation v. Republic of Ecuador, PCA No. 2012-2
PCA · Investment (ICSID and treaty) · Ecuador · 15 Mar 2016
Why it matters
This award is significant for its detailed analysis of investor misconduct and contributory negligence in investment treaty arbitration. The Tribunal reduced damages by 30% due to the investor's own negligent acts, setting a precedent for apportioning liability when both the state and the investor contribute to the loss. It also clarified the scope of fair and equitable treatment and indirect expropriation in the context of mining concessions.
Summary
Copper Mesa Mining Corporation, a Canadian company, brought an arbitration claim against Ecuador under the Canada-Ecuador BIT, alleging that Ecuador breached its obligations by revoking mining concessions and failing to provide fair and equitable treatment. The dispute arose from Copper Mesa's investments in three mining projects in Ecuador: Junín, Chaucha, and Telimbela. Ecuador argued that the claims were inadmissible due to the investor's misconduct, including alleged bribery and improper conduct. The Tribunal, seated in The Hague, rejected Ecuador's jurisdictional objections and found that Ecuador had breached the BIT's fair and equitable treatment and expropriation provisions regarding the Junín and Chaucha concessions. However, the Tribunal also found that Copper Mesa had contributed to its own loss through negligent acts by its senior management in Canada, reducing the compensation for Junín by 30%. The Tribunal awarded US$11,184,595.80 for Junín and US$8,262,899 for Chaucha, totaling US$19,447,494.80, plus compound interest. The claim regarding Telimbela was dismissed. Each party bore its own legal costs, and arbitration costs were split equally.
The detail
Parties: Copper Mesa Mining Corporation v. Republic of Ecuador, PCA No. 2012-2
Case number: italaw/cases/4206
Outcome: The Tribunal found Ecuador liable for breaches of the Canada-Ecuador BIT regarding the Junín and Chaucha concessions, awarding Copper Mesa US$19,447,494.80 in compensation plus compound interest, but dismissed claims regarding the Telimbela concession and ordered each party to bear its own legal costs.
Quantum: US$19,447,494.80
Applicable law: Agreement between the Government of Canada and the Government of the Republic of Ecuador for the Promotion and Reciprocal Protection of Investments (1996); UNCITRAL Arbitration Rules 1976
Issues in play: The case involved the collision between Ecuador's sovereign right to regulate mining and environmental matters and the investor's right to fair and equitable treatment and protection against expropriation under the BIT. The Tribunal also addressed issues of investor misconduct and contributory negligence.
Read the full decision at italaw ↗
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