Pac Rim Cayman LLC v. Republic of El Salvador
ICSID · Investment (ICSID and treaty) · El Salvador · 14 Oct 2016
Why it matters
This case is significant as it is one of the first ICSID awards under CAFTA-DR and addresses the scope of investor protection in the context of mining concessions. The tribunal's decision to award costs to the respondent state underscores the importance of assessing the merits of claims and the potential consequences for investors pursuing unmeritorious claims. It also highlights the interplay between domestic regulatory measures and international investment obligations.
Summary
Pac Rim Cayman LLC, an indirect subsidiary of OceanaGold Corporation, initiated arbitration against the Republic of El Salvador under the CAFTA-DR treaty, claiming that El Salvador's denial of mining permits and subsequent moratorium on mining amounted to expropriation and violated fair and equitable treatment. The tribunal, constituted under ICSID, dismissed all claims on the merits, finding that El Salvador's actions were a legitimate exercise of its regulatory authority and did not breach the treaty. The tribunal also rejected Pac Rim's jurisdictional arguments. As a result, the tribunal ordered Pac Rim to pay US$8 million to El Salvador for legal fees and costs. The award was publicly released on 14 October 2016.
The detail
Parties: Pac Rim Cayman LLC v. Republic of El Salvador
Case number: ICSID Case No. ARB/09/12
Outcome: The tribunal found in favor of the Government of El Salvador and awarded US$8 million to cover its legal fees and costs.
Quantum: US$8 million (costs)
Applicable law: CAFTA-DR (Central America-Dominican Republic-United States Free Trade Agreement); ICSID Convention; Arbitration Rules
Issues in play: The dispute involved the interpretation of CAFTA-DR provisions on expropriation and fair and equitable treatment, and the tribunal's jurisdiction over claims arising before El Salvador's withdrawal from the ICSID Convention.
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