In what would appear to be a victory for El Salvador, a World Bank arbitration panel
ruled that the Canadian mining company Pacific Rim cannot sue El Salvador for damages under the CAFTA, the Central American-US free trade agreement. The lawsuit will instead proceed under Salvadoran law.
The panel, known as the International Center for Settlement of Investment Disputes, or ICSID, found Pacific Rim "did not and does not have substantial activities in the USA" to argue its case under the Central American Free Trade Agreement with the United States, or CAFTA.
The case will now move forward under El Salvador's Investment Law, which prohibits expropriation without compensation, and will be overseen by ICSID, according to the decision seen by Reuters on Saturday.
Pacific Rim is seeking millions of dollars in damages from the Salvadoran government for failing to issue the permits needed to open the El Dorado gold project.
The company lost a key investment and took El Salvador to arbitration, arguing the country violated the trade pact.
The project would represent the first new precious metals mine in El Salvador in 70 years, but locals are worried about contamination from large-scale mining projects.
On Friday, both sides claimed victory after the decision.
Some estimate that the lawsuit has
cost the government of El Salvador approximately $5 million so far and that the case is likely to take another 12 to 18
months to work through Salvadoran courts.
