Gabriel Resources sues Romania for $2.5 billion damages

Published by MAC on 2015-08-09
Source: Policy Alternatives, Rabble, Ecologist, statement

... while research shows Canadian corporations abuse investment treaties

Canadian corporations abuse investment treaties, bully governments into environmental backtrack: study

https://www.policyalternatives.ca/newsroom/news-releases/canadian-corporations-abuse-investment-treaties-bully-governments

5 August 2015

Canadian investors have exploited a controversial mechanism in international investment treaties to challenge public interest regulations in 24 different countries, according to a study released today by the Canadian Centre for Policy Alternatives (CCPA).

The report, by trade and investment researcher Hadrian Mertins-Kirkwood, documents the 55 known cases of Canadian investors using the investor-state dispute settlement (ISDS) system to sue foreign governments in international trade tribunals. It finds that the ISDS process has overwhelmingly been used by Canadian resource companies to dispute resource management and environmental protection measures in developing countries.

The study comes out on the heels of a request for investor-state arbitration, filed at the World Bank on July 30, by Canadian mining firm Gabriel Resources Ltd. The company is claiming that delays to the controversial Rosia Montana gold mine in Romania have violated the government's investment treaty obligations.

“ISDS is supposed to protect foreign investors from arbitrary government actions, but in practice it is being used by multinational corporations to bully democratic governments into backtracking on actions taken in the public interest,” says Mertins-Kirkwood. “Canadian companies—particularly Canadian mining companies—are among the worst in the world when it comes to ISDS.”

Among the study’s findings:

• 62% of the 55 ISDS cases involving a Canadian investor are in the resource or energy sectors. Since 2006, 78% of cases have been in those industries.
• 58% of cases involve a Canadian investor challenging a foreign government’s resource management or environmental protection measures. Since 2006, the proportion is 72%.
• 56% of cases have been brought against developing countries, especially in South and Central America. Since 2006, the proportion is 72%.
  Canadian investors have only won or favourably settled four out of 28 concluded cases—a “success” rate of just 14%—and none of the winning “Canadian” investors were both based in Canada and invoking a Canadian investment treaty.
• 17 ISDS cases involving Canadian investors are still in progress.

The federal government claims it has aggressively pursued new investment treaties containing ISDS in order to provide a more “transparent and predictable climate for Canadian investors abroad.” However, the study finds that it is not at all evident that the supposed benefits of these treaties for Canadian investors outweigh the proven social, political and economic costs incurred by ISDS disputes at home and abroad.

Of the 55 cases identified in the study, only four resulted in a favourable outcome for the Canadian investor. In comparison, Canada has lost nearly half the ISDS cases it has faced from foreign investors, and has been pressured into backtracking on important public health and environmental regulations as a result of those losses.

"Investment treaties have compromised Canadian democracy and the democratic policy space of Canada’s trading partners—yet historically, and in aggregate, these deals have also not created a 'transparent and predictable' investment environment for Canadian investors,” says Mertins-Kirkwood. “Given these high costs and meagre benefits, the evidence does not support the continued expansion and intensification of Canadian investment treaties, or the inclusion of ISDS in larger free trade deals such as CETA and the TPP.”

–30–

A Losing Proposition: The Failure of Canadian ISDS Policy at Home and Abroad is available on the CCPA website.

For more information contact Stuart Trew, Canadian Centre for Policy Alternatives, at 613-563-1341 x304.

---

Romania faces $2.56bn claim for failed gold mine

Oliver Tickell

Ecologist

14 August 2015

Canadian mining company Gabriel Resources is seeking over $2.5 billion damages from Romania after it rejected a vast gold mine at Rosia Montana, writes Oliver Tickell. Incredibly, it is taking legal action under a UK-Romania trade agreement.

This Canadian company, Gabriel Resources, is abusing the UK jurisdiction in using a 'shell' or' mailbox' company registered in Jersey which is not intended to be protected by the UK-Romania trade agreement.

A Canadian company, Gabriel Resources, has filed a $2.56 billion claim in a World Bank trade court against Romania after its rejection of a huge gold mine at Rosia Montana.

In December 2013 the lower house of Romania's parliament refused to pass revisions to the country's mining laws designed to enable the company to construct the mine in the Carpathian mountains. This followed an earlier rejection of the plan by the Senate.

The Rosia Montana mine would be Europe's largest open cast pit gold mine, employing highly toxic cyanide to mine about 300 tonnes of gold and 1,500 tonnes of silver a year.

Although Gabriel Resources is Canadian, it is taking the action under a bilateral trade agreement between Romania and the UK, which includes 'investor-state dispute settlement' (ISDS) clauses similar to those in the 'TTIP' Trans Atlantic Trade and Investment Partnership.

GR is taking the action via a company registered in the UK tax haven of Jersey, which it believes gives it the legal 'standing' to pursue the case under the UK-Romania agreement.

As British as the Klondike

According to GMB's Bert Schouwenburg, Gabriel Resources' action is "abusing the UK jurisdiction in using a 'shell' or' mailbox' company registered in Jersey which is not intended to be protected by the UK-Romania trade agreement. It has no real business activities in the UK to make use of an investment agreement to launch claims before an ISDS tribunal."

GR is also "undermining the sovereignty of Romania to make its own decisions to protect the health and safety and well-being of its own people", he added.

He has now written to the prime minister, David Cameron, asking him "to investigate the case and present evidence to ICSID that Gabriel Resources should not be covered by the provisions of the UK-Romania agreement."

Nick Dearden, director of Global Justice Now, added his voice to the protest: "It's bad enough that Gabriel Resource's 'right to profit' is being put forward as more important than the government of Romania's right to act for the benefit of its citizens.

"It's even worse that a Canadian mining company is able to do this by exploiting a trade agreement between the UK and Romania based on a shell company it owns in Jersey."

According GR's website, Gabriel Resources Ltd "is a Canadian TSX-listed (GBU.TSX) resource company focused on permitting and developing its world class Rosia Montana gold and silver project in Romania. The project is owned through Rosia Montana Gold Corporation S.A. (RMGC), in which Gabriel holds an 80.69% stake with the balance held by the Romanian State."

As such it is unclear on what basis the existence of a Jersey-registered subsidiary would qualify GR to take the action under the UK-Romania agreement.

A decade of protests in Romania

The mine is deeply unpopular among the country's small farmers and its increasingly vocal environmental movement. Huge demonstrations and protest actions took place against the mine throughout 2013 in the small town of Rosia Montana, the nearby city of Cluj, and in Bucharest.

However Gabriel Resources claims that the project "has been strongly supported by the local community as it would assist to alleviate the poverty of the people of Roşia Montana and the region."

It also says there is no rational reason to oppose the mine, which "has been exhaustively analysed by various Romanian competent authorities, as well as a large number of international experts and, as designed, will comply with or exceed all relevant Romanian and European Union legislation, as well as the highest global industrial standards."

Instead, it argues that the project "has become hostage to conflicts between rival political factions and misinformation" that has "unnecessarily damaged the ability for development of the Project."

Gabriel Resources has been pursuing the project for more than 15 years, enjoying the strong support of the Romanian Government, which has an almost 20% stake in the project, for most of that time.

The company claims that it has "not been afforded the treatment by the Romanian Authorities that is stipulated by investment protection treaties signed by Romania. Accordingly, in view of the substantial losses that the Gabriel Group will incur if the Project is not permitted to proceed in accordance with all applicable laws Gabriel has been left with no alternative but to file the Notice."

However this claim appears at odds with the fact that changes in Romania's mining laws were needed for the mine to proceed. Normally ISDS actions are only possible only when laws are changed in a way that adversely affects investors.

A warning for us all

Meanwhile campaigners are warning that many more such actions could take place under TTIP and that the Rosia Montana case shows the dangers to which EU governments would expose themselves if they sign up to the deal, as well as to the very similar CETA deal with Canada. Both contain ISDS provisions.

With TTIP and CETA in place, US and Canadian companies woould no longer have to resort to using Jersey-registed shell companies to pursue such disputes. Instead their rights to sue governments that they deem to reduce their profits could be pursued directly and without subterfuge.

"Cheerleaders of TTIP, the toxic trade deal being pushed by the EU and the USA, have accused its many critics of exaggerating the threat that it poses to democracy", said Nick Dearden. "But this is a clear example of how we are leaving ourselves vulnerable to an enormous corporate power grab."

---

 

'Made in Roșia Montană': Local collective action takes on Canadian mining interests in Romania

By Raluca Bejan

Rabble 

6 August 2015

If ‪Tică Darie would live in Canada he would likely be on some "30 under 30" most famous or most something list. But in Roșia Montană, Tică Darie is just Tică Darie. One of the guys trying to make the town "work" through an alternative and sustainable way of doing business that is not related to mining. Roșia Montană is Romania's oldest mining settlement. It recently gained international attention after it battled a Canadian mining company pursuing an open pit gold drilling project in the area.

I met Tică about a month and half ago when I visited the small town. Forgetting and remembering are quite interrelated processes for me these days yet I remember perfectly the day I visited Roșia Montană. It was one of those rainy and cold summer days that carries out the weight of an entire wet week and equally disperses it into each bone chilling drizzle that touches your skin.

I was talking with someone from a local non-profit organization. When I entered the room I have seen a few pairs of wool socks forgetfully left on the couch.

"Are you selling the socks?" I asked. "I know these socks. And the store. The wool store. I read about them online."

"No, not me'' he said. "It's Tică who trades them. Once we finish I'll send for him."

"Tică, come down. You have a not-to miss appointment." This word, "appointment," gets taken very seriously in the East. Everything is an appointment. From a casual meeting, to a rendezvous-type encounter, to some serious business talks. I was patiently waiting for Tică to descend for our appointment.

"Come," he said, once we passed the introductions phase. "I got the keys to the parochial house. But first I will show you something else." We walked for about two minutes straight to a big house behind the parish. "Here it is. The 'Adopt a House' program. Two guys from Bucharest got it. To renovate."

"They bought it?" I asked.

"No, no, they are restoring it, just it. They know what they're doing. Artists. They volunteered to fix it as part of the program."

The "Adopt a House" program in Roșia Montană was established with the aim of connecting locals with organizations and people who would help them restore the cultural patrimony in the area. The idea was to refurbish historical buildings and offer them back to the community at a somewhat high(er) value on cultural and touristic grounds. Seems that 52 volunteers from over six countries have already participated in the program. Tică showed me every room of the house. It was beautiful. He explained in detail how the refurbished rooms used to look, what were the changes and what were the transformations to be made next. When we left, the Bucharest guys pulled in. They did look like artists indeed.

"Now we can go see the socks," Tică said. He unlocked the door of the big parochial house. "You know, the parish was against the project. They really supported the campaign. Now they are giving us space for this business. We can store everything here, the wool, the socks themselves, the promotional materials, as well as all the signage and pamphlets. I will show you everything we have."

Tică came up with the "Made in Roșia Montană" idea of selling wool made garments manually sewed by local women. Regular socks, yoga socks, cute hats and scarfs. Off-white, beige and grey. Old style red-tiptoes and red-heels looking socks. I was taken back to the childhood spells. To the old communist times when electricity and heat had a 6 p.m. cut off period and the practice of warming the body was almost ritualistic in itself. The red-tiptoes and red-heel wool socks were always an essential. I do miss those times. Occasionally. The predictable time when one knows exactly what to expect.

"When we started this we didn't have any idea about wool," Tică continued. "We learned a lot. We spent time with the women in the village. We went to some wool training workshops. Now we are pushing them to sew even more delicate and snugger. Leaner. We can do even better. But I am assaulted with requests. Everything we do is through Facebook, through Messenger. All the ordering, which is mainly from abroad. They're not expensive you know, but we couldn't have them cheaper. It takes a lot of work to do them. 100 per cent natural wool."

I bought some socks and a hat for myself and diversified with other items for all my Romanian girlfriends from back home in Toronto.

"So this is what we are trying to do," Tică said. "We need to think about ways to make this community work. To make it sustainable in a way that is not related to mining. So people will stay." Tică locked the parish and we left. His online store is easy to find.

Meanwhile, in this month and half, the Canadian mining company that was pursuing the project -- Gabriel Resources LTD -- submitted an arbitration request to the World Bank’s International Centre for Settlement of Investment Disputes. It is suing the Romanian state for stalling the project, claiming the entire value of their prospective (lost) investments. This is roughly estimated at four billion dollars.

---

Cameron told to stop Jersey-registered shell company suing Romania in ‘corporate court’

http://www.globaljustice.org.uk/news/2015/aug/14/cameron-told-stop-jersey-registered-shell-company-suing-romania-‘corporate-court’

14 August 2015

A coalition of environmental and human rights organisations from the UK, Romania and Canada have called on prime minister David Cameron to intervene in an international case which is pitting a Canadian mining company against the government of Romania. The group argues that under new trade agreements like TTIP (the Transatlantic Trade and Investment Partnership) such cases will radically expand, targeting the British and other European governments.

Mining company Gabriel Resources has filed a request for arbitration at the World Bank after a Romanian court annulled a critical environmental document that was required for the Rosia Montana mine to go-ahead in the Transylvania region of Romania. Part of the request uses a Jersey-listed subsidiary company which campaigners believe is a shell company - that is a company which serves as a vehicle for business transactions without itself having any significant assets or operations. Campaigners believe the company is doing this to give it access to a bilateral trade deal between the UK and Romania, under which such corporate cases can be brought.

In a previous interview, the CEO of Gabriel Resources has suggested that they would seek compensation of up to $4 billion if the mine were not to go ahead, despite having spent only a fraction of this amount developing its plans for the mine. According to WHO statistics, Romania’s entire spending on public health for a year is under $8 billion.

The case is an example of the Investor-State Dispute Settlement (ISDS) or ‘corporate courts’ system that has received recent notoriety as a result of their controversial inclusion in the free-trade deal being pushed between the EU and USA, the Transatlantic Trade and Investment Partnership (TTIP). The letter to Cameron highlights the European Commission’s desire to stop “so– called “shell” or “mailbox” companies, owned or controlled by nationals or companies not intended to be protected by the agreement and having no real business activities in the country concerned, to make use of an investment agreement to launch claims before an ISDS tribunal.”

Signatories of the letter, who oppose the use of ISDS in trade agreements, call on Cameron to investigate and call on the court to throw out the case based on the fact that Gabriel doesn’t represent a real British company.

Nick Dearden, the director of Global Justice Now said:

“It’s bad enough that Gabriel Resource’s ‘right to profit’ is being put forward as more important than the government of Romania’s right to act for the benefit of its citizens. It’s even worse that a Canadian mining company is able to do this by exploiting a trade agreement between the UK and Romania based on a shell company it owns in Jersey.

“Cheerleaders of TTIP, the toxic trade deal being pushed by the EU and the USA, have accused its many critics of exaggerating the threat that it poses to democracy. But this is a clear example of how we are leaving ourselves vulnerable to an enormous corporate power grab. Why should UK taxpayers foot the massive bills for compensating greedy corporations when the government rules that their operations are harmful to communities or the environment?”

Image: The church in the village of Geamana, Transylvania near Rosia Montana which is now buried in the tailings pond and surrounded by toxic heavy metals. 400 families were forced to relocate when the valley was flooded. Photo: Glyn Thomas Photography

• Take action to stop the corporate attack on Europe http://action.globaljustice.org.uk/ea-action/action?ea.client.id=1784&ea.campaign.id=41188