El Salvador Wins Arbitration Over Gold Mining

On October 14, an international arbitration panel (the International Centre for the Settlement of Investment Disputes) ruled that El Salvador did not have to pay compensation to Oceana Gold, a foreign mining company that was denied a concession to drill for gold in the country. The panel also ordered Oceana Gold to pay the Salvadoran government $8m to cover the majority of the country’s legal costs.[1]

Oceana Gold’s predecessor, Pac Rim Cayman, LLC, in 2009 had initiated the arbitration against El Salvador seeking more than $250 million after the country refused to grant it permits to mine gold on the company’s El Dorado property in the department of Cabanas.[2]

There was celebration of the victory in El Salvador’s government. Its attorney general, Douglas Meléndez Ruiz, said,“For the people of Cabanas who have been fighting to defend their environment, it is mission accomplished. It is an important step for the country to have been victorious in this lawsuit.” Similar thoughts were expressed by Lina Pohl, the country’s environmental minister: “What is clear is that investments are welcome if they respect institutions, if they respect the environment and health.”

Bernardo Belloso, president of the Association for the Development of El Salvador, part of a national roundtable opposed to metallic mining, said the ruling “vindicates our right to determine our own development path.”

The long-running dispute over whether gold mining would be permitted in El Salvador included the deaths of several activists against the mine. The anti-mining movement has long alleged that these deaths were directed by mining interests, but prosecutors never treated the crimes as anything other than “common” violence in the country.[3]

Although El Salvador was victorious in the arbitration, the country still lacks a comprehensive law banning or regulating extractive mineral mining, and continues to act under the moratorium against further mining permits originally adopted during the ARENA administration of president Tony Saca.


[1] Malkin, El Salvador Wins Dispute Over Denying a Mining Permit, N.Y. Times (Oct. 14, 2014); Prevost & Kennard, World Bank tribunal dismisses mining firm’s $250m claim against El Salvador, Guardian (Oct. 14, 2016); El Salvador wins gold mining arbitration, Tim’s El Salvador Blog (Oct. 15, 2016).

[2] Gold mining arbitration to commence in Washington, D.C., Tim’s El Salvador Blog (Sept. 14, 2014).

[3] A previous blog post mentioned my visiting the area near the site of the disputed gold mining on my 2010 trip to El Salvador. My blog posts about El Salvador focus on my trips to the country, my pro bono representation of Salvadoran asylum applicants, Archbishop Oscar Romero of El Salvador, the four American churchwomen’s mission to the country and their murders, the six Jesuit priests mission to the country and their murders and the El Mozote Massacre.