INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES ... · INTERNATIONAL CENTRE FOR...

INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

ICSID Case No. ARB/09/12

Pac Rim Cayman LLC

Claimant,

v. The Republic of El Salvador

Respondent.

) ) ) ) ) ) ) ) )

THE REPUBLIC OF EL SALVADOR'S COUNTER-MEMORIAL ON THE MERITS

Fiscalía General de la República Foley Hoag LLP de El Salvador

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TABLE OF CONTENTS

I. Introduction ..........................................................................................................................1

II. Pac Rim's Claims Must Fail Because Pac Rim Did Not Have a Right to a Mining Exploitation Concession or to the Exploration Licenses ...................................................12

A. Pac Rim did not have a right to a Mining Exploitation Concession in El Dorado....................................................................................................................17

1. The legal regime for mining under the Salvadoran Mining Law ...............17

2. Claimant did not comply with the land ownership or authorization requirement ................................................................................................30

3. Claimant did not comply with the requirement to submit a Feasibility Study ........................................................................................60

4. El Salvador did not have a legal obligation to change its Mining Law so that Pac Rim's application could be approved under a new law ..............................................................................................................76

5. Pac Rim did not have a right to continue exploring after the original exploration licenses expired and its application for the concession was pending .............................................................................84

B. Pac Rim did not have a right to apply for and receive other exploration licenses included in its claims ................................................................................86

1. Claimant did not have a right to apply for and receive the exploration licenses in Guaco, Huacuco, and Pueblos ..............................86

2. Claimant did not have a right to a new exploration license in Santa Rita .............................................................................................................89

3. Claimant has not established that it has or ever had any rights in Zamora/Cerro Colorado .............................................................................91

4. Even if Claimant had any valid exploration licenses, they would not be "real property rights in a mineral estate," as Pac Rim claims .........92

III. Pac Rim Was Not Entitled to an Environmental Permit for Exploitation .........................94

A. Realization by the Ministry of Environment that it lacked the capacity to fulfill its obligations to protect the Salvadoran population and the environment ...........................................................................................................94

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B. The Ministry of Environment had legitimate concerns about Pac Rim's proposed project specifically ...............................................................................100

1. Comments from the public consultation were "difficult to address" .......103

2. Claimant's dismissive response ................................................................105

3. Claimant's expert report does not address the Ministry's concerns .........108

4. Pac Rim resigned itself to getting the environmental permit through political means ............................................................................111

C. Pac Rim did not earn the necessary social license to operate ..............................115

D. Strategic Environmental Evaluation ....................................................................119

E. Moratorium law still pending...............................................................................123

IV. Pac Rim's Claims Under El Salvador's Investment Law Are Without Merit ..................126

A. The Tribunal's jurisdiction to decide this dispute is limited by the Investment Law ....................................................................................................126

1. The only claims that can be made in an arbitration under Article 15 of the Investment Law of El Salvador are claims regarding the substantive rights and protections included in the Investment Law ........127

2. Salvadoran law is the applicable law to decide the content of the Investment Law's substantive rights and protections ...............................135

3. The Investment Law imposes a significant limitation on investments related to the exploitation of the subsoil ..............................141

4. A three-year statute of limitations applies to Claimant's claims related to the application for the El Dorado concession ..........................143

B. Pac Rim has not alleged any facts and has not made any arguments in support of a claim of breach of Articles 5 or 6 of the Investment Law ...............143

C. The facts alleged by Pac Rim cannot support a claim of breach of Article 8 of the Investment Law .........................................................................................144

D. Pac Rim would not have been able to sustain a claim for expropriation under international law in any event ....................................................................147

1. Pac Rim had no valid mining rights capable of being expropriated under international law ............................................................................148

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2. Pac Rim has failed to establish that El Salvador's regulatory conduct constitutes expropriation under international law ......................150

V. Damages ...........................................................................................................................159

A. Pac Rim is not entitled to compensation ..............................................................159

1. There is no causal link between El Salvador's conduct and any harm to Pac Rim, and therefore Pac Rim cannot be compensated for any damages in this arbitration ...........................................................159

B. The applicable law on damages ...........................................................................166

1. Salvadoran law is the applicable law in this arbitration ..........................166

2. Salvadoran law provides a basis for compensation for Claimant's alleged losses ...........................................................................................167

3. Claimant would not be entitled to compensation under general principles of international law .................................................................169

C. Pac Rim's quantum analysis is seriously flawed ..................................................172

1. Valuation methods and assumptions used by Claimant's experts ............172

2. Pac Rim used the wrong valuation methods to calculate damages in this case ....................................................................................................175

3. Pac Rim applied the wrong valuation methods in a seriously flawed manner ..........................................................................................189

D. Claimant is not entitled to prejudgment interest because it is not entitled to compensation .......................................................................................................198

VI. Jurisdictional Issues .........................................................................................................202

A. Reservation of rights with regard to jurisdictional issues already decided ..........202

B. Additional objections to jurisdiction ....................................................................203

1. Jurisdiction for Pac Rim's claims related to mining rights is exclusively reserved to Salvadoran courts ...............................................203

2. Pac Rim's claims related to its application for the El Dorado exploitation concession are time-barred ..................................................207

3. Conclusion on additional objections to jurisdiction.................................210

VII. Conclusion .......................................................................................................................211

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VIII. Costs .................................................................................................................................215

A. Claimant's "perfected right" to a concession .......................................................215

B. Claimant's access to ICSID arbitration ................................................................217

C. New frivolous arguments on the merits ...............................................................219

D. Conclusion on costs .............................................................................................220

IX. Request for Relief ............................................................................................................222

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TABLE OF AUTHORITIES

Laws

Civil and Commercial Procedure Code of El Salvador, Legislative Decree No. 712, Sept. 18, 2008 ....................................................................................................................... 131, 137, 138

Civil Code of El Salvador, Un-numbered Decree, published in the Official Gazette No. 85, Book 8, Apr. 14, 1860, amended by Decree No. 512, published in the Official Gazette No. 236, Book 365, Dec. 17, 2004 ................................................................................... passim

Constitution of the Republic of El Salvador, Legislative Decree No. 38, Dec. 16, 1983, published in the Official Gazette No. 281, Book 234 ...................................................... passim

Environmental Law of El Salvador, Legislative Decree No. 233, published in Official Gazette No. 79, Book 339 of Apr. 5, 1998 amended by Legislative Decree No. 237, published in Official Gazette No. 47, Book 374 of Mar. 9, 2007 ................................... 95, 103

Investment Law of El Salvador, Legislative Decree No. 732, Oct. 14, 1999 ............................... passim

Mining Law of El Salvador, Legislative Decree No. 544, Dec. 14, 1995 (prior to amendment) ........ 17

Mining Law of El Salvador, Legislative Decree No. 544, Dec. 14, 1995, published in the Official Gazette No. 16, Book 330 of Jan. 24, 1996, amended by Legislative Decree No. 475, July 11, 2001, published in the Official Gazette No. 144, Book 352 of July 31, 2001 ............................................................................................................................ passim

Regulations of the Mining Law of El Salvador and its Amendments, Legislative Decree No. 47, June 20, 2003, published in the Official Gazette No. 125, Book 359 of July 8, 2003 .................................................................................................................................. passim

Cases

Amoco International Finance v. Iran, Award No. 310-56-3, 15 Iran-US Claims Tribunal Rep. 189 (1987) .............................................................................................................. 178

Anaconda-Iran Inc. v. The Government of the Islamic Republic of Iran and the National Iranian Copper Industries Company, Interlocutory Award, Award No. ITL 65-167-3, 13 Iran-US Claims Tribunal Rep. 199 (1986) ..................................................... 200

Archer Daniels Midland Company and Tate & Lyle Ingredients Americas Inc. v. The United Mexican States, ICSID Case No. ARB(AF)/04/05, Award, Nov. 21, 2007 ....... 200

Asian Agricultural Products Ltd. v. Republic of Sri Lanka, ICSID Case No. ARB/87/3, Final Award, June 27, 1990 ............................................................................................ 181

Autopista Concesionada de Venezuela, C.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/00/5, Award, Sept. 23, 2003 .......................................................... 182, 200

vi

Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Decision on the Application for Annulment of the Argentine Republic, Sept. 1, 2009 ........................... 135

Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Award, Aug. 27, 2009 ................................................................. 148

Biloune and Marine Drive Complex Ltd. v. Ghana Investments Centre and the Government of Ghana, UNCITRAL, Award on Compensation and Costs, June 30, 1990................................................................................................................................. 179

Biwater Gauff Ltd v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, July 24, 2008 ................................................................................................................... 161

British Claims in the Spanish Zone of Morocco (Spain v. United Kingdom), PCA Case II U.N.R.I.A.A. 615, Award, May 1, 1925 ......................................................................... 200

Case Concerning Elettronica Sicula S.p.A. (USA v. Italy), Judgment of 20 July, 1989 I.C.J. Reports 15.............................................................................................................. 160

Case Concerning the Factory at Chorzów (Germany v. Poland), 1928 P.C.I.J (Series A) No. 17, Judgment (Sept. 13) ........................................................................................... 170

Case No. 309-2001, Constitutional Chamber of the Supreme Court of El Salvador, June 26, 2003............................................................................................................................. 44

Case of James and Others v. The United Kingdom, European Court of Human Rights, Application No. 8793/79, Judgment, Feb. 21, 1986 ....................................................... 131

Case of the S.S. Wimbledon, 1923 P.C.I.J. (Series A) No. 1 (Aug. 17) ...................................... 199

CME Czech Republic B.V. (The Netherlands) v. The Czech Republic, UNCITRAL, Final Award, Mar. 14, 2003 ..................................................................................................... 200

CME Czech Republic B.V. v. The Czech Republic, UNCITRAL, Partial Award, Sept. 13, 2001......................................................................................................................... 155, 156

CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Ad Hoc Committee on the Application for Annulment of the Argentine Republic, Sept. 25, 2007 ........................................................................ 135, 187

Compañia de Aguas del Aconquija AS and Vivendi Universal SA v. The Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, July 3, 2002 ............... 135

Constitutional Chamber of the Supreme Court of Justice, Final Judgment No. 2-92, July 26, 1999............................................................................................................................. 46

Desert Line LLC v. The Republic of Yemen, ICSID Case No. ARB/05/17, Award, Feb. 6, 2008................................................................................................................................. 200

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Duke Energy Electroquil Partners and Electroquil S.A. v. Republic of Ecuador, ICSID Case No. ARB/04/19, Award, Aug. 18, 2008 ................................................................. 200

Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Award, Nov. 13, 2000 .................................................................................................................. 158

GAMI Investments, Inc. v. The Government of the United Mexican States, UNCITRAL, Final Award, Nov. 15, 2004 ............................................................................................ 152

Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, Sept. 16, 2003 ........ 148

Glamis Gold, Ltd. v. United States of America, UNCITRAL, Award, May 14, 2009 ............... 152

Hoffland Honey Co. v. National Iranian Oil Co., Award No. 22-495-2, 2 Iran-US Claims Tribunal Rep. 41 (1983) .................................................................................................. 161

Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Decision of the Ad Hoc Committee on the Application for Annulment of Mr. Soufraki, June 5, 2007 .................................................................................................... 135

Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, Aug. 2, 2006 ....................................................................................................... 132

Industria Nacional de Alimentos, S.A. and Indalsa Perú ("Lucchetti"), S.A. v. The Republic of Peru, ICSID Case No. ARB/03/4, Decision on Annulment, Sept. 5, 2005................................................................................................................................. 135

International Systems & Controls Corporation v. National Iranian Gas Company, National Iranian Oil Company, the Islamic Republic of Iran, Award No. 464-494-3, 24 Iran-US Claims Tribunal Rep. 47 (1990) .............................................................. 200

Klöckner v. The Republic of Cameroon, ICSID Case No. (ARB/81/2), Decision on the Application for Annulment Submitted by Klöckner Against the Arbitral Award, Oct. 21, 1983 ................................................................................................................... 135

M.C.I. Power Group L.C. and New Turbine, Inc. v. The Republic of Ecuador, ICSID Case No. ARB/03/6, Decision on Annulment, Oct. 19, 2009 ........................................ 135

Marvin Roy Feldman Karpa v. The United Mexican States, ICSID Case No. ARB(AF)/99/01, Award, Dec.16, 2002 .................................................. 154, 155, 156, 200

McCollough & Company, Inc. v. The Ministry of Post, Telegraph and Telephone, The National Iranian Oil Company and Bank Markazi, Award No. 225-89-3, 11 Iran-US Claims Tribunal Rep. 3 (1986) ................................................................................. 200

Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1, Award, Aug. 30, 2000 ............................................................................................. 154, 179

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Methanex Corporation v. United States of America, NAFTA, Final Award, Aug. 3, 2005154, 155

Mohammad Ammar Al-Bahloul v. Tajikistan, SCC Case No. 064/2008, Final Award, June 8, 2010............................................................................................................................. 162

Mr. Franck Charles Arif v. Republic of Moldova, ICSID Case No. ARB/11/23, Award, Apr. 8, 2013 ............................................................................................................ 180, 200

Mr. Patrick Mitchell v. The Democratic Republic of Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, Nov. 1, 2006 ...................... 135

MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award, May 25, 2004 ................................................................................... 158

Nordzucker v. The Republic of Poland, UNCITRAL, Third Partial and Final Award, Nov. 23, 2009................................................................................................................... 161, 162

Norwegian Shipowners' Claims (Norway v. United States of America), PCA Case I U.N.R.I.A.A. 307, Award, Oct. 13, 1922 ....................................................................... 200

Occidental Exploration and Production Company (OPEC) v. The Republic of Ecuador, LCIA Case No. UN 3467, Final Award, July 1, 2004 .................................................... 200

Occidental Petroleum Corporation and Occidental Exploration and Production Company (OPEC) v. The Republic of Ecuador, ICSID Case No. ARB/06/11, Award, Oct.5 2012 .......................................................................................................... 188

Otis Elevator Company. v. The Islamic Republic of Iran and Bank Mellat (formerly Foreign Trade Bank of Iran), Award No. 304-284-2, 14 Iran-US Claims Tribunal Rep. 283 (1987) .............................................................................................................. 160

Phelps Dodge Corp. and Overseas Private Investment Corp. v. The Islamic Republic of Iran, Award No. 217-99-2, 10 Iran-US Claims Tribunal Rep. 121 (1986) .................... 187

Pope & Talbot Inc. v. The Government of Canada, NAFTA, Interim Award, June 26, 2000................................................................................................................................. 152

PSEG Global Inc and Konya Ilgin Elektrik Üretim ve Ticaret Limited Širketi v. Republic of Turkey, ICSID Case No. ARB/02/5, Award, Jan. 2007.............................................. 154

R.J. Reynolds Tobacco Company v. The Government of the Islamic Republic of Iran and Iranian Tobacco Company (ITC), Award No. 145-35-3, 7 Iran-US Claims Tribunal Rep. 181 (1984) ................................................................................................ 200

Ronald S. Lauder (United States) v. The Czech Republic, UNCITRAL, Final Award, Sept. 3, 2001 ................................................................................................... 151, 155, 156

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RosInvestCo UK Ltd. v. The Russian Federation, SCC Case No. 079/2005, Final Award, Sept. 12, 2010 ................................................................................................................. 200

Rudloff Case (Merits), US-Venezuela Mixed Claims Commission, (1903-5) IX U.N.R.I.A.A. 255 ............................................................................................................ 178

S.D. Myers, Inc. v. Government of Canada, UNCITRAL, Partial Award on the Merits, Nov. 13, 2000 .......................................................................................................... 155, 156

SAIPEM S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/7, Award, June 30, 2009 ..................................................................................................... 200

Saluka Investments BV v. The Czech Republic, UNCITRAL, Partial Award, Mar. 17, 2006......................................................................................................................... 155, 156

SD Myers Inc. v. Canada, UNCITRAL, Second Partial Award, Oct. 21, 2002 ......................... 161

Shufeldt claim (Guatemala, United States of America), PCA Case II U.N.R.I.A.A. 1079, Award, July 24, 1930 ...................................................................................................... 178

Sistem Mühendislik Inşaat Sanayi ve Ticaret A.Ş. v. Kyrgyz Republic, ICSID Case No. ARB(AF)/06/1, Award, Sept. 9, 2009 ..................................................................... 188

Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, Case No. ARB/84/3, Award on the Merits, May 20, 1992..................................................... 181, 200

Starrett Housing Corporation, Starrett Systems, Inc., Starrett Housing International, Inc. v. The Government of the Islamic Republic of Iran, Bank Markazi Iran, Bank Omran, Bank Mellat, Award No. 314-24-1, 16 Iran-US Claims Tribunal Rep. 112 (1987) .............................................................................................................................. 200

Swisslion DOO Skopje v. The Former Yugoslav Republic of Macedonia, ICSID Case No. ARB/09/16, Award, July 6, 2012.................................................................................... 148

Sylvania Technical Systems Inc. v. The Government of the Islamic Republic of Iran, Award No. 180-64-1, 8 Iran-US Claims Tribunal Rep. 298 (1985) ............................... 200

Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID Case No. ARB(AF)/00/2, Award, May 29, 2003 ........................................................... 155, 156, 183

Total S.A. v. The Argentine Republic, ICSID Case No. ARB/04/01, Decision on Liability, Dec. 27, 2010 .................................................................................................................. 155

Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB/AF/00/3, Award, Apr. 30, 2004 ..................................................................................................... 158

Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Award, Dec. 8, 2000 ............................................................................................................ 181, 183

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Wena Hotels Ltd. v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Annulment, Feb. 5, 2002................................................................................................. 171

Other Authorities

Andrew Newcombe, The Boundaries of Regulatory Expropriation in International Law, Transnational Dispute Management, July 2007 .............................................................. 156

Bin Cheng, General Principles of International Law as Applied by Courts and Tribunals (2006) .............................................................................................................................. 160

Borzu Sabahi, Compensation and Restitution in Investor-State Arbitration: Principles and Practice (2011) ................................................................................................................ 160

Christoph Schreuer, Consent to Arbitration, in The Oxford Handbook of International Investment Law (P. Muchlinski et al. eds., 2d ed. 2009) ............................................... 206

Christopher Dugan et al., Investor-State Arbitration (2008) ...................................... 148, 152, 155

Ian Brownlie, Principles of Public International Law (6th ed. 2003) ......................................... 150

Mark Kantor, Valuation for Arbitration: Compensation Standards, Valuation Methods and Expert Evidence (2008) ............................................................................ 185, 186, 189

Pamela B. Gann, The U.S. Bilateral Investment Treaty Program, 21 Stan. J. Int'l L. 373 (1985) .............................................................................................................................. 151

Report of the International Law Commission on the work of its fifty-third session, "Draft Articles on Responsibility of States for Internationally Wrongful Acts, with commentaries" U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (2001) . passim

Sergey Ripinsky and Kevin Williams, Damages in International Investment Law (2008) ... passim

Statement of Purpose ("Exposición de Motivos") of the Investment Law of El Salvador .. 133, 134

Suzanne A. Spears, The Quest for Policy Space in a New Generation of International Investment Agreements, 13(4) J. of Int'l Economic L. 1037 (2010) ............................... 151

Thomas W. Wälde and Borzu Sabahi, Compensation, Damages and Valuation in International Investment Law, Transnational Dispute Management, Feb. 10, 2007 ...... 186

Vaughan Lowe, Regulation or Expropriation? 55(1) Current Legal Problems 447 (2002) ...... 151

World Bank, Legal Framework for the Treatment of Foreign Investment, Report to the Development Committee and Guidelines on the Treatment of Foreign Direct Investment: Volume II (1992) ......................................................................................... 178

Zachary Douglas, The International Law of Investment Claims (2009) ............................ 148, 149

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Timeline for Pac Rim Cayman v. El Salvador Dispute 01/24/1996 Mining Law enters into force, with a maximum exploration license period of 5

years. (CL-210) 07/10/1996 Kinross receives 3-year exploration license for El Dorado Norte. (C-326) 07/23/1996 Kinross receives 3-year exploration license for El Dorado Sur. (C-317) 09/10/1997 Pac Rim Cayman LLC ("PRC") is formed by Pacific Rim Mining Corp.

("PRMC") as a holding company incorporated in the Cayman Islands. (C-12) 07/15/1999 Kinross obtains 2-year extension for both El Dorado exploration licenses. This

brings the total time for both licenses to 5 years, the maximum at the time. The expiration of the El Dorado licenses was thus going to be in July 2001. (C-329, C-330)

03/--/2000 Dayton Acquisitions, a subsidiary of Dayton Mining Corporation, merges with

Mirage Resource Corporation, acquiring its Salvadoran interests. (Memorial, para. 72)

06/28/2001 Legislative Decree No. 456 extends all exploration licenses for that year until

December 31, 2001. (CLA-211) 07/11/2001 Amendment to the Mining Law enters into force, extending the maximum

period of exploration from 5 to 8 years. (Memorial, para. 76) 12/10/2001 Kinross obtains second 2-year extension for both El Dorado exploration

licenses. (C-268, C-269) 04/--/2002 PRMC merges with Dayton Mining Corporation, Inc., acquiring Kinross El

Salvador and the El Dorado exploration licenses. (Memorial, para. 128) 01/--/2003 Kinross El Salvador changes its name to Pacific Rim El Salvador, S.A. de C.V.

("PRES"). (NOA, para. 50) 12/18/2003 PRES obtains third extension of the El Dorado exploration licenses. This

extension is for one year, beginning January 1, 2004. This brings the total length of the licenses period to eight years, the limit. (C-13)

09/08/2004 PRES submits first Environmental Impact Study ("EIA") for El Dorado to the

Salvadoran Ministry of the Environment ("MARN"). (Memorial, para. 175) 12/15/2004 PRES writes to MARN letting the Minister know that more than 60 days have

passed since original El Dorado EIA was submitted with no response and that the company is suffering damages as a result of this delay. (R-55)

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12/22/2004 PRES submits its application for the exploitation concession to the Salvadoran Ministry of the Economy ("MINEC"). (R-2)

01/01/2005 The El Dorado Norte and El Dorado Sur Exploration Licenses finally expire. 01/21/2005 PRES submits a final Pre-Feasibility Study based only on the Minita deposit. (C-

9) 02/01/2005 MARN responds to first El Dorado EIA with observations. (C-133) 4/21/2005 PRES responds to MARN’s observations "Vol. IV." (C-136) 5/05/2005 PRES's local counsel submits memorandum arguing that the land ownership or

authorization requirement should not apply for underground mining concessions. (R-30)

06/01/2005 Dorado Exploraciones SA de CV ("DOREX") is formed in El Salvador and

added to PRC's corporate structure. 06/28/2005 Bureau of Mines informs Pac Rim that the office of the Secretariat for

Legislative and Judicial Affairs agrees with the interpretation of the Ministry of Economy and the Bureau of Mines regarding the land ownership or authorization requirement. Fred Earnest reported to Tom Shrake that surface owner authorization was one of the main things missing from PRES's concession application and that obtaining it was "a nearly (if not totally) impossible task." (C-291)

07/27/2005 Ericka Colindres leaves MARN unable to finalize MARN’s comments on the El

Dorado EIA. (Memorial, para. 242) 09/08/2005 Second EIA for El Dorado project submitted to MARN in response to

comments and further observations from MARN in April and August 2005. (C-8)

09/23/2005 Public consultation period opens for El Dorado EIA. (C-152) 09/28-29/2005 DOREX obtains exploration licenses for Huacuco, Pueblos, and Guaco.

(Memorial, para. 210) 09/--/2005 MINEC considered trying to amend the Mining Law to exclude underground

mines from the land ownership or authorization requirement – what Pac Rim needed for its application to proceed – but this did not happen. (R-35, C-400)

10/--/2005 Dr. Robert Moran issues report concluding that the El Dorado exploitation EIA

would not be acceptable to regulatory agencies in most developed countries. (C-165)

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01/--/2006 Ericka Colindres joins PRES as Supervisor of Environmental Protection. (Colindres Witness Statement, para. 3)

01/16/2006 PRES submits EIA for Santa Rita exploration; the environmental permit for

exploration is received in June. (Memorial, paras. 326, 329) 02/17/2006 DOREX submits EIA for Huacuco exploration. (Memorial, para. 341) 03/29/2006 MARN officials meet with F. Earnest, E. Colindres, and L. Medina of PRES to

discuss observations from public comment period on El Dorado EIA. (C-163) 06/--/2006 MARN official allegedly told Claimant that all mining projects are "en stop." (C-

168) 07/5-6/2006 MARN revokes Commerce Group's environmental permits after inspection

found lack of compliance with the terms of the permits. 07/09/2006 Newspaper quotes Minister of Environment Barrera stating that the Ministry

will not authorize any mining project that will harm the environment. (R-120) 07/14/2006 MARN provides additional observations on El Dorado EIA. (C-169) 08/11/2006 Dr. Manuel Pulgar-Vidal, hired as a consultant, submits his final report

regarding mining in El Salvador, concluding that the country is currently not equipped to move forward with mining and recommending that the country complete a Strategic Environmental Evaluation before making a decision about whether or not to develop mining and, if so, under what conditions. (R-129)

09/12/2006 PRES sends response to observations from public consultation. (C-170) 10/02/2006 MINEC writes to PRES giving it 30 days to provide the documents missing

from its exploitation concession application: documentation of land ownership or authorization, an environmental permit, and a technical, economic feasibility study. (R-4)

10/25/2006 PRES sends responses to MARN’s “Final Observations.” (C-171) 11/07/2006 PRES responds to MINEC's October 2nd letter, claiming just impediment with

regard to the environment permit, but does not provide documentation of land ownership or authorization for the area requested or a feasibility study. (R-5)

11/09/2006 Pac Rim admitted in a news release that it may not be able to get the concession

until the Mining Law was changed. (C-309) 12/04/2006 MINEC responds to PRES's November letter, giving PRES 30 days to turn in its

Environmental Permit. (R-6)

xiv

12/05/2006 PRES submits water treatment plant proposal in response to Ministry's July observations. (C-174)

12/13/2006 PRMC announces suspension of drilling at Santa Rita because of local

opposition. (C-263) The suspension continues into 2008. 01/--/2007 The 30-day period under the law for PRES to respond to the Ministry of

Economy's warning letters runs out without PRES having submitted the missing requirements.

05/07/2007 At a meeting with Minister of Economy and Minister of Environment, all

mining companies are told that "all mining activity in the country would be halted until such time as an Evaluación Ambiental Estratégica . . . of the mining industry was conducted." (Memorial, para. 298)

06/24/2007 Minister of Environment Carlos Guerrero quoted in news report confirming that

the Ministry would not be granting concessions until a study of the potential effects of mining was completed. (R-122)

08/07/2007 DOREX submits EIA for Guaco. (Memorial, para. 350) 08/17/2007 DOREX submits EIA for Pueblos. (Memorial, para. 350) 10/24/2007 By this date, Claimant had hired its international arbitration counsel and C&M

Capitolink became a registered lobbyist for Claimant in the United States. (R-128, R-118)

11/--/2007 Claimant supports a New Mining Law in El Salvador that would change the

requirements it had not met to obtain an exploitation concession. (R-36) 12/11/2007 PRC is de-registered in the Cayman Islands. (R-68) 12/13/2007 Pac Rim Cayman LLC is registered as a limited liability company in Nevada.

(R-69) 03/11/2008 According to a press report, President Saca urges caution regarding mining

exploitation, saying that the legislature should study the issue. (C-1) 11/24/2008 PRES, on the verge of submitting its Notice of Intent, writes to MARN asking

for the status of its environmental permit request. (Memorial, para. 302) 12/04/2008 MARN responds to the request for a status update by sending observations

regarding the water treatment plant. (C-180) 12/09/2008 PRC files Notice of Intent to submit a claim to arbitration under CAFTA.

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02/--/2009 PRMC decided to defer completion of the Feasibility Study that it had been working on since 2006. (R-20)

04/30/2009 PRC files Notice of Arbitration.

07/14/2009 Santa Rita exploration license expires. (R-23)

07/17/2009 PRES attempts to request an extension of the four year Santa Rita exploration license. (R-23)

07/20/2009 MINEC tells PRES that the Santa Rita license expired on the 14th and cannot be renewed after that date. (R-23)

07/22/2009 DOREX reapplies for the expired Santa Rita exploration license. (Memorial, para. 334)

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an exploi

explorati

explorati

4

speculati

areas as i

rather tha

to as muc

NTRODUC

This c.

vador when

y then decide

Instea.

on to try to fo

right. It is n

ompany's fai

g "lost profit

When.

ion licenses h

d could not b

lf years to co

xploitation c

to concentra

itation conce

ion. Pacific

ion areas for

Instea.

ive "two-trac

it attempted

an focus on f

ch land as po

CTION

case is about

time was run

ed to make a

ad of acceptin

orce the Gov

ow trying to

iled gamble

s" based on

n Pacific Rim

held by its p

e extended p

onduct the ex

concession in

ate its time, m

ession for a s

Rim could h

which Pacif

ad, Pacific R

ck strategy,"

to prepare th

fulfilling the

ossible for fu

t a Canadian

nning short

a big gamble

ng the conse

vernment to

o convince th

and, in fact,

property rig

m went to El

predecessors,

past January

xploration w

n that area.

money, and

small, well-u

have focused

fic Rim was

Rim made a c

engaging in

he required m

e legal requir

uture explora

1

n mining com

to apply for

and failed.

equences of

grant it a go

his Tribunal

to pay it a w

ghts the comp

Salvador in

, granted in

y 1, 2005. Th

work necessa

Pacific Rim

effort on com

understood a

d on the "Min

able to com

conscious de

n new explor

materials for

rements for

ation. Pacifi

mpany that p

a mining ex

its decisions

old mining co

to order the

windfall from

pany never h

April 2002,

1996, would

his meant th

ary to prepare

m could have

mpleting the

area within t

nita" deposi

mplete even a

ecision to em

ration activit

r a concessio

a smaller are

fic Rim want

urchased ex

xploitation co

s, the compa

oncession to

people of E

m the nationa

had.

, it knew tha

d soon reach

hat Pacific Ri

e the applica

made the re

e work neces

the vast area

t, the only d

a pre-feasibil

mbark on a ri

ties in the ex

on applicatio

ea, sought to

ted to contin

xploration rig

oncession. T

any started th

o which it ne

El Salvador to

al treasury b

at the two

the eight-ye

im only had

ation for a

easonable

ssary to appl

a licensed for

deposit in the

lity level stu

sky and high

xpiring licen

on. Pacific R

o stake its cla

nue exploring

ghts

The

his

ever

o pay

by

ear

two

ly for

r

e

udy.

hly

nse

Rim,

aim

g the

expiring

acquiring

struggled

have bee

5

explorati

concessio

considera

would no

the Minit

everythin

company

"formalit

6

Salvador

to compl

to submit

applicatio

time limi

additiona

officials

the requi

license area

g new explor

d to meet the

n the sole ob

As a r.

ion, Pacific R

on area, faili

ation. In fac

ot have been

ta deposit. B

ng. Pacific R

y's failure to

ty" that coul

Pacifi.

ran Governm

ete its applic

t an incompl

on without r

its to correct

al two years

also tried to

rement to sh

s by includin

ration licens

e requiremen

bject of its at

result of its d

Rim submitt

ing to fulfill

ct, because o

able to mee

But Pacific R

Rim expecte

comply with

d not stand i

ic Rim also m

ment officials

cation for the

lete applicat

review for al

t deficiencies

to try to com

accommoda

how land ow

ng a large un

es to engage

nts for its app

ttention.

decision to st

ed an incom

the minimum

of its risky an

et the require

Rim was not

d the Govern

h the relevan

in its way.

misunderstoo

s, who went

e concession

ion for the c

lmost two ye

s in the appl

mplete a Fea

ate Pacific R

wnership or a

2

nexplored ar

e in explorati

plication for

take out as m

mplete applic

m requireme

nd speculativ

ements even

interested in

nment to gra

nt legal prov

od the good

out of their

n. These Go

concession in

ears, to avoid

ication. Thi

sibility Stud

Rim with ano

authorization

rea in its requ

ion activitie

r the exploita

much land as

ation for an

ents to have

ve "two-trac

for a smalle

n a smaller c

ant it rights a

visions. It vi

will and goo

way to help

overnment of

n December

d triggering

is gave Pacif

dy, but it still

other legal re

n from the lan

uested conce

s elsewhere,

ation conces

s possible fo

unreasonabl

its applicati

k strategy,"

er concession

concession; i

and permits

ewed the law

od intentions

Pacific Rim

fficials allow

of 2004 and

the Mining L

fic Rim clos

l failed to do

equirement i

ndowners fo

ession and

, even as it

sion that sho

or future

ly large

on admitted

Pacific Rim

n only cover

it wanted

regardless o

w as a

s of multiple

m be in a pos

wed Pacific R

d held the

Law's mand

e to an

o so. These

it could not m

or the reques

ould

d for

m

ring

of the

e

ition

Rim

atory

meet,

sted

concessio

meet the

7

Governm

Governm

change it

El Salvad

8

change th

strategy a

with. Pa

the Unite

tried to e

But the la

to the req

9

the laws

obligatio

ICSID ca

has the le

This self-

the sole i

on area, by a

requirement

Inste.

ment officials

ment of El Sa

ts laws, so th

dor's Govern

But th.

he relevant p

and drafted a

cific Rim hi

ed States to p

nlist the assi

aw was not p

quirements o

What .

of El Salvad

n to change

ase in which

egal obligati

f-evident prin

instrument u

attempting to

t.

ead of apprec

s made to he

alvador, had

hat Pacific R

nment officia

hese officials

provision of

a new law th

red lobbyist

put pressure

istance of Pr

passed and a

of the Mining

Pacific Rim

dor and neith

its laws to a

El Salvador

on to make i

nciple is also

under which

o change the

ciating the e

elp it, Pacific

a legal oblig

Rim could ob

als to bend to

s from the Ex

the law as P

hat reversed

s in El Salva

on El Salva

resident Saca

as a result Pa

g Law in for

m still fails to

her El Salvad

accommodat

r was a respo

its investmen

o recognized

this arbitrati

3

e Mining Law

xtraordinary

c Rim has ac

gation to do

btain the con

o its whims.

xecutive Bra

Pacific Rim w

in its favor a

ador to gain

dor to accom

a to get its n

acific Rim's

rce at the tim

o understand

dor nor any o

e a foreign i

ondent and p

nt in accorda

d in the text o

ion proceeds

w so that Pac

y efforts that

cted as if the

whatever w

ncession it w

anch of Gov

wanted. So P

all the requir

legislative s

mmodate the

new law thro

concession a

me Pacific Ri

is that it wa

other countr

investor. As

prevailed, it

ance with th

of the Invest

s.

cific Rim's a

t these Salva

ese officials,

as necessary

wanted. Pacif

vernment wer

Pacific Rim

rements it co

support for it

e company.

ugh the Nati

application r

im went to E

as obligated t

ry in the wor

s established

is the foreig

he laws of the

tment Law o

application c

adoran

and the enti

y, including

fic Rim expe

re unable to

changed its

ould not com

ts new law a

Pacific Rim

ional Assem

remained sub

El Salvador.

to comply w

rld has a lega

d in another

gn investor w

e host State.

of El Salvado

could

ire

ected

mply

and in

m also

mbly.

bject

with

al

who

or,

1

Pac Rim

El Salvad

CAFTA

phase, ex

of El Salv

1

value of

Salvador

mineral d

never had

allow for

1

been defi

to bring a

was not l

explorat

Rim and

not gran

1 For easeto the comCayman a2 Four of tfor as a mdeposits woutside thexploratio

Pacifi0.

Cayman ("P

dor with the

claims were

xclusively ba

vador.

Pac R1.

six undergro

r.2 Pac Rim

deposits that

d an applicat

r their extrac

This c2.

ined and ans

an early end

legally entit

tion licenses

d is not liabl

nting new en

e of reference,mpanies, evenacting in El Sa

the six deposmining exploitwere in explorhe original El on licenses an

ic Rim initiat

Pac Rim") as

threat of a C

dismissed f

ased on the j

Rim comes to

ound gold an

seeks this $3

t are still und

tion for a mi

ction.

case is simpl

swered since

to a claim th

tled to a min

s included in

le for any al

nvironmenta

, we will use

n though it waalvador.

its involved intation concessration areas oDorado explo

nd deposits.

ted this arbit

s the claiman

CAFTA arbi

for lack of ju

urisdiction t

o this Tribun

nd silver dep

301 million b

derground, in

ining exploit

le. In fact, th

e 2010, when

hat, in El Sa

ning exploit

n its claims.

lleged dama

al permits f

"Claimant" aas the Canadia

n Pac Rim's csion, called thoutside of thatoration licens

4

tration in Ap

nt,1 after its a

tration did n

urisdiction, th

the Tribunal

nal seeking a

posits plus tw

based on a th

n expired ex

tation conce

he key issue

n El Salvado

alvador's view

tation conce

El Salvado

ages as a res

for explorat

nd "Pac Rim"an parent, Pac

claims were inhe "El Doradot 12.75 km2 are areas. See

pril 2009, us

attempt to in

not work. Fo

his arbitratio

found it had

an award for

wo early exp

heory that it

xploration are

ssion admitt

to be decide

or filed its Pr

w, is devoid

ession and h

or breached

sult of not g

tion. This C

" throughout cific Rim Min

nside an area o concession area. The twomap on page

sing a shell s

ntimidate the

our years lat

on proceeds

d under the I

$301 millio

loration area

t has propert

eas, even tho

ted, much le

ed in this arb

reliminary O

d of legal me

has no right

d no legal du

granting the

Counter-Mem

the Counter-Mning Corp., an

of 12.75 km2

application." o early explora

16 for the loc

subsidiary ca

e Governmen

er, and after

to the merits

Investment L

on, as the alle

as in El

ty rights over

ough Pac Ri

ss awarded,

bitration has

Objections try

rit: Pac Rim

ts in the

uty toward

e concession

morial

Memorial to rnd not Pac Ri

2 Claimant ap The other twation areas arcations of the

alled

nt of

r all

s

Law

eged

r the

m

to

s

ying

m

Pac

n and

refer im

pplied wo re e

demonstr

by any co

1

Section,

El Salvad

exploitat

requirem

regard to

provide e

requested

technical

14

arbitratio

and Salva

concessio

Esperanz

1

omission

included

1

to believe

property

discovery

rates that in

onduct of El

Sectio3.

El Salvador

dor demonst

ion concessi

ments to obtai

o the environ

evidence of o

d for the con

l and econom

El Sal4.

on are now c

adoran law e

on. As a res

za fail.

El Sal5.

ns of the Gov

in its claims

To sup6.

e that two re

rights over m

y. Regardle

fact Pacific

l Salvador. A

on II is the m

demonstrate

trates that Pa

ion in El Dor

in the conce

nmental perm

ownership o

ncession. Se

mic justificat

lvador's argu

onfirmed by

experts. The

sult, Pac Rim

lvador also s

vernment cau

s.

pport its cas

epealed mini

mineral depo

ss of what th

Rim's losses

As a result, a

most importa

es that all of

ac Rim's clai

rado must fa

ssion, indep

mit. First, Pa

r authorizati

econd, Pac R

tion for the c

uments durin

y recognized

ey each conf

m's claims rel

shows that P

used it any h

e on the mer

ing codes fro

osits located

hese old min

5

s were cause

all of Pac Ri

ant Section o

f Pac Rim's c

ims related to

ail because P

endent of an

ac Rim did n

ion from the

Rim did not s

concession fo

ng the Prelim

d mining exp

firm that Pac

lated to Min

ac Rim cann

harm with re

rits and for l

om El Salvad

d in explorati

ning codes fr

ed by its own

im's claims m

of this Count

claims must

o its applica

Pac Rim did

ny action or i

not comply w

e owners of t

submit a feas

for which it w

minary Objec

perts, interna

c Rim did no

nita, South M

not sustain a

espect to the

lost profits, P

dor uphold i

ion areas by

rom 1881 an

n actions and

must be dism

ter-Memoria

fail for lack

ation for a m

not meet the

inaction by E

with the lega

the surface o

sibility study

was applying

ctions Phase

ational minin

ot have a righ

Minita, Bals

any claims th

other explor

Pac Rim urg

its argument

the mere fac

nd 1922 migh

d decisions, n

missed.

al. In this

of legal mer

ining

e legal

El Salvador

al requireme

of the area

y to provide

g.

e of this

ng law exper

ht to the

amo, and N

hat any acts o

ration licens

ges the Tribu

that it acqui

ct of their

ht have said

not

rit.

with

ent to

the

rts,

Nueva

or

ses

unal

ired

when the

investme

codes, El

relevant t

that any m

pursuant

provision

party, inc

permits a

exploitat

receive s

1

legal righ

expired o

the miner

exploitat

1

Guaco, H

company

with the

Mining L

obtaining

had been

ey were in fo

ent in 2002 a

l Salvador's

times for Pa

mineral depo

to a mining

ns of the Min

cluding Pac

a private inve

ion concessi

uch a conce

El Sal7.

ht to continu

on January 1

ral deposits

ion concessi

With r8.

Huacuco, and

y had a right

expired expl

Law and the

g new explor

n held by any

orce, they we

and when Pac

Constitution

c Rim's inve

osits in the s

exploitation

ning Law. T

Rim, to acqu

estor to acqu

ion, but, as in

ssion.

lvador furthe

ue exploring

, 2005. This

that it contin

ion must fail

regard to the

d Pueblos, E

to obtain the

loration licen

Mining Reg

ration licens

y other comp

ere not the la

c Rim applie

n, Mining La

estment, clea

subsoil conti

n concession

Thus it is not

uire property

uire rights to

ndicated, Pa

er demonstra

in the El Do

s is an additi

nued to explo

l.

e deposits lo

El Salvador d

ese new exp

nses of El D

gulations pro

es that inclu

pany affiliate

6

aw of El Salv

ed for the co

aw, and Inve

arly provide

nue to belon

n granted by

t possible un

y rights in m

o extract min

ac Rim was n

ates that neit

orado area af

ional reason

ore in the 12

cated in the

demonstrates

ploration lice

Dorado Norte

ohibited Pac

uded any area

ed with Pac R

vador when

oncession in

estment Law

that the sub

ng to the Stat

the State in

nder current

mineral depos

nerals upon t

never able to

ther Pac Rim

fter the origi

n why all of P

2.75 km2 are

new explora

s that neither

enses to the e

e and El Dor

Rim and any

as of expired

Rim. The tw

Pac Rim ma

2004. Cont

w that were in

soil belongs

ate until they

accordance

Salvadoran

sits in El Sal

the granting

o meet the re

m nor its sub

inal explorat

Pac Rim's cl

ea of the requ

ation license

r Pac Rim no

extent that th

rado Sur. Th

y affiliated c

d exploration

wo mineral d

ade its

trary to those

n force at all

to the State

y are extracte

with the

law for a pri

lvador. The

of an

equirements

sidiaries had

tion licenses

laims related

uested

es known as

or any affilia

hey overlapp

he Salvadora

company fro

n licenses th

deposits loca

e old

l

and

ed

ivate

law

to

d a

d to

ated

ped

an

om

hat

ated

in those n

arbitratio

and El D

those dep

not inclu

no legal b

1

the licens

explorati

for a new

without h

2

Pac Rim

Therefor

2

this arbit

However

argument

2

environm

regarding

applicatio

2007. El

new explora

on (Nance D

orado Sur ex

posits when

de those dep

basis for Pac

With r9.

se expired in

ion of the are

w exploration

having appli

Finall0.

has not pres

e, Pac Rim c

The fa1.

ration. El S

r, for the sak

ts.

Sectio2.

mental permi

g metallic m

ons related t

l Salvador w

ation license

Dulce and Co

xploration li

the old explo

posits in an a

c Rim to mak

regard to any

n 2009 with n

ea. Neither P

n license afte

ed for a rene

ly, with rega

sented any ev

cannot claim

acts set forth

alvador subm

ke of comple

on III discus

it for exploit

mining, includ

to metallic m

would like to

areas that Pa

oyotera), are

censes. By

oration licen

application f

ke claims ab

y deposit in

no allegation

Pac Rim nor

er Pac Rim a

ewal. Thus,

ard to the exp

vidence that

m compensati

h in Section I

mits that the

teness, El Sa

sses the prob

tation and El

ding the susp

mining annou

note, howev

7

ac Rim has i

e located in t

operation of

nses expired

for a mining

bout those tw

the former e

n that the Go

r its subsidia

allowed the i

any such cla

ploration are

t it has any e

ion for a righ

II are suffici

e Tribunal's i

alvador will

blems with P

l Salvador's e

pension of re

unced to all m

ver, that this

included am

the area of th

f the law, Pa

on January

exploitation

wo deposits i

exploration l

overnment h

aries had any

initial explor

aims must b

eas known as

exploration r

ht it has not

ient to dismi

inquiry shou

respond to t

Pac Rim's ap

efforts to de

eview of env

mining comp

issue is unn

mong its claim

he expired E

ac Rim lost a

1, 2005, and

n concession

in this arbitr

license area

had impeded

y right to exp

ration period

e dismissed.

s Zamora/Ce

rights to thos

established.

iss all of Pac

uld, therefore

the rest of Pa

pplication for

evelop a resp

vironmental

panies in El

necessary to

ms in this

El Dorado No

any rights to

d Pac Rim di

n. Thus, there

ration.

of Santa Rit

d Pac Rim's

plore or to ap

d to expire

.

Cerro Colora

se areas.

.

c Rim's claim

e, end here.

ac Rim's

r an

ponsible poli

permit

Salvador in

decide this c

orte

id

e is

ta,

pply

do,

ms in

icy

May

case.

El Salvad

or to exp

rights and

policy wa

damage t

2

under the

24

Salvador

Rim cann

fact that t

claims th

included

Investme

Pac Rim

decide di

statute of

concessio

2

Salvador

2

damages

Constitut

dor's actions

loration lice

d failed to m

as implemen

to Pac Rim.

In Sec3.

e Investment

This a4.

r. Having inv

not escape th

this arbitrati

hat may be br

in the Inves

ent Law plac

must compl

isputes relate

f limitations

on.

El Sal5.

r did not and

In Sec6.

with referen

tion of El Sa

s in this area

enses, becaus

meet the lega

nted. Nothin

ction IV, El

t Law.

arbitration ha

voked jurisd

he consequen

ion only proc

rought in thi

stment Law;

ces limitation

ly with, inclu

ed to explora

applies to C

lvador applie

d could not h

ction V, El S

nce to any va

alvador, the M

did not affe

se Pac Rim h

al requiremen

ng that the G

Salvador sh

as only been

diction under

nces of that

ceeds under

is arbitration

2) Salvador

ns on investm

uding the ex

ation license

Claimant's cla

es these lega

ave breached

Salvador dem

alue it has ca

Mining Law

8

ct Pac Rim's

had, by its ow

nts to acquir

Government d

hows that it d

n allowed to

r the Investm

choice. The

the Investm

n are claims

an law is the

ments related

clusive juris

es and exploi

aims related

al principles

d its obligati

monstrates th

alculated for

w, and the Inv

s rights (or la

wn decision

re additional

did or did no

did not breac

proceed und

ment Law an

e most impor

ment Law of E

regarding th

e applicable

d to mining

sdiction of th

itation conce

d to the appli

to the facts

ions under th

hat Pac Rim

r the deposit

vestment Law

ack thereof)

ns and action

rights befor

ot do could h

ch any of its

der the Inves

nd seeking it

rtant conseq

El Salvador

he rights and

law in this a

activities in

he courts of E

essions; and

ication for th

of this case,

he Investme

cannot poss

ts still underg

w are clear t

to a concess

ns, lost all its

re any such

have caused

obligations

stment Law o

s protection,

quences of th

are: 1) the o

d obligations

arbitration; 3

the subsoil t

El Salvador

4) a three-y

he El Dorado

to show tha

nt Law.

sibly claim

ground. The

that undergr

sion

s

of El

, Pac

he

only

3) the

that

to

year

o

at El

e

ound

mineral d

exploitat

no altern

Salvador

wrong va

2

Salvador

express r

has jurisd

raises tw

proceed t

2

Rim's rea

expectati

including

granted.

eliminate

this Tribu

2

this arbit

and costs

with the

concessio

deposits belo

ion concessi

ative theory

r will finally

aluation meth

Sectio7.

r wants to ma

reservation o

diction to de

o additional

to the merits

Sectio8.

al dispute wi

ion that El S

g change its

But El Salv

e important l

unal will ren

Finall9.

ration justifi

s in this arbit

legal require

on when it k

ong to the St

ion. Pac Rim

of damages

show that th

hods for this

on VI includ

ake it clear t

of its right un

ecide this dis

objections i

s under the In

on VII is the

ith El Salvad

alvador had

Mining Law

vador was no

legal require

nder an awar

ly, in Section

ies an order

tration. Pac

ements. It th

knew it had n

tate until the

m never held

that could r

he valuation

s case, but ar

des a reserva

that it is filin

nder the Con

spute under t

identified aft

nvestment L

e conclusion

dor is that El

an obligatio

w so that Pac

ot under any

ements Pac R

rd creating a

n VIII, El S

that Pac Rim

Rim deman

hen initiated

no such right

9

moment the

d a concessio

result in an a

methods pro

re also appli

ation of right

ng this Count

nvention with

the Investme

fter the Tribu

Law of El Sa

. At the end

l Salvador di

on to do anyt

Rim's appli

legal obliga

Rim could no

legal obliga

alvador will

m reimburse

nded a conce

an arbitratio

t. When it w

ey are extrac

on. El Salva

award of dam

oposed by P

ied in a signi

ts with regar

ter-Memoria

h regard to t

ent Law of E

unal's decisio

alvador.

d of this case

id not live up

thing to acco

ication for th

ation to chan

ot meet, and

ation where n

l demonstrate

El Salvador

ession in El S

on alleging a

was confront

cted pursuan

ador then sho

mages to Pac

Pac Rim not o

ificantly flaw

rd to jurisdic

al on the Me

the Tribunal'

El Salvador.

on that allow

e, it will be c

p to Pac Rim

ommodate P

he concessio

nge its Minin

d Pac Rim ca

none exists.

e that Pac R

r for all of its

Salvador wit

a perfected r

ted with und

nt to a mining

ows that ther

c Rim. El

only are the

wed manner.

ction. El

erits under an

's finding tha

El Salvador

wed this case

clear that Pac

m's unfounde

Pac Rim,

n could be

ng Law to

annot expect

Rim's conduc

s legal expen

thout comply

right to the

disputable

g

re is

.

n

at it

r also

e to

c

ed

that

t in

nses

ying

evidence

concessio

expert te

forced El

than thre

3

changed

whatever

3

facts rega

Salvador

that it ha

of nation

made a st

(and thus

explorati

Strategic

know unt

"by this p

political

but only

3

could hav

in the Prelim

on, Pac Rim

stimony to p

l Salvador to

e years later

The w0.

its statemen

r it believes i

Most 1.

arding when

r's Abuse of P

d no idea the

nality from th

tatement to a

s before the c

ion and explo

Environmen

til March 20

point [May 2

and would th

through poli

Had P2.

ve ended wit

minary Obje

insisted on

prove its com

o suffer the f

r, it has not d

worst part of

nt of the facts

it will take t

notably, dur

n it knew of a

Process obje

ere was a dis

he Cayman I

a newspaper

change of na

oitation wou

ntal Evaluat

008. Pac Rim

2007], the C

herefore not

itical means.

Pac Rim adm

th an award

ection phase

prolonging t

mpliance wit

full expense

delivered on

Pac Rim's b

s and its argu

o survive to

ring an earlie

a dispute wit

ection. Pac R

spute with E

Islands to Ne

r. But now C

ationality), th

uld be proces

ion. This is

m admits for

laimant was

t be resolved

."

mitted this fac

on jurisdicti

10

of this arbit

the arbitratio

h the require

of a defense

its promises

behavior in th

uments at ev

the next pha

er phase of th

th El Salvad

Rim asserted

El Salvador u

evada in Dec

Claimant fre

hat no enviro

ssed for anyo

the very fac

r the first tim

aware that t

d by means o

ct during the

ion. Instead

tration that it

on, promisin

ements of Sa

e on jurisdict

s.

his arbitratio

very phase o

ase.

he arbitratio

dor that allow

d during the

until March 2

cember 2007

eely admits th

onmental pe

one until aft

ct Pac Rim p

me in paragra

the delay PR

of technical e

e jurisdiction

d, El Salvado

t had no righ

ng to provide

alvadoran law

tion and the

on has been h

f this arbitra

on, Pac Rim

wed it to surv

proceedings

2008 (after P

7), when Pre

hat it was to

ermits for me

ter El Salvad

previously cl

aph 300 of it

RES faced at

environment

nal objection

or has been f

ht to a

e evidence an

w. Pac Rim

merits, but m

how it has

ation, doing

asserted spe

vive El

s on jurisdict

Pac Rim's ch

esident Saca

old in May 20

etallic minin

dor conducte

laimed it did

ts Memorial

t MARN wa

tal assessme

n phase, this

forced to pro

nd

m thus

more

ecific

tion

hange

007

ng

ed a

d not

that

s

ent,

case

oceed

to the me

repealed

Mining L

Pac Rim'

millions

abuse of

resources

3

Memoria

exploitat

answer is

erits of this c

mining code

Law, to try to

's continued

of dollars no

the internati

s for the Gov

Havin3.

al, we now tu

ion concessi

s no.

case, where P

es and on a c

o defend an

insistence th

o matter its n

ional arbitral

vernment an

ng presented

urn to the de

ion in El Do

Pac Rim has

convoluted i

indefensible

hat it should

noncomplian

l system has

nd the people

this summa

ecisive issue

rado and to

11

s resorted to

nterpretation

e argument fr

d be granted a

nce with the

resulted in

e of El Salva

ary of El Salv

in this arbitr

the explorat

frivolous ar

n of the wor

from the Prel

a concession

legal require

a considerab

ador.

vador's comp

ration: was P

tion licenses

rguments bas

rd "and" in A

liminary Obj

n or paid hun

ements and n

ble waste of

plete respon

Pac Rim ent

s included in

sed on old,

Article 37 of

jections pha

ndreds of

no matter its

time and

nse to Pac Ri

titled to a mi

n its claims?

the

ase.

s

m's

ining

The

II. PRE

34

Claimant

Claimant

merely ar

Claimant

Claimant

applicatio

3

Dorado P

on Janua

exploitat

and the r

concessio

3

Dorado S

Claimant

Dorado N

expiratio

emergenc

3 Claimanii. 4 Memoria

PAC RIM'S RIGHT TO AEXPLORAT

In its 4.

t spends rem

t lists severa

reas which C

t was nowhe

t only ever s

on did not m

Claim5.

Project,"3 wh

ry 1, 2005 a

ion concessi

emaining 62

on.

Claim6.

Sur, a 75 km

t knew, Dayt

Norte and El

n date."4 Da

cy legislativ

nt Pac Rim Ca

al, para. 72.

CLAIMS MA MINING

TION LICE

300-plus pag

markably littl

al deposits an

Claimant hop

ere near obta

ubmitted on

meet the requ

mant creates c

hen there is r

nd the allege

ion which co

2.25 km2 wh

mant obtained

m2 area origin

ton had obta

l Dorado Sur

ayton convin

e extension

ayman LLC's

MUST FAILG EXPLOITENSES

ge Memoria

e time expla

nd properties

ped to explo

aining (or eve

ne application

uirements of

confusion by

really no suc

ed "Project"

ould not even

ich were not

d the existing

nally granted

ained those li

r Exploration

nced the Gov

to allow for

Memorial on

12

L BECAUSETATION CO

l claiming d

aining the rig

s without ack

ore or to whic

en requestin

n to mine on

the Salvado

y referring to

ch thing. Th

consists of a

n be admitte

t subject to a

g exploration

d in 1996, by

icenses in M

n Licenses w

vernment to

more explor

n the Merits a

E PAC RIMONCESSIO

damages of m

ghts it claim

knowledging

ch Claimant

ng) the rights

ne single dep

oran Mining

o the entire 7

he exploratio

an applicatio

ed for evalua

any applicati

n licenses to

y merging w

March 2000 a

were rapidly

amend the M

ration: in 20

and Quantum,

M DID NOTON OR TO T

more than $3

s to have had

g that many

t hoped to sta

s to mine the

posit in El Sa

Law.

75 km2 area

on rights to th

on for a 12.7

ation under th

ion for an ex

o El Dorado

ith Dayton i

at a time whe

approaching

Mining Law

001, the Gov

, Mar. 29, 201

T HAVE A THE

300 million,

d in El Salva

of these are

ake a claim.

ese deposits.

alvador, and

as "the El

his area expi

75 km2 area

he Mining L

xploitation

Norte and E

n 2002. As

en "the El

g their final

w and grant it

vernment

13 ("Memoria

ador.

d that

ired

Law

El

t an

al") at

extended

President

friendly m

draft so t

be develo

explorati

eight-yea

3

When the

pre-feasib

describe

meet sev

inadmiss

Governm

a result, C

which Cl

3

Claimant

continued

5 Memoria6 Transcri(C-336). 7 MemoriaDorado NAmended

d the maximu

t of Pacific R

mining laws

that El Salva

oped in a tim

ion of the 75

ar exploratio

But C7.

e exploration

bility level p

how Pac Rim

eral requirem

ible and the

ment is in no

Claimant ha

laimant requ

Moreo8.

t had no righ

d exploration

al, para. 76.

ipt, Company

al, para. 140 (Norte and El Dd Mining Law

um explorati

Rim Mining

. . . which w

ador would b

mely way."6

km2 El Dor

on term finall

Claimant faile

n period end

proposal to m

m's 2004 exp

ments of the

requested co

way respon

d no right to

uested a conc

over, follow

hts to the dep

n in the expi

Interview: Ca

("at PRES's rDorado Sur Exw, the Explorat

ion term from

Corp., in a 2

we, as a matt

be open and r

Thus, Claim

rado license

ly expired on

ed to comple

ded, Claiman

mine a single

ploitation co

Salvadoran

oncession co

sible for Cla

o the exploita

cession.

ing expiratio

posits in thos

ired license a

atherine McL

equest, on 18xploration Liction Licenses

13

m five to eig

2004 intervi

ter of fact, h

receptive to

mant knew w

area needed

n January 1,

ete its explor

nt applied for

e deposit, the

oncession ap

Mining Law

ould therefor

aimant's failu

ation conces

on of the exp

se areas. Th

area and gra

Leod-Seltzer, P

8 December 2censes to 1 Jas could not be

ght years.5 C

ew, explaine

had a hand in

mining inve

when it obtain

d to be compl

, 2005.7

ration goals

r an exploita

e Minita dep

pplication for

w. The incom

re not be gra

ure to submi

ssion for Min

ploration lice

he Mining La

ants no contin

Pacific Rim M

003, MINECanuary 2005. e extended bey

Catherine Mc

ed that El Sa

n helping the

estment and

ned the licen

lete before t

before the li

ation conces

posit. In Par

r the Minita

mplete appli

anted under t

it the require

nita, the only

enses acquir

aw explicitly

nuing rights

Mining Corp.

C extended the According toyond a total o

cLeod-Seltz

alvador has "

e governmen

allow depos

nses that all

the licenses'

icenses expi

sion based o

rt A below, w

deposit faile

ication was

the law. The

ed materials.

y deposit for

red from Day

y prohibits

s to the form

, June 28, 200

e terms of theo Article 19 oof eight years

er,

"very

nt

sits to

red.

on a

we

ed to

e

As

r

yton,

er

04

e El of the .").

license h

to the are

Director

apply for

discovere

concessio

Claimant

an unjust

another s

from the

rights to

Esperanz

3

with resp

environm

explorati

Rita expl

8 Mining LGazette Npublished(Authorit9 Witness Witness Sexplotacióvigencia d10 Regulat20, 2003, Art. 17 (A11 Memor

older.8 Clai

ea after the e

of the Burea

r an exploita

ed during the

on to mine a

t's attempts t

tified, large a

subsidiary—

Governmen

the other dep

za, South Mi

Finall9.

pect to other

mental permi

ion because o

loration licen

Law of El Sal

No. 16, Book 3d in the Officity RL-7(bis))

Statement ofStatement"), pón no conservde la licencia

tions of the Mpublished in

Authority RL

ial, paras. 33

imant is ther

eight-year ex

au of Mines,

tion concess

e exploration

any of the oth

to evade the

area for the c

—fail under th

nt, Pac Rim h

posits within

inita, Balsam

ly, in Part B,

exploration

it for explora

of local oppo

nse before it

lvador, Legis330 of Jan. 24al Gazette No).

f Gina Mercedpara. 16 ("El tva ningún derde exploració

Mining Law ofthe Official G

L-8(bis)).

1-334.

efore wrong

xploration ter

explains: "T

sion does not

n license's p

her deposits

prohibition

concession a

he law.10 Th

had no rights

n the expired

mo, and Nanc

, we show th

licenses. C

ation of Sant

osition.11 Cl

t expired. Cl

lative Decree4, 1996, ameno. 144, Book

des Navas de titular de la licrecho sobre cuón.").

f El SalvadorGazette No. 1

14

g to indicate

rm expired.

The holder o

t retain any r

eriod of vali

mentioned i

against cont

and by secur

hus, entirely

s and could h

d El Dorado

ce Dulce.

hat Pac Rim

laimant rece

ta Rita and w

laimant then

laimant tried

e No. 544, Dended by Legis352 of July 3

Hernández, Dcencia ya expualquier yacim

r and its Amen25, Book 359

that it has so

As Gina Na

of the now-ex

right over an

idity."9 Clai

in its Memor

tinued explo

ring new exp

apart from a

have had no

license area

also did not

eived the exp

was unable to

n failed to re

d to request a

ec. 14, 1995, pslative Decree1, 2001 ("Mi

Dec. 16, 2013pirada que no miento que ha

ndments, Leg9 of July 8, 20

ome sort of c

avas de Hern

xpired licens

ny deposit it

imant did no

rial. As we

oration—both

ploration lice

any alleged a

lawful expe

a including C

have the rig

ploration lice

o complete i

equest a rene

a new licens

published in te No. 475, Juining Law"), A

3 ("Navas de solicita una caya descubier

gislative Decr003 ("Mining

continued cl

nández, form

se that does

t may have

ot apply for a

describe bel

h by request

enses throug

acts or omiss

ectations for

Coyotera, Nu

ghts it claims

ense and

its planned

ewal of the S

se through bo

the Official uly 11, 2001, Arts. 16, 19, 2

Hernández concesión de rto durante la

ree No. 47, Jug Regulations

aim

mer

not

a

low,

ting

gh

sions

ueva

s

Santa

oth

27.d)

une "),

15

of its Salvadoran subsidiaries but, in accordance with the Mining Law, no new license was

granted.12 Claimant now has no rights to explore Santa Rita and no claims that any acts or

omissions of the Government affected its rights to Santa Rita. In addition, Claimant has not even

attempted to describe its alleged rights or claims regarding the "early exploration properties" of

Zamora/Cerro Colorado.13 Claimant, admittedly, had not been granted any rights to these areas.

12 Mining Law, Art. 27 (RL-7(bis)); Mining Regulations, Arts. 11, 17 (RL-8(bis)). 13 Memorial, paras. 669, 687.

Santa Rita

Zamora-Cerro Colorado

El Dorado

Minita

South Minita

Coyotera

10 km

20 k

m

N

Vein

Deposit

Proposed El Dorado

Infrastructure Area

Nance Dulce

Nueva Esperanza

Balsamo

4.5

km

The map above shows the exploration areas identified by Claimant as part of its claims in this arbitration. The 200 km2 area on the right, which Claimant labels "El Dorado" includes the Guaco, Huacuco, and Pueblos exploration license areas surrounding the 12.75 km2 area of the requested concession (in light brown). The deposits for which Claimant seeks damages are identified by name. Claimant's Pre-Feasibility Study was based on a proposal to mine only the Minita deposit.

16

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Line

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Typewritten Text

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A

4

explorati

the proce

licenses a

4

whether t

be econo

area from

concessio

justificat

The Mini

concessio

14 Memor15 Mining16 Miningminero ecy aprovecof the minexploitatio17 In fact uprovision deposits. Art. 24 (CNews Rel

A. Pac RDorad

1.

As Cl0.

ion phase an

edures for re

and exploita

The tw1.

there are val

omically min

m within the

on is determ

ions.15 The

ing Law doe

on in order t

ial, para. 51.

Law, Art. 24

Law, Art. 23conómico en echamiento de ning economion and use of

until the 2001to extend theMining Law

CL-210). Clailease, Change

Rim did not do

The legal r

aimant expla

d an extracti

questing the

ation concess

wo steps are

luable miner

ned. Once a

exploration

mined based o

exploitation

es not allow

to continue u

4 (RL-7(bis)).

3 (RL-7(bis)) el área autorizlos mineralesc potential in

f the minerals

1 amendmentse area to a totaof El Salvado

imant's predees to Salvador

have a righ

regime for m

ains, there is

ion, or explo

e different au

sions.

distinct. A

rals in the gr

deposit has

area to requ

on the size o

n concession

for an applic

unfinished ex

("Concluida lzada, se solics…") ["Upon n the authorize will be reque

s, the law expal of 10 km2 ior, Legislativ

ecessor, Daytoran Mining L

17

ht to a Minin

mining under

s a two-step

oitation, phas

uthorizations

company ob

round, where

been located

uest for explo

f the minera

should be re

cant to seek

xploration.17

la exploraciónitará el otorgaconclusion o

ed area, the grested…"].

pressly limitedif the Bureau

ve Decree No.on, supportedaw, Aug. 23,

ng Exploita

r the Salvado

framework f

se.14 El Salv

s needed for

btains an exp

e they are loc

d and studied

oitation. Th

al deposits an

equested afte

a larger area

7

n y comprobaamiento de la

of the exploratranting of the

d the concessdeemed it ne. 544, Dec. 14

d the amendm2001 (C-225

tion Conces

oran Mining

for mining in

vador's Mini

each step: e

ploration lice

cated, and w

d, an applica

e surface are

nd the applic

er exploratio

a for its expl

ada la existena Concesión ption, and prooe Concession

sion area to 5 ecessary for th4, 1995 (prior

ment. Pacific R5).

ssion in El

g Law

n El Salvado

ing Law outl

exploration

ense to ident

whether they

ant can choo

ea of the

cant's techni

on is comple

loitation

ncia del potenpara la explotaof of the existfor the

km2, with a he best use ofr to amendmeRim Mining C

or: an

lines

tify

can

ose an

cal

ete.16

ncial ación tence

f the ent), Corp.,

4

the Minin

holder w

mining la

the owne

extracted

the subso

until the

exploitat

4

has the ri

exploitat

to mine t

has a rea

18 Miningen el subs["All minand physiNo. 732, OEstado, elmay grant19 Mining20 Expert Rat 9. 21 Mining

As Cl2.

ng Law, own

hen the mine

aw expert Ja

er of in-situ m

d from State-

oil, there is n

mineral dep

ion concessi

There3.

ight to explo

ion concessi

that deposit,

l property ri

Law, Art. 2 (

suelo del terrieral deposits cal state, are Oct. 14, 1999l cual podrá ot concessions

Law, Art. 35

Report of Jam

Law, Art. 10

aimant repea

nership of th

erals have be

ames Otto, w

mineral depo

-owned depo

no transfer of

osits found i

ion granted b

fore, accord

ore and has n

ion holder—

met the con

ght: the righ

(RL-7(bis)) ("torio de la Reexisting in ththe property o

9 ("Investmenotorgar conces

for its exploi

5 (RL-7(bis)).

mes M. Otto o

0 (RL-7(bis)).

atedly affirm

he minerals i

een extracte

who has helpe

osits and the

osits."20 Thu

f ownership

in the subsoi

by the State.

ding to the Sa

no property r

—someone wh

ncession appl

ht to extract t

"Son bienes depública, cualhe subsoil of tof the State .

nt Law"), Art. siones para suitation."]; Me

on Eight Mini

18

ms, the State

is only transf

d from the s

ed draft min

concession

us, during ex

. There can

il are extract

alvadoran M

rights in the

ho has studie

lication requ

the minerals

del Estado, tolesquiera que the territory o. ."]; Investm7(b) (Author

u explotaciónemorial, paras

ing Law Ques

owns depos

ferred to the

subsoil.19 As

ning laws in m

holder is the

xploration, w

be no chang

ted from the

Mining Law,

deposits. O

ed a deposit

uirements, an

from the gr

dos los yacimsea su origen

of the Republiment Law of E

rity RL-9(bi.") ["The sub

s. 16, 39, 433

stions, Dec. 1

sits in the gro

e exploitation

s explained b

many countr

e owner of th

when the min

ge in owners

ground purs

an explorati

On the other h

, defined the

nd received t

round.21

mientos minern, forma y estic, regardless

El Salvador, Ls)) ("El subsusoil belongs t.

19, 2013 ("Ott

ound.18 Und

n concession

by internatio

ries: "the Sta

he minerals

nerals remain

ship unless a

suant to a va

on license h

hand, an

e area necess

the concessi

rales que existado físico…"of origin, for

Legislative Deuelo perteneceto the State, w

to Expert Rep

der

n

onal

ate is

n in

and

alid

holder

sary

ion—

ten ") rm ecree e al

which

port")

44

Claimant

were revo

Article 7

replaced

which ev

and neve

exploitat

text of th

1995 Min

4

provides

demonstr

Accordin

mining . 22 Memor23 Memor24Mining de Vega o("Ayala/F1995 han in the Minforce."]. 25 Ayala/Fley antigulaw cease26 Claimanpara. 482.

The cu4.

t's activities

oked long be

5 of the 199

the 1881 mi

ver applied to

er applied—t

ion concessi

he 1995 Mini

ning Law by

Claim5.

an automati

rates the exis

ng to Claima

. . was its cl

ial, paras. 16-

ial, para. 94.

Law, Art. 75 on AdministraFratti de Vega

sido derogadning Codes en

Fratti de Vegaua deja de tenes to have lega

nt Pac Rim C.

a) Thint

urrent Minin

in El Salvad

efore 2001, t

5 Mining La

ining code.24

o Claimant,

to Claimant's

ion and its al

ing Law. Cl

y speculating

mant relies on

ic right to a c

stence of mi

ant, "the mos

ear and uneq

-23, 49, 51, 8

(RL-7(bis)). ative Law: Ana Expert Repodas expresamenacted prior to

a Expert Repoer efectos juríal effects."].

Cayman LLC's

he old repealeerpret the 19

ng Law, draf

dor. The ear

the year Cla

aw specifica

4 Claimant's

is disingenu

s investment

lleged rights

laimant cann

g about El Sa

n the repeale

concession f

ineable depo

st critical ele

quivocal rec

6 n.156, 458-

See also Expnalysis of Issuort") at 8 ("[T]ente y careceno 1995 have b

ort at 6 ("Si uídicos.") ["If

s Notice of A

19

ed mining co995 Mining L

fted in 1995,

rlier mining c

imant began

ally repeals th

s lengthy dis

uous. The co

t is irrelevan

s in this arbit

not override

alvador's his

ed laws to all

for an explor

osits in the ar

ement of El S

ognition tha

-460, 462-467

pert Report ofues Related to]odas las normn absolutamenbeen expressl

una ley es expa law is expre

Arbitration, Ap

odes of 1881Law

, is and has a

codes cited r

n considering

he 1922 min

scussion of th

ontent of pro

nt.25 Claiman

tration must

the clear pro

storical treatm

lege that the

ration licens

rea of the ex

Salvador's hi

at the discove

7, 479, 507-50

f José María Ao Salvadoran mas en los Cónte de fuerza ly repealed an

resamente deessly repealed

pr. 30, 2009 (

1 and 1922 a

always been

repeatedly b

g investing i

ning code, w

he earlier pr

ovisions that

nt's applicat

be consider

ovisions of E

ment of min

e current Salv

e-holder wh

xploration lic

istorical fram

erer of a valu

08, 561, 571-

Ayala MuñozMining Law,

ódigos Minernormativa.")

nd have absol

erogada por und by a subseq

("NOA"), para

are irrelevan

applicable t

by Claimant2

n El Salvado

which had

rovisions, no

do not apply

ion for an

red based on

El Salvador's

ning.

vadoran law

ho discovers

cense.26

mework for

uable minera

-572.

z and Karla Fr, Dec. 20, 201ros anteriores

["[A]ll provilutely no lega

na ley posteriquent law, the

a. 37; Memor

nt to

to

22

or.23

one of

y—

the

s

w

and

al

ratti 13 a

isions al

ior, la e prior

rial,

deposit h

To suppo

cites the

1995 Min

true: it is

Salvador

together

holder ga

work tha

Both the

4

conclusio

holder do

about the

are distor

sections,

alleged in

27 Memor28 Memor29 Memor30 See Melicense hoof the Exp

has the right

ort its propos

1881 and 19

ning Law do

absurd to tr

ran legislatur

an argument

ains "a subst

t results in th

conclusion a

Pac R6.

on because th

oes not have

e various pro

rtions of the

El Salvador

nterpretation

ial, para. 465

ial, paras. 466

ial, para. 482

morial, parasolders; the subploitation Con

to demand a

sition that ex

922 Mining C

oes not grant

ry, as Claima

re eliminated

t from Articl

tantive right

he verificatio

and the asse

Rim cannot id

he law does

the right to

ovisions of th

actual text a

r explains ho

ns.

.

6-468.

.

. 471-482 (arbsurface minencession;" an

a concession

xplorers can

Codes and th

t such sweep

ant does, to i

d when it rep

les 10, 19, an

to the grant

on or proof o

rtions on wh

dentify any p

not say wha

demand a co

he Mining L

and meaning

ow the plain

rguing that Arerals subject td the languag

20

n from the St

"demand" c

hen claims it

ping rights to

insert into th

pealed the ol

nd 23 of the

of a Conces

of the existe

hich it is bas

provision in

at Pac Rim w

oncession fr

Law not only

g of the Salv

text of the M

rticle 10 grantto an exploratge of Article 2

tate for the e

concessions f

t would be "

o explorers.2

he 1995 Min

ld laws. Cla

Mining Law

ssion upon th

ence of econo

ed are flawe

the 1995 Mi

wants it to sa

rom the State

y fail to supp

vadoran prov

Mining Law

ts "real propetion license "o23 regarding c

exploitation o

from the Sta

absurd" to c

8 In fact, th

ning Law pro

aimant tries t

w that an exp

he conclusio

omic mining

ed.30

ining Law to

ay: an explor

e. Pac Rim's

port its concl

visions. In th

contradicts

erty rights" toonce located,concessions i

of that depos

ate, Claimant

consider that

e opposite is

ovisions that

to cobble

ploration rig

on of explora

g potential."2

o support its

ration rights

s assertions

lusion, but al

he following

Claimant's

exploration become the ois mandatory)

sit."27

t

t the

s

t the

ghts

ation

29

lso

g sub-

object ).

4

to explor

their hold

asserting

4

terms "lic

There is n

use of the

same law

cannot si

depends

4

license co

31 Memor32 Memor33 See Ottdenote maconcessiowhere mathroughou

Claim7.

ration license

ders. The A

g:

[T]he "ExplprovisLicenamounterm.3

Claim8.

cense" and "

no basis for

e term "conc

w. The text o

imply redefin

on such rede

Dr. Ti9.

onfers only t

ial, paras. 47

ial, para. 472

o Expert Repatters relatingn is not appli

atters pertaininut the Mining

i

mant's first m

e holders.31

rticle refers

term "conceoitation Consions of the lse," which, ants to a "con32

mant cites no

"concession"

ignoring the

cession" is so

of Article 10

ne the term "

efinition.

inetti, El Sal

the right to e

1-475.

.

ort at 10 ("Thg to the authoried to matters ng to such exp Law.").

i. An expldepositexplora

mischaracteriz

Article 10, i

only to "the

ession" as usncession," aslaw. Insteadas employed

ncession" wit

source for th

" were used p

e distinction

omehow diff

0 is clear and

"concession"

lvador's Con

explore and

hroughout therization that gpertaining toploration are

21

lorer does nt by the mereation area

zation is that

in fact, says

concession.

sed in Articles the latter te, it includes

d in the Amethin the gene

his assertion

purposefully

included in

fferent from a

d is limited to

" in this prov

nstitutional la

the right to r

e Mining Lawgrants the righo exploration paddressed, th

ot acquire ae discovery o

t Article 10

nothing abo

." Claimant

e 10 is not lierm is used ialso the "Ex

ended Minineral meaning

n. In fact, it

y with distinc

the law and

all other use

o exploitatio

vision becau

aw expert, co

request an ex

w, the term conht to mine andprior to the g

he term 'licens

an ownershipof that depos

provides rea

out explorati

tries to evad

imited to then later

xploration g Law, g of that

is clear from

ct and clear

d arguing tha

es of the sam

on concessio

use its flawed

onfirms that

xploitation c

ncession is usd process minranting of a cse' is consiste

p interest in sit within an

al property ri

on licenses o

de this by

e

m the law tha

meanings.33

at this particu

me term in th

ons. Claiman

d legal theor

t an explorat

concession:

sed consistennerals. The teconcession, anently used

a

ights

or

at the

3

ular

e

nt

ry

tion

ntly to erm nd

5

subsurfac

property

minerals.

34 Expert RReport"), Minería, úlos yacimde solicitayacimientimplicaríade validezeste tipo spretension("[L]icencexploracióexplotació(formales licencia dEl que desque se le oof locatingconcessiosubstantivexploratioThe discoa concessi35 Memor36 Otto Exde la mate

An exonly vactivitas welconcedeposhavinggoodsnull angranteraise oabove

In add0.

ce minerals—

interest of e

.36 Mining l

Report of Jospara. 26 ("La

únicamente comientos de las

ar la concesiótos que se enca una especie z de acuerdo asabe de antemnes de dominicias de explorón de sustancón de las susty sustantivos

de exploraciónscubre sólo adotorgue una cg and explorin to exploit th

ve), which areon license holoverer only acion."] (empha

ial, para. 473

xpert Report, eria por parte

xploration licvests the holdties to find thll as the exclssion. Neithits located ing discovereds that alreadynd void undeed a license oownership cle-cited article

dition, not ev

—much less

exploitation c

law expert Ja

sé Albino Tina licencia de eonfiere al titusustancias mi

ón respectiva. cuentren en elde ocupaciónal ordenamien

mano, en virtuio en tal licenración mineracias mineralesancias que ses) establecidon no adquieredquiere un deconcesión.") [ing for minerahe substancese established ilder does not cquires a rightasis in origina

.

Question 1. Sdel Art. 103,

cense grantedder with the he mineral dlusive right t

her of these rn the explorad it. This woy have an ower the Salvadof this kind klaims by virte.34

ven exploitat

exploration

concession h

ames Otto ex

etti on Salvadexploración qular la facultadinerales para Ninguna de

l área de expln de bienes qunto jurídico sa

ud de lo que dncia."). See aa otorgan el ds, y en el casoe descubran sios en la ley de un derecho d

erecho (que n["[M]ining exal substances,s discovered, in the Miningacquire an ow

t (which is noal).

See also Tine ha fundamen

22

d under Artiexclusive ri

deposits for wto apply for

rights entailsation area simuld imply a

wner—the Stdoran legal fknows in adtue of such l

tion concess

licenses, as

holders is the

xplains:

doran Constitque se otorga dd exclusiva dlas que ha sidesas facultad

loración por eue cuentan coalvadoreño. A

dispone el artíclso Ayala/Fraerecho a reali

o de realizar uiempre y cuane Minería y sude propiedad o es el de pro

xploration lice, and in the evprovided that

g Law and its wnership righot an ownersh

etti Expert Repntado el Art. 3

icle 19 of theight to conduwhich it has the appropri

s the acquisitmply by the sort of approtate—which framework.

dvance that thlicense, acco

sions confer

Claimant su

e right to exp

tutional Law, de conformide realizar acti

do otorgada ydes conlleva lael mero hechoon propietarioAquél al que culo precitadatti de Vega Eizar actividad

un descubrimindo se cumplau Reglamentodel yacimient

opiedad sino eenses grant thvent of makint certain requRegulations

ht over the dephip right but a

port, para. 3135 de la ley d

e Mining Lauct mining been grante

iate tion of the mere fact oopriation of would be Whoever is hey may notording to the

ownership r

uggests.35 In

ploit the sub

Dec. 9, 2013dad al Art. 19 ividades mine

y el derecho taa adquisicióno de haberlo do –el Estado-,

se le otorga udo, que no pueExpert Reportdes de localizaiento, solicitaan determinad

o…. Por endeto por el hechel derecho a ehe right to engng a discoveryuirements (for

are met. . . . Hposit on acco

a right to expl

1 ("La regulacde Minería de

aw

ed,

f

t e

rights to the

ndeed, the re

bsurface

("Tinetti Expde la Ley de

eras para locaambién exclus

n de los descubierto, lolo cual carec

una licencia dede fundament at 13 ación y

ar la concesióndos requisitose, el titular deho de encontrexplotar) en egage in activity, to apply forrmal and Hence, the ount of findingoit) if it is gra

ción constitucconformidad

eal

pert

alizar sivo

o cual ería

de ntar

n de s e una arlo. l caso ties r a

g it. anted

cional d al

5

10 of the

exploitat

5

its asserti

that "the

license h

automati

practical

no right t

cual el titusi aún no propietariis the basishall be thif the min37 Otto Ex38 Memor39 Memor40 See Ayarecurso m

ArticltransfconceMinindoes nconceactualArticlconcethe leg

It is cl1.

Mining Law

ion concessi

Claim2.

ions about A

right [to the

older by me

cally granted

effect."39 C

to receive th

ular de la conse es titular d

io de ellos es is for Article he owner of thnerals are still

xpert Report a

ial, para. 477

ial, para. 485

ala/Fratti de Vminero, sí da d

le 10 states thferable. It dossion holder

ng Article 2, not grant its ssion rights l deposits, cole 10. In effession), not thgally created

lear, therefor

w confers no

ion holders i

ii

mant's asserti

Article 10. C

e concession]

re operation

d, "the 'exclu

Claimant igno

he concession

ncesión –y sólde una concesel Estado.") [35 of the Minhe 'extracted' in the subsoi

at 10.

(citing Ferm

.

Vega Expert Rderecho (exclu

hat a conceses not say thr; that is precand Miningholder owneto exploit th

onstitute the ect, it is the rhe subsoil dd real proper

re, that Claim

o rights on ex

is the right to

i. An explconcess

ons about A

Claimant cite

] is born and

n of law."38 A

usive right' c

ores that the

n.40

lo éste– será eión, o si los m

["In the Constning Law, accminerals. As

il, they belong

mandois Exper

Report at 16 (usivo en algun

23

ssion is a reahat subsoil dcluded by Co

g Regulationsership of minhe subsurface

real propertright to mineeposits themrty right.37

mant's argum

xploration li

o extract min

lorer has ansion, nothing

Article 19 of t

es Article 19

d from the ou

According to

conferred un

e exclusive ri

el dueño de lominerales todatitution, this mcording to wh a consequeng to the State.

rt Report at 66

("El hecho denos casos) a s

al property rideposits are oonstitution As Article 3. Anerals in thee mineral esty interest cre subsoil depmselves, whic

ment is based

icense holder

nerals from t

n exclusive rig more

the Mining L

9 as supportin

utset adds to

o Claimant,

nder Article

ight is to req

os minerales 'avía permanematter is reguhich the concence, if there is ."].

6-67).

e tener licencisolicitar la co

ight and is owned by theArticle 103, A concession

e ground. Thetate, not the

reated by posits (i.e. thch constitute

d on a false

rs and the rig

the ground.

ight to apply

Law are just

ng its expert

o the assets o

if a concessi

19 would be

quest a conce

'extraídos.' Cecen en el subulated under Aession holder not yet a con

ia de exploracncesión, pero

e

n e

he e

premise. Ar

ght it confer

y for a

t as inaccurat

t's conclusio

of the explor

ion is not

e deprived of

ession. Ther

Consecuentembsuelo, el Article 103, w

(and no one encession hold

ción, y descubo no exime al

rticle

rs on

te as

n

ration

f

re is

mente

which else) er, or

brir el

5

concessio

explorati

license ex

concessio

concessio

apply for

54

it is "man

that it 'sh

obligatio

not mand

solicitantede explotaconcesiónresource, not exempto obtain tminerals dNavas de solamente["It is impgrants no 41 Memor42 Otto Exnot requirconcessio43 Otto Ex

Contr3.

on is simply

ion license a

xpires. The

on applicatio

on, the right

r a concessio

Pac R4.

ndatory" tha

hall be verifie

n to apply fo

datory.43

e de cumplir lación. Esto en de explotacidoes give onept the applicathe exploitatidoes not, per Hernández W

e da un derechportant to poinright to recei

ial, para. 482

xpert Report are the holder on").

xpert Report,

ary to Claim

that no one

s long as the

license hold

on to be gran

provided fo

on before the

iii

Rim makes th

t a "concessi

ed' by the M

or an exploit

los requisitoss, el titular de

ión.") ["The fe the right (an

ant from meeton concessionse, have a rig

Witness Statemho de solicitont out that theive the conces

.

at 26 ("[l]ike mof an explorat

Question 2.

mant's allegat

else is perm

e application

der still has t

nted. Once a

or in Article

e license exp

i. Pac RimMinistr

he surprising

ion 'shall be

Ministry."41 T

tation conces

, formales y se una licenciafact of having n exclusive riging the necesn. In other w

ght to obtain ament, para. 17r un concesióe Mining Lawssion."] (emph

mining codestion license th

24

tions, the eff

mitted to appl

n for the conc

to meet the r

an exploratio

19 has been

pires, that ex

m was not rery was not re

g assertion th

requested' b

This is not ac

ssion,42 and

sustantivos, na de exploraci

an exploratioght in certainsary requirem

words, an explan exploitatio7 ("Es importaón, pero no daw only confershasis in origin

s in most othehat has made

fect of the ex

ly for a conc

cession is fil

requirements

on license ho

exercised. I

xclusive right

equired to apequired to gr

hat, under Ar

by the Explo

ccurate. In f

granting of

necesarios parión no tiene, pon license and

n cases) to appments, formal loration licenson concessionante hacer noa ningún deres a right to renal).

er nations, thea discovery t

xclusive righ

cession in th

led before th

s for its expl

older applies

If the license

t is relinquis

pply for a corant the conc

rticle 23 of t

oration Licen

fact, an expl

an exploitati

ra tener derechper se, derechd discoveringply for the conand substant

se holder thatn."] (emphasisotar que la Leyecho a recibir equest a conce

e El Salvador to apply for a

ht to apply fo

e area of a v

he exploratio

loitation

s for a

e holder fail

shed.

oncession ancession

the Mining L

nse holder, a

lorer has no

ion concessi

ho a la conce

ho a obtener g the mining ncession, but ive, to be entit discovers s in original); y de Minería

r la concesiónession, but it

Mining Law mining

or a

valid

on

s to

nd the

Law,

and

ion is

sión

does itled

n.")

does

5

exclusive

that it wo

holder ha

would m

it. Never

concessio

if, and w

"The exp

during th

choose to

having ch

before th

5

to the Mi

submitted

forth a se

5

describes

concessio

44 Otto Ex45 Mining46 Otto Ex

As me5.

e right to app

ould be econ

as the require

ake sense to

rtheless, it is

on. The Salv

hen, to apply

ploration lice

he term of its

o never apply

hosen to app

he exploratio

In add6.

ining Law, th

d the require

eries of steps

Minin7.

s both "comp

on applicant

xpert Report a

Law, Arts. 3

xpert Report,

entioned abo

ply for a con

nomically an

ed technical

o apply for th

s never mand

vadoran Min

y for a conce

ense holder m

s license, app

y."44 Thus,

ply for a con

n licenses ex

dition, it is n

here is no au

ed document

s for reviewi

ng legislation

petency requ

must show

at 28.

8-43 (RL-7(b

§ 2.2.

ove, the Min

ncession in th

d technically

competence

he concessio

datory that a

ning Law lea

ession. As d

may choose

ply on a non

Pac Rim did

cession, Pac

xpired.

not mandator

utomatic righ

ts, which Cla

ing the appli

n expert Jam

uirements" an

that it has th

bis)).

25

ning Law doe

he area of th

y feasible to

e and financi

n while one

an exploratio

aves it up to

described by

to apply for

n-exclusive b

d not have to

c Rim was no

ry for the Mi

ht to a conce

aimant did n

ication after

mes Otto expl

nd "concessi

he required t

es provide th

he license. T

mine a certa

ial means to

still has the

on license ho

the explorat

y mining legi

a concessio

basis after its

o apply for a

ot required t

inistry to gra

ession, even

not do. Indee

it is submitt

lains that the

ion applicati

echnical and

hat the licens

Therefore, on

ain deposit,

carry out ex

exclusive ri

older apply f

tion rights ho

islation expe

n on an excl

s license has

concession

to apply for t

ant a concess

if the applic

ed, the Mini

ted.45

e Salvadoran

ion requirem

d financial co

se holder has

nce studies s

and the licen

xploitation, i

ight to apply

for the

older to deci

ert James Ot

lusive basis

s expired, or

at all and,

the concessi

sion. Accor

cant has

ing Law sets

n Mining La

ments."46 Fir

ompetence t

s an

show

nse

it

y for

ide

tto:

on

ding

s

aw

rst, a

to

carry out

exploitat

needs mo

discover

a concess

through,

commun

automati

must sho

exploitat

5

concessio

informati

required

governm

concessio

documen

5

process l

Bureau o

47 Mining48 Otto Ex49 Otto Ex50 Navas d

t the mining

ion are nece

ore money an

gold-bearing

sion to a com

or make tech

ities. Thus,

cally granted

ow that it is f

ion project i

Secon8.

on applicatio

ion for the G

as part of th

ment informat

on."49 The a

nts.50

Once 9.

eading to a d

of Mines mus

Law, Arts. 6

xpert Report,

xpert Report a

de Hernández

exploitation

ssarily more

nd more tech

g veins in th

mpany that c

hnical mista

it is only sen

d a concessio

financially an

in a sound m

nd, an applic

on.48 As des

Government'

he concession

tional need,

application w

an applicatio

determinatio

st ensure tha

, 8, 9 (RL-7(b

§ 2.2.

at 15.

z Witness Stat

n project.47 T

e onerous tha

hnical exper

he ground. T

could cut cor

akes that cou

nsible that a

on to extract

nd technical

manner.

ant must pro

scribed by M

s decision on

n application

and are imp

will not be ad

on is admitte

on of whethe

at the applica

bis)); Otto Ex

tement, paras

26

The financia

an those for

rtise to extrac

The Governm

rners to save

uld negativel

company th

t those mine

ly capable o

ovide all the

Mr. Otto, the

n the applica

n requiremen

ortant for de

dmitted for c

ed for review

er or not a co

ant publishes

xpert Report,

. 19-21.

al and technic

exploration.

ct and proce

ment has an i

e costs, aband

ly impact the

hat discovers

erals from the

of realizing th

documentat

requested do

ation: "Each

nts under Mi

eciding whet

consideration

w (which Pa

oncession sh

s informatio

§ 2.2.

cal compete

. Logically,

ess gold than

interest in av

don the proj

e environmen

s deposits is

e ground. T

he much mo

tion required

ocuments pr

h of the docu

ining Law A

ther or not to

n without th

c Rim's was

hould be gran

on about its a

nce standard

a company

n it does to

voiding gran

ect partway

nt and local

not

The company

ore complica

d for a

rovide neces

umentation

Article 37 ser

o grant a min

he required

not), there i

nted. The

application a

ds for

nting

y

ated

sary

rve a

ning

is a

and

provide f

applicatio

express t

consider

process t

6

the matte

contents

and then

provides

mining e

capacity

6

no such t

Even if P

applicatio

comment

51 Mining52 Mininghábiles, dsolicitud."the next fiprocessingpublic or 53 Mining54 Mining

fifteen days f

on, or who b

heir opposit

the objectio

o continue o

If the 0.

er to the Min

of the applic

decide whet

factors that

xploitation c

of the applic

Thus, 1.

thing as an a

Pac Rim had

on would sti

t process, an

Law, Arts. 4

Law, Art. 41eclarándola s") ["After the

fifteen businesg of the applithe applicant

Law, Art. 43

Regulations,

for persons f

believe that t

ion to the ap

ns and the a

or to stop the

process con

nister of Econ

cation file, o

ther or not to

the Minister

concession, i

cant, and the

the plain tex

automatic rig

met the form

ill have been

nd the bound

0-41 (RL-7(b

1 (RL-7(bis)) in lugar si noevidence is s

ss days, rejectication to concan appeal th

3 (RL-7(bis)).

, Art. 15 (RL-

from the gen

they will be

pplication.51

applicant's re

ere if the obj

tinues follow

nomy for his

order any inv

o grant the c

r must take i

including th

e characterist

xt of the Min

ght to a minin

mal requirem

n subject to a

ded power of

bis)).

("resolverá soo fuere fundadsubmitted, theting it if it is utinue."]. The

he decision of

-8(bis)).

27

neral public w

negatively a

Under the M

esponse, and

ections are w

wing publica

s/her decisio

vestigations a

oncession.53

into account

e national in

tics of the pr

ning Law an

ng exploitati

ments of the

a substantive

f the Ministe

obre la Oposida, en cuyo cae Bureau shalunjustified, in

e Article provf the Bureau o

who have a

affected by th

Mining Law

then decide

well-founded

ation, the Bu

on. The Min

and inspecti

3 Article 15

in deciding

nterest, the fi

roposed min

nd Regulation

ion concessi

Mining Law

e technical ev

er of Econom

ición, dentro daso ordenará sl issue a decisn which case

vides that eitheof Mines to th

legitimate in

he proposed

w, the Bureau

e whether to

d.52

ureau of Min

nister can ev

ons he/she d

of the Minin

whether or n

financial and

ning operatio

ns demonstr

ion as Claim

w, which it d

valuation, th

my to grant o

de los siguiense continúe csion on the Othe Bureau sher the objectinhe Minister of

nterest in the

d concession,

u of Mines w

allow the

nes will subm

aluate the

deems necess

ng Regulatio

not to grant

d technical

on.54

rates that the

mant alleges.

did not, the

he public

or deny the

ntes quince díon el trámite

Objection withhall order theng members of Economy.

e

, to

will

mit

sary,

ons

the

ere is

ías de la

hin of the

applicatio

mistaken

ClaimanInterp

Accordin10, "explorights undAmendedLaw consproperty rtitleholde

Article 19right to thconcessiominerals within thelicense ar

"The langArticle 23mandatorunequivoconcessiorequestedExploratiholder, an'shall be vthe Minis

6

concessio

55 Memor56 Memor57 Memor

on for the ex

n allegations

t's Mistakenpretation

ng to Article oration der the d Mining stitute real rights of the

er."55

9 provides a he on for located e explorationrea.56

guage of 3 is ry. It states ocally that theon 'shall be d' by the ion License nd that it verified' by stry."57

Thus, 2.

on from El S

ial, para. 471

ial, para. 477

ial, para. 482

xploitation c

is shown in

n

Art. 10. Tproperty tsurface laof the surlocated atreal propeact, with tconsequensecurity f

n

Art. 19. THolder thactivities,for whichconferredconfers thconcessio

e

Art. 23. Uof the exiauthorizedexploitatithe grantithrough agranting oLicense Hextended it complieLaw, in th

Claimant's a

Salvador upo

.

.

.

oncession. T

the followin

Text of

The deposits rthat differ froand; not so thrface where tht the surface; erty right thatthe prior authntly, said con

for mining opThe Exploratihe exclusive p, to locate theh it was grantd and to an inhe exclusive ron. Upon conclusstence of thed area, the gron and use ong of such C

a Resolution fof a contract Holder for a t

at the requeses with the rehe opinion of

allegation th

on a simple s

28

The text of t

ng table:

f 1995 Minin

referred to inom the propehe quarries thhey are foundconsequentl

t is transferrahorization of ncession is caperations. ion License vpower to perfe deposits of ted, within thndefinite deptright to apply

sion of the exe mining econranting of the

of the mineralConcession shfrom the Minbetween the

term of thirtyst of the interequirements ef the Ministry

hat it had a ri

showing that

the law in co

ng Law

n this Law arerties that conhat are an inted, provided tly, a concessiable by an inf the Ministryapable of bei

vests in the Lform mining

f mineral subshe limits of thth. In additiony for the resp

xploration, annomic potente Concessionls will be reqhall materialinistry, followMinistry and

y years, whichrested party, established iny. . . .

ight to dema

t it had disco

ontrast to Cla

re real nstitute egral part they are ion is a

nter vivos y; ing a

Anpel

License

stances he area n, it

pective

Apheacn

nd proof tial in the n for the quested; ize

wed by the d the h may be provided n the

PrfawtR

and an explo

overed a dep

aimant's

Clear Mean

Article 10 donot accord a property righexploration license holde

Article 19 provides a licholder the exclusive righapply for a concession; nothing morePac Rim wasrequired to apfor a concessand the Miniswas not obligto grant Pac Rim's applica

oitation

posit is

ning

oes real

ht to

ers.

cense

ht to

e. s not apply sion, istry gated

ation.

unsuppor

on which

6

condition

in an exp

requirem

64

considere

expect its

requirem

58 Memorconcessio59 Memor60 Mining61 Otto Exmandatory

rtable.58 Cla

h it seeks to r

Claim3.

n for the gran

ploration lice

ments that mu

a) Ploa cartotechnilocatioirrefut

b) Thegrante

c) Thwith a

d) Theprofes

e) Thegeolog

f) Th

The re4.

ed.61 Salvad

s application

ments: "There

ial, para. 52 (n upon discov

ial, para. 488

Law, Art. 37

xpert Report ay.").

aimant's alleg

rely.

b) MaLaw

mant incorrec

nting of a co

ense area.59

ust be submit

ot plan of theographic maical description, boundaritably establi

e ownership ed by the ow

he Environma copy of the

e Technical-ssionals enga

e exploitatiogist or a com

he others esta

equirements

doran Consti

n to be consi

efore, if an a

(referring to thvery of a min

.

7.2 (RL-7(bis)

at 15 ("The su

gations are d

andatory natw

ctly insists th

oncession," w

But Article

tted with an

e property wap of the areaion, extensioies and nameshed;

deed of the wner;

mental Permite Environme

-Economic Faged in the s

on program fmpetent profe

ablished in t

of Article 3

itutional law

dered, much

applicant for

he explorationneable deposit

)).

ubmission of a

29

disproven by

ture of the re

hat there is o

which it claim

37.2 of the M

application

where the acta, topographon of the reqe of borderin

property or

t issued by thental Impact

Feasibility Stsubject matte

for the first fifessional in th

the regulatio

7 are manda

w expert Dr. T

h less granted

a mining ex

n license beint"). See also

all the listed d

y the text of

equirements

only one "fun

ms is the dis

Mining Law

for an explo

tivities will bhic plan and quested area ng properties

the authoriz

he competenStudy;

tudy prepareer;

five years, sihe subject m

ons.60

atory for an a

Tinetti confi

d, if it has no

xploitation co

ng "followed Memorial, pa

documentatio

the Mining L

in Article 37

ndamental su

scovery of a

w provides a l

oitation conc

be carried ouits respectivwhere its s are

zation legally

nt authority,

ed by

gned by a matter;

application t

irms that an

ot complied

oncession do

immediately aras. 465-468

on listed in the

Law provisi

7.2 of the M

ubstantive

mineral dep

list of

cession:

ut, ve

y

to be

applicant ca

with the leg

oes not meet

by an exploit.

e Article is

ons

Mining

posit

annot

gal

t all

tation

the requi

without m

submit al

admitted

are "plain

Claimant

6

environm

for an ex

the feasib

two subs

6

complian

intensely

it would

requirem

62 Tinetti E63 Mining64 NOA, p65 Claiman("ResponsResponde66 RejoindObjection

rements esta

merit."62 Ar

ll the docum

that the requ

n and explici

t cannot now

As El 5.

mental permi

xploitation co

bility study r

ections.

2.

In the6.

nce with Arti

y factual inqu

"produce ev

ments of Artic

Expert Repor

Regulations,

para. 8.

nt Pac Rim Cse (Preliminarent's Prelimina

der (Preliminans, May 31, 20

ablished by t

ticle 18 of th

mentation list

uirements to

it,"64 and tha

w claim that t

Salvador ex

it, Claimant

oncession ap

requirement.

Claimant drequiremen

Preliminary

icle 37.2.b),

uiry"65 that c

vidence – inc

cle 37.2.66 I

rt, para. 50.

, Art. 18 (RL-

Cayman LLC'sry Objectionsary Objection

ary Objection010, at 153:13

the law on th

he Mining R

ted in Article

o obtain a mi

at it needed a

the other req

xplained in it

failed to com

pplication: th

. We will de

did not compnt

y Objection p

the land ow

could not be

cluding expe

n its Memor

-8(bis)).

s Response tos)"), paras. 13n, May 12, 20

ns), para. 132.3-154:3.

30

his matter, it

Regulations r

e 37.63 Claim

ining exploit

an environm

quirements c

ts Preliminar

mply with tw

he land owne

escribe these

ply with the

phase of this

wnership or a

decided in a

ert evidence –

rial on the M

o Respondent'3, 142; Claima010 ("Rejoind

See also Tra

ts claim to ob

reinforces th

mant, in its N

tation conce

mental permit

can be ignore

ry Objection

wo of the oth

ership or aut

e fundament

land owners

s arbitration,

authorization

a preliminary

– to demons

Merits, howev

's Preliminaryant Pac Rim C

der (Prelimina

anscript of He

btain the con

e need for ap

Notice of Ar

ssion under

t to complet

ed.

ns, in additio

her Article 37

thorization re

al deficienci

ship or autho

, Claimant in

n requiremen

y stage. Cla

strate" that it

ver, Claiman

y Objection, FCayman LLCary Objection

earing on Pre

ncession is

pplicants to

rbitration, in

Salvadoran

e its applicat

on to the lack

7.2 requirem

equirement a

ies in the nex

orization

nsisted that i

nt, was "an

aimant promi

t had met the

nt has produ

Feb. 26, 2010C's Rejoinder s)"), para. 142

eliminary

n fact

law

tion.

king

ments

and

xt

its

ised

e

ced

0 on 2.

no new f

utterly fa

6

requirem

applicabl

given all

its promi

Claimant

Therefor

and, for t

6

understan

rather tha

area it de

ahead, de

6

documen

Novembe

not have

67 Memor("Williamthe Amenrequireme68 Memor

factual evide

ailed to comp

Claim7.

ment, but rath

le requireme

the time it n

ise to the Tri

t has change

e, the fact re

that reason a

Claim8.

nd the requir

at Claimant c

esired. Inste

emanding a c

Claim9.

nts. Accordi

er 2004, with

spent the tim

ial, para. 560

ms Expert Statnded 1996 Minent in subpara

ial, para. 190

nce to count

ply with the

mant likewise

her presented

ent for explo

needed to pro

ibunal that it

d course and

emains: Claim

alone, had no

a) Cla

mant's problem

rement, or th

could not co

ad of changi

concession w

mant's problem

ng to Claima

hout having

me necessary

. See Expert tement") at 32ning Law rela

agraph (b).").

.

ter the evide

land owners

e produced n

d an entirely

itation conce

oduce eviden

t would dem

d now argue

mant did not

o right to a c

aimant want

m with Artic

hought it did

omply with A

ing its strate

without com

m is clearly

ant, Pac Rim

decided the

y to consult

Statement of 2 ("All of the ate to the app

31

nce submitte

ship or autho

no expert test

new argume

essions for m

nce and expe

monstrate com

s that the req

t comply wit

concession.

ted more than

cle 37.2.b) w

d not apply to

Article 37.2.b

gy to seek a

mplying with

illustrated fr

m was finaliz

area of the c

and reach ag

f John P. Willdocumentatiolication for a

ed by El Sal

orization req

timony that

ent that "Art

metallic min

erts, Claima

mpliance wit

quirement do

th Article 37

n it could ha

was never tha

o gold explo

b) and still s

a smaller con

the applicab

from Claiman

zing its conc

concession.6

greements w

liams on Minion requirememetallic min

lvador showi

quirement.

it met the A

ticle 37(2)(b

nerals."67 Th

ant has been

th the require

oes not appl

7.2.b) of the

ave been leg

at Claimant

oitation conc

stake its claim

ncession, Cla

ble legal prov

nt's Memori

cession appli

68 Of course

with landown

ing Law, Marents set forth ining Concessi

ing that Clai

Article 37.2.b

b) is not an

hus, having b

unable to m

ement. Inste

y to it.

Mining Law

gally entitled

did not

cessions, but

m to the hug

aimant press

visions.

al and relate

ication in lat

e Pac Rim co

ners since it h

r. 27, 2013 in Article 37.2on except the

imant

b)

been

meet

ead,

w

d to

ge

sed

ed

te

ould

had

2 of e

not even

area poss

without r

concessio

explored

"reasonab

it had a p

7

large" an

Law requ

authoriza

comply w

69 Memor70 Memor71 ApplicaExploitatiConcesión2.3 (R-2) operacionextienda lmunicipalrazonableque tambiidentificadshows tha(IRR), anyworkers, tnot think but also opotential a72 Memor

decided wha

sible for its c

regard to the

on applicatio

based on th

ble" based o

plan to mine.

Accor0.

n area,72 Pac

uirements. P

ation for the

with the "sur

Thereexploi

ial, para. 192

ial, para. 205

ation: Converion Concession de Explotac("Este estudi

nales, grandesla vida de la olidades . . . , l

e solicitar solaién las otras ádas como zonat, due to the fything that exthe municipalit reasonable

other nearby aas the Conces

ial, para. 205

at area to req

concession.69

e Mining Law

on, Pac Rim

e low operat

on its investm

.71

rding to Clai

Rim reduced

Pac Rim nev

entire area i

rface owner

are two maiitation conce

.

, n.393.

rsion of El Doon (Solicitud:ción El Dorado [de pre-fact

s costos capitaoperación serála República damente el áreaáreas cercanasnas con potenfavorable opextends the lifelities . . . , theto request on

areas containinssion area."].

.

quest—Pac R

9 Claimant a

w requireme

explained th

ting costs an

ment to reque

imant's own

d the reques

ver attempted

it requested.

authorization

in things thaession at this

orado Norte an Conversión d

do), Dec. 22, 2tibilidad] mueales y tasa intá favorable alde El Salvadoa de las vetas s donde se en

ncial, como árerating costs, e of the operae Republic of nly the areas ong mineralize

32

Rim was sol

admits that i

ents for a con

hat it was req

nd high capit

est the small

admissions,

ted area to 1

d to provide

Pac Rim's o

n issue" in J

at are lackings time: the en

nd El Doradode Licencias 2004 ("Conceestra claramenterna de retornl proyecto, y por, y a los inve

Minita y Mincuentran vetaea de Conceshigh capital ction will be bEl Salvador a

of the Minita aed veins and g

lely focused

it originally

ncession app

questing a la

tal costs, cla

ler area requ

, after being

12.75 km2, an

documentat

own official

June 2005:

g in our requnvironmenta

o Sur LicenseEl Dorado Noession Applicnte, que debidno (TIR) muypor ende a losersionistas. Bnita 3, área deas mineralizadsión.") ["This costs and verybeneficial to thand the investand Minita 3 geological zon

on requestin

applied for a

plication.70 I

arger area th

aiming that it

uired to mine

told that 62

nd still igno

ion showing

s discussed t

uest for the al permit and

s into an El Dorte y El Dor

cation" or "Apdo a los bueny baja, que cus trabajadoresBasado en este la planta y pdas y zonas g[pre-feasibili

y low internalhe project andtors. Based onveins, plant anes identified

ng the larges

a 62 km2 are

Indeed, in th

han it had ful

t would not b

e the one dep

km2 was "to

red the Mini

g ownership

the failure to

d

Dorado rado Sur a pplication") anos costos ualquier cosa s, las to, no nos parpresa de colaseológicamentity] study cleal rate of returnd therefore thn the above, wand tailings dd as having

st

ea,

he

lly

be

posit

oo

ing

or

o

at 6, §

que

rece s, sino te arly n

he we do

dam,

7

requirem

this requi

Salvador

documen

requirem

task."74 C

been exe

7

the lando

Exploitat

approxim

requested

7

Rim was

feigned s

Director

view that

73 Memo f("Pac Rim74 Pac Rim75 Conces

the aunot to

Thus, 1.

ment and chos

irement. By

r, the time to

ntation of ow

ment because

Claimant can

mpt from co

Claim2.

owners for th

tion Concess

mately 1.6 km

d.75

This d3.

forced to ad

surprise that

of the Burea

t the Mining

from Fred Ea

m Internal Me

m Internal Me

sion Applicat

uthorization otally) impos

Claimant's o

se not to cha

y 2008, when

correct this

wnership or a

it considere

nnot now de

omplying wit

b) Clatha

mant did not a

he surface ar

sion. Pac Ri

m2 of the 12.

deficiency w

dmit in its R

this was an

au of Mines,

g Law require

arnest to Tom emo re Surfac

emo re Surfac

tion at 4 (R-2

of the land osible task.73

own docume

ange its requ

n Pac Rim ar

defect had l

authorization

ed that comp

emand comp

th this Minin

aimant provian 13% of th

allege or pro

rea over the r

im provided

.75 km2 area

was brought t

ejoinder to E

issue at all),

informed P

ed PRES to

Shrake regare Owner Auth

ce Owner Aut

).

33

owners. . . . t

ents show th

uest to reflect

rgues it first

long passed.

n. Claimant

liance would

ensation by

ng Law requ

ided proof ohe area reque

ovide eviden

requested co

proof of ow

a requested—

to Claimant's

El Salvador's

, "in March 2

RES that sev

acquire own

rding Surface horization") (

thorization (C

the latter is a

hat Pac Rim k

t the very lim

became awa

Pac Rim ne

hoped to ge

d be a "nearl

arguing that

uirement.

of ownershipested for the

nce that it ow

oncession in

wnership or a

—i.e., less tha

s attention al

s Preliminary

2005, Ms. G

veral person

nership of, or

Owner Auth(C-291) (emp

C-291).

a nearly (if

knew that it

mited area fo

are of its dis

ever provide

et away with

ly (if not tot

t its applicat

p or authorizaconcession

wned or had p

its Applicat

authorization

an 13% of th

lmost immed

y Objections

Gina Navas d

ns in MINEC

r authorizati

horization Issuphasis added).

had not met

or which it m

spute with El

ed the requir

ignoring thi

ally) imposs

tion should h

ation for less

permission f

tion for an

n for only

he total area

diately. As

s (after havin

de Hernández

C were of the

ion to use, th

ue, June 28, 2.

t this

met

l

red

is

sible

have

s

from

Pac

ng

z, the

e

he

2005

entire lan

its own o

need auth

mine.77

74

2005 "tha

mining la

Division

uncertain

trying to

the time t

interpreta

Fred Earn

surface o

applicatio

76 Rejoind77 Letter fattached M78 Pac Rim79 Memor80 Pac Rim81 Navas dsolicitadoRepúblicasimplemehacer el rinversioniopinion o

nd surface ov

opinion, prep

horizations f

Claim4.

at the office

aw and was

of Mines."7

nty within bo

help "resolv

that the Min

ation had be

nest, the Pre

owner author

on.80 There

der (Prelimina

from MinisterMemorandum

m Internal Me

ial, paras. 217

m Internal Me

de Hernández la opinión de

a no significabente un intentorequerimientoista extranjerof the Secretar

verlaying the

pared by its S

from landow

mant now furt

of the Secre

in agreemen

8 So Claima

oth MINEC

ve the confus

nistry and the

en affirmed

esident of Cl

rization was

was no "unc

ary Objection

r of Economym, "Interpretac

emo re Surfac

7, 219.

emo re Surfac

z Witness State la Secretaríaba que nosotro de buscar uno de la propiedo, ante su insiry for Legal a

e concession

Salvadoran l

wners for the

ther admits t

etariat for Le

nt with the in

ant contradic

and the Bure

sion."79 In f

e Bureau of M

by the Presi

aimant's Sal

one of the m

certainty" or

ns), para. 30.

y to Secretary ción Ley de M

ce Owner Aut

ce Owner Aut

tement, para. a para Asuntoros tuviéramona opinión ddad del inmuistencia.") ["T

and Legislativ

34

n."76 Soon th

legal counse

entire area o

that the Bure

egislative an

nterpretation

cts its own al

eau of Mines

fact, Claiman

Mines had a

ident's Secre

lvadoran sub

main things m

r "confusion"

for LegislativMinería," May

thorization (C

thorization (C

45 ("El hechoos Legislativoos ninguna due alto nivel reeble, como un

The fact that tve Affairs of t

hereafter, on

el, outlining i

of the conce

eau of Mine

nd Judicial A

n of the Mini

llegations th

s on the issu

nt's exhibit s

agreed on an

etariat for Le

bsidiary, repo

missing from

" about the r

ve and Legal y 5, 2005 (R-3

C-291) (emph

C-291).

o que la Minios y Jurídicos uda sobre el siespecto de la na muestra dthe Minister othe Office of t

n May 5, 200

its argument

ssion for an

s informed P

Affairs had re

istry of Econ

hat there was

ue" and that C

shows that it

n interpretatio

egislative and

orted to Tom

m Pac Rim's

requirement.

Affairs, May30).

hasis added).

istra de Econo de la Presideignificado de posición de qde tratar de aof Economy rthe President

05, Pac Rim

t that it did n

undergroun

Pac Rim in J

eviewed the

nomy and the

s "considerab

Claimant wa

was inform

on and that t

d Legal Affa

m Shrake tha

concession

.81 Mr. Earn

y 25, 2005 wit

omía haya encia de la ese requisito

que no se debayudarle a un requested the of the Repub

sent

not

d

June

e

ble

as

med at

this

airs.

at

nest

th

. Era ería

blic

noted tha

have 30 d

was "a ne

Mines wa

applicatio

7

of Mines

October 2

applicatio

land subj

7

ownershi

applicatio

activities

does not mseek a higfollowed, 82 Pac Rim83 Pac Rim84 Letter fPREVIENestablecidTREINTATestimonipor los prbetter reacestablishesubmit theproperty sfor mining85 Letter f

at if the Bure

days to prod

early (if not

as "sympath

on—"this bu

More 5.

s finally trigg

2, 2006. Th

on, including

ject to the co

In resp6.

ip or authori

on; the area

s in El Dorad

mean that we gh-level opini

as an attemp

m Internal Me

m Internal Me

from Bureau oNESE, a la Sodo en los ArtícA DIAS preseios de venta dopietarios delch a decision,ed in Articles e following dsales agreemeg exploitation

from Pacific R

eau of Mines

duce the "aut

totally) imp

hetic" and ho

uys us time."

than a year

gered the 30

his letter gave

g certified co

oncession.84

ponse to the

ization docum

of land acco

do for 2008 s

had any doub

ion regarding t to assist a fo

emo re Surfac

emo re Surfac

of Mines to Pociedad 'PACIculos 36, 37 nente a esta Dirde los inmuebl área solicita, WARNS the36, 37 numer

documentationents or legallyn . . . ."] (emp

Rim El Salvad

s requested t

horizations o

ossible task.

olding off on

"83

later, howev

-day period

e Pac Rim th

opies of the

October 20

ments relate

ounted for di

submitted to

bt about the mthe position t

oreign investo

ce Owner Aut

ce Owner Aut

acific Rim ElIFIC RIM ELnumeral 2 y 3rección la doc

bles debidameada para la expe company PAral 2, and 38 on: 1. Certifiedy executed autphasis added).

dor to Bureau

35

the missing a

of the land o

."82 Mr. Ear

n starting the

ver, with no r

by sending a

hirty days to

registered la

06 letter, Pa

d to the sam

id not signifi

o the Salvado

meaning of thithat the propeor, at its insist

thorization (C

thorization (C

l Salvador, OL SALVADO38 de la Ley dcumentación ente inscritos plotación de lACIFIC RIMof the Miningd copies of ththorizations f.

u of Mines, No

application c

owners," som

rnest express

30-day peri

resolution of

a prevención

o submit item

and purchase

ac Rim merel

me parcels it h

icantly chan

oran Ministry

is requiremenerty ownershitence."].

C-291).

C-291).

ct. 2, 2006 (ROR, S.A. DE Cde Minería, pasiguiente: 1. o autorizaciola mina. . . .")

M EL SALVADg Law, that whe duly recordfrom the lando

ov. 11, 2006

components,

mething Mr.

sed relief tha

iod for curin

f this key iss

n (warning le

ms missing fr

es or authori

ly submitted

had referred

ge.85 In fact

ry of Econom

nt. It was simip requiremen

R-4) ("Para mC.V.', . . .de coara que en el Copias certif

ones otorgada) ["The BureDOR, S.A. D

within THIRTYded official trowners in the

(R-5).

, Pac Rim w

Earnest note

at the Bureau

ng defects in

sue, the Bure

etter) dated

rom its

izations for t

d updated

d to in its orig

t, in its repor

my, Pac Rim

mply an attempnt should not b

mejor proveer onformidad aplazo de

ficadas de los as en legal forau, in order to

DE C.V., . . . aY DAYS it manscripts of the area request

ould

ed

u of

the

eau

the

ginal

rt of

m

pt to be

a lo

rma o

as must

he ted

included

land own

equivalen

7

defect in

86 2008 ADorado E87 69 + 930.127.

a map of the

nership or au

nt to, at mos

Articl7.

an applicati

Annual Report

xploitation C

3 = 162. The

e areas it ow

uthorization r

t, 1.62 km2,

le 38 of the M

ion for a min

t of Exploratio

Concession, Fe

conversion fr

wned that cle

requirement

which is les

Mining Law

ning exploita

on for the Woeb. 2009 ("20

rom hectares t

36

arly shows t

.86 Roundin

ss than 13%

only allows

ation concess

ork Done by P008 Annual R

to km2 is 100

that it still ha

ng up, the are

of the reque

s a maximum

sion after th

Pacific Rim EReport"), § 6 (R

0:1, so 162 he

PamAGpirearshfoclowau

ad not comp

ea it claimed

ested area.87

m 30-day tim

e official wa

El Salvador inR-3).

ectares is 1.62

ac Rim submmap with its 2Annual ReporGovernment.

ink outline isequested conrea and the chapes are theor which Paclaimed to havwnership or uthorization.

plied with the

d to own is

me limit to cu

arning letter

n the Proposed

2 km2. 1.62/1

mitted this 2008 rt to the (R-3) The s the

ncession colored e only land c Rim ve

e

ure a

is

d El

2.75=

received

granted i

adjudicat

option un

7

Memoria

authoriza

with this

7

concessio

8

undergro

the limite

the under

argument

88 Mining89 Memor90 Respon91 Pac Rim

by the appli

n December

ted. Once th

nder the law

Thus, 8.

al on the Mer

ation for add

mandatory r

The r9.

on. There is

The fo

b) Thegrante

In resp0.

ound mine, th

ed surface ar

rground min

t was proper

Law, Art. 38

ial, Section IV

nse (Prelimina

m Internal Me

icant.88 Afte

r had run), th

he thirty day

was for the

Pac Rim did

rits, Pac Rim

ditional land.

requirement

c) Threq

i

requirement

s no limiting

ollowing doc

e ownership ed by the ow

ponse to El S

he applicant

rea where m

ne and the ab

rly rejected b

8 (RL-7(bis)).

V.F.

ary Objection

emo re Surfac

er this period

he applicatio

s passed and

application

d not own or

m does not al

.89 It is, ther

t for its explo

he land ownequested in a c

i. The reqproject

of Article 37

language in

cumentation

deed of the wner;

Salvador's P

only needs t

ining activit

bove-ground

by the Gover

s), para. 147.

ce Owner Aut

37

d had run (or

on could no l

d the applica

to be rejecte

r have autho

llege any new

refore, indisp

oitation conc

ership requirconcession

quirement is t proponent p

7.2.b) applie

n the provisio

n shall also b

property or

Preliminary O

to demonstra

ties are to be

mining faci

rnment in 20

thorization (C

r even after t

longer be law

ation defects

ed.

orization for

w facts abou

putable that

cession appl

rement applie

not limited plans to dire

es to all prop

on:

be submitted

the authoriz

Objections, C

ate ownersh

e conducted –

ilities are to b

005.91 Altho

C-291).

the second 3

wfully admit

were not co

the property

ut owning or

Claimant fai

ication to be

es to the ent

to surface pectly affect

perty covered

: . . .

zation legally

Claimant arg

hip of, or auth

– i.e., where

be located."

ough Pac Rim

30-day period

tted, reviewe

orrected, the

y at issue. In

r having

iled to comp

e admitted.

ire area

roperties the

d by the

y

gued that, "fo

horization to

e the entranc

90 This

m now prim

d

ed, or

only

n its

ply

e

for an

o use,

e to

marily

argues th

Salvador

impacted

8

the Minin

Article 3

technical

actividad

with whi

authoriza

contain th

8

import th

qualifyin

"where th

provision

requirem

"surface

surface a

8

"where th

92 Memorthese procproposed 93 Mining

hat Article 37

r will explain

d, included in

First, 1.

ng Law. Tw

7.2.a) requir

l description

des" or "prop

ch Claimant

ation for the

he qualifier

Claim2.

he Article 37

ng the genera

he activities

n. Even if th

ment (which i

activities."

and undergro

Secon3.

he activities

ial, para. 576ceedings, PREmining opera

Law, Art. 37

7.2.b) simply

n why the arg

n the Memor

Pac Rim's in

wo provision

res an applic

, coordinate

perty where t

t failed to co

"inmueble"

"where the a

mant thus mak

7.2.a) limitat

al term, "pro

will be carri

he text of 37

it is not), the

Claimant's i

ound.

nd, at the tim

will be carri

("as ClaimanES did obtainations").

7.2 (RL-7(bis)

y does not ap

gument limi

rial as a fallb

nterpretation

s in Article 3

cant to provid

s and bound

the activities

omply, requir

or "property

activities wil

kes two mis

ion into Arti

perty." In a

ied out" lang

.2.a) were ap

ere would be

nterpretation

me it submitte

ied out" to re

nt pointed outn all the surfac

)).

38

pply to appli

iting the requ

back argume

n is not supp

37.2 of the M

de detailed i

daries—for th

s will be carr

res that the a

y." Unlike A

ll be carried

takes in inte

icle 37.2.b) e

ddition, Clai

guage of Art

pplicable to

e no basis for

n ignores the

ed its Applic

efer to the en

t on numerouce rights over

ications for m

uirement to s

ent,92 is inco

portable base

Mining Law

information—

he "inmueble

rried out."93

applicant mu

Article 37.2.a

out" after th

erpreting 37.

even though

imant tries t

ticle 37.2.a)

the ownersh

r limiting the

e fact that ac

cation, Claim

ntire area of

s occasions dr areas that wo

metallic con

surface area

orrect.

ed on the tex

use the term

—such as a l

e en el cual

Article 37.2

ust prove ow

a), this Artic

he term "prop

2.b). Claim

h the latter ha

to force a me

that is not in

hip or author

e reference t

ctivities can

mant underst

f the concess

during the preould have bee

ncessions, El

s directly

xt of Article

m "inmueble.

location map

se realizará

2.b), the Arti

wnership or

cle does not

perty."

mant tries to

as no langua

eaning on th

n the text of

rization

to "activities

happen on th

tood the phra

sion. In

liminary phasen affected by

l

37 of

."

p, a

n las

icle

age

e

that

s" to

he

ase

se of y its

complian

entire are

parts whe

its descri

for purpo

by neces

own actio

concessio

understoo

concessio

84

the surfac

forces a d

Claimant

concessio

need to p

distingui

Indeed, th

undergro

94 ConcesConcessioDec. 200495 Under Sfrom argu96 Mining

nce with Arti

ea of the requ

ere surface a

iption of the

oses of that A

sary implica

ons in submi

on area in re

od that the p

on area, and

Third4.

ce area of th

distinction th

t's "prelimin

on, it is impo

physically af

shed underg

he drafters s

ound, where

sion Applicaton Applicatio4 (R-25).

Salvadoran Lauing that the te

Regulations,

icle 37.2.a),

uested conce

activities wo

"property w

Application,

ation 37.2.b)

itting detaile

esponse to th

phrase "wher

not just som

d, the argume

he entire con

hat is not fou

ary" plans an

ossible for P

ffect for its su

ground mines

specifically d

the extractio

tion at 4, § 2.n, Dec. 2004

aw, the doctrierm "property

, Art. 2 (RL-8

Claimant su

ession with i

uld take plac

where the act

the "inmueb

, is the entire

ed mapping,

he Article 37

re the activit

me small part

ent that the e

cession requ

und in the la

nd its desire

Pac Rim to h

urface work

s from open-

defined "Min

on of minera

1, and at 7, §§(R-24) and M

ine of "actos py" means som

8(bis)) (empha

39

ubmitted the

its Applicati

ce. Claiman

ivities will b

ble" or "prop

e area reque

coordinates

.2.a) require

ties will be c

t of it.95

explicit requi

uested should

aw. In this re

to expand it

ave known i

ks. The draft

-pit mines, b

ne" as: "The

al substances

§ 4.0 and 4.1 Map 2, Locati

propios" (estmething differ

asis added).

coordinates

ion for the C

nt's Applicat

be carried ou

perty" referre

sted for the

s and other in

ement demon

carried out" r

irement to o

d be ignored

egard, it is w

ts operations

in 2004 wha

ters of the M

but reasonab

physical pla

s is carried o

(R-2); Map 1ion of Conces

toppel) wouldrent in Article

s and maps c

Concession, n

tion for the C

ut" thus leav

ed to in Arti

concession.9

nformation f

nstrates that

referenced th

own or have

d for undergr

worth noting

s after obtain

at surface pro

Mining Law c

ly chose not

ace, whether

out."96 The d

1, Location ofssion, Conces

d apply to pree 37.2.b).

covering the

not just those

Concession a

e no doubt th

icle 37.2.a),

94 Claimant'

for the entire

Claimant w

he entire

authorizatio

round mines

that given

ning the

operty it wou

could have

t to do so.

r at the surfa

drafters

f Concession,ssion Applicat

clude Claima

e

and

hat,

and

's

e

well

on for

s

uld

ace or

, tion,

ant

purposefu

area for e

8

not have

one. Wh

open-pit

found in

centers o

8

Number

requirem

lists the r

exploitat

97 Memor

fully required

either type o

In its 5.

to comply w

hereas Claim

and undergr

Article 37.2

on the unamb

As the"Concit contconceMininreferreobservCONCMINEdocum

In turn37(2)(concethe AmEl Sal

This a6.

1 lists the re

ments for app

requirements

ion concessi

ial, paras. 563

d ownership

f mine.

ii

Memorial, C

with Article 3

mant's first lin

round mines

2) between m

biguous word

e title to Articession for Etains the docssions. "Min

ng Law as med to as non-ves, Article CESSION FERALS,' whimentation req

n, the determ(b) is intendessions must mended Minlvador.97

argument is b

equirements

lications for

s for applica

ions for mine

3-564.

or authoriza

i. The req

Claimant has

37.2.b), but

ne of attack w

, Claimant's

metallic mine

d: "and." Ac

icle 37(2) inExploitation cumentation nes" are defi

metallic miner-metallic mi37(2) "is notOR METALich would imquirements f

mination of wed to apply tbe made on

ning Law, vi

baffling. Ho

for applicati

r exploitation

ations for pro

es were diffe

40

ation from al

quirement ap

s now chang

the new argu

was to draw

newest argu

es and non-m

ccording to C

ndicates, thatof Mines anrequirementned in Articral deposits,ineral deposit entitled 'FOLLIC OR NOmply that it cfor either typ

whether the rto applicantsthe basis ofewed in ligh

ow could the

ions for expl

n concession

ocessing plan

erent from th

ll landowner

pplies to bot

ed its princip

ument is as u

w a distinction

ument attemp

metallic quar

Claimant an

t provision and Quarries,"nts for both tycle 2 of the A whereas "quits. As Mr. WOR EXPLOION-METALcontains the pe of Conces

requirement s for metallicf a systematiht of the Con

e title of Arti

loration licen

ns for mines

nts. If the ap

hose for qua

rs in the enti

th mines and

pal argumen

unsupportab

n (not in the

pts to make

rries. Claim

nd its expert

applies to " meaning thypes of

Amended uarries" are Williams ITATION LLIC

ssion."

in Article c mining c review of

nstitution of

icle 37.2 be

nses, numbe

and quarries

pplication re

arries, there w

ire concessio

d quarries

nt for why it

ble as the ear

e law) betwee

a distinction

ant's argume

John William

hat

clearer?

er 2 lists the

s, and numb

equirements

would simpl

on

did

rlier

en

n (not

ent

ms:

er 3

for

ly be

a separat

Otherwis

that the l

of the tex

the merit

"systema

requirem

8

allegedly

purported

ignoring

solely ab

Claimant

not requi

as Claim

do now t

8

explorati

98 Memor99 Memor100 Vienna101 Claimamap and tLaw, Art.descripcióbe carriedis not limi

e subparagra

se, the fact th

isted docum

xt, and this is

ts stage of th

atic review"

ment, a) throu

Based7.

y conducted

dly support t

the use of th

bout quarry e

t is mistaken

ire a search f

ant sought to

o property w

Claim8.

ion and explo

ial, para. 564

ial, para. 565

a Convention

ant's argumentechnical desc 37.1.a) (RL-

ón técnica y ed out, technicaited in the wa

aph, or some

hat number 2

mentation is r

s what Claim

his arbitration

of the Minin

ugh f), applie

d on the alleg

a "systemati

the argumen

he word "inm

exploitation,

n. "Inmueble

for suppleme

o do before t

where non-m

mant also rep

oitation righ

.

.

on the Law o

nt is thoroughcription of the7(bis)) ("Plan

extensión del al descriptionays Claimant

e other indic

2 applies to c

required for b

mant had und

n. Its new ar

ng Law in lig

es to its appl

ged ambigui

ic review" of

nt that Claim

mueble" in th

is the only "

e" means pro

entary mean

to property a

metallic mine

eats its flaw

hts holders ha

of Treaties, M

ly underminee property to bno de ubicacióárea solicitad

n and extensioseeks to impo

41

ation that 37

concessions

both types o

derstood unt

rgument that

ght of the Co

lication is ab

ty of the me

f the Mining

mant can disre

he same Arti

"substantive

operty, unqu

s of interpre

affected by s

erals are foun

ed argument

ave a real pr

May 23, 1969,

ed by the use obe included inón del inmueb

da") ["Plot plaon of the requose.

7.2.b) was lim

for both min

of application

til coming up

t a concessio

onstitution, t

bsurd and un

eaning of "an

g Law and fo

egard this re

icle, claims t

antecedent

ualified. The

etation.100 Th

surface work

nd.101

t that Article

roperty right

1155 U.N.T.

of "inmueblen a requestedble en el cualan of the propuested area"].

mited to qua

nes and quar

ns. This is th

p with a new

on applicant

to determine

nworkable.98

nd" in Articl

ound two Ar

equirement.

that Article

for that term

e meaning is

he term cann

ks, nor as Cla

e 10 recogniz

t in subsoil m

.S. 331, Art. 3

" in Article 3d exploration ll se realizaránperty where th This propert

arries.

rries indicate

he plain mea

w argument f

should cond

e whether eac

e 37.2, Claim

rticles that

Claimant,

30, which is

m."99 But

s clear and d

not be restric

aimant seeks

zes that

metallic mine

31 (RL-81).

7.1.a), requirlicense. Mini

n las actividadhe activities shty for explora

es

aning

for

duct a

ch

mant

s

oes

cted

s to

eral

ring a ing des, hall

ation

deposits.

have a pr

must, con

8

relate to m

quarries"

a concess

subject to

insists, A

would be

property!

could be

minerals,

case, min

exploitat

authoriza

9

concessio

establish

102 Memor103 Miningsurface orya sea sup

102 As alrea

roperty right

nsider the rig

Claim9.

materials at

" versus "min

sion to explo

o the require

Article 37.2.b

e granted wit

! If Claiman

excavated a

, like non-m

nes or quarri

ion concessi

ation for the

Claim0.

ons would b

es that the m

rial, para. 567

g Regulationsr undergroundperficial o sub

ady explained

t to extract th

ghts of priva

mant makes a

the surface.

nes and quar

oit a metallic

ement of sho

b) does not a

thout requiri

nt's interpreta

and removed

etallic miner

ies, for mine

ion in El Sal

land include

iii

mant finally a

e contrary to

mining of me

7.

s, Art. 2 (RL-d, where the ebterráneo don

d, Article 10

he State-own

ate landowne

a further inte

Accepting

rries" would

c deposit wit

owing owner

apply to meta

ing any docu

ation were c

d without so m

rals, can be l

rals at the su

lvador must p

ed in the req

i. The req

argues that ap

o the "basic c

etallic minera

8(bis)) (definextraction of mnde se lleva a

42

0 recognizes

ned deposits

ers before gr

erpretative m

Pac Rim's n

d lead to the

th an open-p

rship or auth

allic deposit

umentation o

correct, the e

much as con

located at th

urface or und

provide docu

quested conce

quirement is

pplying Arti

constitutiona

als, as a prod

ning "Mine" amineral substcabo la extrac

that exploita

. Of course

ranting conc

mistake by as

ew argumen

nonsensical

pit mine (i.e.

horization of

ts, concessio

of ownership

entire surface

nsultation wi

he surface or

derground, a

umentation

ession.

not unconst

icle 37.2.b) t

al order in E

ductive use o

as: "The physitances is carricción de las s

ation conces

the State ca

essions.

ssuming that

nt regarding

result that a

, not a quarr

f the land.103

ns for open-

p or authoriz

e of a landow

ith that owne

r in the subso

an applicant

of ownership

titutional

to metallic m

El Salvador, w

of the State's

ical place, whied out." / "Msustancias min

ssion holders

an, and in fac

t quarries alw

"mines or

an applicatio

ry) would no

If, as Claim

-pit mining

zation for the

wner's prope

er. Metallic

oil. In either

for an

p or

mine exploita

which

s own prope

hether at the MINA: Lugar f

nerales.").

s

ct

ways

on for

ot be

mant

e

erty

r

ation

erty,

físico

is an acti

be in the

But every

reason, th

land own

circumsta

applicabl

9

2005 opi

Law,105 n

Article 2

integrity,

of the sam

9

the right

104 Memor105 Navas 106 Legal O107 Constitthe Officiderecho aposesión, life, physiconservatprivada desin ser preright to lifjudged in

ivity in the p

public inter

y time some

he Mining L

nership or au

ances of eac

le to Claiman

The S1.

nion for the

noted that m

of the Cons

, freedom, se

me.107

Dr. M2.

to security i

rial, para. 570

de Hernánde

Opinion from

tution of the Ral Gazette No

a la vida, a la iy a ser proteg

ical and moraion and defenel derecho a leviamente oídfe, freedom, paccordance w

public interes

est when it c

one seeks to

Law requires

uthorization,

h specific ca

nt and is, in

Salvadoran C

Bureau of M

ining involv

stitution state

ecurity, work

Méndez indica

includes the

0 (emphasis in

z Witness Sta

m Dr. Marta A

Republic of Eo. 281, Book integridad físgida en la conal integrity, libnse of the samla vida, a la libda y vencida eproperty and pwith the law. .

st."104 But C

can be done

o mine, it is n

applicants t

to help the M

ase. This req

fact, ground

Constitution r

Mines, Dr. M

ves dangers t

es that every

k, property,

ated that Sal

right to enjo

n original).

atement, para

Angélica Ménd

El Salvador, L234 ("Constitica y moral, a

nservación y dberty, security

me.]. See alsobertad, a la pren juicio con possession, n. . ."].

43

Claimant see

in a technica

not necessari

to submit det

Ministry ma

quirement ha

ded in the Co

recognizes p

Marta Ménde

to life, health

y person has

and to be pr

lvadoran Co

oy one's prop

. 44.

dez for Burea

Legislative Detution"), Art. a la libertad, adefensa de losy, work, prop

o Constitutionropiedad y poarreglo a las or of any othe

eks to take th

ally and env

rily in the pu

tailed inform

ake the right

as always be

onstitution.

property righ

ez, a primary

h, and prope

the right to

rotected in th

nstitutional j

perty withou

au of Mines D

ecree No. 38,2 (Authority

a la seguridads mismos.") [

perty and possn, Art. 11 ("Nosesión, ni deleyes . . . .") [er rights with

his point too

vironmentally

ublic interest

mation, inclu

decision dep

een in the M

hts and secur

y drafter of th

erty.106 As sh

life, physica

he preservati

jurisprudenc

ut risks, distu

Director, May

Dec. 16, 198y RL-121) ("Td, al trabajo, a[Every personsession, and t

Ninguna persone cualquier otr["No one can

hout first bein

far. Mining

y safe mann

. For this

uding eviden

pending on t

Mining Law

rity rights. I

he 1995 Min

he highlighte

al and moral

ion and defen

ce has held t

urbances, or

y 31, 2005 (R-

83, published Toda personaa la propiedadn has the rightto be protectedna puede ser ro de sus derebe deprived

ng heard and

g can

er.

nce of

the

In her

ning

ed,

nse

that

fear

-32).

in a tiene d y t to d in

echos of the

and that t

Indeed, th

includes

property

explained

mean tha

authoriza

9

congruen

that the s

Mining L

for assum

where on

108 See, e.g2003 (RLtranquilido inmueblpreventivaright is eqwithout ripreventati109 Case N33) ("estamedidas pciudadanoque afectato an obliggoods andsecurity th110 Legal Opertenezcparticular111 Tinetti

the State mu

he Supreme

an obligatio

of citizens.1

d in her 2005

at the State w

ation."110

Salvad3.

nt with the C

subsoil belon

Law were we

ming, as Clai

nly the subsu

g., Case No. 3-33) ("En su

dad, es decir, ules que cada uas para no suf

quivalent to a isks, disturbanive measures

No. 309-2001,a vertiente delpertinentes (inos, de tal sueraría de manergation for thed property of hat would dir

Opinion froma al Estado, nes sin su auto

i Expert Repo

ust take appr

Court of El

n for the Sta

09 Therefore

5 opinion, "t

will permit ex

doran Const

Constitution.

ngs to the Sta

ell aware of

imant does, t

urface would

309-2001, Codimensión deun derecho deuno posee, o bfrir ningún daright to peace

nces or fears, to avoid any

, Constitutionl derecho a la ncluso, prevenrte que si no sra directa el dee State to adopcitizens, suchectly affect th

m Dr. Marta Ano significa quorización.").

ort, paras. 7-9

opriate preca

Salvador ha

ate to take ap

e, as Dr. Mé

the fact that

xcavation un

titutional law

He begins b

ate in Article

this Constitu

that the Min

d be directly

onstitutional Ce seguridad me poder disfrubien la tranquaño o perturbae, meaning, aand also withdamage or di

nal Chamber oseguridad . .

ntivas) para lase realiza tal aerecho a la prpt appropriateh that if the Sthe property ri

Angélica Méndue va a permi

.

44

autions to pr

as explained

ppropriate pr

éndez, a draf

the subsoil m

nder private

w expert, Dr.

by noting tha

e 2. It is the

utional provi

ning Law dra

impacted w

Chamber of thmaterial, tal deutar sin riesgouilidad de queación.'") ["In

a right to be abh the peace ofisruption."].

of the Suprem. se refiere a a protección dactividad, exisropiedad.") ["e (even prevetate does not ght."].

dez, May 31, itir que se exc

rotect people

that the righ

reventive me

fter of the M

minerals bel

property wit

. Tinetti, con

at the Minin

erefore clear

ision.111 Ac

afters uninten

when requirin

he Supreme Cerecho 'equivos, sobresaltose el Estado tomthe dimensioble to enjoy of mind that th

me Court of Eque es una obde los bienes stiría una viol"this aspect ofntative) measact, it would

2005 (R-32) cave subterrán

e and their p

ht to security

easures to pr

Mining Law in

ong to the S

thout the ow

nfirms that th

ng Law expre

that the draf

ccordingly, th

ntionally inc

ng ownership

Court of El Savale a un derecs ni temores lmará las med

on of materialone's goods anhe State will t

El Salvador, Jubligación del muebles o inlación a la sef the right to ssures for the pbe a violation

("el hecho deneamente las

property.108

y of property

rotect the

n question,

State does no

wner's

he requireme

essly recogn

fters of the

here is no ba

cluded the ar

p or authoriz

alvador, June cho a la los bienes mudidas pertinenl security, thisnd property ake appropria

une 26, 2003 Estado adopt

nmuebles de loguridad matesecurity . . . rprotection of n of material

e que el subsupropiedades

y

ot

ent is

nizes

asis

rea

zation

26,

uebles ntes y s

ate,

(RL-tar las os

erial efers the

uelo de

for the ar

required

Constitut

94

He expla

9

to underg

Salvador

that socie

initiative

greatest n

Court ha

individua

112 Tinetti113 Constitsocial. Elacrecentarpaís.") ["EState shalwealth an

rea of the co

the landown

tional rights.

Dr. Ti4.

ains that the r

dominowneragains(erga obligalegal a

Claim5.

ground mine

r cannot igno

etal well-bei

s within nec

number of th

s confirmed

al rights and

Howeeconogeneraand unfreedo

i Expert Repo

tution, Art. 10l Estado fomer la riqueza nEconomic freel encourage ad ensure that

ncession. D

ners' authoriz

.

inetti confirm

right to prop

nion or owner in a situatiost specified pomnes). The

ation, but a gauthority gra

mant disregar

erals without

ore its laws o

ing limits eco

cessary cond

he country's

that the righ

the best inte

ever, it is impomic freedomal right to frenlimited. Buom, in terms

ort, para. 13.

02 (RL-121) entará y proteacional y paraedom is guara

and protect prits benefits re

Dr. Tinetti ag

zation even f

ms Dr. Mend

perty is absol

ership is an aon of legal apersons, but ese types of general duty anted to the o

rds this provi

t considering

or its citizens

onomic freed

ditions to incr

inhabitants.1

ht to econom

erests of the

portant to pom for a licenseedom, whe

ut the truth is of legal free

("Se garantizegerá la iniciaa asegurar losanteed, providrivate enterprieach the great

45

grees with Dr

for activities

dez's 2005 an

lute:

absolute righauthority that

also againstrights do noto respect anowner by law

ision when i

g anyone else

s' Constitutio

dom; the Sta

rease nation

113 As Dr. T

mic freedom i

community

oint out that se to believere private ins each indiviedom, may o

a la libertad etiva privada ds beneficios dded that it doise within thetest number o

r. Méndez th

s in the subso

nalysis of A

ht, since it plt is enforceat everyone o

ot impose a snd not interfw.112

it insists that

e's interests.

onal rights.

ate shall enc

nal wealth an

Tinetti explai

is limited by

:

it is commoe that there onitiative can idual's right only exist an

económica, endentro de las de ésta al mayes not conflic

e conditions nof the country

hat the drafte

oil to protec

Article 2 of th

laces the able not onlyor anyone specific fere with the

t the State m

. But the Go

The Constit

ourage and p

nd assure the

ins, the Salv

y the need to

n to mistakeonly exists a be absolute to economic

nd operate

n lo que no secondiciones n

yor número dect with social necessary to iny's inhabitants

ers purposefu

ct the landow

he Constituti

y

e

must grant rig

overnment of

tution provid

protect priva

e benefits to

vadoran Supr

o protect othe

e

c

e oponga al innecesarias pare habitantes dinterests. The

ncrease nations."].

fully

wners'

ion.

ghts

f El

des

ate

the

reme

ers'

nterés ra

del e nal

9

exploitat

to the are

complies

Constitut

El Salvad

Constitut

9

Court of

challenge

Supreme

114 TinettiJudgmentseñalar qudesenfrenpuede ser cuanto libconstitucilos demás115 Tinettiel derechodos normaexistir supdecisión dde la Ley right to prother, are may be silawmaker116 Constit

subjecensuriother intere

The M6.

ion concessi

ea of the con

s with the pro

tional rights

dor, the requ

tion of El Sa

Claim7.

El Salvador

e the land ow

Court of El

i Expert Repot No. 2-92, Juue, muchas veno y creer que

absoluta e ilibertad jurídicaionales y legas y con el inte

i Expert Repoo de propiedaas válidas y cpuestos en losde quienes dede Minería.")

roperty or domtwo equally vtuations wherrs who drafted

tution, Art. 17

ct to a numbing a harmonindividuals' st114

Mining Law,

ion must obt

ncession.115

ovisions of t

of its citizen

uirement in A

alvador.

mant's argum

r can rule tha

wnership or a

Salvador. U

ort, para. 16 (quly 26, 1999 (Aeces, se incurr únicamente eimitada, cuana, únicamenteales, encaminaerés y el biene

ort, para. 19 ("ad o dominio pcoherentes en s cuales ellos cretaron la Le) ["The articlemain, on the ovalid, coherenre they may cd the Mining

74 (RL-121).

er of legal anic exercise freedom and

therefore, c

tain authoriz

El Salvador

the Mining L

ns. Thus, far

Article 37.2.b

ent would be

at a law is un

authorization

Unless and u

quoting ConstAppendix 3 tore en el error existe un dere

ndo lo cierto ee puede existiradas a asegurestar de la com

"El artículo qupor un lado yprincipio. . . pueden entra

ey de Mineríae of the Salvaone hand, andnt rules, in prconflict, and thLaw to establ

46

nd constitutiof such righd community

orrectly prov

zation from a

must ensure

Law for obta

r from being

b) ensures th

e misguided

nconstitution

n requiremen

until the Sup

titutional Chao Tinetti Expde confundir

echo general des que el derecr y operar conar su ejerciciomunidad.").

ue reconoce y el que garant. Tal como s

ar en conflictoa para estableadoran Constid the article thrinciple. . . Ahat is the truelish the requir

ional limitatht without inty wellbeing

vides that an

all landowne

e that an app

aining a conc

g contrary to

hat the Minin

d in any even

nal.116 In thi

nt of the Mi

preme Court

amber of the Spert Report)) (r libertad econde libertad, encho de libertan sujeción a uo armónico y

y garantiza entiza la liberta

se detalla en eo y éste es el vecer el requisiitution that rehat guarantee

As explained ine reason behinrement of Art

tions aimed anterfering wit

and

n applicant f

ers in the are

plicant such

cession in or

o the Constitu

ng Law is co

nt because on

is case, Pac R

ining Law be

were to decl

Supreme Cou("Sin embargonómica con lan donde la in

ad económicauna serie de liy congruente c

n la Constitucad económica,el apartado anverdadero funito contenido ecognizes ands economic frn the previound the decisioticle 37.2.b)."

at th

for an

ea correspond

as Pac Rim

rder to protec

utional order

onsistent wit

nly the Supre

Rim did not

efore the

lare the

urt of Justice, o es importana licencia y elniciativa privaa de cada uno,imitaciones con la libertad

ción de El Sal, por el otro, s

nterior, sí puedndamento de en el Art. 37.

d guarantees thfreedom, on ths section, ther

on of the "].

ding

ct the

r of

th the

eme

Final nte l ada , en

d de

lvador son den la .2.b) he he re

requirem

simply de

effect, an

including

comply w

9

single sen

authorize

during th

areas tha

complian

applies to

entrance

The Trib

stage bec

99

Prelimina

the surfac

117 Memor118 Respon119 Respon120 Respon

ment unconsti

ecide a requ

nd regardless

g the Directo

with it.

Claim8.

ntence of its

ed to use. A

he preliminar

t would have

nce, Claiman

o land "wher

to the under

unal will rec

cause it was

Claim9.

ary Objectio

ce owners w

rial, para. 576

nse (Prelimin

nse (Prelimin

nse (Prelimin

itutional, Ar

uirement is un

s of any argu

or of the Bur

d) Claow

mant alleges t

s Memorial w

ccording to

ry phase of t

e been affec

nt cites its ar

re the mine p

rground min

call that Clai

"an intensely

mant follows

ons stage wit

within the pro

6.

nary Objection

nary Objection

nary Objection

rticle 37.2 is

nconstitution

uments abou

reau of Mine

aimant admiwners of the a

that it has sa

without prov

Claimant, "a

these procee

ted by its pr

rgument in th

project is loc

e and the ab

imant insiste

y factual inq

its concluso

th the asserti

oposed El Do

ns), para. 143

ns), para. 147

ns), para. 13.

47

the law and

nal and choo

ut its Constitu

es, must com

its that it didarea requeste

atisfied the re

viding any in

as Claimant

dings, PRES

oposed mini

he Prelimina

cated,"118 wh

ove-ground

ed that this is

quiry."120 Bu

ory statement

ion that "PRE

orado Explo

.

.

must be com

ose to ignore

utionality, al

mply with it a

d not own or ed in the con

equirement o

nformation a

pointed out

S did obtain

ing operation

ary Objection

hich it inexp

mining facil

ssue could n

ut now Claim

t harkening b

ES maintain

oitation Conc

mplied with.

e it. As long

ll Govermen

and oblige ap

have permisncession

of Article 37

about the lan

on numerou

all the surfa

ns."117 As p

ns stage that

plicably limit

lities are to b

not be determ

mant provide

back to its a

ned good rela

cession area

. No one can

g as the law i

nt officials,

pplicants to

ssion from th

7.2.b) in one

d it owns or

us occasions

ace rights ove

proof of its

t the requirem

ted to "wher

be located."1

mined at that

es no new fa

arguments in

ations with a

, and believe

n

is in

he

e

is

er

ment

re the

119

t

acts.

n the

all

ed it

could get

is not tru

2005, Fre

of the "m

authoriza

this is ex

Pac Rim

impossib

1

for all the

are appro

1

decided t

Tribunal

121 Memor122 Pac Ri123 Letter attached 124 El Salvabout 987National R

t whatever 'p

ue. The exhib

ed Earnest w

main things"

ations from a

xactly what P

owned just t

ble to obtain

Pac R00.

e land within

oximately 1,0

Pac R01.

to pursue oth

will recall C

Claimconceuse mexpropClaimhave p

rial, para. 576

m Internal M

from MinisteMemorandum

vador obtaine7 properties inRegistry is att

permission' t

bit Claimant

wrote to Tom

missing from

all the land o

Pac Rim had

the area of th

all the perm

Rim's assessm

n their desire

000 individu

Rim did not h

her means to

Claimant's ad

mant could hassion size; b

more surface lpriate any la

mant or authoproceeded w

6.

Memo re Surfa

er of Economym, "Interpreta

ed informationn the requestetached as Exh

that may be r

t cites in the

m Shrake des

m Pac Rim's

owners was "

told the Min

he plant, "bu

missions beca

ment in 2005

ed 12.75 km

ual owners w

have the requ

o demand the

dmission in t

ave revised tby seeking toland; by seekand that privorize Claimawith the appli

ace Owner Au

y to Secretaryación Ley de M

n from the Saed concession hibit R-127.

48

required from

very same p

scribing the s

concession

"a nearly (if

nister of Eco

ut not the res

ause there are

5 was correct

m2 area would

within that ar

uired authori

e concession

the Prelimin

the applicatio obtain ownking to haveate owners w

ant to use, etcication, hopi

uthorization (C

y for LegislatiMinería," Ma

alvadoran Natarea. The in

m them if it

paragraph st

surface owne

application.

f not totally)

onomy, who

st of the area

e many own

t. Obtaining

d have been

rea.124

izations, cou

n without com

nary Objectio

on (e.g., by nership or aue the Governwere not wilc.); or Claiming that the B

C-291).

ive and Legalay 5, 2005 (R-

tional Land Rndex of registe

became nec

tates the opp

er authorizat

. He wrote t

impossible t

at the time

a, and they b

ners."123

g ownership

nearly impo

uld not obtai

mplying with

ons stage:

changing theuthorization tnment lling to sell t

mant could Bureau of

l Affairs, May-30) (emphasi

Registry in 20ered owners o

cessary."121 T

osite. In Jun

tion issue as

that getting

task."122 Ind

described th

believe that i

or authoriza

ossible. Ther

n them, and

h the law. T

e to

to

y 25, 2005 wiis added).

10 that there aobtained from

This

ne

s one

deed,

hat

it is

ation

re

The

ith

are m the

1

requirem

kind of a

provides

what was

Pac Rim'

Navas de

lease agre

whether o

about the

while see

1

have com

so.130 Ind

125 Rejoin126 Navas 127 Memorresolved, would be 128 Memor129 Navas 130 Memorits applicadone so.")

Minesissue i

As alr02.

ment and chos

authorization

on this poin

s required, an

's suggestion

e Hernández

eement, or au

on or below t

e requiremen

eking to chan

Claim03.

mplied with t

deed, Pac Ri

nder (Prelimin

de Hernánde

rial, para. 576given that thecarrying out.

rial, para. 576

de Hernánde

rial, para. 229ation for an E).

s would ultimin Claimant'

ready noted,

se not to com

n was require

nt, the Direct

nd Pac Rim

n that the aut

, former Dir

uthorization s

the property

nt are just po

nge the law.

e) El to c

mant even trie

the law if on

im now labe

nary Objection

z Witness Sta

6 ("the questiese surface ow").

6 (quoting Pa

z Witness Sta

9 ("if the BureExploitation C

mately resolv's favor. Clai

however, th

mply. Even

ed is far-fetc

tor of the Bu

simply did n

thorization b

rector of the

so that Pacifi

for which au

ost hoc excus

Salvador didcure the defe

es to excuse

nly the Gover

els the statem

ns), para. 49.

atement, para

on of what kiwners did not

ac Rim Interna

atement, para

eau of Mines Concession to

49

ve its appareimant chose

here was no "

Pac Rim's n

ched.127 Acc

ureau of Min

not like the a

be directed to

Bureau of M

ic Rim could

uthorization is

ses for its de

d not have a fect in its app

its lack of c

rnment had

ments from th

s. 43-45.

ind of 'permist have any leg

al Memo re S

. 50.

had asked PRinclude a sma

ent uncertainthe latter co

"uncertainty

new argumen

cording to th

nes answered

answer and a

o El Salvado

Mines, explai

d carry out mi

s given."129

eliberate cho

a legal obligaplication

compliance b

explicitly to

he Bureau o

ssion' PRES cgitimate intere

Surface Owne

RES to purchaller concessi

nty on this ourse.125

y."126 Pac Ri

nt that it did

he exhibit tha

d Pac Rim's q

argued with

or is nonsens

ins, "Permiss

ining exploit

Claimant's n

oice to ignore

ation to advi

by implying

old the comp

f Mines abo

could obtain west in the activ

er Authorizati

hase additionaion area, PRE

im knew the

not know w

at Claimant

questions ab

her about it.

se. As Gina

sion could be

tation activiti

new argumen

e the require

se Claimant

that it would

any how to

ut its non-

was not easilyvities that PR

on (C-291)).

al lands or to rES would hav

e

what

bout

.128

e a

ies,

nts

ement

how

d

do

y RES

revise ve

complian

Mining L

applicatio

Pac Rim

had alleg

Claimant

1

been forc

(which n

the Gove

Claimant

admitted

1

it needed

take the G

applicatio

Governm 131 Memor132 Rejoin133 Pac Ri

nce with Arti

Law" and cla

on because o

did not think

gedly voiced

t must have c

The w04.

ced to argue

ever change

ernment did n

t did not nee

that it knew

Claimconceuse mexpropClaimhave pMinesissue i

The G05.

d to do by all

Government

on, change t

ment's efforts

rial, para. 230

nder (Prelimin

m Internal M

icle 37.2.b) a

aims that it d

of the suppor

k it would h

support for

complied wi

weakness of C

that it canno

d and was ap

not tell it spe

ed the Gover

w its options

mant could hassion size; b

more surface lpriate any la

mant or authoproceeded ws would ultimin Claimant'

Government

lowing the c

t's goodwill a

the law, or te

s to help the

0.

nary Objection

Memo re Surfa

as "conversa

did not consi

rt it had rece

have to fix its

its project.

ith Salvador

Claimant's p

ot be held re

pplicable fro

ecific steps t

rnment to tel

and chose to

ave revised tby seeking toland; by seekand that privorize Claimawith the applimately resolv's favor. Cla

applied the l

ompany extr

and convert

ell the compa

company ca

ns), para. 49 (

ace Owner Au

50

ations with M

ider its failur

eived from G

s deficient ap

But to make

an law.

position is de

sponsible fo

om the time

to take to cu

l it how to fi

o try to chan

the applicatio obtain ownking to haveate owners w

ant to use, etcication, hopive its appareaimant chose

law. The Go

ra time to fix

it into a lega

any what to

annot becom

(emphasis add

uthorization (C

MINEC abou

re to comply

Government

pplication be

e claims und

emonstrated

or its failure

Claimant m

ure the defect

fix the applic

nge the law in

on (e.g., by nership or aue the Governwere not wilc.); or Claiming that the Bent uncertaine the latter co

overnment w

x its applicat

al obligation

do to get the

me an obligati

ded).

C-291).

ut clarifying

y a "fundame

officials.131

ecause Gove

der the Invest

by the fact t

to comply w

ade its inves

t in its applic

cation; Pac R

nstead of co

changing theuthorization tnment lling to sell t

mant could Bureau of nty on this ourse.132

went above a

tion.133 Clai

n to ignore an

e concession

ion to ignore

the Amende

ental flaw" in

In other wo

ernment offi

tment Law,

that Claiman

with the law

stment) beca

cation. In fa

Rim has alrea

mplying wit

e to

to

and beyond w

imant wants

ny defects in

n. But the

e or change

ed

n its

ords,

cials

nt has

ause

act,

ady

th it:

what

to

n its

its

law for P

Governm

lawfully:

which it w

applicant

1

Rim knew

Governm

Gavida d

requirem

requirem

concessio

against th

the Minis

1

134 Witnespara. 7 ("Euna conce135 Gavidi

Pac Rim. As

ment's suppor

"At no time

was not enti

t is solely re

Claim06.

w as early as

ment's interpr

describes tha

ment because

ment given th

on."135 Whe

he Governm

stry of Econ

As Cl07.

In theobtainEconoMeetithe beauthen

ss Statement oEn ningún moesión a la que

ia Witness Sta

s explained b

rt of Pac Rim

e was I willin

itled under th

sponsible fo

f) Clathe

mant took adv

s 2005 that i

retation of th

at Pac Rim co

"they expre

he large numb

en the May 5

ment's interpr

omy, the com

aimant descr

matter of thn the authoriomia" has acings have beest course of ntic interpret

of Yolanda Momento yo huno tuviera de

atement, para

by former M

m was alway

ng to grant P

he laws of E

r its failure t

aimant chosee risk of tryin

vantage of th

ts applicatio

he law chang

ould not com

ssed to me t

ber of land o

5, 2005 mem

etation of Ar

mpany bega

ribes in its M

he interpretatzation of the

cknowledgeden held with

f action shoutation or a ch

Mayora de Gavubiera estado erecho de con

a. 4.

51

Minister of Ec

ys limited to

Pacific Rim,

l Salvador."

to comply w

e not to try tng to change

he extra time

on could not

ged. Former

mply with th

hat it was im

owners in th

morandum fro

rticle 37.2.b

an seeking al

Memorial:

tion of the lae surface owd that somethh political could it becomehange in the

vidia, Dec. 20dispuesta a ot

nformidad con

conomy, Yol

helping it ob

or any othe

134 Eventua

with the legal

to cure the de the mining

e to try to ch

move forwa

r Minister of

e land owne

mpossible fo

e area they w

om Claiman

b) did not sw

lternative cou

aw regardingwners, the "M

hing needs toonsultants to e necessary te law. It is ho

0, 2013 ("Gavtorgarle a Pacn las leyes de

landa de Gav

btain the con

r company,

ally goodwill

l requiremen

defect but insg law

hange the law

ard unless th

f Economy Y

ership or auth

r them to me

wished to ob

nt's local cou

way the Burea

urses of acti

g the need toMinistra de

o be done. determine

to seek an oped that a

vidia Witnesscific Rim, ni ae El Salvador.

vidia, the

ncession

a concession

l runs out an

nts.

stead assume

w. Indeed, P

he law or the

Yolanda de

horization

eet this

btain as a

unsel arguing

au of Mines

ion.

o

s Statement"),a otra empres").

n to

nd an

ed

Pac

g

and

, sa,

1

Pac Rim'

obtain th

forward."

argument

Law as w

would ac

not be pe

136 Memor288)) (ori137 Memor138 Email 139 Memorany eventConstituti

courseTom S

Shortl08.

's local coun

e "kind of au

"138 Pac Rim

t, but omits t

written had to

ctually be a "

ermitted in th

We shlandowownerto the

Howebe ob

Regarspecifyou hatext ofratherchanglogica

This wwith a

rial, para. 222ginal emphas

rial, para. 224

from Ricardo

rial, paras. 21t. That is a poion.

e of action wShrake's visi

ly thereafter

nsel sought a

uthentic inte

m repeatedly

the part of th

o be observe

"reform" of t

he Salvadora

hare your opwners authorship practiclatter the ow

ever, that is served.

rding how tofically as relaave preparedf Section 37

r than clarifyging its meanal and desirab

would mean a reform of th

2 (quoting El sis omitted, cu

4.

o Suarez to Lu

14, 224, 574. ower that belo

will be clear it in Septemb

, Pac Rim's l

assistance fro

erpretation th

y touts Mr. S

he response

ed.139 Mr. Su

the law unde

an legal syst

inion that thrize subsurfa

ce enshrined wner of the s

the current

o reconcile thates to the "ad, it appears with the tex

ying an opaquning, assignible—to the t

that rather thhe text unde

Dorado Projeurrent emphas

uis Medina, S

It is worth noongs solely to

52

after the meber.136

local counse

om Ricardo S

hat we need

uarez's respo

where Mr. S

uarez inform

er the guise o

em:

he legal requiface mining i

in our legal subsoil is the

t legal text,

hat text with authentic intto us that in

xt of the propue passage ong a differentext.

han an interper the guise o

ect Report forsis added).

Sept. 23, 2005

oting that Mro the Salvador

etings to [be

el sought an

Suarez in the

for the minin

onse as sym

Suarez explic

med Pac Rim

of an interpr

irement thatis not consissystem, sinc

e State. . . .

and the one

h State ownerterpretation"n contrastingposed interpof the law, ynt scope—al

pretation, weof an interpre

r the Month E

5 (C-289) (em

r. Suarez had nran legislature

e] held durin

"authentic in

e Vice-Presi

ng project to

mpathetic to i

citly advised

m that their "i

retation and t

t surface stent with thece according

e that must

rship, and " proposal thg the current pretation, you would belthough

e are dealingetation,

Ending 31 Au

mphasis added

no power to ie under Artic

ng

nterpretation

ident's Offic

o move

ts constitutio

d that the Mi

interpretatio

that this wou

e g

hat

e

g

ugust 2005 (C

d).

interpret the lcle 131 of the

n."137

e to

onal

ining

n"

uld

C-

law in

1

Secretary

this appa

Claimant

this inter

President

conclusio

of the law

guise of a

that inspi

and her c

concessio

140 Email 141 ResponInterpreta142 Claima143 Email 144 Gavidi

sometdoctri

A cou09.

y for Legisla

arent attempt

t complained

rnal memoran

t's Office sen

on: Claimant

w—"rather th

an interpreta

ires it."143 A

colleagues in

on.

The faOfficethen fbecauthe intthe repI madinterpinterpwould

from Ricardo

nse from Secration," Octobe

ant's Rejoinde

from Ricardo

ia Witness Sta

thing alloweine that inspi

uple of week

ative and Leg

t to change th

d repeatedly

ndum.142 Bu

nt to Claima

t's proposed

han an interp

ation, someth

As former M

n the Ministr

act that I hade of the Presfor an authenuse I or my trterpretation peated and ie these attemreted in the reted, which

d be able to m

o Suarez to Lu

retary for Leger 6, 2005 (R-

er (Preliminar

o Suarez to Lu

atement, para

d for neitherires it.140

ks later, in an

gal Affairs o

he law using

in the Prelim

ut now Claim

ant's local co

"interpretati

pretation, we

hing allowed

inister de Ga

ry already kn

d asked the Sident of the

ntic interpretrusted colleaof this provinsistent requ

mpts to be sumanner Paci

h seemed to bmove forwar

uis Medina, S

gislative and L-34).

ry Objection)

uis Medina, S

a. 5.

53

r in our legal

n opinion req

of the Preside

g a procedur

minary Obje

mant has pro

unsel two w

ion" would a

e are dealing

d for neither

avidia explai

new: the requ

Secretary forRepublic, fi

tation of thisagues harborision of the Muests by Pacure there wasific Rim insibe the only wrd with its co

Sept. 23, 2005

Legal Affairs

, paras. 2, 35,

Sept. 23, 2005

l system, no

quested by th

ency of El S

re intended o

ection phase

oduced an e-

weeks earlier

actually chan

g with a refo

in our legal

ins, the resp

uirement wa

r Legal Affairst for its ops requiremenred any doubMining Lawific Rim's res no way theisted it shouway that Paconcession ap

5 (C-289) (bo

s to Minister o

, 43.

5 (C-289) (em

r in the

he Minister o

Salvador like

only to interp

that El Salv

-mail from th

arriving at t

nge the mea

orm of the te

l system, nor

ponse confirm

as for the ent

airs of the pinion, and nt, was not bt regarding

w. Faced witepresentativee law could b

uld be cific Rim pplication.144

ld added, und

of Economy r

mphasis in orig

of Economy

ewise objecte

pret the law.

vador relied o

he Vice-

the same

aning of the t

xt under the

r in the doctr

med what sh

tire area of th

th es, be

4

derline in orig

re: "Authentic

ginal).

y, the

ed to

141

on

text

rine

he

he

ginal).

c

1

considere

ownershi

would sp

requirem

and bosse

company

"exactly

1

Pac Rim

if a legisl

reducing

land."148

its applic

legislatur

1

be chang

145 Letter El Salvad146 Letter 147 Email Gehlen, O148 Memor149 Email commitmARENA wready in th

Pac R10.

ed amending

ip or authori

pecifically ex

ment.146 The

es at Pac Rim

y would only

what we nee

Accor11.

decided to w

lative solutio

the concess

Thus, even

cation, Pac R

re to pass the

By No12.

ged for its ap

from Bureau

dor, Sept. 13, 2

to Elí Valle w

from Fred EaOct. 25, 2005

rial, para. 229

from Fred Eaent of supporwill ensure thhe legislative

Rim then supp

g the Mining

ization requi

xclude under

President of

m, describin

y need author

ed."147

rding to Clai

wait for the l

on could be

ion area or t

though Pac

Rim made no

e amendmen

ovember 200

plication to

of Mines Dir2005 ("Letter

with Proposed

arnest to Tom(C-400) (emp

9.

arnest to Tomrt for the projehat the reform area").

ported an ef

g Law to cha

rement for u

rground min

f PRES, Fred

ng the propos

rizations for

imant, this in

law to be cha

implemented

trying to buy

Rim knew t

o efforts to fi

nts.149

06, Pac Rim

move forwa

rector to Elí Vr to Elí Valle

d Amendment

m Shrake, Barbphasis added)

m Shrake, Feb.ect from the P

m passes]. With

54

ffort to chang

ange Articles

underground

nes from the

d Earnest, pa

sed amendm

r where surfa

nitiative was

anged: "Mr.

d, such a sol

y or acquire a

that this was

ix it. Instead

admitted in

ard: "Pacific

Valle with Prowith Propose

ts to the Mini

bara Henderso.

. 15, 2006 (C-PCN [one of th a great deal

ge the law. T

s 24 and 37 t

d mines.145 T

land authori

assed the pro

ment that for u

ace installati

s not actually

Shrake and

lution would

authorization

s one of the "

d, it focused

its public re

Rim's Explo

oposed Amened Amendmen

ing Law (R-3

on, Catherine

-295) ("we hathe moderate l of satisfactio

The Ministe

to get rid of

The proposed

ization or ow

oposal on to

underground

ions would b

y introduced

the Compan

d be preferab

n to use mor

"main things

d on lobbying

eports that th

oitation Con

ndments to thents to the Min

5).

e McLeod-Sel

ave sought anparties – thei

on, I can info

er of Econom

the surface l

d amendmen

wnership

his colleagu

d operations

be constructe

d in 2005, an

nies believed

ble to further

re surface

s" missing fr

g the Salvad

he law neede

ncession

e Mining Lawning Law") (R

ltzer, and Bill

nd obtained thir vote along wrm you that w

my

land

nts

ues

the

ed as

nd

d that

r

rom

oran

ed to

w of R-35).

l

he with

we are

applicatio

Dorado E

Salvador

there wou

Canadian

mining p

law."151

1

proposal

only the

increased

Claimant

"leading

cousin, H

engaged

in Decem

Governm

150 Pacificadded). 151 Pacific(emphasis152 Propos153 Memor154 Email 155 Email 156 Letter

on for the El

Exploitation

ran Mining L

uld be no co

n regulatory

permit will be

Follow13.

to replace th

land on whic

d its efforts i

t was commu

lobbyist and

Herbert Saca

C&M Capit

mber 2007 an

ment."156 Ms

c Rim Mining

c Rim Minings added).

sed New Mini

rial, para. 300

from Tom Sh

from Tom Sh

from Claiman

l Dorado pro

Concession

Law."150 An

oncession un

authorities,

e granted pri

wing the fail

he Mining L

ch the comp

in 2007 to ob

unicating wi

d political str

, to move fo

tolink, and o

nd February

s. Mary Anas

g Corp., News

g Corp., 2007

ing Law of E

0.

hrake to Mark

hrake to sever

nt's counsel to

oject remains

will be gran

nd by 2007, P

ntil the law w

Pacific Rim

ior to the exp

led efforts to

Law in 2007,

any would l

btain its conc

ith Mark Klu

rategist," Fid

orward.155 C

ne of its U.S

2008 to mee

stasia O'Gra

s Release, El D

Annual Repo

l Salvador, N

k Klugmann, M

ral recipients,

o El Salvador

55

s in process

nted prior to

Pac Rim was

was changed.

m Mining Cor

pected refor

o reinterpret

which woul

ocate mining

cession throu

ugmann, a po

del Chavez M

Claimant has

S. lobbyists t

et with "vari

ady, a column

Dorado Proje

ort (Canada),

Nov. 2007, Art

May 18, 2007

Aug. 14, 200

r's counsel, Ap

however it i

the forthcom

s even more

. In its 2007

rp. mentione

rmation of th

or amend th

ld require ow

g infrastruct

ugh "politica

olitical cons

Mena, to wo

admitted tha

traveled to E

ious officials

mnist for the W

ect Update, N

with Letter to

ts. 34, 35, 38,

7 (C-306).

07 (C-307).

pr. 22, 2011 (

is uncertain w

ming reform

open about

7 Annual Rep

ed that "it is

he El Salvad

he law, Claim

wnership or

ture.152 Clai

al means."15

sultant,154 an

ork with Pres

at by late 20

El Salvador w

s of the Salv

Wall Street J

Nov. 9, 2006 (

o Shareholder

, 52, 54 (R-36

(Exhibit R-1

whether the

mation of the

the fact that

port for the

unlikely tha

oran mining

mant support

authorizatio

mant also

53 In mid-20

nd counting o

sident Saca's

007 it had

with Mr. Shr

vadoran

Journal, also

(C-309) (emp

rs at 10 (R-37

6).

28).

El

El

t

at a

g

ted a

on for

007,

on its

s

rake

o

phasis

7)

traveled t

lobbyist,

CEO, tes

1

Claimant

1

from 12.7

would sti

have auth

undergro

1

to the Ap

third of th

concessio

not show

157 Letter 158 Transc159 See MaDec. 2004

to El Salvad

and several

stified:

We coremedI was El Salpoint.

But th14.

t filed this ar

Even 15.

75 km2 to th

ill not have m

horization fo

ound mine C

The su16.

pplication fo

he total area

on is under a

w ownership

from Claiman

cript of Hearin

ap 5, Lands P4 (R-28).

dor in Februa

Salvadoran

onsidered vadies to the sitlobbying. I w

lvador. I was158

he Salvadora

rbitration wh

g) In evepos

if Claimant

he 1.6 km2 co

met the lega

or even the la

laimant prop

urface area C

r the Conces

a requested f

a surface are

or authoriza

nt's counsel to

ng on Objecti

Purchased or i

ary 2008 and

Governmen

arious--at thituation. I mewas lobbyins doing num

an Mining La

hen its effort

any event, Cen if it had rssible size

had been wi

overed by Cl

l requiremen

and directly

posed to con

Claimant ow

ssion. Map

for the conce

ea of less tha

ation.159

o El Salvador

ions to Jurisdi

in Process and

56

d attended a

nt officials.15

s point we cean, I talked

ng in the Unimerous--nume

aw was not c

ts to change

Claimant woueduced the s

illing to redu

laimant's ow

nt to obtain t

above a por

nstruct.

wns or has au

5 only inclu

ession. As M

an 0.2 km2 of

r's counsel, Ap

iction, May 3

d Location of

dinner with

57 Tom Shra

considered vad to counsel iited States toerous things

changed, des

the law faile

uld have beesize of the co

uce the area

wnership or a

the concessio

rtion of the a

uthorization

des an area o

Map 5 shows

f land, for m

pr. 22, 2011 (

3, 2011, at 46

f Infrastructur

Mr. Shrake,

ake, Pac Rim

arious in El Salvadoo pressuring at that

spite Claima

ed.

en unable to oncession to

of the reque

authorization

on. Claiman

access ramp

for is repres

of 4 km2, or

s, the propos

much of whic

(R-128).

1:14-19.

re, Concessio

, the U.S.

m's President

or

ant's best eff

cure the defo the smalles

sted concess

ns, Claimant

nt did not ow

and most of

ented in Ma

less than on

sed mine for

ch Claimant

n Application

t and

forts.

fect t

sion

t

wn or

f the

ap 5

ne-

the

did

n,

1

gold depo

area own

regarding

Feasibilit

and acce

(more tha

The grap

160 See Fig(R-49), anReport, N161 This de

In add17.

osit denomin

ned by Claim

g the size an

ty Study on

ss ramp (mo

an 60%), are

phic below sh

gure 4.3, "Ovnd Figure 9.1,

Nov. 2003) (R

emonstrative

dition, accord

nated Minita

mant or for w

d location of

the relevant

ore than 80%

e outside the

hows the res

verall Plan Vie, "Schematic -50).

exhibit has b

ding to Claim

a is located o

which it has a

f the Minita

area of Map

%), and a sign

e areas for wh

sults of this s

ew Decline anCross-Section

een provided

57

mant's own d

outside the u

authorization

and Minita

p 5 shows th

nificant porti

hich Pacific

superimposit

nd Minita Zonn of the Main

in more deta

documents,

underground

n.160 Superim

3 veins prov

hat most of th

ion of the co

Rim has ow

tion:

nes" (from Prn Minita Vein

ail as Exhibit R

a significant

projection o

mposing the

vided by Cla

he undergrou

ombined Min

wnership or a

re-Feasibilityns," (from MD

R-51.

t portion of t

of the surfac

e information

aimant in its

und mine are

nita deposit

authorization

y Study, Jan. 2DA Technical

the

e

n

Pre-

ea

n.161

2005) l

58

The structure of the underground mine is located at the top of the map, showing the tunnels and spirals of the ramps. The locations of the Minita and Minita 3 veins, taken from Claimant's 2005 Pre-Feasibility Study, are shown in red and blue. These locations have been georeferenced and superimposed on a portion of Map 5, which shows the location of the proposed underground mine in relation to the areas, outlined in pink, for which Pac Rim claims ownership or authorization.

1

3), consti

submitted

concessio

demonstr

located u

legally gr

for which

1

met the l

areas it o

least 200

1

landowne

of this re

exploitat

Mining L

and then

Governm

Objection

complian

162 Letter

As wi18.

itutes the sol

d to justify t

on applicatio

rate that a sig

under the lan

ranted the co

h it has show

There19.

egal requirem

owned or had

05 of the surf

El Sal20.

ers for the en

quirement, b

ion concessi

Law was not

Pac Rim be

ment in late 2

n phase by p

nce with the

from Claiman

ill be discuss

le basis for t

the economic

on. In short,

gnificant por

nd it owns or

oncession, ev

wn ownership

fore, Claima

ment for a c

d authorizati

face land req

h) Co

lvador's Min

ntire area inc

but did not o

ion applicati

changed, de

gan preparin

2007.162 Cla

promising to

requirement

nt's counsel to

sed below, th

the calculatio

c feasibility

, because Cla

rtion of the m

r has authoriz

ven if Claim

p or authoriz

ant's own sub

oncession by

on for. Mor

quirement an

onclusion on

ning Law req

cluded in its

obtain owner

ion. Rather,

espite Pac R

ng to file this

aimant avoid

provide fac

t. Given the

o El Salvador

59

he Minita de

on of reserve

of its applic

aimant's own

mineral depo

zation for, th

mant had redu

zation.

bmissions di

y reducing th

reover, as no

nd did nothin

land surface

quired Pac R

concession

rship of or au

Pac Rim sou

im's best eff

s arbitration

ded a decision

tual evidenc

opportunity

r's counsel, Ap

eposit, with t

es in Claima

ation for the

n submission

osit it propo

he Ministry o

uced the area

isprove its a

he size of its

oted, Claima

ng to cure th

e requiremen

Rim to own o

application.

uthorization

ught to chan

forts through

as a new wa

n on this issu

ce and expert

y, however, C

pr. 22, 2011 (

two veins (M

ant's Pre-Fea

e entire 12.75

ns to the Go

sed to mine

of Economy

a requested t

allegation tha

s requested c

ant was fully

he defect.

nt

or obtain per

. Pac Rim w

for the land

nge the law.

hout 2005, 2

ay to pressur

ue in the Pre

t reports dem

Claimant ha

(R-128).

Minita and M

asibility Stud

5 km2

overnment

is not even

y could not h

to the 1.6 km

at it could ha

concession to

y aware since

rmission of th

was fully awa

d included in

The Salvad

006, and 200

re the

eliminary

monstrating

s provided n

Minita

dy

have

m2

ave

o the

e at

he

are

n its

doran

07,

its

no

new evid

indisputa

requirem

failure to

exploitat

1

Claimant

Applicati

updated v

complete

1

to the lan

provide t

connectio

from the

submitted

1

163 Conces164 Letter 165 Letter engineerinof exploit

dence and on

able that Cla

ments for its e

o comply wit

ion concessi

3.

Claim21.

t did not sub

ion, Pac Rim

version of th

ed the actual

The O22.

nd ownership

the required

on with the l

Bureau of M

d its Pre-Fea

Claim23.

the ElgeneraPacifi

ssion Applica

from Bureau

from Pacific ng and designtation of the s

nly a new arg

imant did no

exploitation

th the land su

ion.

Claimant dStudy

mant likewise

bmit a techni

m submitted

he Pre-Feasib

Feasibility S

October 2006

p and author

Feasibility S

land ownersh

Mines for a F

asibility Stud

mant now alle

l Dorado PFSally understoic Rim mana

ation at cover

of Mines to P

Rim El Salvan of the ramp,ubterranean m

gument that

ot comply w

concession t

urface requir

did not comp

e failed to co

cal, econom

only a "Prel

bility Study

Study requir

6 letter from

rization requ

Study with d

hip and auth

Feasibility St

dy and added

eges that

S was in facood by mininagement that

letter (R-2).

Pacific Rim E

ador to Bureau, access routemine, and clo

60

it did not ha

ith Article 3

to be admitte

rement, Clai

ply with the

omply with A

mic Feasibilit

iminary Pre-

one month l

red by Salva

the Bureau

uirement, also

detailed plan

horization req

tudy and pro

d the plans f

t a feasibilityng specialistt were respon

El Salvador, O

u of Mines, Ns and infrastrsure of the m

ave to compl

37.2.b), one o

ed by the Bu

imant could

requirement

Article 37.2.

ty Study. W

-Feasibility

later in Janua

adoran law.

of Mines, m

o alerted Pac

s.164 Consis

quirement, i

ofessional pl

for the six sp

ty study as thts such as thensible for ma

Oct. 2, 2006 (R

Nov. 11, 2006ructure, a taili

mine).

ly. As a resu

of the manda

ureau of Min

not have be

t to submit a

d) of the Mi

With its Conce

Study."163 I

ary 2005, bu

mentioned ab

c Rim to its

stent with its

n its respons

lans, Pac Rim

pecific areas

hat term is e members oaking the

R-4).

6, at 3.b (R-5)ings dam, a fl

ult, it is

atory

nes. Due to

en granted a

a Feasibility

ining Law:

ession

It submitted

ut it never

bove with reg

failure to

s failure to ac

se to the requ

m simply re-

requested.16

of

) (including low plant, me

its

an

an

gard

ct in

uest

-

65

ethod

This claim

pre-feasib

Second, P

admitted

by the Sa

Feasibilit

prelimina

1

merely in

greater th

advisor to

Study an

feasibility

166 Memor167 Rejoin168 ExpertRelated Econcludesdetail andinternatio169 Behre feasibilityand increa

determwell aPRES

m is simply

bility and fe

Pac Rim wa

ly never com

alvadoran M

ty Study sho

ary study.168

The d24.

n the name.

han that of a

o the minera

d concluded

y study:

The dstated

rial, para. 522

nder (Prelimin

t Report of BeExploration Ars, based on itsd supporting dnal mineral in

Dolbear Expey study requirase the accura

mination wheas the BureauS's Concessio

not true. Fir

asibility stud

s working on

mpleted that

Mining Law."

ows that it is

a) Difa m

difference bet

The level of

pre-feasibil

als industry w

d that it was l

document Pacd to be a "Pre

2 (emphasis in

nary Objection

ehre Dolbear reas, Jan. 6, 2s experience tdocumentationndustry report

ert Report, pares much greaacy of cost es

ether to procu of Mines pon Applicatio

rst, Claiman

dies and spe

n the actual

study, which

167 Third, ev

not sufficien

fference betwmere formali

tween a Pre-

f detail and t

ity study.169

with extensiv

less compreh

cific Rim sue-feasibility

n original).

ns), para. 154

Minerals Indu2014 ("Behre that the Pre-fen for it to be cting codes.").

aras. 19-23. Sater depth of dtimation.").

61

ceed with thepersonnel chon.166

nt and SRK C

cifically con

feasibility st

h it concede

ven ignoring

nt to be cons

ween a Pre-Fity

-Feasibility S

the confiden

Behre Dolb

ve experienc

hensive than

ubmitted to thStudy" and d

4.

ustry AdvisorDolbear Exp

easibility Studconsidered a F.

See also Behrdetail than a P

e El Doradoarged with r

Consulting k

ntracted for a

tudy from 20

s is the same

g that admiss

sidered anyt

Feasibility a

Study and a

nce level of a

bear, a well-

ce, reviewed

n what would

he Governmdoes not me

rs, El Doradoert Report"), dy does not cFeasibility St

re Dolbear ExPre-feasibility

Project, as reviewing

knew the diff

a pre-feasibi

006 into 200

e "feasibility

sion, the con

thing more th

and a Feasibi

Feasibility S

a feasibility s

-regarded ind

d Claimant's

d be required

ment is clearlyet the

o Concession para. 34 ("Beontain sufficitudy, as stipul

xpert Report, py Study to ver

fference betw

ility study.

09, and it

y study requi

ntent of the P

han a

ility Study is

Study is not

study will be

dependent ex

Pre-Feasibil

d for a full

y

Application aehre Dolbear ient technicallated by

para. 29 ("A rify its finding

ween

ired

Pre-

s not

e

xpert

lity

and

gs

1

because i

its applic

Feasibilit

1

Feasibilit

Pre-Feas

Feasibilit

McIntosh

and does

exploitat

1

it hoped t

discovery

Septemb

170 Behre 171 PacificStudy") at172 Pre-Fe

comprstandaGoverExplo

In 20025.

it had not fin

cation. Claim

ty Study and

Both C26.

ty Study, rec

ibility Study

ty Study stat

h Engineerin

not have the

ion concessi

Claim27.

to propose e

y was annou

er 2005, Cla

PacifiMinitaCompdelinezone. study

Dolbear Expe

c Rim Miningt i (C-9).

asibility Stud

rehensivenesards or that wrnment for it

oitation Conc

04, Pac Rim

nished the ex

mant therefo

d then began

Claimant an

cognized tha

y for the El D

tes that it wa

ng.172 Thus,

e requisite le

ion.

mant, in fact,

expanded ope

unced only af

aimant report

ic Rim's expla, which rem

pany is satisfeated, and thThe Compato take into

ert Report, pa

g Corp., Pre-F

dy at 9 (C-9) (

ss of a Feasiwould be cont to make a dcession shou

was not in a

xploration an

ore complete

n working on

d SRK Cons

at it was "a C

Dorado Proje

as based on a

the docume

evel of detai

did not rush

erations incl

fter the appl

ted:

loration stratmains open afied that the

hen commissany will then

consideratio

ara. 28.

Feasibility Stu

(emphasis add

62

ibility Studynsidered necdecision as tould be grante

a position to

nd technical

d and submi

n the required

sulting, the c

Canadian Nat

ect located in

a "Conceptu

nt itself emp

l to support

h to complete

luding a dep

ication for th

tegy is to coat depth and target has beion a resourc

n amend the Mon the new o

udy, El Dorad

ded).

y under interncessary by tho whether or

ed.170

complete th

work for the

itted the less

d Feasibility

company con

ational Instru

n El Salvado

ual Undergro

phasizes that

Claimant's a

e the require

osit called S

he concessio

ontinue to drialong strikeeen adequatece estimate fMinita pre-f

ounces define

do Project, Jan

national he r not an

he required f

e area it wan

s detailed, le

y Study.

ntracted to p

ument 43-10

or."171 In ad

ound Mine D

t it is not a F

application f

ed Feasibility

South Minita

on was filed.

ill test South, until the ely for this gold

feasibility ed by the

n. 21, 2005 ("

feasibility stu

nted to inclu

ss definite P

prepare the P

1 . . . compli

ddition, the P

Design" by

Feasibility St

for a 12.75 k

y Study beca

a, whose

. Thus, in

h

d

"Pre-Feasibili

udy

de in

Pre-

Pre-

iant

Pre-

tudy

km2

ause

ity

1

economic

feasibility

would no

proposed

prepare t

the Pre-F

SRK esti

Feasibilit

1

had sent

within 30

working

173 PacificCompone174 PacificDorado E175 PacificResults, DAnnounceproposed / haulage 176 SRK C177 SRK C

SouthanalysSouth

Indeed28.

c assessmen

y study for t

ot move forw

d expanded p

he required

Feasibility St

imated that i

ty Study.177

As Cl29.

the prevenci

0 days or hav

on the requi

In Noprojecdrillin

c Rim Miningnt of Pacific R

c Rim MiningExploration Ta

c Rim MiningDec. 13, 2005 es Fiscal 2006expanded operamp on the E

Consulting Pro

Consulting Pro

h Minita resosis of a prop

h Minita simu

d, in Decem

t of a combi

this expande

ward with its

program" wa

feasibility st

tudy it prepa

t would cost

aimant's own

ión (warning

ve its file clo

ired Feasibil

vember 200ct is in progrng in and aro

g Corp., NewsRim's Explora

g Corp., Newsargets to Beco

g Corp., News(C-405). See

6 Third Quareration will bEl Dorado is m

oposal for El

oposal for El

ource estimatosed operatiultaneously.

mber 2005, Cl

ined Minita/

ed operation.

s El Dorado m

as undertaken

tudy in 2006

ared in 2005

t about half a

n documents

g letter) requ

osed—Pac R

ity Study:

6, PRMC reress. Certain ound the Min

s Release, Souation Strategy

s Release, Souome Focus of

s Release, Pace also Pacificterly Results,

be undertakenmade.").

Dorado Proje

Dorado Proje

63

te, which wiion that invo173

laimant was

South Minit

"174 At the t

mine plans u

n.175 Claima

6.176 Nothing

was anythin

a million dol

s describe, b

uiring that Pa

Rim had been

ported: "A fengineering

nita and Sout

uth Minita Goy, Sept. 9, 200

uth Minita Def 2006 Drill P

cific Rim Ann Rim MiningMar. 14, 200 before a deci

ect Feasibility

ect Feasibility

ill provide anolves mining

planning to

ta operation

time, Claima

until a "full f

ant did in fac

g in SRK's 2

ng more than

llars to comp

by late 2006—

ac Rim subm

n unable to c

feasibility stug informationth Minita de

old Zone Con05 (C-253) (e

efinition DrillProgram, Dec

nounces Fiscag Corp., News06 (C-428) ("Aision to comm

y Study, Jan.

y Study, Jan.

n economic g Minita and

"commissio

. . . followe

ant explicitly

feasibility st

ct hire SRK

2006 proposa

n a prelimina

plete the req

—after the B

mit the Feasi

complete and

udy for the En garnered freposits has ta

ntinues to Evoemphasis add

ling Nears Coc. 6, 2005 (C-

al 2006 Secons Release, PacA full feasibimence constru

2006 (C-42).

2006, at 19 (C

on a prelimin

d by a full

y stated that

tudy of a

Consulting

al suggests t

ary study; in

quired El Do

Bureau of M

bility Study

d was still

El Dorado from technicaken longer

olve as a Key ed).

ompletion; Ne-254).

nd Quarterly cific Rim ility study of auction of an a

C-42).

nary

it

to

that

ndeed

rado

ines

al to

ew El

a access

1

that Pac R

included

continued

force of t

submissi

Article 9

which ma

Claimant

based on

1

required

October 2

a feasibil

178 Pacificadded). 179 PacificResults, D180 Propos

complcompothe ansecon

In Decgeotecthe geDorad

Indeed30.

Rim was we

a provision

d application

this Law the

on of a pre-f

8 provided t

aintained the

t supported w

simply dem

Pac R31.

feasibility st

2006 and the

lity study, C

c Rim Mining

c Rim MiningDec. 15, 2006

sed New Mini

lete than origonents neces

nticipated timd calendar q

cember 2006chnical data eotechnical ddo feasibility

d the propos

ell-aware tha

in Article 98

n processing

existence o

feasibility stu

that it was "w

e requiremen

would have a

monstrating th

Rim needed s

tudy. In Feb

e allotted tim

laimant chos

g Corp., News

g Corp., News(C-427) (emp

ing Law, Art.

ginally expessary to commeframe for quarter of 20

6, PRMC repwas comple

drilling is reqy study that i

sed new min

at it had not f

8 for pendin

g for any com

f mining pot

udy."180 Th

without preju

nt of a techn

allowed Pac

he existence

such a chang

bruary 2007,

me had passe

se to put the

s Release, El D

s Release, Pacphasis added)

. 98 (R-36).

64

ected, which mplete the ban

completion 07."178

ported: "drileted during thquired to comis currently u

ing law push

fulfilled Arti

ng application

mpany that h

tential in the

is special pr

udice to the

nical econom

Rim, and on

e of mining p

ge to the law

, after Pac R

ed to cure the

feasibility s

Dorado Proje

cific Rim Ann).

has caused nkable feasiof the study

lling for the phe current qmplete certaunderway."1

hed by Pac R

icle 37.2.d).

ns. This pro

had "demons

e authorized

rovision wou

provisions o

mic feasibility

nly Pac Rim

potential wit

because Cla

Rim had recei

e defect in it

study "on ho

ect Update, N

nounces Fisca

a delay in geibility study.

y has been ex

purposes of quarter. The iain componen

79

Rim in 2007

The propos

oposed articl

strated as of

area pursuan

uld apply onl

of the preced

y study. Thu

m, to receive

th just a pre-

aimant never

ived the war

ts applicatio

old" to furthe

Nov. 9, 2006 (

al 2007 Secon

enerating . As a result xtended to th

collecting information nts of the El

demonstrate

sed new law

le provided f

the entry int

nt to the

ly to Pac Rim

ding article,"

us, the new l

a concession

feasibility st

r completed

rning letter i

n by submitt

er explore th

(C-309) (emp

nd Quarter

. . . he

from l

es

w

for

to

m.

"

law

n

tudy.

the

n

ting

he

phasis

Balsamo

definite m

1

Report su

work to c

study, pr

including

study, rev

new reso

181 PacificMining Pe182 2008 AEl Doradode PACRIempezaro2008.") ["reorganizeon the revfeasibility183 2008 Aestudios t2009, un Eincluye esde extraccEstudio dPila de Cominero. CEstudio d

deposit. In

mine plan fo

Pacifistudy,drill dand infeasibwith aestimathe cu

But th32.

ubmitted to t

complete the

ojected for 2

g: structural

vised plans f

ource estimat

c Rim Miningermit Granted

Annual Reporo fue detenidoIM. Luego dn los trabajos

"In 2006, the e the data obt

vised calculatiy study in earl

Annual Reporécnicos con lEstudio de Fastudios técnicción; Estudiosetallado de coolas; RevisiónComo se mene Factibilidad

2008, the co

or El Dorado

ic Rim is pro, which had b

define the Banclude them bility study wa mine plan fate and provurrent prices

he feasibility

the Governm

e "final feasi

2009, would

and geotech

for the tailin

te.183

g Corp., Newsd; Local Staff

rt, § 7 (R-3) ("o para reorgan

de un informe s técnicos parFinal Feasibiltained in past ion of reservely 2008."].

rt, § 7 (R-3) ("a informaciónactibilidad mácos tales comos estructuraleostos para el dn del Estudio

ncionó anteriod en 2009.") [

ompany desc

:

oceeding witbeen put on

alsamo gold in the updat

will provide tfor El Dorad

viding a measof commodi

y study and m

ment of El Sa

ibility study"

be "more co

hnical studies

ngs dam, the

s Release, Pacffing Reduced,

"Durante el añnizar los datode avance en

ra retomar y clity Study fordrilling camp

es in July 200

"Los datos obn existente enás completo qo: Estudios ms y geotécnicdesarrollo y ode Mina Sub

ormente, todos"The data obt

65

cribed its pla

th the El Dorhold in Febrdeposit, qua

ted study. Cothe Compan

do based on tsure of the pities and con

mine plan we

alvador expl

" during 200

omplete" and

s, a final hyd

underground

cific Rim Susp, July 3, 2008

ño 2006 el Esos obtenidos en la revisión dcompletar el er the El Doradpaigns conduc06, technical w

btenidos de lan el proyecto vque el present

metalúrgicos enos; Estudio H

operación de mterránea y Plas estos datos tained from h

ans to compl

rado project ruary 2007 iantify its golompletion ofny and its shathe updated

project's valunsumables.18

ere never co

lains that the

08.182 Pac Ri

d would con

drogeologica

d mine, and

pends Furthe8 (C-262).

studio de Facen campañas pdel cálculo deestudio final ddo Project wacted by PACRwork began to

as perforacionvan a dar comtado en años pn nuevos cue

Hidrogeológicmina; Revisióanta de Proceserán incorpo

holes drilled in

lete a feasibi

feasibility in order to ld resources f the areholders resource

ue based on 81

mpleted. Th

e company b

im promised

ntain addition

al study, a de

the processi

er Drilling in

tibilidad Finapasadas de pe

e reservas en Jde factibilidadas delayed in oRIM. After ao resume and

nes hechas en mo resultado apasados. Esteerpos mineralico Final Proyeón del Estudioeso; Nuevo cáorados en un an 2007 and o

ility study w

he 2008 Ann

began technic

d that the new

nal informat

etailed costs

ing plant, an

El Salvador U

al para el proyerforación a cJulio de 2006d a principiosorder to a progress rep

complete the

2007 y otros a principios de nuevo estudizados y el precto El Dorado de Presa parálculo de recuactualizado ther technical

with a

nual

cal

w

tion,

s

nd a

Until

yecto cargo , se de

port e final

de dio roceso do; ra

urso

l

1

the 2005

delaying

Feasibilit

submitted

actually s

1

had not e

Prelimina

1

admissio

studies alothat is moas: MetalgeotechnidevelopmPlant Studan update184 Rejoin185 Memor

In sho33.

Pre-Feasibi

and never c

ty Study was

d a "Pre-Fea

something m

In the34.

ever complet

ary Objectio

ClaimdiffereMininsame

Never35.

n, Claimant

the ElgeneraPac Rdetermwell aPRES

ong with the e

ore complete tllurgical studiical studies; F

ment and operady; New calcud Feasibility

nder (Prelimin

rial, para. 522

ort, Pac Rim'

lity Study an

ompleted. U

s anything m

asibility Stud

more.

b) Pacstu

Preliminary

ted the requi

ons,

mant is not "sent from the

ng Law," as adocument.18

rtheless, in it

asserts:

l Dorado PFSally understo

Rim managemmination wheas the BureauS's Concessio

existing inforthan those preies on new mi

Final Hydrogeation; Revisedulation of minStudy in 2009

nary Objection

2 (emphasis in

's own docum

nd the need f

Until this arb

more than its

dy," Pac Rim

c Rim has adudy

y Objection p

ired Feasibil

suggest[ing] e feasibility sasserted by R84

ts Memorial

S was in facood by mininment that weether to procu of Mines pon Applicatio

rmation on theesented in pasineralized bodeological Studd Tailings Daning resource9."].

ns), para. 154

n original).

66

ments repeat

for a Feasibi

bitration, Pac

name impli

m is estopped

dmitted that

phase of this

ity Study. A

that the feasstudy requireRespondent

on the Meri

t a feasibilityng specialistere responsibceed with thepersonnel chon.185

e project willst years. The dies and the edy for the El Dam Study; Rev. As mention

4 (emphasis ad

tedly acknow

ility Study, s

c Rim never

ied. Indeed,

d from arguin

it did not su

s arbitration,

As Claimant

sibility studyed by the Sain its Reply.

its, in direct

ty study as thts such as theble for makine El Doradoarged with r

l result in a Fenew study in

extraction proDorado Projevised Undergned above, all

dded).

wledge the s

something th

indicated th

having cont

ng that the s

ubmit the req

, Claimant ac

stated in its

y on hold is lvadoran . They are th

contradictio

hat term is e members ong the Project, as

reviewing

easibility Studncludes techniocess; Structuect; Detailed cground Mine al these data w

shortcomings

hat Pac Rim

hat the Pre-

tracted for an

study was

quired Feasib

ccepted that

Rejoinder o

he

on to its earli

of

dy in early 20ical studies su

ural and cost study for and Processin

will be include

s of

kept

nd

bility

t it

on the

ier

009 uch

mine ng ed in

1

its Pre-Fe

Law."186

and-on fr

required

"mining s

though C

complete

considera

Pac Rim

was neve

1

once and

way blam

"unpredic

Mining C

186 Rejoin187 Pacific(R-20).

Claim36.

easibility Stu

Claimant re

rom 2006 int

by Salvador

specialists" w

Claimant spen

e feasibility s

ably" to qual

has repeated

er done.

Pacifi37.

d for all, that

med El Salva

ctability in c

Corp. explain

A feasfiscal fiscal discovCompto: undue tocapitainputs

nder (Prelimin

c Rim Mining

mant's new as

udy is not th

epeatedly sta

to 2009, whe

ran law) to "

would view

nt several ye

study with n

lify as a "fea

dly acknowl

ic Rim Minin

no Feasibili

ador for such

capital costs"

ned:

sibility study2006 and pu2009 while

very of the Bpany decidedpredictabilit

o recent econal items; the s have stabili

nary Objection

g Corp., Repo

ssertion is de

he complete "

ated that it w

en it decided

sav[e] cash."

the submitte

ears after sub

new informat

asibility stud

edged, by w

ng Corp.'s U

ity Study has

h failure but

" due to "rec

y for the El Dut on hiatus bthe basis of

Balsamo depd to defer comty in capital nomic volatiCompany's fized and the

ns), para. 154

rt of Foreign

67

emonstrably

"feasibility s

was working

d to defer co

"187 Therefo

ed Pre-Feasi

bmitting the

tion, which s

dy" in the Un

words and act

U.S. Governm

s ever been c

rather attrib

cent economi

Dorado projebetween latethe study wa

posit. In Febrmpletion of costs as chanlity become focus on savstudy can ac

4.

Issuer (Form

false. Claim

study require

on the comp

ompletion of

ore, Claiman

ibility Study

pre-feasibil

still "would

nited States o

tions, that th

ment filing in

completed.

buted the dec

ic volatility.

ect . . . was ie fiscal 2007as expandedruary 2009 . the feasibilinges in comreflected in

ving cash unccurately ref

m 6-K) Exhibit

mant already

ed by the Sa

plete feasibi

f that study (i

nt's assertion

y as a feasibil

lity study wo

have to be u

or Canada is

he required F

n September

Tellingly, C

cision not to

." Specifical

initiated in 7 and early d due to the

. . the ity study due

mmodity pricethe prices fo

ntil these flect change

t 99.2, Sept. 1

y admitted th

alvadoran Mi

lity study of

i.e., the one

n now that

lity study ev

orking on a

updated

s outrageous

Feasibility St

r 2009 confir

Claimant in n

proceed to

lly, Pacific R

e es

for

ed

14, 2009, § 3.

hat

ining

ff-

ven

s.

tudy

rms,

no

Rim

.1.2

1

according

Mining L

1

14

and could

it to mak

the Minis

Feasibilit

14

contrary

188 Pacific(R-20). 189 Rejoin190 Memor

econopermi

This f38.

g to Claiman

Law."189

Thus, 39.

the req

the reqbecauattribu

there hsince

the dobe concountr

These40.

d not cover t

ke a decision

stry that it w

ty Study.190

Claim41.

to its admiss

c Rim Mining

nder (Prelimin

rial, para. 527

omic realitiestting proces

feasibility stu

nt, "the same

Claimant ha

quired Feasi

quired Feasiuse of incomputable to El S

have been nethe Pre-Feas

ocument it hansidered a Fery.

e admissions

the necessary

regarding an

was working

c) ThinsDo

mant argues th

sion that it w

g Corp., Repo

nary Objection

7.

s; and, uncers.188

udy, the com

e document"

as expressly

ibility Study

ibility Studyplete exploraSalvador),

ew deposit dsibility Study

as been workeasibility Stu

clearly show

y technical a

n exploitatio

on expandin

he Pre-Feasibsufficient to orado

hat, regardle

was working

rt of Foreign

ns), para. 154

68

rtainty in the

mpletion of w

" as "the feas

admitted tha

y was never c

y has been ination or insu

discoveries ay, and

king on wouudy in the U

w that the su

and economi

on concessio

ng the known

bility Study ssupport the a

ess of the nam

on the "mor

Issuer (Form

4.

e timing of th

which Claim

sibility study

at:

completed,

ndefinitely deufficient reso

and changes

uld have to bUnited States

ubmitted Pre

ic informatio

on. Indeed, P

n resources a

submitted byapplication f

ame of the Pr

re complete"

m 6-K) Exhibit

he El Dorad

mant deferred

y required by

elayed or waources (and f

in the "econ

be "updated cs or Canada,

e-Feasibility

on for the M

Pac Rim adm

after submitt

y Pac Rim wfor the conce

re-Feasibility

" required fe

t 99.2, Sept. 1

o

d in 2009, is

y the Salvad

as never possfor no reason

nomic landsc

considerablyClaimant's h

Study did n

Ministry to rel

mits that it to

ting the Pre-

would be ession in El

y Study and

easible study

14, 2009, § 3.

oran

sible n

cape"

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describe

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14

191 Memor192 Behre 193 Behre

d Pre-Feasib

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t information

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xploitation c

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ibility Study

d. Claimant'

Behre43.

the mine pla

erenced in Cl

onsidered at

or Conceptu

Behre44.

"lacksFeasib

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ased on the r

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he fact that th

o justify the

icle 24 of the

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xpert advisor

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e-Feasibility

lity level acc

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rther noted th

e of technica" and

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ara. 30.

ara. 30.

69

requirement

g finance com

e Pre-Feasib

he submitted

12.75 km2 c

e Salvadoran

nted based o

en by the Con

the mine pla

lity Study fa

e-Feasibility

rs to the min

to any minin

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curacy, and p

hat the Pre-f

al studies tha

amount of deaccuracy. T

t of Article 3

mpany" alleg

bility Study.1

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concession re

n Mining Law

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alls short.

y Study is ba

nerals industr

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a "conceptua

possibly at th

feasibility St

at are normal

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bility Study f

equested by

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itude of the d

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much small

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detail and sup

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ld have been

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od by Claim

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meters to safen the concessacific Rim's

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ort, paras. 44,

dy at 48 (C-9)

ely execute thsion boundaExploitation

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the total req

me of the stu

ution and limMinita vein, of the ounces sociates] has and suggests xtending to thMinita . . . inc] removed f

asibility Stud

nita deposit.

ies for the re

, 46.

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71

he mine planaries. . . . It isn applicationthe project esary for the Ecludes surfac

g its explorat

Pre-Feasibi

quested conc

udy. For exa

mited nature one hole witin the Minitrecommendthat further

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dded).

n for the Mins Behre Dolbn for 12.75 sestimate of 1El Dorado mce area that tion program

ility Study w

cession, even

ample, the P

of the drillinth a high-grata vein. . . . [ded further ddrilling mig

d down dip. esolved comimate.200

s a lack of co

firms that Pa

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nita deposit bear's opiniosquare 1.6 square mine Pacific Rim

ms.199

was limited to

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omplete defin

ac Rim had n

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ty Study exp

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in an

plains

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limits of

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the area e

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to the 12

km2 area

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Claimant

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201 MemorApplicatioConcessio202 Reply added)). 203 Pre-Fe204 See Coexploratio

Claim50.

he 12.75 km

n phase, "[n]

ng finally m

the Explorat

ty Study con

eventually re

uired to mine

.75 km2 area

requested b

Law.

In fac51.

exploration l

t's intent to e

al other vein

ulce and La

rial, para. 205on and the El on area of 62

(Preliminary

asibility Stud

oncession Appon licenses: N

iii

mant admits t

m2 area for th

]ear the end

entions that

tion License

ntains very g

equested for

e a known de

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based on the

t, the Januar

licenses expi

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targets . . . y

Coyotera, ar

5 ("As ClaimaDorado PFS,square kilom

Objections),

dy at 31 (C-9)

plication at 5,Nance Dulce, S

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he concession

of the Pre-F

Pacific Rim

e areas to an

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ired, include

cudo, Nueva

yet to be dril

re even outs

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meters was too

para. 140 (cit

).

, § 2.2 (R-2) (San Matías, C

72

e-Feasibilitykilometer re

Feasibility S

n.201 As El S

Feasibility St

m 'has elected

Exploitation

mation abou

sion. Far fro

re-Feasibilit

ession. Such

deposits disc

Feasibility S

es a section o

a Esperanza,

lled."203 Som

side the requ

ware, followinof Mines conc

o large.").

ting Pre-Feas

(listing veins Coyotera, Por

y Study doesequested con

Study was su

Salvador exp

tudy submitt

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n Concession

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om justifying

ty Study was

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overed, as re

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on "Explorat

La Coyotera

me of the "ex

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ibility Study

outside the crvenir, El Gal

s not even mencession are

ubmitted befo

plained in th

ted in Januar

62.73km2 fr

ns [sic].'"202

most five tim

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mply cannot j

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leted the mo

tion Targets,

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xploration ta

ssion area.20

ssion of the Che originally r

at 140 (C-9)

oncession arellardo, Iguana

ention the 12ea

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om within th

So the Pre-

mes greater t

ted area as th

without reg

justify the 12

Article 24 of

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argets," such

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oncession requested

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nt

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205 Pre-FePre-Feasibvein. Seechart of thsurface,[aarea, but d206 Mining

ates, "La Coy

ion."205

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on area base

wo veins in a

discuss and

ne the project

en to define,

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ments of Salv

a mining pro

t found durin

The le54.

a "conceptu

mately 0.21 k

d concession

the future. A

asibility Studbility Study, C Pacific Rim

he 2003 resouand] potentialdata on its res

g Law, Arts. 2

yotera is a si

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d upon a tec

a tiny fractio

justify the e

t's economic

, much less e

despite fillin

vadoran law b

oject was 1) b

ng exploratio

iv

egal deficien

ual mine plan

km2; and 3) i

n area, but ra

As expressly

dy at 31 (C-9)Claimant alsoMining Corp

urce estimate lly open-pitabserve estimate

24, 37.2.d) (R

ignificant ex

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chnical and e

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entire area re

c and technic

examine, the

ng over 200

because, inte

based on the

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v. It is cleminimaSalvado

ncies of the P

n;" 2) it is ba

it does not ev

ather general

y conceded i

) (emphasis ado refers to a pp., http://wwwwith the state

ble"). The Nues was not inc

RL-7(bis)).

73

xploration tar

rmit a compa

economic stu

uested area.

equested. It

cal viability w

e entire area

pages, the P

er alia, it fai

e size and loc

echnically ju

ear that the Pal requiremeoran law

Pre-Feasibili

ased on mini

ven refer to

lly reference

in the Pre-Fe

dded). In addotential open

w.pacrim-miniement that theueva Esperanzcluded in the

rget with po

any to reque

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is impossibl

when the su

at issue.

Pre-Feasibili

ils to show th

cation of the

ustified.206

Pre-Feasibilents to justify

ity Study are

ing a deposit

(much less s

es the desire

easibility Stu

dition to this rn-pit mine to eing.com/s/Elde "Nueva Espeza vein is withPre-Feasibilit

otential for fu

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ked, on a pre

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t located und

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to explore a

udy, it was n

reference to Lexploit the Nudorado.asp (Reranza vein r

thin the requety Study.

uture open-p

xploitation

eliminary ba

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aluators to

hnical study

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ested 12.75 k

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not submitted

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R-48) (showinresource is neested concessi

pit

asis,

ity

l the

km2

he

it is

of

times

d

n the za

ng a ear ion

with an in

achieve a

exploitat

complete

claim ove

legally-re

1

companie

required

1

to secure

was suffi

concessio

207 Pre-Fe208 Rejoinon hold isResponde209 Otto E210 See Beno funds fand could

ntent to justi

a very differe

ion concessi

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er a large are

equired Feas

As mi55.

es to prepare

to carry out

Manyfeasibfeasibcostlyexplorcompaadditiacquir

Thus, 56.

e funds.210 It

icient for the

on to extract

asibility Stud

nder (Prelimins different froent in its Repl

xpert Report

ehre Dolbear Efrom operatio

d rightly be de

ify the 12.75

ent goal: to f

ions, and De

easibility Stu

ea when its e

sibility Study

ining law ex

e a pre-feasib

the full feas

y explorationbility studies bility study (ay and requireration compaanies to use onal fundingre competen

it made sen

t does not m

e Governmen

t its mineral

dy at 9 (C-9).

nary Objectionm the feasibil

ly. They are t

at 28.

Expert Reporons that it eithescribed as a 'j

5 km2 conces

facilitate "[t]

evelopment o

udy because

exploration l

y was never

pert James O

bility study t

sibility study

n companies or having o

as required bes specializedany. It is coma pre-feasib

g or to attracncy and to pa

se for Pac R

ake sense, h

nt to rely on

resources.

ns), para. 154lity study reqthe same docu

rt, para. 70 (noher managed o'junior miner.

74

ssion, as the

]he conversi

of capital fun

it wanted to

licenses exp

completed.2

Otto describe

to attract the

y:

are capable ne prepared by Mining Ld expertise nmmon for juility study as

ct a partner oay for a full f

Rim to begin

however, to l

for a decisio

4 ("Claimant iquired by the Sument.").

oting that betor operated" a'").

law require

ion of the ex

nd-raising ac

o continue ex

pired on Janu

208

es, it is not u

e necessary f

of preparingfor them, bu

Law Article 3not usually funior exploras an aid in a

or suitor in ofeasibility st

with a pre-f

later claim th

on on wheth

is not 'suggesSalvadoran M

tween 2003 anand thus, "wa

ed, but was i

xploration lic

ctivities."207

xploring and

uary 1, 2005

uncommon f

financing or

g pre-ut a full 37.2(d)) is found in an ation acquiring order to tudy.209

feasibility stu

hat that preli

her or not to

st[ing] that theMining Law,' a

nd 2008, "Pacas not an oper

intended to

censes to

Claimant

d maintain its

. The actual

for junior

partnership

udy as a first

iminary stud

grant a 30-y

e feasibility stas asserted by

cific Rim recerating compan

s

l,

t step

dy

year

tudy y

eived ny

1

different

km2 expl

requested

1

it was no

feasibility

be determ

1

following

continue

on Janua

explorati

Pac Rim

maximum

Thirty da

option un

211 Miningmina y haa que se reactividadese refiere preceded Law shallstudies ththe previo212 Mining

Claim57.

things, and

loitation con

d concession

Pac R58.

otified of pro

y study. Th

mined based

Pac R59.

g the request

exploration

ry 1, 2005.

ion done bef

had submitt

m 30-day tim

ays after the

nder the law

g Regulationsaya precedidoefiere el Art. es y estudios el Artículo anby an Explorl be proven wat were perfo

ous Article."].

g Law, Art. 3

mant knew th

that the "Pre

ncession did n

n.

d) Cla

Rim submitte

oblems with t

e application

on the mate

Rim's applica

ts from the B

activities in

Legally, Pac

fore the licen

ted a deficien

me limit to cu

second prev

was for the

s, Art. 18 (RL Licencia de E23 de la Ley,que fueron ejnterior.") ["Wation License

with the documrmed during t.

8 (RL-7(bis))

hat a pre-feas

e-Feasibility

not demonst

aimant had t

ed its concess

that applicat

n's complian

erials submitt

ation was def

Bureau of M

n the area of

c Rim's Feas

nses expired.

nt applicatio

ure the defec

vención, whe

application

L-8(bis)) ("CuExploración, , se hará con decutados dura

When an Exploe, the existencments that are the effective

).

75

sibility study

Study" it su

trate the econ

to submit a F

sion applicat

tion, Pac Rim

nce with the

ted to the Go

ficient as sub

Mines in late 2

El Dorado a

sibility Study

.211 Thus, lo

on. Followin

cts in its exp

en the defect

to be rejecte

uando se solicla demostrac

documentos qante la vigencoitation Concce of the depo

consistent orterm of such

y and a feasib

ubmitted wit

nomic and te

Feasibility St

ation on Dece

m never subm

legal require

overnment a

bmitted in 20

2006. Pac R

after the expl

y had to be c

ong before an

ng the 2006 p

ploitation con

ts had still no

ed. From tha

cite Concesiónción de la exisque sean congcia de esa Liccession is apposit or depositr in accordancLicense and t

bility study

th its applica

echnical fea

tudy with its

ember 22, 20

mitted a new

ements (or la

at the time.

004, and rem

Rim could no

loration licen

completed ba

ny alleged b

prevención,

ncession app

ot been cure

at point forw

n para la explstencia del o dgruentes o acocencia y el inflied for, and its referred to ce with the acthe final repo

were two

ation for a 12

asibility of th

s application

004. Even a

w application

ack thereof)

mained defic

ot legally

nses had exp

ased on the

reach in 200

Pac Rim had

plication.212

ed, the only

ward, Pac Rim

lotación de unde los yacimiordes con las forme final a it has been in Art. 23 of

ctivities and ort referred to

2.75

he

n

after

n or a

must

cient

pired

08,

d a

m

na entos

que

the

in

could not

beginnin

followed

rather tha

requirem

exploitat

1

considere

economic

resource

Although

claim to

concessio

rights all

insufficie

1

itself has

Salvador

Accordin

quarries,

213 Memor

t receive the

g with a dec

d by its decis

an comply w

ments for an e

ion concessi

Pac R60.

ed seeking a

cally justify,

estimates,21

h Claimant in

in El Salvad

on based on

eged in this

ent materials

4.

Pac R61.

s failed to co

r may only o

ng to Article

the State ma

rial, paras. 36

e concession

cision to purc

ion to attem

with the law,

exploitation

ion as of the

Rim could ha

a smaller con

, but it chose

3 but these d

ncludes info

dor, Claiman

the 2004 ap

arbitration m

s presented w

El Salvadothat Pac R

Rim asserts it

mply with th

btain those r

3 of the Min

ay Grant Lic

65-367.

based on its

chase explor

mpt to capture

and 3) culm

concession u

end of 2006

ave submitted

ncession area

e not to. Cla

documents w

ormation abo

nt's actual cla

plication. Th

must be eval

with it.

or did not haRim's applica

ts claims und

he laws of E

rights by com

ning Law: "F

censes or Co

76

s incomplete

ration license

e the largest

minating in it

under the M

6.

d a new appl

a, which it m

aimant relies

were not part

out all the de

aim is that th

herefore, bas

uated with r

ave a legal obation could b

der the Salva

El Salvador.

mplying with

For the explo

oncessions, p

e application

es close to th

area possibl

ts decision n

Mining Law—

lication, but

might have be

s, without ex

of any appli

eposits it hop

he Governme

sed on Claim

regard to the

bligation to be approved u

adoran Inves

A company

h the Mining

oration and

provided the

n. By its own

heir expirati

le for future

not to comply

—Pac Rim ha

it never did

een able to t

xplanation, o

ication to th

ped to explor

ent should h

mant's own c

2004 applic

change its Munder a new

stment Law.

y seeking min

g Law and R

exploitation

provisions o

n choices—1

on date, 2)

exploration

y with two k

ad no right to

d. It could ha

technically a

on 2006 and

e Governme

re and stake

have granted

choices, the

cation and th

Mining Law w law

But Pac Ri

ning rights in

Regulations.

n of mines an

of this Law a

1)

key

o an

ave

and

2008

ent.

a

a

he

so

im

n El

nd

and

its Regul

rights it c

1

deciding

effect in

Law with

1

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1

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that it cou

to increa

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214 Miningpodrá OtoReglamen215 Memor216 Memor217 Memor

lations are m

claims under

Pac R62.

to merge wi

2001 are the

h which it fa

But in63.

es that it view

Pac RDecemapplicGoverthe opthe Buadminlaw – provenviabil

This i64.

ment was ver

uld take adv

se non-agric

xtraordinary s

g Law, Art. 3 orgar Licencianto.") (empha

rial, paras. 12

rial, para. 454

rial, para. 26.

met."214 Havi

r that law.

Rim alleges th

ith Dayton a

e same laws

ailed to comp

n fact, Pac R

wed the requ

Rim filed its Cmber 2004 wcation procernment interpen working ureau of Minnistrative verwhich largen ore reserveity of the Pro

s the crux of

ry accommod

vantage of th

cultural job o

signs of goo

(RL-7(bis)) (

as o Concesioasis added).

23-127.

4 (emphasis a

ing failed to

hat it conduc

and acquire t

applicable to

ply.

Rim considere

uirements of

Concession Awith the reasedure was arest in develo

relationshipnes, there warification of ely consistedes and MARoject – the C

f the dispute

dating to Pac

hat supportiv

opportunities

od will shown

("Para la explones, Siempre

added).

77

comply wit

cted due dili

the El Dorad

o Pac Rim's

ed itself exe

f the Mining

Application sonable unda formality: opment of thp that prevailas simply nothe substant

d of verificatiRN's sign-offConcession w

e between Cl

c Rim for a n

ve relationshi

s to reduce p

n by the Bur

loración y expe que se cump

th the law, P

igence in El

do exploratio

application,

mpt from co

Law as "a f

with MINEderstanding

given the lohe El Doradoled between

o question thtive requiremion of the idf on the enviwould be gra

laimant and t

number of y

ip. Claiman

poverty,217 an

reau of Mine

plotación de mpla con lo disp

ac Rim does

Salvador in

on licenses.21

, including th

omplying wi

formality":

EC in g that the ong history oo Project andPac Rim an

hat upon ments of the dentified ironmental anted.216

the Governm

years, and Cl

nt knew the c

nd it therefo

es and the As

minas y cantepuesto En est

s not have th

2001 before

15 The laws

he 1995 Min

ith the law. P

of d nd

ment. The

laimant decid

country want

ore benefitted

samblea" an

eras, el Estadota Ley y su

he

e

in

ning

Pac

ded

ted

d

nd the

o

Bureau o

But Pac R

knowing

Governm

and good

whatever

concessio

1

with the r

admit the

arbitratio

itself had

complyin

1

socially r

designing

deposit to

218 Memor219 Navas 220 Transcany assuralaw? A. N221 NOA, Statement

of Mines' "ac

Rim was not

it had not co

ment into gra

d-faith effort

r Pac Rim w

on without m

But as65.

requirement

e application

on by insistin

d to admit th

ng with the l

Pac R66.

responsible m

g a mine and

o develop a m

rial, para. 628

de Hernánde

cript of Hearinances that youNo").

para. 14; First"), para. 41.

ctive collabo

t satisfied wi

omplied with

anting the con

ts to work wi

anted, includ

meeting seve

s Gina Nava

ts under the M

n to be proce

ng that it rec

at no one ev

aw.220

a) Pacsee

Rim has repea

mining comp

d obtaining t

mine with th

8.

z Witness Sta

ng on Objectiur Concession

st Witness Sta

oration" to try

ith the "extra

h the legal re

ncession any

ith the comp

ding change

eral legal req

as de Hernán

Mining Law

essed.219 Clai

eived vague

ver assured P

c Rim wanteeking "extrao

atedly told th

pany.221 But

the needed au

he least nega

atement, para

ions to Jurisdin application

atement of Th

78

y to help bri

aordinary sig

equirements

yway. Based

pany, Pac Ri

its laws, to

quirements.

ndez explains

w, the Bureau

imant has att

e "assurances

Pac Rim that

ed to stake itordinary pro

his Tribunal

t, in fact, Cl

uthorization

ative impact

s. 60-61.

iction, May 3would be app

homas C. Shra

ing a success

gns of good

s, Pac Rim tr

d on the Gov

m expected

allow Pac R

s, where the

u of Mines c

ttempted to s

s" in support

it could rec

ts claim to thofits"

l that it is an

aimant was

ns for the sm

possible. R

3, 2011, at 473proved if it di

ake, Dec. 31,

sful project t

will" it rece

ried to pressu

vernment's p

the Governm

Rim to obtain

application

ould not, an

sustain its cla

t of its proje

eive the con

he largest po

environmen

not focused

mall area arou

Rather, Claim

3:5-8 (Q: Didid not comply

2010 ("First

to Cabañas.2

eived. Instea

ure the

previous sup

ment to do

n a huge

failed to com

d would not

aims in this

ct, but Claim

ncession with

ossible area,

ntally and

on carefully

und a known

mant was sole

d you ever recy with the exi

Shrake Witne

218

ad,

pport

mply

t,

mant

hout

y

n

ely

ceive sting

ess

focused o

Claimant

Salvador

sharehold

1

company

is our foc

explorati

reasonab

explorati

available

222 Pacific10, 2002 (223 Pacific224 Memordeposits in225 Memor226 Pac Ri227 See e.gSept. 23, 2program, the MinitaSecond Qproducersremainingfor new ch

on staking th

t's own exhib

r as an oppor

ders in 2000

Our exstage projeca prem

This w67.

y's activities

cus."226 As a

ion,227 instea

le concessio

ion areas can

e data, incom

c Rim Mining("Pac Rim 20

c Rim Mining

rial, para. 97 n Latin Amer

rial, para. 120

m 2002 Prese

g., Pacific Rim2002 (C-233)which is desia Vein."); Pac

Quarter Results with larger og to be tested,hutes of mine

he largest cla

bits, Pacific

rtunity to ma

, the year be

xploration stprojects, enh

ct or the Commium.223

was in line w

in El Salvad

a result, Pac

ad of prepari

on area. As B

n result in de

mplete testing

g Corp., 2002 002 Presentati

g Corp., 2000

("[I]n short, orica and the U

0 ("Mr. Shrak

entation to Sh

m Mining Cor) ("The Compigned to locatcific Rim Mints, Dec. 17, 20operations, an Pacific Rim

eralization.").

aim possible

Rim Mining

ake "extraord

efore it turne

trategy is to hance their vmpany to an

with Tom Shr

dor.225 As To

Rim deliber

ng the neces

Behre Dolbe

ecisions that

g and fieldw

Extraordinarion to Shareho

Annual Repo

over the past United States (

ke's expectatio

hareholders at

rp., News Relpany has adopte additional hning Corp., N003 (C-362) (nd with a seriewill concurre

79

e to sell off a

g Corp. is an

dinary profit

ed its attentio

acquire highvalue througestablished

rake's exper

om Shrake t

rately chose

ssary studies

ear describes

are not base

work, and poo

y General Meolders") at 1 (

ort at 2 (C-33

thirty years, h(many of them

ons extended

t 2 (C-218) (e

lease, Additiopted a deliberahigh-grade ch

News Release,("Cognizant oes of high quaently conduct

at extraordina

n exploration

ts."222 As Pa

on to El Salv

hly prospectgh exploratio

major minin

rience as a m

told sharehol

to focus its

s and materia

s, stretching

ed on a comp

or planning a

eeting, Presen(C-218).

8).

he has foundm in Nevada)

well beyond

emphasis adde

onal Drill Resate, systemati

hutes separate Pacific Rim

of the market ality vein targt additional ex

ary profits.

n company th

ac Rim expla

vador,

tive early on and sell thng company

mine-finder22

lders in 2002

time and res

als for a muc

resources to

plete underst

and allocatio

ntation to Sha

numerous sig).") (emphasis

the El Dorad

ed).

sults From Elic approach to

e from the knoMining Corppremiums af

gets on the Elxploration dri

As shown in

hat saw El

ained to its

he at

24 and the

2: "Profitabi

sources on

ch smaller, m

o cover mult

tanding of al

on of availab

areholders, Ap

gnificant mines added).

do Project.").

l Dorado Progo its current down resource p. Announces fforded to l Dorado projeilling in the se

n

ility

more

iple

ll

ble

pr.

eral

gram, drill in

ect earch

funds.228

areas "m

the requi

1

data nece

project,"2

March 20

targets."2

environm

Rim purs

goal of en

finalizing

drill prog

1

concessio

228 Behre 229 Behre 230 PacificResults, D231 PacificResults, M232 MemorStatementin 2004, "continuallexploracióvalor del p233 Memor

For Pac Rim

ade it less lik

rements of a

In acc68.

essary for a "

230 at the end

004 "to build

231 Thus, wi

mental impac

sued parallel

nlarging the

g its materia

gram at the n

The n69.

on, noting th

Dolbear Expe

Dolbear Expe

c Rim MiningDec. 17, 2003

c Rim MiningMar. 15, 2004

rial, para. 161t of Ericka Co"the companyly increasing ón en ningún proyecto.").

rial, para. 159

m, Behre Do

kely that Pac

an exploitatio

cordance wit

"preliminary

d of 2003, it

d on our El D

th very limit

ct study, as w

l tracks to bo

resource fur

ls for its con

newly discov

ext month, P

hat it would n

ert Report, pa

ert Report, pa

g Corp., News(C-362).

g Corp., News(C-365) (em

1 (citing Pacifolindres, Mar

y at no time wthe value of tmomento, ya

9.

olbear consid

cific Rim wo

on concessio

th its focus o

y economic a

nevertheless

Dorado resou

ted time left

well as gathe

oth apply for

rther."232 In

ncession app

vered South

Pac Rim sub

need more ti

ara. 76.

ara. 83.

s Release, Pac

s Release, Pacmphasis added)

fic Rim Minin. 22, 2013 ("C

wished to suspthe project"/ "a que los resu

80

ders that the

ould be able

on for Minita

on profits, alt

assessment (

s turned its "

urce by cont

to carry-out

er the materi

r the concess

n November

plication, Pac

Minita distri

bmitted the ap

ime and mon

cific Rim Min

cific Rim Min).

ng Corp. 200Colindres Witend the explo"la empresa nltados del mis

e strategy of

to complete

a."229

though Claim

('scoping stu

"focus for th

tinuing to sc

t the feasibil

als for its co

sion and con

2004, when

c Rim "comm

ict."233

application fo

ney to fully e

ning Corp. An

ning Corp. An

04 Annual Reptness Stateme

oration prograno quería suspsmo seguían

pursuing oth

e the extensiv

mant did not

udy') for the E

he immediate

out drill high

lity study an

oncession ap

ntinue explor

it should ha

menced a res

or an exploit

explore the a

nnounces Seco

nnounces Thir

port (C-29)). ent"), para. 59am since its repender el progcada vez más

her explorati

ve work to m

t have all the

El Dorado

e future" in

h priority ve

nd the

pplication, Pa

ration "with

ave been

source defin

tation

area: "Basic

ond Quarter

rd Quarter

See also Wit9 (explaining esults were grama de s aumentando

ion

meet

e

ein

ac

the

nition

ally,

tness that

o el

more yea

Pac Rim

been com

assessme

Claimant

the cost o

request o

the "right

made.237

234 Concesfinancieroforma sen["Limitativeins or identire area235 ConcesplanificadMinita Suplanificaddicho esorequeriráncomenzarconcessioincluded dincluded ithe Nuevabefore any236 Concesvetas Mindonde se ecomo áreaMinita 3 vgeologica237 Concesdesarrollaopinión secon relacimomento

ars are neede

insisted that

mpletely exp

ent.235 This

t's unilateral

of constructi

only the area

t" to develop

Pac Rim pe

ssion Applicaos no le han pncilla, se requions in the expdentified expla covered by

ssion Applicada y el área deur en el sur. Eda y por su po, se reconoce n un estudio dr en estas vetan area. The Ndue to their clin the operatioa Esperanza ay mining activ

ssion Applicanita y Minita 3encuentran vea de Concesióveins, plant anal zones identi

ssion Applicaar el distrito Ee basa en nueión a las Licencomo parte d

ed for a detai

t it should be

lored, and fo

approach wa

opinion of h

ing the mine

needed to m

p El Dorado

erhaps could

ation, § 2.2 (Rpermitido perfieren más añoploration metloration targethe Licenses.

ation, § 2.2 (Re procesamienEstas han sidootencial para s

que operaciode impacto amas.") ["The areNueva Esperalose proximityons plan in th

and/or Minita vity in these v

ation, § 2.3 (R3, área de la petas mineralizón") ["[W]e dnd tailings daified as havin

ation, § 2.3 (REl Dorado, a sstro fiel cumpncias El Dora

de este cumpl

iled assessm

e granted an

or which it h

as not based

how it could

and beginni

mine the Min

"to its maxi

d have filed a

R-2) ("Limitacforar cada vetos para evaluathod and finanets. Basically,"].

R-2) ("Se inclunto. Además,o incluidas deser incluidas eones mineros mbiental aprobea of the plananza vein to thy to the plann

he near futureSur veins wo

veins could b

R-2) ("[N]o noplanta y presazadas y zonasdo not think itam, but also ong potential as

R-2) ("Es la opsu potencial mplimiento conado Norte y Eimiento.") ["I

81

ment of the en

exploitation

had not subm

d on El Salva

d maximize i

ing operation

nita deposit.2

imum potent

a more comp

ciones en el mta encontrada ar detalladamncial resource more years a

uyó en el área, se incluyó labido a su cercen el plan ope(sic) en las vebado antes de

nned mine andhe north and tned operating. That being

ould require aegin."].

os parece razoa de colas, sins geológicamet reasonable toother nearby as the Concess

pinión de Pacmáximo, le pen las exigenciEl Dorado SurIt is Pacific R

ntire area co

n concession

mitted an env

ador's Minin

its benefits: P

ns, it would

236 In fact, P

tial" based o

plete applica

método de expo blanco de e

mente la totalides have not alare needed for

a de la concesa veta Nueva cana proximideracional en eetas Nueva Ee que cualquied the processithe Minita Su

g area and becsaid, we reco

an approved e

onable solicitno que tambiéente identificao request onlyareas containision area."].

cific Rim queertenece legalmas de la 'Ley r y basado en

Rim's opinion

overed by the

n covering ar

vironmental

ng Law, but r

Pac Rim arg

not be "reas

Pac Rim insi

on the investm

ation if it had

ploración y enexploración iddad del área dllowed it to dr a detailed as

sión el área dEsperanza aldad al área deel futuro cercasperanza y/o er actividad ming area wereur vein to the cause of their ognize that mienvironmental

tar solamente én las otras áreadas como zoy the areas ofng mineralize

e el derecho dmente a Pacifde Minería y las inversionthat the right

e Licenses."2

reas that had

impact

rather on

gued that due

sonable" to

isted that it h

ments it had

d focused on

n los recursosdentificado. de las Licenci

drill all discovssessment of

de la mina l norte y la vee operación ano. HabiendMinita Sur

minera pueda e included in t

south were alpotential to bining operatiol impact study

el área de laseas cercanas

onas con potenf the Minita aned veins and

de evaluar y fic Rim. Esta Sus Reforma

nes hechas hast to evaluate a

234

d not

e to

had

d

n

s En ias.")

vered the

eta

do

the lso be ons in y

s

ncial nd

as' sta el and

meeting t

"extraord

1

applicatio

the law a

activities

action by

start a 30

off—"thi

1

the law.

Articles 2

concessio

"be expan

undergro

1

Mining L

develop thbased on othe El Dothis comp238 Pac Ri239 Letter 240 Letter razones de

the requirem

dinary profit

It was70.

on open long

and allowed

s in the reque

y the Bureau

0-day clock,"

is buys us tim

As de71.

In 2005, the

24 and 37 to

on, based on

nded for pur

ound mines f

When72.

Law in 2007

he El Dorado our strict comrado Norte an

pliance."].

m Internal M

to Elí Valle w

to Elí Valle we protección"

ments for one

s."

b) It wsta

s to Pac Rim

g after it sho

Pac Rim to i

ested conces

of Mines re

" but because

me."238

scribed abov

e Minister of

o accommoda

n the size of t

rposes of pro

from the land

n the law was

. The propo

district to its

mpliance with nd El Dorado

Memo re Surfa

with Proposed

with Proposed).

e deposit, bu

was to Pac Ralled while it

m's benefit tha

ould have be

incorrectly i

ssion area. A

elated to the

e the Bureau

ve, the comp

f Economy c

ate the comp

the deposits

otecti[ng]" th

d authorizati

s not amende

osed new law

maximum pothe requiremSur Licenses

ace Owner Au

d Amendment

d Amendment

82

ut that would

Rim's benefitt tried to cha

at the Bureau

en rejected.

nsist that it c

As Fred Earn

items missin

u was "symp

pany support

considered am

pany.239 The

and the tech

he requested

ion or owner

ed, Claiman

w would rem

otential legall

ments of the "Ms and the inve

uthorization (C

ts to the Mini

ts to the Mini

d not have sa

t to have the ange the law

u of Mines k

This allowe

could contin

nest wrote to

ng from Pac

pathetic" to P

ted several e

mending the

e changes w

hnical justifi

d deposits an

rship require

nt supported

move the deci

ly belongs to Mining Law aestments made

C-291).

ing Law (R-3

ing Law (R-3

atisfied Claim

concession

kept the conc

ed time for e

nue some exp

o Tom Shrak

Rim's appli

Pac Rim, it w

efforts to cha

e Mining Law

ould allow t

ications of th

nd would spe

ement.240

a proposal to

ision-making

Pacific Rim.

and Its Reforme up to the m

5).

5) ("pudiéndo

mant's desire

application

cession

efforts to cha

ploration

ke in June 20

cation "wou

was holding

ange or repla

w to change

the area of th

he applicant,

ecifically exc

o replace the

g and regula

This opinion

ms" in relatiooment as part

ose ampliar p

e for

ange

005,

uld

ace

he

, to

clude

e

atory

n is on to t of

por

authority

represent

law, an a

explorati

concessio

Only afte

submit an

land on w

to reverse

including

applicatio

1

lessen the

obtaining

applicatio

below, co

no obliga

therefore

interprete

Tribunal

241 Propos242 Propos243 Propos

y from the Bu

tation from p

applicant wou

ion and explo

on applicatio

er completin

n environme

which it wou

e the normal

g an automat

on.243

Instea73.

e requiremen

g an exploita

on alive whi

ontinued una

ation to chan

e had to comp

ed by the Go

.

sed New Mini

sed New Mini

sed New Mini

ureau of Min

private indus

uld be able t

oitation, with

on (an enviro

ng an extende

ental permit,

uld locate mi

l administrat

tic right to a

ad of comply

nts and remo

ation concess

ile it pursued

authorized ex

nge its law fo

ply with the

overnment, c

ing Law (R-3

ing Law, Arts

ing Law, Art.

nes and inste

stry and the

to obtain a "M

hout submitt

onmental per

ed 16-year e

a feasibility

ining infrastr

tive presump

concession

ying with the

ove the Bure

sion. Pac Ri

d efforts to c

xploring in t

or Claimant

law in effec

contrary to th

36).

s. 34, 35, 38,

. 38 (R-36).

83

ead establish

mining indu

Mining Con

ting any of t

rmit, a feasib

exploration p

y study, and

ructure.242 I

ption of deni

in the event

e Mining Law

eau of Mines

im was using

change the la

the requested

and, in fact,

ct at all relev

he interpreta

52, 54 (R-36)

h a new Mini

ustry.241 Acc

ncession," wh

the documen

bility study,

phase, the ap

ownership o

In fact, the p

ial by silence

t there was n

w, Claimant

s and landow

g the Govern

aw and, in fa

d concession

the law was

vant times, w

ations that C

).

ing Authorit

cording to th

hich would i

nts lacking fr

and land do

pplicant wou

or authorizat

proposed law

e in Salvado

no response t

t tried to cha

wners from th

nment's goo

act, as will b

n area. The

s not change

which was co

laimant has

ty with

he proposed n

include both

rom Pac Rim

ocumentation

uld need to

tion for only

w went so far

oran law by

to the

ange the law

he process f

dwill to keep

e described

Governmen

ed. Claimant

onsistently

presented to

new

h

m's

n).

the

r as

to

for

p its

t had

t

o this

1

Dorado e

right to c

1

license te

produce e

Thus, on

license re

expired l

unless an

area.

1

Mining L

explorati

Rim spec

licenses c

prohibite

244 Ayala/otorgan y 245 Otto E246 Email 247 Miningsin la corrthis law w

5.

Pac R74.

exploration l

continue exp

Accor75.

erminates the

effects from

ce the final e

elinquishes a

icense can a

nd until such

Moreo76.

Law that tem

ion license ev

cifically requ

could not be

ed by Article

/Fratti de Veghasta el día e

xpert Report

from Fred Ea

g Law, Art. 1respondiente

without the co

Pac Rim dexplorationpending

Rim ran out o

licenses final

loring in the

rding to Min

e license. E

m the day on w

extension of

any rights to

apply for a co

h application

over, as min

mporarily pre

ven in the ca

uested more

e extended.24

e 16 of the M

ga Expert Repen que expiran

at 30.

arnest to Tom

6 (RL-7(bis))autorización…

orresponding a

did not have n licenses ex

of time to com

lly expired o

e 75 km2 area

ning Law Art

l Salvador's

which they a

f an explorat

o the license

oncession if

is granted th

ing law expe

eserves or sav

ase where a m

time to expl

46 As a resul

Mining Law.2

port at 34 ("lan.").

m Shrake, Nov

) ("Prohíbese …") ["It is forauthorization

84

a right to coxpired and it

mplete its ex

on January 1

a of the orig

ticle 27.d), e

administrati

are granted u

ion license h

area and the

it meets the

he holder of

ert James Ot

ves any righ

mining conc

lore and was

lt, continued

247

s licencias só

v. 8, 2004 (C-

realizar las acrbidden to car…"].

ontinue explots application

xploration go

, 2005. Afte

ginal licenses

expiration of

ive law expe

up until the d

has expired,

e deposits the

requiremen

f an expired l

tto finds: "Th

ht previously

cession appli

s "consistent

d exploration

ólo producen e

392).

ctividades mirry out the mi

oring after thn for the con

oals in El Do

er that date,

s.

f the term of

erts explain:

day on which

the holder o

erein. The h

nts to file the

license has n

here is no pr

y granted und

ication is pe

tly" told that

n was withou

efectos desde

ineras a que sining activitie

he original ncession was

orado: the E

Claimant ha

f the explorat

"licenses on

h they expir

of the expired

holder of the

e application

no rights to t

rovision in th

der an expire

nding."245 P

t its explorat

ut authorizat

e el día en que

se refiere estaes referred to

s

El

ad no

tion

nly

re."244

d

e

, but

the

he

ed

Pac

tion

tion,

e se

a ley, in

1

in explor

explorati

in the req

explorati

explained

if the Go

Bureau m

cannot gr

compens

1

in the are

any harm

248 Memor249 MiningReport at 250 The risreformingED Mininbegan to uresolved b251 Ayala/mediante manera.")

Never77.

ration activit

ion program

quested conc

ion, without

d by El Salv

vernment w

may grant an

rant one, and

ation from th

Thus, 78.

ea of the exp

m to Claiman

rial, para. 256

g Law, Art. 630.

sk Claimant ag the Amendeng Environmeunderstand thby through th

/Fratti de Vegun acto con e

).

rtheless, con

ties in El Sal

during 2005

cession area,

a valid explo

ador's admin

as informed

n exploration

d did not gra

he State for

Claimant di

pired El Dora

nt—it had no

6 (emphasis a

9 (RL-7(bis))

assumed was eed Mining Lawental Permit ahat the delay Pe technical as

ga Expert Repel contenido e

ntrary to the l

lvador, emba

5."248 Any e

, was a "serio

oration licen

nistrative law

of the ongo

n license by a

ant one, by o

its unauthor

id not ever h

ado licenses

o rights that c

added).

) ("Constituye

even greater gw continued tapplication or PRES faced wssessment, bu

port at 36 ("la establecido en

85

law, "Pac Ri

arking upon

exploration in

ous infringem

nse, was don

w experts, th

ing explorat

an act with t

other means."

rized explora

***

have the righ

. Any allege

could have b

en infraccione

given Claimathrough 2007 the Exploitat

with respect tout only throug

Dirección pun la ley pero n

im continued

an aggressiv

n El Dorado

ment" of Sal

ne at Claiman

here is no im

tion and did

the content e

"251 Claiman

ation activiti

ht to a conces

ed breach in

been affected

es … graves l

ant's admissio and no furthetion Concessio its Concessigh political me

uede otorgar lno puede otor

d to invest m

ve target-gen

o after Januar

lvadoran law

nt's own risk

mplied right t

not seek to e

established b

nt cannot no

ies.

ssion and ha

2008 could

d.

las siguientes

on "when the der progress wion applicatioion applicatioeans." Memo

la licencia de rgarlo, ni lo ot

millions of do

neration and

ry 1, 2005, e

w.249 Such

k.250 As

to explore, ev

end it: "the

by law, but it

ow seek

as no other ri

not have ca

s"); Otto Expe

discussion of was made on thon, the Compaon would not borial, para. 32

exploración torgó, de otra

ollars

d

even

ven

t

ights

aused

ert

fhe anies be

21.

a

B

1

companie

expired e

1

explorati

request n

prohibit f

license fo

extension

explorati

enforces

Mining L

license th

1

252 Mining253 Miningprórroga, la totalida254 Ayala/la Ley, pupueda vac

B. Pac Rlicens

1.

The M79.

es from appl

exploration l

Under80.

ion.252 The h

new explorat

former explo

or any part o

n has expired

ion license o

the time lim

Law would b

hrough a rela

As the81.

The rewithothe exthroug

g Law, Art. 1

g Regulationsel Titular no

ad o parte de l

/Fratti de Vegues sin contraciarse de cont

Rim did not ses included

Claimant dlicenses in

Mining Law a

lying for and

license areas

r the Salvado

holder of an

tion rights fo

oration right

of the origina

d, the Holde

ver all or pa

mit for explor

be rendered m

ated compan

e Salvadoran

egulations, but contradic

xtensions estgh the interv

9 (RL-7(bis))

s, Art. 17 (RLpodrá obtenelo que compre

ga Expert Repadecirla, prectenido por vía

have a righd in its claim

did not haven Guaco, Hua

and its Regu

d receiving n

s.

oran Mining

expired lice

or the same a

ts holders an

al license are

r may not ob

art of what th

ration; the ei

meaningless

ny.

n administrat

by so specifycting it, theyablished by

vention of a n

).

L-8(bis)) ("Cuer por sí, ni poendía la fenec

port at 37 ("Elcisa que el líma de interpone

86

ht to apply fms

a right to apacuco, and P

ulations proh

new explorat

g Law, there

ense is not al

area. The Sa

nd related ent

ea: "Once th

btain directly

he expired L

ight-year lim

if the comp

tive law exp

ying, are devy specify thatLaw cannot new legal en

umplido el plaor interpósita cida.").

l reglamento, mite máximo der una nueva e

for and rece

pply for and Pueblos

hibit Pac Rim

tion licenses

is an eight-y

llowed to con

alvadoran M

tities from o

he term of the

y, or through

License cover

mit establishe

pany could si

perts explain

veloping thet the maximu be rendered

ntity.254

azo de la Licepersona, otra

al hacer esta de las prórrogentidad jurídi

eive other ex

receive the

m and its affi

s covering an

year maximu

ntinue explo

Mining Regul

obtaining ano

e Exploratio

h another pe

red."253 Thi

ed in Article

imply start o

,

e Law, since,um limit of

d meaningles

encia de Exploa licencia de e

precisión, esgas que establica.") (empha

xploration

exploration

filiated

ny area of th

um term for

oring or to

lations explic

other explora

on License or

rson, anothe

s Regulation

e 19 of the

over with a n

,

ss

oración o de sexploración so

stá desarrollalece la Ley nosis in original

he

citly

ation

r its

er

n

new

su obre

ando o l).

1

had the r

Dorado N

2005. Th

applied f

substanti

explained

areas kno

Explorati

1

Salvador

administr

licenses,

of the Gu

licenses g

licenses a

based on

255 Memor256 Ayala/257 Otto Ein contradto grant) a

Thus, 82.

ight to obtai

Norte and El

his, however

for and receiv

ial parts of th

d by Claiman

own as Guac

ion Licenses

Claim83.

ran law from

rative law, e

the grant do

uaco, Huacu

granted to D

and the expi

deposits loc

rial, para. 209

/Fratti de Veg

xpert Report diction to this and such gran

neither PRE

in another ex

l Dorado Sur

r, is exactly w

ved, through

he expired E

nt: "On 26 A

co, Huacuco

s outside of t

mant had no r

m doing so. A

even if the Bu

oes not becom

co, and Pueb

DOREX wou

red licenses

cated in the o

9 (emphasis a

ga Expert Rep

at 32 ("In theprohibition,

nt would thus

ES nor DOR

xploration lic

r exploration

what Claima

h DOREX, in

El Dorado No

August 2005

, and Pueblo

the newly de

right to obtai

As explained

ureau of Min

me legal bec

blos explorat

uld be null an

held by PRE

overlapping

added).

port, § 7.3.2.b

e event that a such grant wobe considere

87

REX, both wh

cense for any

n licenses aft

ant sought to

n Guaco, Hu

orte and El D

, DOREX ap

os, covering

efined Conce

in those licen

d by El Salva

nes made a m

cause the Bu

tion licenses

nd void to th

ES.257 As a

areas.

.

Government ould be ultra d null and vo

holly owned

y of the 75 k

fter those lice

o do. The ex

uacuco, and

Dorado Sur e

pplied for Ex

the remaind

ession area."

nses and wa

ador's expert

mistake in g

ureau cannot

s was not leg

he extent of t

result, Pac R

officer shoulvires (i.e. bey

oid.").

d subsidiaries

km2 area cov

enses expire

xploration lic

Pueblos ove

exploration l

xploration L

der of the are

"255

as prohibited

ts on Salvad

granting the e

ignore the l

gal. Thus, th

the overlap b

Rim cannot m

ld grant an exyond the pow

s of Pac Rim

vered by the

d on January

censes Pac R

erlapped

license areas

Licenses for t

ea of the orig

d under

doran

exploration

aw.256 The

hese explora

between the

make any cla

xploration licewer of the offic

m,

El

y 1,

Rim

s. As

the

ginal

grant

ation

new

aims

ense cial

1

area that

Figure 4.

concessio

license an

1

km2 area

rights to

under Sa

Claimant

having ne

no legitim

explorati

licenses t

1

period, to

not seek

not meet

258 See Me159 (desc259 TechniAssociate

Claim84.

are outside t

.2 of a techn

on and the n

nd Nance Du

Claim85.

of El Dorad

Coyotera an

lvadoran law

t, therefore,

ever been gr

mate expecta

ion in an area

that were no

Claim86.

o choose an

an exploitati

the legal req

emorial, pararibing the dis

ical Report Ues Mar. 3, 200

a) ThHuexp

mant includes

the 12.75 km

ical report p

ew explorati

ulce is in the

mant had no l

do Sur and E

nd Nance Du

w, those righ

cannot ask th

ranted the en

ation to rece

a for which t

ot granted leg

mant had the

area, or area

ion concessi

quirements f

. 139 (describ

scovery of the

Update on the 08, at 15 (R-9

he two deposuacuco and Ppired license

s in its claim

m2 requested

prepared for C

ion licenses,

e Huacuco li

legitimate rig

El Dorado No

ulce ended w

hts could not

his internati

nvironmental

ive environm

the maximum

gally.

opportunity,

as, for which

ion for the C

for those are

bing Coyoterae Nance Dulce

El Dorado Pr).

88

sits included Pueblos werees

ms two depos

d concession

Claimant in

, indicating t

icense area.2

ght to these

orte expired

when the El D

t be extended

onal arbitral

l permits to

mental perm

m term of ex

, following t

h to seek an e

Coyotera or N

as: it had no

a as located we vein in the E

roject Gold an

as claims ine located in t

sits from the

area: Coyot

2008 shows

that Coyoter

259

deposits. Its

on January

Dorado explo

d for Pac Rim

l Tribunal to

continue exp

mits and be al

xploration ha

the maximum

exploitation

Nance Dulce

ot sufficiently

within the El DEl Dorado pr

nd Silver Reso

n this arbitratthe overlap a

original 75

tera and Nan

s the areas of

ra is included

s right to exp

1, 2005. An

oration licen

m or any rel

o award it dam

ploring these

llowed to con

ad expired, b

m eight-year

concession.

e deposits be

y studied the

Dorado Projecoject area in M

ources, Mine

tion located area with the

km2 explora

nce Dulce.258

f the request

d in the Pueb

plore in the 7

ny exploratio

nses expired,

ated entity.

mages for

e areas. The

ntinue

based on new

r exploration

Claimant d

ecause it cou

em. Thus,

ct area) and pMay 2004).

Developmen

in e

ation

8

ted

blos

75

on

, and

ere is

w

n

did

uld

para.

nt

following

an exploi

1

expire. P

then faile

by the M

1

affecting

was force

2007 bec

were susp

meeting w

were told

1

explorati

Claimant

260 Ayala/el día en qfrom the d261 Bureaulicense exJuly 20, 2262 Memor263 Memor264 Letter extension

g January 1,

itation conce

2.

Claim87.

PRES receiv

ed to request

Mining Law a

Prior t88.

g Claimant's

ed to suspen

cause of loca

pended, thro

with the Min

d that all min

Nothin89.

ion rights in

t wanted to c

/Fratti de Vegque se otorganday on which

u of Mines Rextensions and 2009 (R-23) (d

rial, para. 331

rial, para. 298

from Pacific of the Santa

2005, when

ession for th

Claimant d

mant has no r

ved the explo

t the renewal

and Regulatio

to the expira

exploration

nd its explora

al opposition

ough no fault

nisters of Ec

ning activity

ng that El Sa

the Santa Ri

continue exp

ga Expert Repn y hasta el d they are gran

esolution, Julythat the Santa

denying the re

1.

8.

Rim El SalvaRita explorat

n the explora

ese deposits

did not have

rights in Sant

oration licens

l of the expl

ons.261

ation of the l

rights. Inde

ation drilling

n.262 Thus, C

t of El Salva

conomy and

y in the count

alvador did o

ita license ar

ploring and r

port at 34 ("Enía en que expnted up until t

y 16, 2009 (Ra Rita licenseequested exte

ador to Bureaution license).

89

ation licenses

, Claimant h

a right to a

ta Rita, havi

se and the en

oration licen

license, there

eed, as Claim

g program at

Claimant's ea

ador, when C

Environmen

try would be

or did not do

rea. In 2009

requested an

n este sentidopiran.") ["In ththe day on wh

R-22) (noting e expired on Jension).

u of Mines, Ju

s expired and

had no rights

new explora

ing allowed t

nvironmenta

nse before th

e was no alle

mant explains

t Santa Rita f

arly explorat

Claimant atte

nt during wh

e halted unti

o in 2008 aff

9, the explora

extension o

o, las licenciashis regard, lichich they exp

the legal provJuly 14, 2009)

uly 17, 2009

d Claimant d

s to them.260

ation license

the explorat

al permit for

he term expir

eged breach

s in its Mem

from late 20

tion activitie

ended the M

hich the mini

l the EAE w

fected Claim

ation license

of the license

s sólo produccenses only prpire."].

visions releva); Bureau of M

(R-21) (reque

did not reque

e in Santa Ri

ion license t

this area, bu

red, as requi

or damage

morial, Claim

006 through l

es at Santa R

May 7, 2007

ing compani

was conducte

mant's early

e expired.

e.264 The

cen efectos deroduce effects

ant to exploraMines Resolu

esting an

est

ta

to

ut

ired

mant

late

Rita

ies

ed.263

esde s

ation ution,

Governm

Article 1

its other

Claimant

1

indirectly

Santa Rit

extension

holders f

was not g

response

license to

granted n

1

not have

265 Bureau266 Memor267 See Pa53) (mentexpired an268 Claimalegal imperefers to a"Cimarrón269 Mining

ment denied C

1 of the Min

Salvadoran

t tried to "re-

But as90.

y through rel

ta license ex

n. Pac Rim's

failed. The M

granted is in

would have

o expire, has

new rights to

There91.

any rights in

u of Mines Re

rial, para. 334

cific Rim Mintioning that, "nd was imme

ant submittedediment, this a request for an" license, an

g Regulations

Claimant's re

ning Regulat

subsidiary, D

-stake" its cl

s described a

lated entities

xpired on Jul

s attempt to

Ministry did

accordance

e been to den

s no rights to

o Santa Rita

fore, Claima

n Santa Rita

esolution, July

4.

ning Corp., ""[s]ubsequent diately re-stak

d a copy of theapplication w

a new explorand provides a

s, Art. 17 (RL

equest as no

tions. 265 Th

DOREX.266

laim to Santa

above, an ex

s, to seek a n

y 14, 2009.

use DOREX

not grant th

with Article

ny the applic

o Santa Rita

contrary to t

ant holds no

upon which

y 16, 2009 (R

Santa Rita," hto the end of

ked by the Co

e application would not supation license ctable of costs

L-8(bis)); Aya

90

t allowed by

en Claimant

Thus, long

a Rita throug

xploration rig

new explorat

Pac Rim sim

X to circumv

he license to

e 17 of the M

cation.269 Cl

and could ha

the Mining L

exploration

h to base any

R-22).

http://www.paf fiscal 2009, ompany's sub

without annexpport grantingcalled "Cimars for the "Seso

ala/Fratti de V

y Articles 27

t re-applied f

after the alle

gh both PRE

ghts holder i

tion license a

mply missed

vent the legal

DOREX.268

Mining Regu

laimant, havi

ave no legiti

Law provisio

license in S

y claims in th

acrim-miningthe Santa Rit

bsidiary DORE

xes with its eg the license inrrón," proposeori" license.

Vega Expert R

7 of the Mini

for the same

eged breach

ES and DOR

is not allowe

after its licen

d the deadlin

l limits on ex

The fact th

ulations, and

ing allowed

imate expect

ons.

Santa Rita, an

his arbitratio

g.com/s/ES_Sta exploration

REX.").

exhibit C-424n any case; thes an explora

Report, § 7.3.2

ing Law and

e license thro

in March 20

REX.267

ed, directly o

nse expires.

ne to request

xploration ri

hat the licens

the only law

its explorati

tation of bein

nd Claimant

on.

SantaRita.asp n licence [sic]

. Aside fromhe applicationation plan for

2.c.

d

ough

008,

or

The

an

ights

se

wful

ion

ng

t does

(R-

m the n the

1

demonstr

absolutel

1

Letter of

it "acquir

except to

environm

respect to

1

Company

Colorado

1

to Pac Ri

Bureau o

alleged d

1

payment

Rim tried

very clea 270 Memor271 Memor272 Pacific

3.

Pac R92.

ration of Cla

ly meritless.

In its 93.

f Intent to acq

red" the Cerr

o include the

mental permi

o these areas

In fac94.

y has not yet

o project area

The B95.

im. Pac Rim

of Mines, and

damages calc

Includ96.

for somethin

d to acquire t

ar: Pac Rim w

rial, para. 361

rial, para. 364

c Rim Mining

Claimant hZamora/C

Rim's claims

aimant's gree

Memorial, C

quire an inte

ro Colorado

m in damage

its for these a

s.

t, according

t received co

a have been

Bureau of Mi

m has no exp

d it never did

culations.

ding these ar

ng to which

these license

was trying to

1.

4.

g Corp., "Proj

has not estaberro Colorad

related to Za

ed and exagg

Claimant des

erest in the Z

project.271 C

es calculatio

areas or abou

to Pac Rim'

onfirmation t

formally gra

ines has no r

ploration righ

d. It is absu

reas is simply

it never had

es in 2006, th

o change the

ects: Zamora/

91

blished that ido

amora and C

gerated claim

scribes that "

Zamora gold

Claimant say

ons. Claiman

ut any action

's own descr

that the licen

anted."272

record of hav

hts to Zamor

rd that these

y the most b

d any right. T

he problems

e law and con

/Cerro Colora

it has or ever

Cerro Colora

ms against E

"in February

Project"270 a

ys nothing m

nt makes no

ns or omissi

ription of the

nces it stake

ving transfer

ra and Cerro

e areas have

blatant attem

The Tribuna

s with its exp

nvince Salva

ado, El Salva

r had any rig

ado may be t

l Salvador.

y 2006, Pac R

and that in S

more about th

allegations

ons by the G

ese areas on

d in the Zam

rred licenses

o Colorado re

been include

mpt by Pac R

al will recall

ploitation co

adorans that

dor" (C-425)

ghts in

the clearest

These claim

Rim signed a

September 20

hese areas,

about licens

Government

its website:

mora -- Cerro

s for these ar

ecognized by

ed in Claima

im to deman

that when P

oncession we

mining wou

.

ms are

a

006,

ses or

with

"The

o

reas

y the

ant's

nd

Pac

ere

uld

not hurt t

intensive

unique ge

Yet again

additiona

bear new

1

any harm

alleging t

obtain lic

related to

1

rights wo

above,275

nothing m

"constitu

concessio

273 Pacificin El Salv274 Pacificin El Salv275 See Se276 Memor277 Mining

the environm

e reconnaissa

eological kn

n, instead of

al ground," d

w opportuniti

There97.

m with respec

that it is enti

censes or get

o these areas

4.

Finall98.

ould not give

5 an explorat

more. Despi

ute real prope

on is a right

c Rim Miningvador, Sept. 2

c Rim Miningvador, Sept. 2

ction II.A.1.

rial, para. 471

g Law, Art. 1

ment. Even s

ance-style pr

nowledge and

f focusing on

describing ho

ies."274

is not even

ct to these ar

itled to dama

t to the point

s should be s

Even if Cl"real prope

ly, even if Cl

e rise to the c

tion license g

ite Claimant

erty rights."2

in rem.277 T

g Corp., News5, 2006 (C-25

g Corp., News5, 2006 (C-25

1.

0 (RL-7(bis))

so, Pac Rim

roject genera

d continue to

n complying

ow its "'first

an allegation

reas. Pac Ri

ages for area

t of applying

ummarily re

laimant had aerty rights in

laimant coul

claims Pac R

grants the rig

t's insistence

276 Under th

Therefore, C

s Release, Pac58).

s Release, Pac58).

).

92

thought that

ation initiativ

o build its po

with the law

to market' a

n of El Salva

im is cavalie

as where it tr

g for environ

ejected.

any valid exn a mineral e

ld establish t

Rim has pres

ght to explor

otherwise, a

he plain text

laimant is in

cific Rim Min

cific Rim Min

t was the op

ve within El

ortfolio of hi

w, Pac Rim w

advantage in

ador violatin

erly wasting

ried to stake

nmental perm

xploration licestate," as Pa

that it had an

sented in this

re and study

an exploratio

of the Minin

ncorrect to as

ning Acquires

ning Acquires

portune time

l Salvador to

igh-quality g

was focused

n El Salvador

ng any oblig

the Tribunal

ground, but

mits. Damag

censes, they ac Rim claim

ny exploratio

s arbitration

y a particular

on license do

ng Law, only

ssert that it i

s Cerro Color

s Cerro Color

e to "conduc

o capitalize o

gold projects

on "staking

r continues t

gations or cau

l's time by

t did not eve

ges calculati

would not bms

on rights, su

. As explain

r area and

oes not

y an exploita

is somehow

rado Gold Pro

rado Gold Pro

ct an

on its

s."273

to

using

en

ions

be

uch

ned

ation

oject

oject

entitled t

explorati

1

Huacuco

Claimant

legally ob

still be a

mine that

obtaining

apply for

2

first and

legitimat

any alleg

windfall

278 Memor279 Behre hundred" para. 60.

o the fair ma

ion licenses i

Claim99.

, Pueblos, S

t's failures w

btained the e

long way fro

t deposit, de

g the require

r and obtain

As a r00.

foremost be

te expectatio

ged explorati

of "extraord

rial, paras. 66

Dolbear highpreliminary e

arket value o

it claims.278

mant is unabl

anta Rita, an

with regard to

exploration l

om planning

emonstrating

d authorizat

a concession

result, in add

cause Claim

ons to receive

ion license w

dinary profits

62, 669.

hlights that "exexploration pr

of either the

e to make cl

nd Zamora/C

o each of the

licenses and

g a mine, dem

g the technica

tions from la

n.279

dition to the

mant has no e

e those right

would not co

s" it seeks in

xploration is rojects becom

93

mineral dep

laims based

Cerro Colora

ese license ar

environmen

monstrating

al and econo

andowners, e

fact that Cla

exploration r

ts under the M

onstitute prop

n this arbitrat

a high-risk buming producin

posits located

on explorati

ado. El Salv

reas. Moreo

ntal permits

its financial

omic feasibil

etc. that wou

aimant's expl

rights and co

Mining Law

perty rights t

tion.

usiness" with ng mines. Beh

d within or th

ion rights in

vador is not r

over, even if

for explorati

l and technic

lity of its mi

uld have been

loration licen

ould not have

w and Mining

that entitle P

h "fewer than hre Dolbear E

he area of th

Guaco,

responsible f

f Claimant ha

ion, that wou

cal ability to

ne plan,

n necessary

nse claims f

e had any

g Regulation

Pac Rim to th

one in one Expert Report

he

for

ad

uld

to

fail

ns,

he

t,

III. PE

2

Feasibilit

individua

has no cl

will brief

exploitat

Environm

metallic m

concerns

steps the

A

2

obligatio

280 See Se281 Constitgoce de la282 ConstitEl Estado283 Constitdiversidad

PAC RIM WEXPLOITAT

Claim01.

ty Study req

ally sufficien

laim with res

fly address th

ion concessi

ment's legitim

mining in th

about Pac R

Governmen

A. Realizfulfillenviro

El Sal02.

n is reflected

"it is tenjoym

"The hState a

"It is tintegr

ction II.A abo

tution, Art. 1 a libertad, la s

tution, Art. 65 y las persona

tution, Art. 1d e integridad

WAS NOT ETION

mant's failure

quirements—

nt to show th

spect to the E

he third, dist

ion: the envi

mate general

he country. E

Rim's propos

nt has taken t

zation by thl its obligationment

lvador has a

d in several

the obligatioment of liber

health of theand people a

the State's durity of the en

ove.

(RL-121) ("esalud, la cultu

5 (RL-121) ("as están oblig

17 (RL-121) d del medio am

ENTITLED

s to comply

—both necess

hat Claimant

El Dorado co

tinct item m

ironmental p

l concerns ab

El Salvador w

sed project.

to protect its

he Ministry ons to prote

responsibili

provisions o

on of the Statrty, health, c

e inhabitantsare obligated

uty to protecnvironment, t

es obligación ura, el bienest

"La salud de lgados a velar p

("Es deber dembiente, para

94

TO AN EN

with the lan

sary for an ex

t did not hav

oncession ap

issing from

permit. El Sa

bout its capa

will then me

Finally, El S

s people and

of Environmect the Salva

ity to protect

of the Salvad

te to secure fculture, econ

of the Repud to see to its

ct natural resto ensure sus

del Estado astar económico

los habitantespor su conser

el Estado prota garantizar el

NVIRONME

nd ownership

xploitation c

ve a right to a

pplication.280

Claimant's a

alvador will

acity to evalu

ention some

Salvador wil

d the environ

ment that itadoran pop

t its people a

doran Consti

for the inhabnomic well-b

ublic constitus conservatio

sources, as wstainable dev

segurar a los ho y la justicia

s de la Repúbrvación y rest

teger los recul desarrollo so

ENTAL PER

p or authoriz

concession a

a concession

0 Neverthel

application f

first explain

uate, monito

of the most

ll describe th

nment.

t lacked thepulation and

and the envir

itution:

bitants of thebeing and so

utes a publicon and restor

well as the divelopment."

habitantes de social").

blica constituyablecimiento

ursos naturaleostenible.").

RMIT FOR

zation and

application—

n and therefo

ess, El Salva

for an

n the Ministr

or, and super

significant

he reasonabl

e capacity tod the

ronment; thi

e Republic, ocial justice."

c good. The ration."282

iversity and "283

la República

ye un bien púb.").

s, así como la

R

—are

ore

ador

ry of

rvise

le

o

is

the "281

a, el

blico.

a

2

obligatio

responsib

environm

shall prev

evaluate

in line w

2

of Enviro

was the v

particular

project, t

country u

evaluate

norms du

Economy

"the Min

284 EnviroBook 339Book 374285 Enviro286 Enviroprincipio

The S03.

n under the

ble for carry

mental policy

vail in the m

environmen

ith the Preca

El Sal04.

onment was j

very first one

r. Around th

the Ministry

up for metall

proposed pr

uring operati

y regarding t

nistry of Envi

onmental Law9 of Apr. 5, 194 of Mar. 9, 20

onmental Law

onmental Lawde prevención

Salvadoran E

Constitution

ing out the n

y specifically

management o

ntal impact st

autionary Pri

lvador does n

just created

e the Ministr

he time that

of Environm

lic mineral e

rojects' impa

ions. Dr. Ma

the suitabilit

ironment is n

w of El Salvad998 amended 007 ("Environ

w, Art. 3 (CL-2

w, Art. 2.e) (Cn y precaució

Environmenta

n to protect t

national envi

y provides th

of environm

tudies and m

inciple, i.e.,

not have rec

in 1997 and

ry had to eva

it was consi

ment realized

exploitation.

acts and to m

anuel Pulgar

ty of mining

not equipped

dor, Legislativby Legislativ

nmental Law"

2).

L-2) ("En la gón.").

95

al Law confi

he environm

ironmental p

hat: "The pri

mental protec

make decision

it must err o

cent experien

d Pac Rim's E

aluate for me

dering Pac R

d that it lack

The Minist

monitor and e

r-Vidal, cont

exploitation

d to effectiv

ve Decree Nove Decree No"), Art. 1 (CL

gestión de pro

firms and fur

ment.284 The

policy.285 Th

inciple of pre

ction."286 Th

ns about wh

on the side o

nce with met

Environmen

etallic minin

Rim's EIA fo

ked the capac

try lacked th

enforce comp

tracted in 20

n in El Salva

ely assume a

o. 233, publish. 237, publish

L-2).

otección del m

rther details

e Ministry of

he Salvadora

evention and

hus, the Mini

hether or not

f caution.

tallic mining

ntal Impact S

ng in general

or its propos

city necessar

he resources

pliance with

006 to advise

ador, describ

a strong env

hed in Officiahed in Officia

medio ambien

the State's

f Environme

an national

d precaution

istry must

to grant per

g. The Minis

Study ("EIA"

l and gold in

sed exploitat

ry to open th

to sufficient

h environmen

e the Ministr

bed the view

vironmental

al Gazette Noal Gazette No

nte, prevalece

nt is

n

rmits

stry

")

n

ion

he

tly

ntal

ry of

that

o. 79, . 47,

erá el

policy re

and expe

2

insufficie

than 2,00

overwhel

with MA

Environm

in the cou

heightene

of Enviro

287 Manuesocial relaReport: StEconomy 130) ("Prollevar a caejemplo eactividad the compecase of Meffects."].288 Pulgar 289 Pulgar 290 Memor291 Pulgar

garding min

ertise on the

Dr. Pu05.

ent resources

00 environm

lmed and de

ARN "did not

mental Law w

untry for ma

ed concerns

onment, to p

the levare alssense what wimpacas min

el Pulgar-Vidaations, Aug. 1trategic Envirof El Salvad

ovocada princabo la labor den el caso espeeconómica quetent institutio

MARN, for tra

Final Report

Final Report

rial, para. 255

Final Report

ning activity.

subject, lack

ulgar, who c

s at the Mini

ental impact

aling with a

t seem partic

were "relativ

any years."29

among Salv

rotect the co

vels of citizeso high. Thethat the Minwould entailct studies as ning.291

al, Final Repo11, 2006 ("Puronmental Asor Foreign Cocipalmente po

de gestión, segecífico del Mue pueda provons to managcking the env

t at 13 (R-129

t at 47 (R-129

5.

t at 47-48 (R-

."287 Dr. Pul

k of sufficien

urrently serv

istry of Envi

t studies.289

new industr

cularly surpr

vely new" an

90 Dr. Pulgar

vadorans who

ommunities a

en distrust reere does not nistry of Envl making a dspecialized a

ort: Mining aculgar Final Ressessment of tooperation Unor las carenciaguimiento y f

MARN para el vocar esos efee, track and a

vironmental e

9).

9).

129).

96

lgar describe

nt personnel,

ves as Peru's

ironment had

Claimant, in

ry. Accordin

rising" becau

nd "[t]here h

r noted that

o depend on

and the envi

egarding the seem to be a

vironment is decision regaas those rele

ctivity, overveport") at 13 (the Metallic Mnit, Sept. 8, 2as que presen

fiscalización dseguimiento

fectos.") ["Primaudit metallic ffects of any

ed that this w

, and an insu

s Minister of

d already res

n fact, knew

ng to Claima

use both the

had been alm

the lack of r

n the Govern

ironment:

Ministry's cany credibiliin a position

arding enviroevant to an a

view of develo(Exhibit R-12Mining Sector2011 ("Tau Fintarían las instde la actividadde los efectomarily due tomining activeconomic act

was due to la

ufficient bud

f Environme

sulted in a ba

w the Ministry

ant, the delay

Mining Law

most no gold

resources and

nment, throug

capabilities ity in the n to undertakonmental activity such

opment, envir29). See alsor of El Salvadinal Report") tituciones comd minero mets ambientales

o the shortcomvity. For examtivity that cou

ack of experi

dget.288

ent, noted tha

acklog of mo

y was

ys it experie

w and the

mining activ

d delays

gh the Minis

ke

ronment, and , Tau Group, dor, Ministry at 65 (Exhibimpetentes partálica. Esto ess de cualquier

mings presentemple in the speuld cause said

ience

at the

ore

enced

vities

stry

Final of it R-ra s, por r ed by ecific

d

2

commun

2

gold extr

Group ha

Law wer

full envir

Commer

environm

negative

environm

with the u

292 Pulgar

In his 06.

ities, includi

"El Saof neain Lat

"the pinevit

"the pRiver more contam

"the cbeen d

Regar07.

raction was w

ad received a

e enacted, so

ronmental im

ce Group's p

mental measu

environmen

mental permi

unmitigated

AccordrainaLima able todown

Final Report

August 200

ing that:

alvador is a carly 7 milliontin America

population deably place th

potential of lobasin, the cothan a third mination neg

ountry's expdone irrespo

rding this las

with the Nor

an exploitati

o it was gran

mpact study

property reve

ures establish

ntal impacts.

its for Comm

harm cause

rding to the Lage in the miMunicipalityo document 30 years ago

t at 11-15 (R-

06 report, Dr

country mean inhabitantswith almost

ensity, acutehe country in

ocating miniountry's mosof the populgatively affe

perience shownsibly."292

st point, the o

rth American

ion concessio

ndfathered in

approval pro

ealed that Co

hed in its en

Therefore,

merce Group

d by Comme

Latin Ameriining cantony, and the deacid drainago. . . .

129).

97

. Pulgar desc

asuring 21,04s, resulting i350 people

e deforestation a situation

ing operationst important lation, createecting water

ws that the l

only other re

n company, C

on before th

nto the new s

ocess. In 20

ommerce Gr

nvironmental

in July 2006

p. Unfortuna

erce Group's

ican Water Tn of San Sebaepartment ofge coming ou

cribed the co

41 square kiin one of theper square k

on, and poorthat is movi

ns in the arewater sourc

es a risk thatquality leve

ittle activity

ecent experie

Commerce G

e new Minin

system with

005-2006, en

roup was not

l permits to p

6, the Minist

ately, the Go

s past operat

Tribunal, theastián, Santaf La Unión, ut of a mine

oncerns of th

lometers wite highest popkilometer;"

r use of wateing toward 'w

ea of influencce which supt could resultels;" and

y that has bee

ence in El S

Group Corp.

ng Law and

out having t

nvironmental

t complying

prevent and

try revoked t

overnment co

tions:

ere is acid a Rosa de and it was that shut

he Salvadora

th a populatipulation dens

er resources water stress;

ce of the Lempplies water ft in

en carried ou

alvador with

. Commerce

Environmen

to go through

l audits of

with the

mitigate

the

ontinues to d

an

ion sities

;'"

mpa for

ut has

h

e

ntal

h the

deal

2

report de

to it and

Sebastián

movemen

to be care

monitor m

environm

293 Tau Fiácido en eUnión, y paños. . . . específicaDique de muestreoslímites deresultaría agua ácida294 Pulgar ["the actio295 Pulgar country laprevent thasegurar qexcluya dMinister Benvironm

In 200of theComemost sthat alcoppepotablwater streamconsid

Thus, 08.

escribing the

2) was just b

n River by ea

nt against m

eful and it ha

metallic min

ment.295

nal Report at el cantón minpudo documeEn 2006, CEI

amente en tresLixiviación. Ls valores de me la norma de nociva para ea— y lejano a

Final Reportons in opposit

Final Reportacks the tools he operator froque este impa

del cumplimieBarrera "was ental damage

06 CEICOM San Sebasti

ercio Streamsignificant wll the sample

er, iron and ale water. In owas unsafe

ms was also vdered approp

in 2006, the

Ministry's i

beginning to

arlier gold e

mining was ga

ad legitimate

ning in such

47-48 (R-130ero de San Se

entarse un dreICOM impulss puntos estraLos datos má

metales pesadoagua potable

el consumo hua valores apto

t at 9 (R-129) tion to mining

t at 14 (R-129to ensure tha

om evading cacto ambientaento de sus obaware of his

e] and ensure

M sponsored aián River, sp, El Taladrón

water analysies contained aluminum—other words,for human cvery low—apriate for hum

e Ministry of

nsufficient c

o understand

xploitation a

aining mome

e concerns th

a way as to

0) ("Según elebastián, Munenaje ácido qusó un estudio atégicos del ríás relevantes dos —como m. Es decir, quumano. Ademos para el con

("las accioneg have been o

9) (noting, witat this environcompliance wl puede ser ad

bligaciones.")Ministry's limthat there wa

98

a technical specifically atn Stream andis data, showheavy meta

in excess of , with amounconsumptionacidic water—man consum

f Environme

capacity and

the extent o

and processi

entum in El

hat it was no

effectively s

Tribunal Latnicipio de Sanue salía de un

técnico de laío: Quebrada de los análisis

manganeso, coue con estas camás, el pH de nsumo human

es en oposicióongoing for li

th respect to Pnmental impa

with its obligatdecuadamente; Gavidia Wit

mitations to bes no damage

study of the wt three strated the leachin

wn in Table 1als—such as f the allowabnts of metals

n. Moreover,—and far fro

mption.293

ent 1) had rec

d resources to

of the unmiti

ing activities

Salvador.294

ot equipped t

safeguard the

tinoamericanonta Rosa de La mina que su

a calidad del aEl Comercios de agua . . . obre, hierro y antidades de mlas quebrada

no.").

ón a la mineríittle more than

Pacific Rim's ct can be apptions." / "el pae cubierte y ptness Statemee able to asseto the environ

water qualityegic points: Eng dike. The17, indicatedmanganese,

ble limits fors, the river , the pH of thom levels

ceived Dr. P

o take on the

igated harm t

s. In additio

4 The Minis

to evaluate,

e population

o del Agua, eLima, departamuspendió sus agua del río S, Quebrada Eindicarían enaluminio—pmetales, el ag

as sería asimis

ía tienen pocon a year"].

application, propriately deaaís carece de

para evitar quent, para. 9 (ness this type onment or to th

y El e d , r

he

Pulgar-Vidal

e tasks assign

to the San

n, the social

try knew it h

permit, and

n and the

xiste un drenmento de La labores hace

San Sebastián,El Taladrón y n todos los or encima de

gua de este ríosmo muy bajo

o más de 1 añ

the view that alt with and therramientase el operador

noting that of risk [of he life and he

l's

ned

l

had

aje

30 ,

los o o —

ño")

"the to s para r se

ealth

2

Minister

harm the

explained

2

the Minis

was comp

President

need to s

of the peolas limitachubiese dproyectos296 La PreEnvironmllegó a la minería mhabría dañmejorar el["Ministermining exthat there reason thagoing ahe297 La Pre298 El Diaconcederáun diagnómaintainscompanieyear."].

As a r09.

Barrera pub

environmen

d:

The MenviroCabañsignal

Almo10.

stry would n

pleted.298 A

t Saca "ask[e

tudy the pot

ople, particulaciones que tenaños al medio

s de explotació

ensa Gráfica, ment) (Exhibit

conclusión demetálica, ni otoño ambiental,l marco legal r Barrera con

xploration, or would be no

at we thoughtead with these

ensa Gráfica,

rio de Hoy, "án licencias dóstico sobre lo that exploita

es, until the co

result of thes

blicly explain

nt.296 The le

Ministry of Eonmental proñas and otherls a "no" to t

ost a year lat

not be grantin

And it was th

ed] for cauti

tential impac

arly for exploinía en su mino ambiente asón, que eran l

Enfoques, "At R-120(bis))e que no podíorgar el perm, y así lo dijo y las capacid

ncluded that hgrant Pacificenvironment

t about seekine activities."].

Enfoques, "A

Protesta contre explotaciónos efectos de lation licenses ountry comple

se concerns,

ned that the M

ead-in to the

Environment otection withr places. Rethe mining c

ter, in June 2

ng concessio

herefore no su

on regarding

cts of mining

itation projec

nisterio para psí como a la vlo que tenían

Adiós a Las M). See also Gaía seguir otorg

miso ambientapúblicamente

dades institucie could not co

c Rim the enval damage, an

ng to improve

Adiós a Las M

ra explotaciónn, algunas ya sla minería, mwill not be gretes a study o

99

in July 2006

Ministry wo

story under

does not hah gold exploecognizing thompanies.297

2007, his suc

ons until a st

urprise eight

g mining exp

g in the coun

cts, which carroder evaluar

vida y a la salumayors riesg

Minas," July 9avidia Witnesgando permisl a Pacific Rie a mediados ionales antes ontinue to appironmental pend he stated th the legal fram

Minas," July 9

n minera," Jusolicitadas po

mismo que podranted, some

of the effects o

6, in a spread

ould not auth

the title, "F

ave the capacitation projehe deficiency7

ccessor, Carl

tudy of the p

t months late

ploitation pr

ntry before d

ried greater rieste tipo de rud de las pers

gos.").

9, 2006 (Intervss Statement, sos ambientalm, mientras ndel año 2006de embarcarnprove environermit, as longhis publicallymework and i

9, 2006 (R-120

une 24, 2007 (or las empresadría tardar porof which havof mining, wh

d in a Salvad

horize any pr

Farewell to M

city to ensureects in y, the Minst

los Guerrero

potential effe

er, in March

rojects," and

deciding how

isks." / "estabriesgo y asegusonas, particu

view with Mipara. 10 ("El

les para la expno pudiera ase6. Por eso pennos en esas acnmental permg as he was uny in mid-2006institutional c

0(bis)).

(R-122) ("[S]as, hasta que r lo menos un

ve already beehich could tak

doran newsp

roject that w

Mining,"

e

ter

o, confirmed

ects of minin

h 2008, that t

reiterated th

w to go forwa

ba consciente urar de que noularmente para

inister of the l ministro Barploración de egurar de que

nsamos en busctividades.")

mits for metallnable to ensur6. It was for thcapacity prior

ostiene que nel país cuente

n año.") ["[H]en requested bke at least a

paper,

would

that

ng

then-

he

ard:

de

o a

rrera

e no scar

lic re his r to

no se e con ]e by

2

country,

considera

Cabañas.

B

2

general, t

Claimant

of Enviro

Economy

Ministry,

the Proje

asserted t

Project, a

gathering

299 Inverti(C-1). 300 Memor– El Dora301 Memor– El Dora

We wdisadvshownthe exthat ti

The in11.

both by the

ation of Pac

.

B. The Mpropo

In add12.

the Ministry

t did not ade

onment with

y. For exam

, Pac Rim sim

ect," and wou

that it would

and also duri

g data."301

ia, "Presidente

randum fromado EIA's Tea

randum fromado EIA's Tea

want to genervantages of mn proof that gxploitation peme, a law m

ncreased awa

Ministry of

Rim's applic

Ministry of Eosed project

dition to the

y had legitim

equately addr

h the same di

mple, right fro

mply told M

uld prepare t

d continue ex

ing the const

e de El Salva

m A. Juarez, Cam, Jan. 14, 2

m A. Juarez, Cam, Jan. 14, 2

rate a space tmining. Andgreen mininermits, whic

must be made

areness in 20

Environmen

cation for a 3

Environment specifically

serious conc

mate concerns

ress the Min

ismissive att

om the start

MARN offici

the engineer

xploration ac

truction and

dor pide caut

onsultoría y T004 (C-105).

onsultoría y T004 (C-105).

100

to reflect on d after we refg exists and

ch is what wee to make ev

005-2006 of

nt and the loc

30-year, 12.7

nt had legitiy

cerns about m

s about Claim

nistry's conce

itude that it

of the proce

als that it wo

ing designs

ctivities "dur

d operation p

tela ante proy

Tecnología A

Tecnología A

the benefitsflect on it, anthat it is pos

e have not gverything ver

f mining's po

cal commun

75 km2 expl

imate conce

metallic min

mant's El Do

erns, but inst

had for issue

ess, rather tha

ould "presen

"in a later st

ring the perm

phases of the

yectos de expl

Ambiental, S.A

Ambiental, S.A

s or nd we're ssible to gra

given them, ary clear.299

otential impa

nities, necess

loitation con

erns about P

ning in El Sa

orado permit

tead approac

es raised by

an seek guid

nt the concep

tage."300 Pac

mitting proc

Project, to c

lotación mine

A. to Pacific R

A. to Pacific R

ant at

acts in the

sarily impact

ncession in

Pac Rim's

alvador in

t application

ched the Min

the Ministry

dance from th

ptual design

c Rim furthe

ess for the

continue

era," Mar. 11,

Rim Mining C

Rim Mining C

ted

n.

nistry

y of

he

of

er

2008

Corp.

Corp.

2

present a

the Term

to the pro

detailed i

inter alia

2

Ministry

The obse

occupied

302 Email del proyecsensitive n303 Ministr(emphasis304 ObservFeb. 1, 20

The T13.

a "conceptua

ms of Referen

oject's sensit

information.

a:

"Descthe prprodu

"Charremov[and]

"Submwith tprotecetc.). Uobstru

"Submthe tuduring

Pac R14.

in February

ervations beg

d by the proje

exchange betcto, hemos tenature, we ha

ry of Environs in original).

vations from M005 (C-133).

Terms of Ref

l design" an

nce for the E

tive nature."3

. Among the

cribe and proroject's phaseuction proces

racterize andved during thmanagemen

mit a map indtheir respectiction of the cUnder no ciucted or alt

mit a geotechunnel, mine g the operati

Rim submitte

y 2005 show

gin by noting

ect nor ident

tween Fred Eanido algunos

ave had some

nment, Terms

MARN on the

ference show

d continue e

El Dorado EI

302 The Term

e 30 points f

ovide details es of implemsses to the cl

d estimate thehe implemennt and siting

dicating the ive minimumcourse and nircumstancetered by the

hnical assessand residueions and proj

ed its EIA in

that Pac Rim

g that Pac Ri

tified the vei

arnest and Luinconvenientproblems in t

of Reference

e Environmen

101

w that the Mi

exploring. T

IA, explainin

ms of Refere

for "Project D

concerning mentation, frolosure of ope

e volumes ontation and owith regard

direction of m engineerinnatural bankse shall the c

e project's im

sment (takinge dam area, ject impleme

September 2

m had not co

im had not a

ins to be exp

uis Trejo, Julytes en la prepthe preparatio

e for El Dorad

ntal Impact S

inistry did no

The Ministry

ng that they w

ence issued i

Description,

the activitieom site preperations and

f soil and unoperation phto final disp

f rainwater dng work to ps of rivers ancourse of rivmplementat

g into considsuch that th

entation pha

2004, and th

omplied with

accurately de

ploited.304 A

y 22, 2004 (Caración de lo

on of the ToR

do Exploitatio

tudy for the E

ot accept Pa

spent consid

were difficu

in July 2004

" Claimant w

es to be carriparation, con

rehabilitatio

nusable matease (especia

posal."

drainage and revent erosio

nd streams, avers or streation."

deration seisheir stability ases."303

he first obser

h the Terms

escribed the

Additional co

C-119) ("Debids TdR") ["Du

R"].

on Project, Ju

El Dorado exp

ac Rim's plan

derable time

ult to draft "d

4 require very

was asked to

ied out in eacnstruction, on."

erials to be ally for the m

discharge poon (channeliaccess pointsams be

smic factors)may be ensu

rvations from

of Reference

area to be

omments

do a lo delicaue to the proje

uly 2004 (C-1

ploitation pro

n to

e on

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y

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ado ect's

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requested

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2

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its enviro

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Plan.308

granted a

305 ObservFeb. 1, 20306 Email 307 Enviro("A detailfinal desig308 2005 Edevelop ahandling fenvironmand good the designcyanide aMar. 2013developed

d significant

mental manag

sure plan.305

d informatio

he reviewers

designs are d

Thus, 15.

t never subm

onmental per

mine closure

ment Plan th

Thus, simila

an environm

vations from M005 (C-133).

from Fred Ea

onmental Impled reclamatiogns.").

EIA at 7-68 (Cand prepare a fuels, chemicental laws aninternational

ns are comples described in3 ("Hutchisond" as part of th

t additional i

gement plan

5 An interna

n to the Min

think that w

done" and pl

just like Cla

mitted the ma

rmit applicat

e plan.307 It

at would "be

ar to its appr

ental permit

MARN on the

arnest to Tom

act Assessmeon plan will b

C-8) ("As partSolid and Haal products and regulations practices. Ea

eted, approprin Section 7.3.n and Mudderhe comprehen

nformation,

n and propose

al e-mail reve

nistry. Rathe

we should be

lanned to arg

aimant ignor

aterials reque

tion. For ex

also listed s

e developed"

oach with th

t without pro

e Environmen

m Shrake, Feb.

ent "El Doradbe developed

t of the Projeazardous Mannd reagents. Tof El Salvad

ach plan is speate plans will6."). See also

r Expert Reponsive Environ

102

including ab

ed mitigation

eals that Pac

er, Pac Rim c

providing in

gue about 10

red the requi

ested by the

xample, the u

several comp

" at a later da

he Ministry o

oviding all of

ntal Impact S

. 3, 2005 (C-1

o Mine Projeduring the en

ct Environmeagement PlanThis plan willor, the enviroecific for the l be developedo Expert Repoort") at 18-19 nmental Mana

bout impacts

n measures,

c Rim did no

complained

nformation t

0% of the ob

irements for

Ministry of

updated EIA

ponents of th

ate, includin

of Economy

f the require

tudy for the E

132) (emphas

ect," Sept. 200ngineering pha

ental Managemn describing tl be establisheonmental guidproject site and. A separateort of Ian Hut(listing separ

agement Plan

s on water, t

cyanide tran

ot intend to p

that "[i]t see

that won't be

bservations.3

an exploitat

f Environmen

A submitted in

he Environm

ng the Cyani

, Pac Rim ex

ed informatio

El Dorado exp

sis added).

05 ("2005 EIAase of the Pro

ment Plan, Pathe general pred pursuant todelines of the nd individual

e plan will be utchison and Trate plans thatn).

the

nsport, and t

provide all o

ems that one

e available u

06

tion concess

nt with regar

n 2005 still

mental

de Managem

xpected to be

on.

ploitation pro

A") at 7-111 (oject and base

acific Rim wirocedures for o the World Bank/

l facilities. Ondeveloped fo

Terry Muddert "would be

the

f the

e or

until

ion,

rd to

ment

e

oject,

(C-8) ed on

ill

/IFC nce or r, 29

2

provided

identified

25 provid

complied

10 days.

2

experienc

visited M

conclude

countries

Dorado E

2

opposing

309 Enviro310 Pulgar 311 RobertEl Salvad312 Dr. Mo

1.

In Oct16.

d for in Artic

d as needing

des that the s

d with this re

There was n

Dr. Ro17.

ce in water q

MARN, the p

ed: "This EIA

s."311 He foc

EIA:

includ

lacked

presenwater,

insuffdetoxi

failed other

In its 18.

g the propose

onmental Law

Final Report

t E. Moran, Tdor, Oct. 2005

oran's Techni

Comments

tober 2005, t

le 25 of the

g improveme

study should

equirement b

no electronic

obert E. Mor

quality, hydr

proposed min

A would not

cused his det

ded incomple

d stream flow

nted no base, including a

ficiently addrification pro

to consider deposits nea

Memorial, C

ed El Dorado

w, Art. 25 (CL

t at 44 (R-129

echnical Rev5 ("Dr. Moran

cal Review at

s from the pu

the El Dorad

Environmen

ent is that the

d be made av

by having on

c copy and n

ran, a consu

rogeology, a

ne site, and n

be acceptab

tailed observ

ete water qu

w measurem

eline concentarsenic, merc

ressed the toocess; and

the cumulatar Minita.312

Claimant des

o project, sig

L-2).

9).

iew of the El n's Technical R

t 3, 4, 6, 8, 11

103

ublic consul

do EIA enter

ntal Law. On

e law require

vailable to th

ne copy avail

no one was a

ltant with m

and geochem

nearby comm

ble to regulat

vations on w

uantity and in

ments necessa

trations for ncury, nitrate,

oxic byprodu

tive impacts

scribes that t

gned by mor

Dorado MineReview") at v

1, and 13 (C-1

ltation were

red the perio

ne of the issu

es a very lim

he public for

lable at the M

allowed to m

more than 30

mistry work, r

munities in O

tory agencie

water issues a

nadequate w

ary to measu

numerous ch, and sulfate

ucts released

of Pac Rim'

the two sets

re than 200 p

e Project Envv, 15 (C-165)

165).

"difficult to

od of public

ues that has

mited review

r only 10 day

Ministry in S

make photoco

years of inte

reviewed Pa

October 2005

es in most de

and criticized

water quality

ure surface w

hemical cons;

d by the INC

's stated plan

of public co

people from

vironmental Im.

address"

consultation

since been

process. Ar

ys.309 Claim

San Salvado

opies.310

ernational

ac Rim's EIA

5. He

eveloped

d that the El

baseline dat

water;

stituents in th

CO cyanide

n to develop

mments

the local

mpact Assess

n as

rticle

mant

r for

A and

l

ta;

he

sment,

commun

Claimant

correspon

the publi

public co

President

had foun

especially

2

the annex

not to tra

the exper

for the pu

commun

opposed

313 Memor314 Email 315 MinuteExploitatiMinutes")providing316 Public 317 Public que la ONde la minepersonas qpendientewith interorganizatiagainst th

ities, cited D

t fails to high

ndence betw

c consultatio

omments wit

t of PRES, to

d that some

y with regar

At the19.

xes to the EI

anslate the at

rt."316 MAR

ublic to be a

ity organizat

to its projec

rial, para. 268

from Erwin H

es of Meetingion" and "San) at 2. Claima

g the exhibit w

Consultation

ConsultationNG ADES estería, y que estque han firma

es.") ["The prornational orgaion's business

he mining proj

Dr. Moran's r

hlight in the

ween Claiman

on "very stro

th Pac Rim a

old the MAR

of its observ

rd to analyzin

e meeting, M

IA were only

ttached techn

RN emphasiz

able to evalua

tion against

t.317

8.

Haas to Fred E

g between MAnta Rita Exploant submitted with translatio

n Meeting Min

n Meeting Miná ligada a orgta organizacióado el documoject represenanizations, ands is to lend moject are peopl

report as tech

Memorial is

nt's officers,

ong and diffi

at a meeting

RN officials

vations were

ng water qua

MARN menti

y available in

nical reports

zed that it wo

ate the mater

mining and

Earnest, Feb.

ARN and Pac oration" Projethese minute

on as Exhibit

nutes at 4 (R-

nutes at 4-5 (Rganizaciones ión tiene un trento en contr

ntative mentiod they have sponey and theyle who have l

104

hnical suppo

s that, accord

MARN offi

icult to overc

in March 20

that Pac Rim

e valid and sh

ality and qua

ioned the ob

n English. F

s in order to "

ould neverth

rial. Pac Rim

questioning

28, 2006 (C-

Rim Represeects, Mar. 29, s as C-163, buR-131.

-131).

R-131) ("El tiinternacionaleabajo de pres

ra del proyectoned that theyponsored twoy suspect thatoans pending

ort for their o

ding to cont

ficials consid

come."314 T

006. At that

m was evalu

hould be tak

antity.315

bservation fro

Fred Earnest

"preserve th

heless be imp

m responded

the motives

-159) (emphas

entatives rega2006 ("Publiut did not inc

itular del proyes, y que han

star dinero y tto son personay know that tho anti-mining t the people wg."].

opposition.3

temporaneou

dered the obs

The Ministry

t meeting, Fr

uating Dr. M

ken into cons

om the publi

t explained th

he clarity of t

portant to ha

d by disparag

s of the comm

sis added).

arding the "Elic Consultatioclude translati

yecto mencion auspiciado dtienen sospechas que tienen he NGO ADEmeetings and

who have sign

13 What

us

servations fr

y shared the

red Earnest,

oran's report

sideration,

ic that some

hat they cho

the language

ave translatio

ging the loca

munity mem

l Dorado on Meeting ion. El Salva

onó que ellos dos foros en cha que las préstamos

ES is associatd that the ned the docum

rom

t and

of

ose

e of

ons

al

mbers

ador is

saben ontra

ed

ment

2

Septemb

were that

would be

Thus, Cla

on how t

2

omission

required

Moran's r

after Dr.

presente

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6-38 of th

Dr. Mora

undergro

and woul

318 Public 319 Memor320 Responand the Suto Public 321 2005 E

2.

Pac R20.

er 2006. In

t 1) the proje

e a favorable

aimant shou

o proceed. T

In its 21.

ns, mentionin

from rainwa

report becau

Moran's rep

ed has been

Project (10.

he EIA, the

an), provides

ound wells."3

ld therefore

Consultation

rial, para. 286

nse Report toummary TablConsultation

EIA at 6-38 (C

Claimant's

Rim provided

March, it ha

ect could mo

e finding on t

uld have unde

The flippant

Memorial, C

ng "[f]or inst

ater collectio

use it was act

port: "it is cla

modified, si

8 liters/seco

document pr

s that the pro

321 Thus, the

have no neg

n Meeting Min

6.

the Technicale of the OpinObservations

C-8).

s dismissive

d its response

ad been infor

ove on to a p

the project;

erstood that

t tone of Clai

Claimant alle

tance" that P

on.319 This, h

tually a chan

arified that

ince 100% o

ond) would

resented for

oject will hav

e assertion th

gative impact

nutes at 6 (R-

al Review for nions and/or Os") at 8 (C-17

105

response

es to the pub

rmed that the

public consul

or 3) there w

its response

imant's respo

eges that Dr.

PRES promis

however, co

nge from the

the water su

of the total d

be supplied

public consu

ve two water

hat Pac Rim

t on water su

-131); Memor

the El DoradObservations 70) (emphasis

blic consulta

e three optio

ltation at the

would be an

was import

onse is there

. Moran's rep

sed to obtain

ould hardly b

e plan outlin

upply propos

demand for

d by the rain

ultation (i.e.

r sources: ra

could rely s

upply was ne

rial, para. 270

do Mining ProCreated by M in original).

ation observa

ons followin

e municipal l

unfavorable

tant to the M

efore surpris

port containe

n 100% of th

be an omissio

ed in the EIA

sal on page

r water by t

nwater harv

, the docum

ainwater and

solely on col

ew in late 20

0.

oject done byMARN, Sept.

See also id. a

ations in

g its respons

level; 2) ther

e finding.318

Ministry's dec

ing.

ed errors and

he water it

on in Dr.

A implemen

6-39 of the E

the El Dorad

vesting."320

ment reviewed

d "[w]ater fro

llected rainw

006. The ch

y Robert E. M2006 ("Respo

at 13, 67.

se

re

cision

d

nted

EIS

do

Page

d by

om

water

hange

Moran onse

is mentio

data.

2

metallic m

it conside

with disd

and acce

Mining P

the obser

environm

others, co

knowledg

response

retorted:

organism

2

EIA that

that "alm

avoid the

322 Email 323 Respon324 Respon325 Respon

oned in the re

Claim22.

mining and h

ered "very st

dain. Thus, i

ss to EIAs fo

Project is loc

rvation that m

mental impac

ommenting:

ge of the com

to observati

"The tailing

ms."325

Regar23.

the propose

most no one u

e impacts and

from Erwin H

nse to Public

nse to Public

nse to Public

esponse to th

mant, even kn

had commen

trong and di

in response t

or the public

cated in El S

many mining

ct, Claimant

"The numbe

mpany, none

ions about to

gs deposit ha

rding the obs

d project wo

understands t

d control the

Haas to Fred E

Consultation

Consultation

Consultation

he public co

nowing that t

nts from the

fficult to ove

to Dr. Moran

c consultatio

alvador, not

g projects ar

said it was "

er of similar

e of these are

oxic byprodu

as not been c

servation tha

ould have no

the technolo

e risks assoc

Earnest, Feb.

Observations

Observations

Observations

106

nsultation ob

the Ministry

local comm

ercome,"322

n's observati

n requireme

in the Unite

round the wo

"irresponsibl

r mines is les

e generating

ucts of the IN

considered or

at civil socie

o negative im

ogy available

iated with th

28, 2006 (C-

s at 10 (C-170

s at 12 (C-170

s at 71 (C-170

bservations w

y was consid

munity in opp

treated the o

ion that othe

ent, Claimant

ed States nor

orld do have

le" to compa

ss than 5, an

g negative im

NCO treatme

r envisioned

ety had doub

mpacts on wa

e and the pro

he activity" a

-159).

0).

0).

0).

without any

dering the fir

position to th

other technic

er countries a

t responded:

r Canada."32

some negat

are its propo

d according

mpacts."324 F

ent process,

d to be a sanc

ts about the

ater, Claiman

ocedures imp

and that "lac

new analysi

rst EIA for

he project wh

cal observati

allow more t

: "The El Do

3 In respons

tive

sed mine to

to the

Finally, in

Claimant

ctuary for aq

claims in th

nt complain

plemented to

ck of knowle

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hich

ions

time

orado

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the

quatic

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edge

influence

one unde

the comp

2

that its re

mention

fact that

comment

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explorati

Ministry

once it go

cumulativ

Rim's stu

to the pro

assessme

2

Salvador 326 Respon327 PacificGrade Goemphasis the Compcalculatioexamine tof a minin328 Respon329 Behre

es the negativ

erstands how

pany's public

Claim24.

equested con

any potentia

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ted that "all

t, disingenuo

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needed to co

ot its permit

ve impacts o

udies do not

oposed curre

ent.

This o25.

r failed long

nse to Public

c Rim Miningold; Updated R

over the pastpany's Januaryn of a new re

the economicsng permit, the

nse to Public

Dolbear Expe

ve opinions

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c consultatio

mant likewise

ncession area

al cumulative

g to expand i

observations

ous. Claima

thin the area

onsider Clai

. As describ

of operating

provide suff

ent Project."3

once again h

before any a Consultation

g Corp., NewsResource Calct year and a hay 2005 pre-feaesource estimas of an expane commencem

Consultation

ert Report, pa

and lack of

ny will preve

n process ha

e refused to a

a included ar

e impacts if

its project to

s related to o

ant itself crea

requested fo

imant's expre

bed by minin

multiple pro

ficient inform

329 Ignoring

highlights the

alleged acts o

Observations

s Release, Souculation Initiaalf has been tasibility studyate for the El

nded operationment of underg

Observations

ara. 123.

107

trust."326 Of

ent and mitig

ad not been e

acknowledge

reas of explo

other mines

o include Sou

other project

ated the cum

or an exploit

ess plan to e

ng experts B

ojects concur

mation to est

g its expansio

e central reas

of the Gover

s at 22 (C-170

uth Minita Deated, Mar. 27to expand andy . . . . This sDorado proje

n at the Minitground ramp

s at 92 (C-170

f course, this

gate negative

effective.

e the problem

oration, but t

were eventu

uth Minita b

ts are illogic

mulative impa

tation conce

expand the m

ehre Dolbea

rrently are w

timate the ad

on plans resu

son why Cla

rnment in 20

0).

elineation Dri7, 2006 (C-256d develop the strategy will cect, the complta -- South Miconstruction.

0).

s response, c

e impacts, o

m observed

the EIA did

ually permitt

y 2006,327 C

cal."328 Claim

act issue by

ssion. Of co

mine or build

ar, "[t]he pot

wide-ranging

dditional cum

ults in an ina

aimant's inve

008: Claiman

illing Yields A6) ("Pacific REl Dorado m

continue throuletion of a feainita deposit, .").

claiming tha

nly confirms

by Dr. Mora

not consider

ted. Ignorin

Claimant

mant's respo

including

ourse the

d other mines

tential

g and . . . Pac

mulative imp

adequate imp

estment in E

nt was greed

Additional HRim's explorat

mine proposedugh 2006 withasibility studyand, upon rec

at no

s that

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onse

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pacts

pact

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dy. It

High tion

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but still w

doing thi

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cover the

necessary

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providing

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welfare o

2

improve

that the b

the quant

seismic a

translatio

EIA in re

2

Hutchiso 330 Respon331 Respon332 Respon

hased explor

wanted to ap

is was to imp

ion concessi

d a chance of

e expansion p

y to justify th

an environm

g the require

d the Salvado

of the Salvad

Claim26.

its submissi

baseline data

tity of water

activity, Clai

on of two of

esponse to D

3.

Claim27.

on and Mudd

nse to Public

nse to Public

nse to Public

ration rights

ppropriate fo

properly incl

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f completing

plans is anot

he 12.75 km

mental permit

ed technical

oran Ministri

doran people

mant did, how

on according

a was incomp

r.330 In respo

imant also pr

the EIA's an

Dr. Moran's o

Claimant's

mant has subm

der, asserting Consultation

Consultation

Consultation

in El Salvad

r itself a vas

lude explora

han request a

the required

ther clear sig

m2 concession

t and an app

information

ies to abdica

e.

wever, accep

gly. Claima

plete and sta

onse to Dr. M

rovided mor

nnexes and th

observations

s expert repo

mitted a shor

g that the EIA

Observations

Observations

Observations

108

dor when the

st area for fu

ation prospec

an exploitati

d technical w

gn that Claim

n for which i

plication for a

for the vast

ate their Con

pt some of D

ant recognize

ated that it w

Moran's com

re recent data

he seismic ri

.332

ort does not a

rt report from

A for the El

s at 17 (C-170

s at 48, 87 (C

s at 78, 87 (C

ey were near

uture explora

cts in the are

on concessio

work. The fa

mant simply

it had applie

an exploitati

majority of

nstitutional d

r. Moran's o

ed as "valid"

was gathering

mments on wa

a.331 In addi

isk evaluatio

address the M

m two U.S.-b

Dorado exp

0).

C-170).

C-170).

r their final t

ation. Part o

ea for which

on for an are

act that the E

had not don

ed. It asked

ion concessi

f the area req

duty to protec

observations

" Dr. Moran'

g and presen

ater quality

ition, Claima

on presented

Ministry's co

based expert

ploitation per

termination

of its strategy

it requested

ea for which

EIA did not

ne the work

El Salvador

ion without

quested. Clai

ct the health

and try to

s observatio

nting new dat

and risks du

ant provided

d in the origi

oncerns

ts, Drs.

rmit fully

date,

y for

d an

it at

to

imant

h and

on

ta on

ue to

d a

inal

complied

either the

Moran's

respond d

2

that was

requested

that the g

technical

to the Go

EIA, whi

1995 "Pr

listed am

2

admissio

INCO pr

accepted

than that

"sanctuar

333 Hutchi334 Hutchi335 Hutchi336 2005 E337 Hutchi338 Respon

d with Salvad

e standards o

October 200

directly to D

Drs. H28.

never provid

d in 2004, su

geological fin

l studies."335

overnment in

ich is alleged

refeasibility R

mong those re

Moreo29.

ns with no e

ocess, "cyan

that the pro

of cyanide"

ry for aquati

ison and Mud

ison and Mud

ison and Mud

EIA at 1-5 (C-

ison and Mud

nse to Public

doran and in

or the alleged

05 technical

Dr. Moran's c

Hutchison an

ded to the G

uch as the 20

ndings for th

In fact, as d

n support of

dly the subje

Report" and

eviewed by C

over, Claima

explanation o

nide is transf

cess would h

) and asserte

ic organisms

dder Expert R

dder Expert R

dder Expert R

-8).

dder Expert R

Consultation

nternational s

d complianc

review as a

criticisms.

nd Mudder a

overnment i

008 MDA Re

his project ar

described ab

its request fo

ect of Claima

d a 1997 "Bas

Claimant's e

ant's experts

or discussion

formed into o

have some n

ed that the ta

s."338 The ex

Report at 22.

Report at 2.

Report at 13.

Report at 16.

Observations

109

standards.333

ce. Although

document th

apparently ba

n support of

eport,334 and

re based on

bove, PRES o

for an exploit

ant's expert r

seline Study

xperts.

make assert

n. For exam

other benign

non-benign b

ailings depos

xperts likewi

s at 71 (C-170

3 They do n

h Drs. Hutch

hey reviewed

ased their rep

f the El Dora

d are therefor

"two compre

only submitt

tation conce

report, actua

y."336 Neithe

tions contrad

mple, they ass

n constituent

byproducts (

sit should no

ise assert tha

0).

ot provide a

hison and Mu

d, their repor

port on upda

ado exploitat

re under the

ehensive fea

tted one pre-

ession. In ad

ally relies on

er of these do

dicting Claim

sert that as a

ts,"337 even t

"with toxicit

ot be expecte

at "[d]etailed

any details on

udder list Dr

rt does not

ated informa

tion concess

misconcept

asibility and

feasibility st

ddition, the 2

n data from a

ocuments is

mant's own

a result of the

though Claim

ty much low

ed to be a

d baseline w

n

r.

ation

sion

tion

tudy

2005

a

e

mant

wer

ater

quality an

the prepa

that the b

that the s

2

and impl

plan [tha

about the

managem

of the Pro

Cyanide

conclusio

339 Hutchi340 Respon341 Behre 342 Hutchicomplemeinvolving developed343 Hutchi

nd related en

aration of the

baseline data

sections of C

[T]he areas:availaincomand 3)conclureportmeasuundernot avIntern

Claim30.

emented" on

t] would be

ese yet to be

ment plans no

oject" and "[

Code."343 N

ons. Behre D

ison and Mud

nse to Public

Dolbear Expe

ison and Mudenting this plamanagement

d during the e

ison and Mud

nvironmenta

e EIA even t

a was incomp

Claimant's EI

EIA lacks s 1) no factua

ability are prmplete and/or) baseline stuudes that thet require supurement and ground wate

vailable, thisnational or Sa

mant's experts

nce the proje

developed."

developed p

ot only durin

[t]he propose

Not surprisin

Dolbear, on

dder Expert R

Consultation

ert Report, pa

dder Expert Ran, written det of the Projecengineering ph

dder Expert R

al studies we

though Claim

plete and ina

IA dealing w

ufficient datal estimates ovided by Pr is outdatedudies are note Hydrology plementary sample anal

er sources. C section of thalvadoran St

s also refer t

ect was unde

342 They the

plans, asserti

ng operation

ed cyanide m

ngly, they do

the other han

Report at 19.

Observations

ara. 113.

Report at 18. Setailed procedct's cyanide.")hase of the Pr

Report at 20-2

110

ere complete

mant itself ad

adequate wa

with water iss

ta on water iof water conRES; 2) mos

d (i.e., complt available. Band Hydroginformation lysis of strea

Considering the report wotandards.341

to several im

erway includ

en, however

ing that "[t]h

n but also dur

management

not get into

nd, notes tha

s at 17 (C-170

See also 2005dures will be e) and at 7-111roject and bas

1.

d over an ex

dmitted that

as "valid."340

sues were in

issues in at lensumption anst of the dataleted prior toBehre Dolbegeology sect based on acam, spring, wthat this infoould not mee

mportant plan

ding "a detail

r, inexplicabl

he EIA . . . e

ring the con

t plan fulfille

o details or ex

at Claimant's

0).

5 EIA at 7-33 established to1 ("A detailedsed on final d

xtended time

t Dr. Moran's

Behre Dolb

nsufficient:

east three nd abase is o year 2000)ear, thereforetions of the ctual well and ormation is et EP,

ns "that wou

led closure o

ly reach broa

established e

nstruction and

ed the requir

xplain the ba

s closure pla

(C-8) ("Witho include all thd reclamationdesigns.").

e period"339 f

s observation

bear confirm

; e,

uld be develo

or rehabilitat

ad conclusio

ffective

d closure ph

rements of th

ases for thes

an was

h the purpose he activities

n plan will be

for

n

ms

oped

tion

ons

hases

he

se

of

"concept

their sche

Dolbear c

comply w

2

about Pac

impacts o

who owe

was expr

proposed

of these i

standards

2

by denyin

long befo

submitted

In this ph

environm

344 Behre 345 Behre 346 Memor

ual" and wo

edule and th

concluded th

with the leve

Thus, 31.

c Rim's prop

on water, dis

ed money) or

ressly planni

d project's im

issues exist a

s.

4.

In this32.

ng El Salvad

ore any alleg

d with its M

hase, Claima

mental permi

Dolbear Expe

Dolbear Expe

rial, paras. 27

uld need to b

e decommis

hat "the curr

el of detail re

Claimant's e

posed projec

smissed the p

r resulting fr

ing to develo

mpacts. In thi

and baldly a

Pac Rim repolitical m

s arbitration,

dor's assertio

ged statemen

emorial in fa

ant has admit

it for exploit

ert Report, pa

ert Report, pa

73, 297-298.

be updated "

sioning of th

rent Closure

equired for a

expert repor

ct. In 2004-2

public's conc

rom a lack o

op other depo

is arbitration

ssert that the

esigned itselmeans

, Claimant su

on that any d

nt by Preside

act confirm t

tted that it k

tation in 200

ara. 133.

ara. 133.

111

"to include a

he mine and

and Reclam

a feasibility l

rt does not ad

2006, Claima

cerns as eith

f knowledge

osits in the a

n, Claimant's

e EIA met al

lf to getting

urvived the a

dispute betwe

ent Saca in 2

that its dispu

knew that the

6 (or by Ma

a manual of i

plant facilit

mation Plan su

level design.

ddress the M

ant inadequa

her dishonest

e, and refuse

area which w

s experts, un

ll Salvadoran

the environm

abuse of pro

een Pac Rim

2008. The m

ute with the

e Governmen

ay 7, 2007 at

internal and

ties."344 As a

ubmitted in

."345

Ministry's sig

ately conside

t (signatures

ed to address

would necess

nconvincingl

n and interna

mental perm

ocess objecti

m and El Salv

materials Clai

Governmen

nt was not g

t the latest)34

external rep

a result, Beh

the EIA doe

gnificant con

ered possible

s from peopl

s the fact tha

sarily affect

ly, deny that

ational

mit through

on to jurisdi

vador existe

imant has

nt existed ear

oing to issue

46 and that it

ports,

hre

es not

ncerns

e

e

at it

the

t any

iction

d

rlier.

e the

focused i

compared

"I was pathe Goverthere wasin 2006. Ifrom the with Salv2002 mer2008, offthe Salvaexpressedparticularus that thextractionbe forthcomeetings Salvador.

2

pursuing

environm

was lobb

347 First S348 Memorpara. 120.349 Memor350 Memor351 EmailsMARN anwill fight

its efforts on

d side-by-sid

Jurisdictioarticularly surrnment is nows a dispute beIn fact, nothicase. . . . Fro

vadoran officrger with Dayficials at the hadoran Goverd support for rly in 2007 ane permits necn activities atoming. I recaon my many

.347

In its n33.

political me

mental permi

bying both M

hrake Witnes

rial, para. 273.

rial, para. 297

rial, para. 298

s between Petnd the Ministrfor that.").

n seeking a p

de below:

on Phase rprised to leaw claiming t

etween the pang could be f

om my meetinials prior to tyton and welhighest levelsrnment repeaour project,

nd 2008, assucessary to cot El Dorado wall numerous y trips to El

new account

eans of puttin

it in spite of

Ministries: rel

ss Statement,

3 (emphasis a

7 (emphasis a

8 (emphasis a

te Neilans andry of Econom

political solu

arn that hat arties further ngs the ll into s in tedly and, ured

onduct would such

Jun"allMin earassiEvaMArespConthatmin Mawith"theactian Eindu

t of events, C

ng pressure

the Ministry

lying on "po

paras. 89-90

added); First W

added).

added).

d Ericka Colinmy are politica

112

ution. Claim

Inconsistenne 2006: a Ml mining projnister."348

rly 2007: "Msistance of Zaaluación AmbARN to makeponses that Pnsultation. At Minister Guning, includin

ay 7, 2007: Ph Minister Ge mining comivity in the coEvaluación Austry was con

Claimant als

on the Minis

y's concerns.

olitical consu

(emphasis ad

Witness State

ndres, Jan. 3, al . . . The pr

mant's contrad

nt informatMARN officia

jects were 'on

s. Colindres aida Osorio, hbiental . . . ine progress wiPRES had sub

At this time, Muerrero had ong exploratio

ac Rim repreGuerrero and Mmpanies wereountry wouldAmbiental Esnducted."350

so admits tha

stry of Envir

.351 Indeed,

ultants" rega

dded).

ement of Erick

2007 (C-193rincipal idea i

dictory statem

tion in the Mal told Erickan hold,' on th

went to MARhead of the Gn encouragingith the evaluabmitted after

Ms. Osorio toordered all peon, to be put

esentatives atMinister de Ge informed thd be halted ustratégica . .

at, long befo

ronment to g

as early as 2

arding the sur

ka Colindres,

3) ("I realize ts to get techn

ments are

Merits Phasa Colindres thhe orders of th

RN to requesGerencia de g Mr. Córdovation of the r the Public old Ms. Colinermits relatinon hold."349

ttended a meGavidia at what all mininguntil such tim

. of the minin

ore 2008, it w

get the

2005, Pac Ri

rface land is

, Mar. 22, 201

that this issuenical approval

e hat he

st the

va of

ndres ng to

eeting hich g

me as ng

was

im

ssue

13,

with l. I

with the

Galeas, w

2

mining a

Assessm

what hap

informati

Prelimi

"From Dethrough Dhowever,all officiawith the crespect tonotwithstthat Salvaclearly stiMARN mdefinitivesubmissiobusiness under exccircumstamaximumdays. Derequiremenot provinot proviany justifinexplicab

352 El DorShrake, N353 Respon354 Memor355 Memor356 Memor

Ministry of

with MARN

After 34.

ctivity woul

ent, Claiman

ppened after

ion it has pro

inary ObjecPhase

ecember 200December 20 MARN ceas

al communicacompany wito its applicatitanding the faadoran law ipulates that

must take e action on Eons within 60days, and eveceptional ances, withinm of 120 busiespite this ent, MARN dde, and still hded, PRES wfication for itble silence."3

rado Project R

Nov. 25, 2005

nse to Prelimi

rial, para. 260

rial, para. 296

rial, para. 298

Economy an

.352

mid-2007, w

ld be halted u

nt only incre

May 2007 w

ovided is ent

ction

6 008, sed ation th ion, act

IA 0 en

n a iness

did has

with ts 353

"ThrMAR MarGuerComtechn MayGuerwereuntilmini MayClaimand wenvir DeceSalvaSalva

Report, Month

(C-285).

inary Objecti

0.

6.

8 (emphasis a

nd an "image

when the min

until El Salv

eased the pol

with respect t

tirely incons

Inc

roughout 20RN on the iss

rch 7, 2007: "rrero, and the

mmission for tnical and env

y 7, 2007: Pacrrero and Mine informed th such time asng industry w

y 2007: "As Mmant was awwould therefronmental as

ember 2007 ador with Toadoran Gove

h Ending Aug

ons, para 49 (

added).

113

e consultant

ning compan

vador could c

litical pressu

to its environ

sistent with w

consistent in

06 and 2007sue of the ED

"Ms. Colindre Comisión Nthe Environmvironmental f

c Rim represnister de Gav

hat all minings an Evaluacwas conducte

Mr. Shrake anware that the dfore not be ressessment, bu

and Februaom Shrake anernment, inclu

gust 31, 2005

(emphasis add

who has ties

nies were tol

complete a S

ure. Claiman

nmental perm

what it initia

nformation

7 the CompanD Mining Env

res attended aNacional de Mment . . .), in features of th

sentatives attevidia at whicg activity in tión Ambientaed."356

nd Ms. Colindelay PRES fesolved by mut only throug

ary 2008: A Und met with "uding officia

(C-288); Em

ded).

s to Hugo B

ld without re

Strategic Env

nt provides l

rmit applicat

ally alleged:

since provi

nies continuevironmental

a meeting wiMedio Ambiewhich she pr

he El Dorado

ended a meeth "the mininthe country wal Estratégic

ndres affirm, faced at MAReans of techngh political m

U.S. lobbyist"various officals of MARN

mail from Fred

arrera," Mar

eservation th

vironmental

little detail o

ion, but the

ded

ed to engage Permit . . ."3

ith Minister ente (Nationaresented the Mine Projec

ting with Ming companieswould be haltca . . . of the

by this pointRN was polinical means."357

t traveled to Ecials of the

N."358

d Earnest to T

rvin

hat all

of

little

with 54

al

ct."355

nister s ted

t, the tical

El

Tom

2

push its a

Memoria

halting al

consultan

2007 sho

Chavez M

has also a

and Febr

officials

attended

officials

had enga

President

357 MemorWitness S358 Letter 359 Memor360 Email 361 Email 362 Letter 363 Letter 364 Letter

Thus, 35.

application t

al, one can se

ll mining act

nt, about an

ows that Clai

Mena, to wor

admitted tha

ruary 2008 to

of MARN."

a dinner wit

in San Salva

aged C&M C

t and CEO, t

We coremedI was

rial, para. 300

Statement"), p

from Claiman

rial, paras. 30

from Tom Sh

from Tom Sh

from Claiman

from Claiman

from Claiman

Claimant no

through MAR

ee that withi

tivity, Claim

"interesting"

imant was co

rk with Pres

at a U.S. lobb

o meet with

362 Ms. Mar

th Mr. Shrak

ador in Febru

Capitolink as

testified:

onsidered vadies to the sitlobbying. I w

0; Second Wipara. 128.

nt's counsel to

00-301.

hrake to Mark

hrake to sever

nt's counsel to

nt's counsel to

nt's counsel to

ow admits th

RN.359 From

in days of the

mant was com

" meeting wi

ounting on it

sident Saca's

byist travele

"various off

ry Anastasia

ke, Pac Rim's

uary 2008.36

s a lobbyist b

arious--at thituation. I mewas lobbyin

itness Stateme

o El Salvador

k Klugmann, M

ral recipients,

o El Salvador

o El Salvador

o El Salvador

114

hat, by 2007,

m the exhibit

e announcem

mmunicating

ith the Vice

ts "leading lo

cousin, Her

d to El Salva

ficials of the

a O'Grady, a

s U.S. lobby

63 Claimant

by October 2

s point we cean, I talked

ng in the Uni

ent of Thoma

r's counsel, Ap

May 18, 2007

Aug. 14, 200

r's counsel, Ap

r's counsel, Ap

r's counsel, Ap

, it resolved

ts provided b

ment to the m

g with Mark

President.360

obbyist and

rbert Saca, to

ador with M

Salvadoran

columnist fo

yist, and seve

confirmed d

2007.364 Tom

considered vad to counsel iited States to

as C. Shrake,

pr. 22, 2011 (

7 (C-306).

07 (C-307).

pr. 22, 2011 (

pr. 22, 2011 (

pr. 22, 2011 (

to use "polit

by Claimant

mining comp

Klugmann,

0 Another e

political stra

o move forw

Mr. Shrake in

Governmen

for the Wall S

eral Salvado

during this ar

m Shrake, Pa

arious in El Salvadoo pressuring

Mar. 21, 201

(R-128) (emp

(R-128).

(R-128).

(R-128).

tical means"

t with its

panies about

a political

email in Aug

ategist," Fide

ward.361 Clai

n December 2

nt, including

Street Journ

oran Governm

rbitration tha

ac Rim's

or

3 ("Second S

phasis added)

" to

t

gust

el

imant

2007

al,

ment

at it

hrake

.

2

from MA

applicatio

of 2007 a

pressure

concerns

with MA

submittin

Claimant

C

2

Dr. Pulga

2

it did not

submissi

365 Transc366 Memor367 Second368 Manueand social

El Salso yea

Thus, 36.

ARN, the trut

on and the g

and 2008 to

on the Salva

that had bee

ARN to ask fo

ng its Notice

t initiated thi

C. Pac R

As Cl37.

ar also highl

it is cucarry

This ldecisiown c

When38.

t accept the c

on:

cript of Hearin

rial, para. 302

d Shrake Witn

el Pulgar-Vidal relations, Au

lvador. I wasah.365

contrary to

th is that Cla

general conce

lobby both w

adoran Gove

en raised. A

for a status up

e of Intent."3

is arbitration

Rim did not

aimant recog

lighted that i

urrently not out its activi

icense is notion from the capacity to o

n Pac Rim's e

communities

ng on Objecti

2.

ness Statemen

al, Recommenug. 11, 2006 (

s doing num

Claimant's o

aimant was i

erns regardin

within El Sal

ernment to gr

According to

pdate (break

66 In other w

n as the next

earn the ne

gnizes, socia

it is essential

possible to tities without

t the result oauthority, bbtain it.368

efforts to ear

s' "no" to its

ions to Jurisdi

nt, para. 85.

ndations: Min("Pulgar Reco

115

merous--nume

original asse

informed of

ng metallic m

lvador and in

rant the envi

Claimant, it

king the alleg

words, when

step in putti

ecessary soc

al license to

l for compan

think that ant obtaining s

of an adminisut rather the

rn the approv

proposed pr

iction, May 3

ning activity, ommendation

erous things

ertion that it

both the tec

mining in El

n the United

ironmental p

t initiated the

ged silence)

n Claimant's

ing pressure

cial license t

operate is "o

nies to obtain

n operation wocial license

strative proce result of the

val of the co

rojects. As d

3, 2011, at 46

overview of ns") at 24 (Ex

at that poin

faced "inexp

chnical conce

l Salvador. C

d States to pu

permit despi

e late 2008 c

when it "wa

lobbying eff

e on the Gov

to operate

of paramoun

n social licen

will be able te.

cess, or of a e company's

ommunities f

described by

1:14-19.

developmentxhibit R-132)

nt,

plicable silen

erns about it

Claimant use

ut outside

te all the

corresponden

as on the ver

fforts failed,

ernment.

nt importanc

nse:

to

s

failed, howe

y the amici

t, environmen).

nce"

ts

ed all

nce

rge of

e."367

ver,

nt,

2

were aga

Pac Rim.

Claimant

lends mo

letter opp

protester

assumed

few doin

24

who curr

various lo

mining "h

impacted

369 AmicusMetálica d370 Amicus371 Public 372 Memor373 Pulgar

It is unSalvadaffectorganoppos2004, enginedrillinwas b

Accor39.

ainst allowin

."370 When p

t responded t

oney and Cla

posing their

s prevented

"we still had

g harm to th

In his 40.

rently serves

ocal groups

has historica

d the environ

s Curiae Submde El Salvado

s Curiae Subm

Consultation

rial, para. 331

Final Report

ncontrovertedor arose orged local comize and prote

sition were eas it ramped

eers trespassng exploratoroth "suspicio

rding to amic

g metals min

presented wi

that ADES,

aimant theref

project were

Claimant fro

d the social l

he majority."

report on th

as Peru's M

opposed to t

ally not only

nment throug

mission by Mor, May 20, 2

mission by La

n Meeting Min

1 (citing Seco

t at 6 (R-129)

ed that oppoganically fro

mmunities anect themselv

engendered bd up explorased on the prry wells withous and arro

ci, the oppos

ning in El Sa

ith the conce

the local As

fore suspecte

e "people wi

om realizing

license from

372

he situation i

Minister of En

the developm

y failed to ge

gh poor prac

Member Organ2011, at 3.

a Mesa at 4.

nutes at 4-5 (R

ond Shrake W

.

116

sition to Pacom the first-hnd their commves. Indeed, tby Pac Rim iatory drillingrivate properhout permissogant."369

sition grew a

alvador, desp

erns of the c

ssociation fo

ed that the m

th loans pen

g its explorat

m the local co

n El Salvado

nvironment,

ment of mini

enerate devel

tices."373 A

nizations of L

R-131).

Witness Statem

c Rim's planshand experiemendable efthe first stirritself when ig work, its terty of local rsion and in a

and "by late

pite the lobb

ommunities

r Economic

more than 20

nding."371 Li

tion program

ommunities

or in August

described th

ing activity"

lopment, but

s opposition

La Mesa Nacio

ment, para. 92

s for El ences of fforts to rings of in 2003 and echnicians anresidents, a manner tha

2007, 62.5%

bying campa

in March 20

and Social D

00 citizens w

ikewise, whe

m in Santa Ri

and saw this

t 2006, Manu

he "strong pr

" based on th

t has also sig

n grew in the

onal Frente a

2).

nd

at

% of Salvado

aign deploye

006, howeve

Developmen

who signed th

en anti-mini

ita, the comp

s as a case of

uel Pulgar-V

ressure by

he idea that

gnificantly

e communitie

a la Minería

orans

d by

er,

nt,

he

ng

pany

f a

Vidal,

es

around C

convince

Salvador

activities

24

Claimant

Tragicall

the murd

24

killed in

reported

be next:

374 Pacific$110,740 Indirect P(Exhibit RPersonnelProject CoThe total $1,129,39375 AmnesR-136).

Claimant's pr

e everyone to

ran Governm

s between 20

Claim41.

t's activities

ly, the situati

der of an env

Threaat leasexplorthis yefollow

A few42.

December 2

on the anti-m

The thCabañRiverarepres(Comiattack

c Rim El Salvon Public Re

Public RelatioR-134) (reporl, and $170,30osts, Aug. 21expenditures

95.

sty Internation

roposed proj

o accept its p

ment show th

007 and 2008

mant's actions

in Cabañas h

ion escalated

vironmental a

ats, attacks anst as early asration in the ear when act

wing the elec

w months late

2009 and the

mining camp

hreats followñas departmea on 20 Decesentative of tité Ambienta

k in which he

vador, S.A. deelations, $37,6ns); Pacific Rrting $66,90603 on Indirect, 2008 (Exhibon these thre

nal: Urgent A

ects, Claima

projects. Th

hat Claimant

8.374

s were not w

have becom

d in 2009. In

activist and d

nd intimidats May 2008 warea began

tivists denouctions.375

er, Amnesty

staff of Rad

paign, receiv

wed the killinent: Gustavoember. Ramthe NGO Caal de Cabañae was shot ei

e C.V., Guaco625 on Public

Rim El Salvad6 on Public Ret Public Relatbit R-135) (re

ee public relat

Action, Death

117

ant increased

e 2008 Annu

spent more

without conse

e highly pol

n August 20

described:

ion against awhen campaand have int

unced elector

issued anoth

dio Victoria,

ved threateni

ngs of two ano Marcelo Rimiro Rivera wabañas Enviras), and had ight times.

o Project Costc Relations Ador, S.A. de Celations, $22,tions; Pacific eporting $113tions costs acr

Threats for D

d its spendin

ual Reports t

than $1 mill

equence. Th

arized for an

009, Amnesty

activists repoaigning againtensified sinral irregular

her alert afte

a communit

ing message

nti-mining aivera in Junewas the legaronment Comsurvived an

ts, Aug. 21, 2dministrative

C.V., Huacuco,732 on PubliRim El Salva

3,047, $38,40ross the three

Demanding Ju

ng on "public

that Claiman

lion on publ

he communit

nd against m

y Internation

ortedly beganst mining ce January

rities

er two more

ty radio stati

es indicating

activists in e and Ramiroal mmittee n August

2008 (Exhibite Personnel, ao Project Cosic Relations Aador, S.A. de

09, and $287,7e licenses in o

ustice, Aug. 2

c relations" t

nt filed with

ic relations

ties around

mining.

nal reported

an

people were

ion that had

that they wo

o

t R-133) (repoand $281,880 sts, Aug. 21, 2Administrative C.V., Pueblo753, respectiv

one year was

27, 2009 (Exh

to

the

on

e

ould

orting on

2008 e os vely).

hibit

24

informed

insistenc

encourag

This failu

Claimant

the comm

24

negative

year min

environm

"purify"

376 AmnesR-137). 377 Memor378 Univerand PerceR-138). 379 Pulgar

On 26CommmonthwoundEnviro

El Sal43.

d anti-mining

e that all the

gement of ce

ure to ackno

t lacked the n

munities to b

80.8%very s

84.9%and

only 1

The S44.

impacts that

ing operatio

mental impac

water from i

sty Internation

rial, para. 332

rsidad Centroeptions of Min

Final Report

6 December,mittee was kihs pregnant, ded. Her huonment Com

lvador highli

g contingent

e anti-mining

rtain NGOs"

wledge that

necessary so

be impacted b

% thought thaserious;

% agreed with

18.9% consid

Salvadoran p

t metallic mi

n, so the dir

ct could last

its tailings p

nal: Urgent A

2 (citing Press

americana "Jning in Areas

t at 14 (R-129

another memilled. Dora Awas shot de

usband, José mmittee spok

ights these e

in the local

g people wer

"377 or peopl

the public h

ocial license

by mining in

at the impact

h the statem

dered El Sal

opulation wa

ining could h

ect benefits

much longer

ond, which w

Action, Two A

s Release, Sa

osé Simeon CAffected by

9).

118

mber of the Alicia Recinoad, and her tSantos Rodr

kesperson.376

events to sho

communitie

re either "bei

le with pend

had legitimat

to operate.

ndicated that

t of mining o

ment that min

vador an app

as justifiably

have on the

would be re

r.379 For exa

was not "con

Activists Kille

nta Rita Drill

Cañas" InstituMining in El

Cabañas Enos Sorto, whtwo-year-oldríguez, is the6

ow that there

es. In these c

ing imported

ding loans fro

te concerns i

Indeed, a 20

t:

on water pol

ning compan

propriate cou

y concerned

environmen

elatively shor

ample, Pac R

nsidered or e

ed, Others Th

l Program Up

ute on Public Salvador, No

nvironment ho was eightd child was e Cabañas

e is a large, p

circumstanc

d from outsi

om ADES is

is part of the

007 survey o

llution woul

ies harm the

untry for me

about the si

nt. Pac Rim

rt-lived, thou

Rim's comm

envisioned to

hreatened, Jan

pdate, Dec. 13

Opinion, Survov. 2007, at 2

t

passionate,

ces, Claiman

de areas at t

s not credible

e reason that

of Salvadora

d be serious

e environmen

etallic minin

ignificant

proposed a s

ugh the

mitment to

o be a sanctu

n. 4, 2010 (Ex

3, 2006 (C-26

vey on Know27, 39, 54 (Ex

t's

he

e.

ans in

or

nt;

ng.378

six-

uary

xhibit

63)).

wledge xhibit

for aquat

a tailings

devastati

24

would flo

necessary

D

24

issues reg

vision reg

about pot

protectio

environm

mechanis

result, he

380 Respon381 See, e.gRisk of D139) (listicontinue tThe consemany case382 See Be"fears thatwill be poundergrouand lack o383 Pulgar

tic organism

s dam spill, p

ing.381

In sho45.

ow from its p

y social licen

D. Strate

Dr. Pu46.

garding min

garding the p

tential envir

n of water q

mental and m

sms and regu

e considered

nse to Public

g., Report of angerous Occing several exto occur despequences of thes, human los

ehre Dolbear Et water used b

ollution of waund water, theof credibility

Recommend

s," before di

possibly as th

ort, Pac Rim

proposed Pro

nse to go for

egic Environ

ulgar, in his

ing activity

potential for

onmental im

quality and av

mining legisla

ulation of cit

that El Salv

Consultation

the ICOLD Ccurrences," Uxamples of taiite the availabhese failures hss.").

Expert Reporby the compaater by cyanide TSF may faof Pacific Rim

dations at 3-5

ischarge into

he result of a

never convi

oject were w

rward.

nmental Ev

report on the

in El Salvad

r developing

mpacts, there

vailability du

ation as well

tizen particip

vador was no

Observations

Committee onU.N.E.P. Bulleilings dam faible improved have been hea

rt, para. 125 (dany will diminde and metals ail, and that thm.").

(R-132).

119

o the San Fra

an earthquak

inced the com

worth the risk

valuation

e status of en

dor in 2006, f

the mining

was no wat

uring mining

l as institutio

pation in the

ot ready to m

s at 71-72 (C-

n Tailings Dametin 121 (200ilures) and 53technology f

avy economic

describing locnish their currdownstream,

here will be lim

ancisco Rive

ke. A tailing

mmunities th

ks.382 As a r

nvironmenta

found that th

sector, there

ter policy tha

g activities,

onal capacity

e decision-m

move forward

-170).

ms and Waste1), ISSN 053

3 (concluding for the designc losses, envi

cal inhabitantrent supply fo, that leakage mited new job

er,380 did not

gs dam spill

hat the limit

result, Pac R

al, social, an

he country la

e was a lack

at would ens

there were g

y, and there

making proce

d with minin

e Lagoons, "T4-8293, at 15

g "Failures of n, constructionironmental de

ts' concerns sor potable and

from the TSFbs for a short

t address fea

could be

ed benefits t

Rim lacked th

nd developm

acked a com

of informati

sure the

gaps in the

were inadeq

ess.383 As a

ng at that tim

Tailings Dam5-16 (Exhibittailings damsn and operatioegradation and

temming fromd other uses; tF will pollutet period of tim

ars of

that

he

ent

mmon

ion

quate

me:

s t R-s on. d, in

m there e me

24

evaluate

concerns

availabili

assessme

of discus

384 Pulgar relación aen condicfines polítalguna y mmás confltravés delmecanisminsuficienestá en ma("Dr. Pulgmetallic m2006, que385 Pulgar 386 Pulgar

[T]he the lawactivit

In respresponradicainsteapolarisituatishouldconsencredib

[T]he that thMininEcono

Dr. Pu47.

potential env

raised durin

ity and quali

ent."386 Follo

ssions based

Recommend

a la ley y la poiones de crecticos, poca inmás bien incidlictivas. Las e diálogo, la g

mos que genernte pensar queanos tan sólo gar concludedmining activite El Salvador

Recommend

Recommend

current situaw and policyty being carr

ponse to thisnds to politicalism of orgaad impact theization and wions. Internad be channelnsus-buildin

bility among

proposals shhe solution inng Law or thomy.384

ulgar recomm

vironmental

ng the Pac R

ity of water r

owing a Stra

on the infor

dations at 5 (Rolítica, puede iente conflictformación o edirá en las baexperiencias i

generación de ren credibilidae la solución pdel Ministeri

d in his reporty . . ." / "El Dno estaba list

dations at 9 (R

dations at 10 (

ation, with oy, can result ried out in an

s, to think orcal ends, limanizations we fundamentawill be reflecational experled through dng, and by in the parties.

hould be comnvolves noth

hat this task s

mended a St

l impacts of a

Rim public co

resources is

ategic Enviro

rmation gath

R-132) ("la sitgenerar que c

to. Frente a eeventual radic

ases de lo que internacionalespacios de c

ad entre las ppasa por tan sio de Economt, submitted to

Dr. Pulgar conto para la acti

R-132).

(R-132).

120

opposing viein any futurn environme

r attempt to cmited informawill not bring

al elements cted in even rience showdialogue, cre

ncorporating . . .

mprehensivehing more thshould fall o

trategic Envi

any mining p

onsultation, h

a central ele

onmental As

ered to 1) ad

tuación actualcualquier des

ello pensar o icalismo de lagenera la pol

es demuestranconstrucción dartes. . . . [L]

sólo modificarmía . . ."). Seeo me in Auguncluyó en su rvidad minera

ews not just ire performanent of growin

conclude thaation, or pos about a soluof what genemore conflic

ws that these peating forummechanism

e. It is not enhan amendinnly to the M

ironmental A

policy in El

he noted tha

ement for the

ssessment, D

ddress the cu

l, con posiciosarrollo de la aintentar interps organizaciolarización y sn que estas pode consensos]as propuestar la Ley de M

e also Gavidiaust 2006, that reporte, que ma metálica . . .

in relation tonce of the ng conflict.

at all of this ssible ution, and werates ctive positions

ms for ms that build

nough to thinng the 1995 Ministry of

Assessment t

Salvador.385

at the "situati

e strategic en

Dr. Pulgar en

urrent conflic

ones encontraactividad en epretar que todones, no generse reflejará enosiciones deb y la incorpor

as deben ser inMinería de 199a Witness StaEl Salvador w

me fue presen").

o

will

nk

to identify an

5 In line wit

ion regardin

nvironmenta

nvisioned a s

ct and oppos

das no sólo enel futuro se ha

do esto responrará solución

n situaciones aben canalizarsración de ntegrales. Es 95 o que esta atement, para.was not ready

ntado en agost

nd

th the

ng

al

series

sing

n aga

nde a

aun se a

tarea . 11 y for to del

views to

. determi

24

Strategic

President

was nece

mining in

suspensio

never, as

Rather, a

decision

mining (a

could dec

24

technical

was part

Economy

the Strate

was in th

he sudde

387 Pulgar that Dr. Pwhether toinstrumenminería m

begin buildi

ne whether c

Althou48.

Environmen

t Funes, who

essary and co

n El Salvado

on of proces

Claimant al

as Claimant a

to suspend t

a "moratoriu

cide how and

Dr. Ro49.

l director of

of a technic

y in 2010 to

egic Environ

he last step o

nly passed a

Recommendulgar recommo develop the

nto necesario pmetálica y si la

ing a consen

carrying out

ugh Presiden

ntal Assessm

o took office

ontracted the

or in 2010. T

sing of envir

lleges, a "ban

admits it wa

the review of

um") to take

d when to m

obert Goodla

the World B

al committee

review the w

nmental Eval

f finalizing a

away on Dec

dations at 12 (mended an EAe metallic minpara que El Sa respuesta er

nsus vision o

t mining acti

nt Saca's adm

ment, nothing

e in mid-200

e Tau Group

Throughout t

ronmental p

n" (denoting

s informed i

f application

the time to s

move forward

and, a World

Bank's indepe

e appointed

work of the i

luation study

an expert op

cember 28, 2

(R-132). See AE "as a necening industry,Salvador pudira afirmativa,

121

n mining an

vity falls wi

ministration

g was under

9, agreed tha

to study and

this period, E

ermit applic

g a permanen

in May 2007

ns for enviro

study the situ

d.

d Bank envir

endent Extra

by the Mini

international

y of metallic

pinion to sub

2013. We in

also Gavidia ssary instrum and if so, unera tomar unabajo cuáles c

nd 2) develop

ithin that vis

took some s

rway by the t

at a Strategi

d evaluate is

El Salvador

cations for m

nt prohibitio

7, El Salvado

onmental per

uation and th

ronmental ad

active Indust

stry of Envir

l consulting

c mining in E

bmit with thi

nclude the fin

Witness Statment for El Sander what cona decisión sobcondiciones.")

p "the countr

ion."387

steps toward

time he left o

c Environme

ssues related

reasonably

metallic minin

on) on metall

or made the r

rmits related

he potential

dvisor from

try Review f

ronment and

company hi

El Salvador.

s Counter-M

nal draft of h

tement, para. alvador to be anditions." / "cobre si desarro).

ry's vision an

d realizing th

office in 200

ental Assess

d to metallic

continued th

ng. There w

lic mining.

reasonable

d to metallic

impacts bef

1971-2001

from 2001-2

d Ministry of

red to carry

Dr. Goodla

Memorial wh

his expert

11 (describinable to decideomo un llar la industr

nd . .

he

09.

sment

he

was

fore it

and

2004,

f

out

and

hen

ng e on

ria de

opinion e

situation

precautio

2

Moran an

the water

environm

aggravati

Report in

conflict,

in additio

appears t

populatio

2

388 ExpertMining, Dopinion at389 Tau Fi390 Tau Fique la actambiental391 Tau Fi392 Tau Filas organi

explaining h

in El Salvad

onary step gi

The T50.

nd local com

r concerns an

mental aspect

ing the exist

ncludes a tab

health probl

on to the env

to be a const

on affected b

The T51.

El Salcountrto a hiwith iresourand of

t Opinion of RDec. 17, 2013t a time to be

nal Report at

nal Report at ividad pueda l y de baja cal

nal Report at

nal Report at izaciones com

is view, base

dor, that a m

iven the circu

Tau Group's F

mmunities an

nd risks of n

ts are the po

ting environm

ble of the arg

lems, and the

vironmental

tant in most o

by mining ac

Tau Report fo

lvador is a cory's environmigh populationstitutions frrces for effecften lacking

Robert Goodla

("Goodland specified by

6-10, 12-14 (

20 (R-130) (generar sobre

lidad del agua

21 (R-130).

27 (R-130) (munales y, de

ed on his ext

moratorium on

umstances in

Final Report

nd noted in D

natural disast

tential harm

mental vulne

guments rais

e fact that an

concerns.391

of the comm

ctivity."392

ound:

ountry facinmental vulneon density—

frequently hactively carryin credibilit

and on the GoExpert Opinithe Tribunal.

(R-130).

"los aspectose el medio ama.").

"La oposiciónforma genera

122

tensive expe

n metallic m

n El Salvado

t confirmed

Dr. Pulgar's 2

ter,389 and fo

m the activity

erability and

ed against m

ny employm

According

munity organ

ng significanterability is p

—the highest aving limitedying out theiry according

overnment ofon"). El Salv

ambientales mbiente, agrav

n a la mineríaal, en la pobla

erience and u

mining was a

or at the time

the concerns

2006 report.

ound that "th

y might cause

d poor water

metallic mini

ment benefits

g to this Repo

nizations and

t challengesparticularly e

in Central Ad capabilitier duties and to Salvador

f El Salvador'vador intends

que más preovando el prob

a parece ser uación afectada

unique know

a legitimate a

e.388

s previously

The Tau R

he most conc

e to the envi

quality issu

ing, which m

would be ve

ort, "Opposi

d generally a

. The elevated due America—s and priorities,

ran citizens,

s Moratoriumto file a corro

ocupan son loblema de la vu

una constante a por la activi

wledge of the

and reasonab

y raised by D

eport discus

cerning

ironment,

es."390 The

mentions soc

ery short-liv

tion to minin

among the

m on Metal oborating exp

os posibles daulnerabilidad

en la mayoríaidad minera."

e

ble

Dr.

sed

cial

ed,

ng

pert

años

a de ).

2

El Salvad

in the mi

met.394

E

2

Governm

noting th

respect fo

mining a

assured."

393 Tau Fi2010) ("Epoblacióncapacidadcredibilidparte de suterritorio especialmposibilidaimpactos económic394 Tau Fi395 Propos

with snaturapart odisast

Thesethe pometallrisks athe co

Accor52.

dor, "the mo

d to long-ter

E. Mora

In July53.

ment propose

hat "the Strat

or the precau

ctivity until

"395 Accordi

nal Report at

El Salvador esn—la mayor ddes y recursosad entre los sus recursos ncon riesgo ele

mente elevada.ad de que el pambientales y

co del país.").

nal Report at

sed Moratoriu

significant leal resources—f its territoryers . . . .

e conditions ossibility of tlic mining thand impacts,ountry's socia

rdingly, the T

ost advisable

rm, once cer

atorium law

y 2012, cons

ed a moratori

tegic Environ

utionary prin

compliance

ing to the pro

73 (R-130) (

s un país que ede un país cens para el desaralvadoreños, aturales—impevado de sufr. . . . Estas coaís pueda gary sociales, y e

79 (R-130) (

um Law, July

evels of pollu—also entaily subjected t

of vulnerabithe country bhrough contr, and in makal and econo

Tau Report r

option" from

rtain econom

w still pendin

sistent with t

ium until co

nmental Ass

nciple and to

with the rel

oposed law,

citing a reporenfrenta granntroamericanorrollo efectivocon niveles iplicando ademrir catástrofes ondiciones derantizar una men realizar un

"la opción má

17, 2012 ("P

123

ution and deling health rito a greater r

ility present being able torolling its en

king an overaomic develop

recommende

m an environ

mic, social, an

ng

the Strategic

mpliance wi

sessment adv

o that effect,

evant social

the morator

rt by the Unitdes retos. Co

o—,con instituo de sus funcimportantes dmás riesgos pnaturales, la

e vulnerabilidminería metálina contribució

ás aconsejabl

Proposed Mor

egradation inisks—and wrisk of suffer

a significanto guarantee environmentalall positive cpment.393

ed either pro

nmental stan

nd environm

c Environme

ith certain go

vises the utm

recommend

and environ

rium could e

ted Nations Dondicionado ptuciones muchiones y priori

de contaminacpara la salud—

vulnerabilidaad suponen uica eficaz en e

ón neta positiv

le").

ratorium Law

n most of its with a large

ring natural

t obstacle toeffective l and social contribution

ohibiting me

ndpoint, or a

mental guaran

ental Evaluat

oals could b

most caution

ds postponin

nmental guar

nd when var

Disaster and Cpor una elevadhas veces escidades, y a meción y degrada—y con una grad ambiental una barrera imel control de va al desarrol

") (Exhibit R

to

tallic mining

allowing min

ntees could b

tion Report,

e achieved,

and the grea

g any metall

rantees is

rious

Coordination tda densidad dasas de enudo faltas dación de granran parte de sdel país es

mportante a la sus riesgos e lo social y

R-140).

g in

ning

be

the

atest

lic

team, de

de n su

improvem

responsib

of the mi

and other

The decr

2

with rega

Goodland

2

ensured a

ensured,

Salvador

El Salvad

interests,

environm

396 Propos397 Goodla398 Tinetti

ments had be

ble for envir

ining regulat

r policy instr

ree is still pen

El Sal54.

ard to metall

d concluded

GivenEl SalsignifmeaniSuch cright"enviroenviroencoupermi

Until 55.

and there is n

the only rea

ran Constitut

dor is Consti

, including "

ment, as well

sed Moratoriu

and Expert Op

i Expert Repo

een made, in

onmental as

tory instituti

ruments that

nding before

lvador's actio

lic mining ar

d in his exper

n the high levlvador and thficant changeingful contrichanges willby focusing

onmental eduonmental decurage only thts.397

the necessar

no social lic

asonable cou

tional law ex

itutional bec

environment

l as the prote

um Law, Art.

pinion at 17.

ort, paras. 60-6

ncluding: "fa

sessment, co

ons;" and "d

t will guaran

e the Salvado

ons to seek a

re the best co

rt opinion:

vel of violenhe current laes are neededibution to sul take time. E

g on regionalucation of itcision-makin

he best actors

ry changes ar

ense to oper

urse of action

xpert Dr. Tin

cause it is a r

tal integrity

ection of the

4 (R-140).

61.

124

ar-reaching s

ontrol, and m

development

ntee a progre

oran legislat

an informed

ourse to prot

nce surroundack of institud before min

ustainable deEl Salvador l planning, ins citizens, anng. Such an s in the mini

re made, env

rate. And un

n would be to

netti, a morat

reasonable st

and every in

health of inh

strengthening

monitoring;"

t of taxation,

essive distrib

ture.

solution to t

tect its envir

ding the issueutional strengning could mevelopment ihas a chancenstitutional nd scientificapproach woing industry

vironmental

ntil environm

o not allow m

torium with

tep to protec

ndividual's ri

habitants of

g of the insti

"far-reachin

, financial, c

bution of min

the complex

ronment and

e of mining gth,

make a in the countre to "do it strengthenin

c rigor in ould to apply for

protection c

mental protec

mining. As

respect to m

ct important

ight to a hea

f the Republi

itutions

ng strengthen

compensatory

ning profits.

x issues it fac

citizens. A

in

ry.

ng,

r

cannot be

ction can be

explained by

metallic mini

collective

althy

ic."398

ning

y,

"396

ces

s Dr.

y

ing in

2

general a

Pac Rim'

independ

environm

admitted

Likewise

licenses b

damages

Howe56.

and Pac Rim

's application

dent requirem

mental permi

for consider

e, El Salvado

because Pac

.

ever, as alrea

's environme

n for an expl

ments under

it, its applica

ration witho

or's policy de

Rim did not

ady stated, E

ental permit

loitation con

the Mining L

ation for an e

ut the requir

ecision did n

t have a righ

125

El Salvador's

specifically

ncession faile

Law. Wheth

exploitation

red land docu

not affect any

ht to the expl

decisions re

y did not hav

ed to comply

her or not Pa

concession w

umentation

y rights with

loration licen

egarding met

ve any impac

y with two a

ac Rim recei

would not h

and feasibili

h regard to e

nses for whi

tallic mining

ct on Pac Rim

additional,

ived the

ave been

ity study.

exploration

ich it claims

g in

m.

IV. PW

2

exploitat

explorati

Therefor

of alleged

result, th

2

section th

A

2

under tw

decided i

proceed t

2

jurisdicti

were juri

establish

2

arbitratio

jurisdicti

escape th

PAC RIM'S WITHOUT M

El Sal57.

ion concessi

ion areas. W

e, Pac Rim's

d property ri

e Tribunal n

Howe58.

hat El Salvad

A. The TLaw

Claim59.

o separate in

in June 2012

to the merits

As fur60.

ion to decide

isdiction, the

ed by the Inv

Pac R61.

on are brough

ion to ICSID

he consequen

CLAIMS UMERIT

lvador alread

ion and did n

Without those

s claims in th

ights that Pa

need not go a

ever, for the

dor has not b

Tribunal's ju

mant initiated

nstruments: C

2 that there is

s on a finding

rther explain

e this particu

e Tribunal's j

vestment La

Rim admits in

ht under Art

D arbitration

nces of that c

UNDER EL

dy demonstr

not have a ri

e rights, Pac

his arbitratio

ac Rim never

any further to

sake of com

breached its

urisdiction

d this arbitrat

CAFTA and

s no jurisdic

g of jurisdict

ned in Sectio

ular dispute u

jurisdiction w

aw itself.

n paragraph

ticle 15 of th

under the In

choice.

126

SALVADO

rated that Pac

ght to the m

Rim's losses

on, which are

r had, would

o decide this

mpleteness, E

obligations

to decide th

tion in Marc

d the Investm

ction under C

tion under th

on VI below,

under the Inv

would have

401 of its M

he Investmen

nvestment La

OR'S INVES

c Rim did no

mineral depos

s cannot be a

e all grounde

d fail under a

s case in fav

El Salvador w

under the In

his dispute i

ch 2009 invo

ment Law of

CAFTA, but

he Investmen

, El Salvado

vestment La

to be exerci

Memorial that

nt Law of El

aw of El Salv

STMENT L

ot have a rig

sits located i

attributable t

ed on claims

any system o

or of El Salv

will also dem

nvestment La

is limited by

oking ICSID

f El Salvador

allowed the

nt Law of El

r maintains t

aw. Howeve

sed within th

t "[t]he claim

Salvador."

vador, Pac R

LAW ARE

ght to an

in other

to El Salvad

s of expropri

of law. As a

vador.

monstrate in t

aw.

y the Investm

jurisdiction

r. The Tribu

e arbitration t

l Salvador.

that there is

er, even if the

he strict limi

ms in this

Having invo

Rim cannot

dor.

iation

a

this

ment

n

unal

to

no

ere

its

oked

2

Investme

jurisdicti

Salvador

protectio

made sub

the explo

claims re

2

investors

recognize

"the Gov

(compen

"[d]eclar

Law."400

2

protectio

from the

CAFTA

customar

399 NOA, 400 NOA,

The m62.

ent Law of E

ion are claim

ran law is the

ns and deter

bject to a sig

oitation of th

elated to the

1.

The In63.

s. In its Noti

ed the specif

vernment's co

sation for ex

e that El Sal

Claim64.

ns under cus

Cayman Isla

were dismis

ry internation

para. 90 (emp

para. 128 (em

main consequ

El Salvador a

ms regarding

e applicable

rmine wheth

gnificant limi

he subsoil; an

application f

The only cInvestmenand protec

nvestment L

ice of Arbitr

fic claims it

onduct viola

xpropriation)

lvador has br

mant had orig

stomary inte

ands to the U

sed for lack

nal law claim

phasis added)

mphasis added

uences of the

are that: 1) th

the rights an

law to decid

her El Salvad

itation impo

nd 4) a three

for the El Do

claims that cnt Law of El ctions includ

Law of El Sal

ration filed w

could make

ates Articles

)."399 Accor

reached the t

ginally intend

ernational law

United State

of jurisdicti

ms in this arb

).

d).

127

e fact that th

he only claim

nd protection

de the conten

dor has breac

sed in the In

e-year statute

orado conce

can be made Salvador are

ded in the Inv

lvador includ

with the ICSI

under the In

5 (equal pro

rdingly, Pac

terms of CA

ded to benef

w included i

s in Decemb

ion, and Pac

bitration. In

his arbitration

ms over whic

ns included i

nt of those su

ched them; 3

nvestment La

e of limitatio

ession.

in an arbitrae claims regvestment Law

des substant

ID Secretari

nvestment L

otection), 6 (

Rim request

AFTA and of

fit primarily

in CAFTA b

ber 2007. Bu

Rim is there

nstead of acc

n proceeds o

ch the Tribu

in the Invest

ubstantive ri

3) Claimant's

aw on invest

ons applies to

ation under Agarding the suw

tive rights an

at in April 2

aw. Pac Rim

(non-discrim

ted that this

f the Salvado

from the rig

by changing i

ut Pac Rim's

efore unable

cepting the lo

only under th

unal can exer

tment Law; 2

ights and

s investment

tments relate

o Claimant's

Article 15 ofubstantive ri

nd protection

2009, Claima

m alleged th

mination), and

Tribunal

oran Investm

ghts and

its nationalit

s claims und

e to bring

oss of its

he

rcise

2)

t was

ed to

s

f the ights

ns for

ant

at

d 8

ment

ty

der

CAFTA

Memoria

relief and

Foreign I

2

substanti

claims in

to decide

Salvador

Investme

2

Rim alleg

Articles

expropria

includes

unnamed

is especia

anyone to

Law, cou

401 See, e.gprinciples402 MemorInvestmenmain sour

claims, Pac

al.401 As a si

d now reque

Investment L

But th65.

ive rights and

n this arbitrat

e this dispute

r has breache

ent Law.

The su66.

ged from the

5 (equality f

ation) of the

these specif

d causes of a

ally so given

o believe tha

uld be the ba

g., Memorial,s of economic

rial, para. 692nt Law" in itsrce of Pac Rim

Rim is now

ignal of this

sts this Tribu

Law (sic), th

his attempt to

d protection

tion are thos

e based on th

ed the substa

ubstantive ri

e beginning a

for all invest

e Investment

fic rights and

ction for rig

n that there i

at some addi

asis for claim

, paras. 614, 6

c freedom, leg

2 (emphasis as title becausem's mistake tr

trying to "in

repackaging

unal to "[d]e

he Constitutio

o expand the

s upon whic

se specificall

he Investmen

antive rights

ights and pro

as having be

tors), 6 (non

t Law. It is n

d protections

hts under cu

s not a singl

itional rights

ms under the

617, 620-622gal certainty,

added). The Ie it applies borying to intern

128

nternationali

g of its claim

eclare that R

on, and gene

e available so

h Pac Rim m

ly included i

nt Law must

and obligati

otections inc

een breached

n-discriminat

nonsensical t

s, but also all

ustomary inte

e provision i

s and protect

Investment

, 641 (attemplegality, legit

Investment Lath to domestinationalize th

ze" its rema

ms, Pac Rim

Respondent h

eral principle

ources for it

may attempt

in the Investm

t be limited t

ions specific

cluded in the

d by El Salva

tion), and 8

to suggest th

lows the imp

ernational la

in the Invest

tions, not spe

Law.

pting to includtimate expecta

aw of El Salvic as well as tohis law.

aining claims

has changed

has breached

es of interna

ts claims fail

to frame its

tment Law.

to deciding w

cally include

e Investment

ador are thos

(compensati

hat the Inves

portation of

aw (or any ot

tment Law th

ecifically inc

de claims regaations, etc.).

vador is not a o foreign inve

s in its

d its request

d the terms of

ational law."

ls. The only

remaining

Any jurisdic

whether El

ed in the

t Law that Pa

se included i

ion for

stment Law

a whole set

ther law). T

hat can lead

cluded in the

arding breach

"Foreign estors. This i

for

f the

402

y

ction

ac

in

of

This

d

e

hes of

is the

2

investors

domestic

establish

the "Inve

Law appl

equally, i

2

provides

have the

exception

other law

differentl

Investme

2

them, the

repatriate

internatio

403 Investmque éstos nacionale404 Investm

Indeed67.

s is limited to

c as well as t

ed by Articl

estment Law

lies to both d

is fatal to Pa

Articl68.

that: "Foreig

same rights

ns save for th

w of El Salva

ly than dome

ent Law will

When69.

ey expressly

e the proceed

onal arbitrati

If coninvestin El Sjustice

ment Law, Arparticipen, tes, sin más exc

ment Law, Ar

d, the text of

o those right

o foreign inv

e 5. The law

w of El Salva

domestic and

ac Rim's atte

le 5 of the In

gn investors

and obligati

hose set fort

ador creates

estic investo

be exactly t

n the legislato

included a p

ds of their in

ion. Article

ntroversies ortors and the Salvador, thee, in accorda

rt. 5 (RL-9(biendrán los miscepciones que

rt. 4 (RL-9(bi

f the Investm

ts and protec

vestors and i

w is not calle

dor." The d

d foreign inv

mpts to inter

nvestment La

and the com

ions as natio

th by law . .

a specific ex

ors, the rights

the same as t

ors intended

provision gra

nvestments.4

15 of the In

r differencesState, regarde parties mayance with leg

is)) ("Los invesmos derechoe las señalada

is)).

129

ment Law co

ctions it expr

includes a pr

ed the "Fore

ifference is

vestors, and

rnationalize

aw, under th

mmercial com

onal investor

. ."403 There

xception whe

s and obliga

the rights an

d to grant for

anting such

04 Another e

nvestment La

s arise betweding the invey resort to thgal procedur

ersionistas exos y obligacioas por la ley")

onfirms that t

ressly includ

rinciple of e

eign Investm

significant.

includes a c

El Salvador

he title "Equa

mpanies in w

rs and compa

efore, unless

ere foreign i

ations of fore

nd obligation

reign investo

exception. O

example is t

aw provides

een national estments theyhe competenres.

xtranjeros y laones que los in).

the protectio

des. The law

quality for a

ment Law of E

The fact tha

commitment

r's Investmen

ality for all i

which they p

anies, with n

s the Investm

investors wil

eign investor

ns of domest

ors certain ri

One exampl

the right to b

that:

or foreign y have made

nt courts of

as sociedades nversionistas

on afforded t

w applies to

all investors

El Salvador,

at the Investm

to treat them

nt Law.

nvestors"

participate sh

no other

ment Law or

ll be treated

rs under the

ic investors.

ghts specific

e is the right

bring dispute

e

mercantiles ey sociedades

to

," but

ment

m

hall

any

c to

t to

es to

en las s

2

under "ge

available

and prote

claims un

treatment

405 InvestminversioniSalvador, procedimireferentescontroverel objeto dsobre Arre(Convenioremoving therefore 406 The cuas such, toindicated required iThus, whestandard orights juriown, custrecognitioHuman R"Especiallgood grouconcernedthey will g

In casregardsubmi

a) To DisputhrougConveStates

This r70.

eneral princi

e to domestic

ections speci

nder "genera

t" under cus

ment Law, Aristas nacionallas partes po

ientos legaless a inversionesia: a) Al Cende resolver laeglo de Difero CIADI)…."the referencehas no effect

ustomary intero the nationalin its case lawn case of expere interferenof compensatiisprudence, womary interna

on of this diffRights in the Ja

ly as regards unds for drawd. To begin wgenerally hav

se of disputesding their invit the dispute

the Internatiutes (ICSID)gh mediationention on thes and Nation

right, howev

iples of Inter

c investors.

ifically inclu

al principles

tomary inter

rt. 15 (RL-9(bles o extranjerdrán acudir a

s. En el caso ds de aquellos ntro Internacia controversiarencias Relativ"). Article 15e to internatioon this arbitr

rnational law ls of the host w that the stanpropriation, dince with propeion will be as

whereas when ational law w

ference in treaJames and Oth

a taking of prwing a distinctwith, non-natiove played no p

s between fovestments me:

ional Centre, with the pun and arbitrae Settlementals of Other

er, does not

rnational Law

Domestic in

uded in the In

of Internatio

rnational law

bis)) ("En casros y el Estad

a los tribunalede controversefectuadas enonal de Arreg

a mediante convas a Inversio

5 of the Investonal arbitratioration.

rules and prinState. By wandard of proteiffers significaerty rights is assessed accordthe interferen

will provide thatment are refhers v. Unitedroperty effecttion between nonals are morpart in the ele

130

oreign investmade in El Sa

e for Settlemurpose of resation, in accot of InvestmeStates (ICSI

include a rig

w" or custom

nvestors can

nvestment L

onal Law" su

w.406 Accord

so que surgierdo, referentes es de justicia cias surgidas en El Salvadorglo de Diferennciliación y aones entre Esttment Law of

on. The amen

nciples pertaiay of exampleection for proantly dependiat the hands oding to the Conce is at the hhe standard. Tflected in the d Kingdom cated in the connationals and

re vulnerable tection or desig

tors and the alvador, the i

ment of Investsolving the dordance withent DisputesID Conventi

ght for foreig

mary interna

only make c

Law. Domes

uch as claim

ding to the S

ren controversa inversiones

competentes, entre inversior, los inversioncias Relativaarbitraje, de ctados y Naciof El Salvador ndment does n

ining to the tre, the Europeaoperty rights, ing upon the nof the claimanourt's rather d

hands of a statThe fundamenseminal decis

ase. As the Cntext of a socid non-nationalto domestic lgnation of its

State, investors ma

tment dispute h the s between ion) . . . .405

gn investors

ational law th

claims based

stic investors

ms for "fair an

Salvadoran C

sias o diferens de aquellos,de acuerdo a

onistas extranjonistas podránas a Inversiononformidad conales de otrowas amended

not apply retro

reatment of alan Court of Hincluding thenationality ofnt's own state deferential Eute other than tntal reasons psion of the Euourt stressed al reform, thels as far as coegislation: unauthors nor h

ay

s to make cla

hat are not

d on the righ

s cannot mak

nd equitable

Civil Code, th

ncias entre los, efectuadas ea los jeros y el Estan remitir la nes (CIADI), con el Convenos Estados d in July 2013oactively and

liens do not aHuman Rightse compensatiof the claimantof nationality

uropean humathe claimant's

prompting theuropean Courin that case:

ere may well bompensation inlike nationalhave been

aims

hts

ke

e

he

s en El

ado,

con nio

3, by d

apply, s has on t. y, the an s e rt of

be is s,

Investme

all its par

"equality

could ma

cannot m

2

would cr

Article 1

courts of

in the Inv

internatio

principle

another s

judge wo

lacuna in

lists the o

customar

consulted interest, dlegitimatenationals.Applicatio407 Civil CApr. 14, 117, 2004 (408 Civil a("Civil an

ent Law mus

rts and, there

y for all inve

ake claims un

make such cla

Furthe71.

reate inconsi

5 of the Inve

f El Salvador

vestment Law

onal law and

s of Internat

specific bind

ould not be a

n Salvadoran

only sources

ry internation

on its adopti

different consie reason for re" Case of Jamon No. 8793/7

Code of El Sa1860, amende("Civil Code"

and Commercnd Commercia

st be read and

efore, does n

stors" establ

nder "genera

aims, withou

ermore, allow

stent rulings

estment Law

r, which wou

w. El Salva

d the courts o

tional Law"

ding agreeme

able to resort

n law. Articl

s to which a

nal law is no

on. Secondlyiderations maequiring natiomes and Othe79, Judgment

lvador, Un-nued by Decree N"), Art. 22 (A

cial Procedureal Procedure C

d interpreted

not contradic

lished in Art

al principles

ut a specific

wing other t

s in the diffe

w. A foreign

uld only hear

ador's law do

of El Salvado

or customary

ent to apply

t to customar

le 19 of the S

Salvadoran j

ot included o

, although a t

ay apply to naonals to bear aers v. The Unt, Feb. 21, 198

umbered DecNo. 512, publuthority RL-

e Code of El SCode"), Art.

131

d in a way w

ct itself.407 I

ticle 5 of the

of Internatio

exception fo

ypes of claim

rent dispute

n investor can

r claims bas

oes not ackno

or cannot ad

y internation

such princip

ry internatio

Salvadoran C

judge can re

on that list.40

taking of propationals and na greater burdited Kingdom86, para. 63 (

cree, publishedlished in the O-123).

Salvador, Leg19 (Authorit

where the law

It would be c

e Investment

onal Law" w

or the differe

ms from out

settlement p

n choose to

ed on the rig

owledge the

djudicate cla

nal law in th

ples of Intern

onal law even

Civil and Co

esort in cases

08 Therefore

perty must alwnon-nationals den in the pubm, European C(Authority R

d in the OfficOfficial Gaze

gislative Decrty RL-124).

w is internall

contrary to th

Law, if fore

while domest

ent treatmen

tside the Inve

procedures p

submit its di

ghts and prot

direct effect

aims based on

he absence of

national Law

n when there

ommercial P

s of lacunae

e, there woul

ways be effecand there ma

blic interest thCourt of Hum

RL-122).

cial Gazette Nette No. 236, B

ree No. 712, S

y consistent

he principle

eign investor

tic investors

nt.

estment Law

provided for

ispute to the

tections incl

t of customa

n "general

f a treaty or

w. A Salvado

e is a vacuum

Procedure Co

in the law, a

ld not be a le

cted in the pubay well be han non-

man Rights,

No. 85, Book Book 365, De

Sept. 18, 2008

t in

of

rs

s

w

by

e

luded

ary

oran

m or

ode

and

egal

blic

8, ec.

8

basis to a

the dispu

2

Investme

tribunal t

claimant

rights and

attempt t

Salvador

2

arbitratio

grounds i

Centre on

situation

to any att

Investme

2

letter of s

409 See Ex("Tercerofor the meinternatioparidad lepresentar controver410 Inceysa2006, para411 Inceysa

allow differe

ute is filed be

This l72.

ent Law of E

that was pres

was attempt

d protection

o introduce

r.

The In73.

on jurisdictio

in said law."

nly to hear d

in the two c

tempts by a

ent Law.

Pac R74.

submission o

xpert Report o

Expert Repoere fact that anal tribunal, t

egal, no es dabsu reclamo bsia sería difer

a Vallisoletana. 333 (RL-30

a v. El Salvad

ent claims re

efore the cou

imitation on

El Salvador h

sented with t

ting to bring

s included in

claims from

nceysa tribun

on provided i

"410 The trib

disputes arisi

cases was dif

claimant to b

Rim alleges th

of the draft l

of José Robertort"), para. 40 a foreign investhe law applicble sostener qajo la Ley de rente.").

na S.L. v. Rep0) (emphasis

dor, para. 334

garding diff

urts of El Sal

n the jurisdic

has already b

this situation

g claims unde

n the Investm

m outside the

nal stated wi

in the Invest

bunal added t

ing from the

fferent, the g

bring in any

hat a referen

law by the M

to Tercero Za("In this situa

stor decides tcable to the dque por el solo

Inversiones a

public of El Saadded).

4 (RL-30) (em

132

ferent rights

lvador or in

ction of a trib

been upheld

n. In Inceysa

er the Invest

ment Law. E

Investment

ithout qualif

tment Law, t

that the Inve

application

general princ

y extraneous

nce to treatm

Minister of E

amora on the ation of legalo bring its claispute would o hecho de quante un tribun

alvador, ICSI

mphasis added

and protecti

an internatio

bunal decidin

in a unanim

a Vallisoleta

tment Law w

El Salvador r

Law, and th

fication that

there must b

estment Law

of the Law.

ciple enuncia

provisions a

ment that is "f

conomy, and

El Salvador Il equality, it isaim under thebe different."

ue un inversional internacio

ID Case No. A

d).

ions, depend

onal arbitrat

ng a dispute

mous award b

ana v. El Sal

which were o

rejected the

he tribunal ag

"in order to

be a claim wi

w "grants juri

"411 While t

ated by that

as claims of

fair and equi

d a reference

Investment Las not possiblee Investment L" / "Ante estaonista extranj

onal, el derech

ARB/03/26, A

ding on whet

tion.409

e under the

by the first IC

lvador, the

outside of th

claimant's

greed with E

invoke the

ith substanti

isdiction to t

the particula

tribunal app

breach of th

itable" in the

e to the "bes

aw, Dec. 9, 2e to maintain Law before a

a situación de ero decida

ho aplicable a

Award, Aug.

ther

CSID

he

El

ive

the

ar

plies

he

e

st

013 that

an

a la

2,

practices

Investme

treatment

under the

2

purpose,

extraneou

drafters.

the same

law allow

Law."

2

Rim fails

equitable

both dom

just forei

to attemp

invoking

first two

to be app

attemptin

412 Memor413 StatemRL-101(b

" recognized

ent Law, ope

t" and "the p

e Investment

First, 75.

cannot chan

us causes of

Article 5 of

rights unles

wing foreign

Secon76.

s to observe

e" treatment

mestic and fo

ign investors

pt to open th

g the Investm

lines in the p

plied to inves

ng to do. By

rial, paras. 40

ment of Purposbis)).

d in internati

en the door f

protection of

t Law.412 Pa

Pac Rim fai

nge the plain

f action not f

f the Investm

ss a specific

n investors to

nd, even the

that the para

in the Minis

oreign invest

s, but for all

e door to "ge

ment Law bef

paragraph fr

stments "in g

y failing to n

07-411.

se ("Exposició

ional investm

for it to bring

f foreign inv

ac Rim is mi

ls to underst

n meaning of

found in the p

ment Law is c

exception is

o make claim

documents c

agraph imme

ster's letter sp

tors.413 Thus

investors un

eneral princi

fore an inter

rom which it

general" and

note these im

ón de Motivo

133

ment include

g claims base

estors' legiti

staken.

tand that a le

f the text of t

provisions o

clear that do

s created by t

ms for breach

cited by Pac

ediately prec

pecifically re

s, the use of

nder this dom

iples of Inter

national trib

t quotes, stat

d not only to

mportant qual

s") of the Inv

ed in the Stat

ed on the "p

imate expect

etter from a m

the law. The

of the law sp

omestic and f

the law. An

hes of "gener

Rim fail to

ceding the re

efers to the l

the term "fa

mestic law. I

rnational La

bunal. Pac R

ting that the

foreign inve

lifications, P

vestment Law

tement of Pu

rinciple of f

tations" in an

minister, or

ese reference

pecifically in

foreign inve

nd there is no

ral principle

support its a

eference to "

law being m

air and equita

It cannot, th

aw" for just f

Rim also fails

principles o

estments, as

Pac Rim over

w of El Salvad

urpose of the

fair and equit

n arbitration

a statement

es do not im

ncluded by th

estors will ha

o exception i

es of Internat

allegation. P

fair and

meant to attra

able" is not f

erefore, be u

foreign inves

s to include

of protection

Pac Rim is

rlooks and f

dor at 5 (Auth

e

table

n

of

mport

he

ave

in the

tional

Pac

act

for

used

stors

the

are

fails

hority

to apply t

Investme

2

Statemen

is import

has a clea

investme

referring

unequivo

additiona

between

defeat the

domestic

on "gene

otherwise

regard to

414 Statem101(bis)) tratamientreglas en derecho."415 Tercerinterpretinframeworconstitutioproducir uextranjero416 Ad hocthat it hasVivendi U

the principle

ent Law itsel

With r77.

nt, after listin

tant to expre

ar and precis

ents and the g

to the neces

ocally limits

al protection

domestic an

e law's purpo

c.415 Conseq

ral principle

e would amo

o this dispute

ment of Purpos

("es importanto, de tal manlas que establ) (emphasis a

o Expert Repng the law "wrk containing onal protectioun 'marco lego la protección

c Committeess jurisdiction wUniversal SA v

e of equality

lf.

regard to the

ng the substa

ssly establis

se knowledg

guarantees th

ssity of expre

those guaran

s from other

nd foreign inv

ose of provid

quently, this

es of internat

ount to an an

e.416

se ("Exposiciónte establecernera, que el inlecerá y desaradded).

port, para. 57 (would be incon

clear and preon of his/her ral apropiado n constitucion

have held thwhen in fact jv. The Argent

y of treatmen

e Statement o

antive protec

sh the condit

ge of the rule

hat they are

essly includi

ntees to thos

r sources wo

vestors creat

ding clear an

Tribunal mu

tional law" th

nnullable exc

ón de Motivor en la ley de unversionista terrollará sus in

(describing thnsistent with cise rules' andright to legal que contenganal a su derec

at there may bjurisdiction istine Republic,

134

nt established

of Purpose,

ctions includ

ions afforde

es under whi

entitled to h

ing the prote

se specificall

ould not only

ted by Articl

nd precise ru

ust reject Pac

hrough a bac

cess of any j

s") of the Invuna manera eenga conocimnversiones, as

hat opening ththe intention d the intentiosecurity." / "s

a reglas clarascho a segurida

be an excess s lacking. See, ICSID Case

d in Article 5

it is also imp

ded in the Inv

ed to the prot

ich they coul

have."414 Th

ections affor

ly included i

y violate the

le 5 of the In

ules for all in

c Rim's attem

ck door that

jurisdiction t

vestment Lawexpresa las comiento de una sí como tambi

he door to extof producingn of providinsería incongrus y precisas' yad juridical.")

of powers if ae Compañia dNo. ARB/97

5 of the text

portant to no

vestment La

tections, so t

ld establish a

he Investmen

rded to inves

in the Law.

principle of

nvestment L

nvestment, f

mpts to bring

does not ex

the Tribunal

w of El Salvadondiciones del

manera claraién, las garan

trajudicial soug an 'appropriang the foreignuente con la iny la intención ).

a tribunal incde Aguas del A7/3, Decision

of the

ote that the

aw, states tha

that the inve

and develop

nt Law, by

stors,

Bringing in

f equality

Law, but also

foreign and

g in claims b

xist. To do

l might have

dor at 5 (RL-l referido

a y precisa lastías a las que

urces for ate legal er with the ntención de de dispensar

correctly concAconquija ASon Annulmen

at "it

estor

p their

n

o

based

with

s tiene

al

cludes S and nt,

2

breached

might ha

authority

the Gove

Constitut

such state

jurisdicti

2

dispute in

July 3, 20ICSID Caparas. 47,ICSID CaArgentineRepublic, Republic,Perú ("LuSept. 5, 20Republic o(Authorittribunal exNo. (ARBAward, OEmirates,Annulmen417 Constitla cual correglamentÓrgano Ejde esta Coresolve chcorpus, direasons m

Likew78.

d El Salvador

ve under the

y for an inter

ernment. Th

tional Cham

ement, Pac R

ion.

2.

Articl79.

n accordance

002, para. 86 (ase No. ARB/ 48, 67 (Auth

ase No. ARB/e Republic, Se

ICSID Case Sept. 1, 2009

ucchetti"), S.A005, para. 99 of Ecuador, Ity RL-130). xceeds the sc

B/81/2), DecisOct. 21, 1983,

ICSID Case nt of Mr. Sou

tution, Art. 17rresponderá ctos, los procejecutivo a quonstitución.")hallenges of uisputes betwe

mentioned in th

wise, Pac Rim

r's Constituti

e Investment

rnational arb

hat is an area

ber of the Su

Rim is also a

SalvadoranInvestmen

le 42(1) of th

e with such r

(Authority R/99/7, Decisiohority RL-12/01/8, Decisioept. 25, 2007,No. ARB/01/9, para. 45 (AA. v. The Repu

(Authority RICSID Case NCommittees hope of its jurision on the Appara. 4 (AuthNo. ARB/02/

ufraki, June 5,

74 (RL-121) conocer y resosos de ampare se refiere el

) ["The Supremunconstitutionen the Legislhe 7th power

m's request f

ion would ex

t Law. Now

itral tribunal

a reserved by

upreme Cou

asking the Tr

n law is the nt Law's subs

he ICSID Co

rules of law

RL-125); Mr. on on the App26); CMS Gason of the Ad H, para. 47 (Au/12, Decision

Authority RLublic of Peru,RL-129); M.CNo. ARB/03/6have also heldisdiction. Seepplication forhority RL-13/7, Decision o, 2007, para. 4

("La Corte Suolver las demo, el habeas cl Art. 138 y lame Court wil

nality of laws,ative and Exeof Article 18

135

for the Tribu

xceed the sc

where in the I

l to decide o

y Article 174

urt of El Salv

ribunal to co

applicable lastantive righ

onvention pr

as may be a

Patrick Mitch

plication for As TransmissioHoc Committuthority RL-n on the AppliL-128); Indust

ICSID Case C.I. Power Gr6, Decision ond that there coe Klöckner v. r Annulment 31); Hussein Nof the Ad Hoc42 (Authority

uprema de Jumandas de incocorpus, las coas causas menll have a Cons, decrees and ecutive Branc82 of this Con

unal to declar

cope of any j

Investment L

on the constit

4 of the Salv

vador.417 By

ommit an an

aw to decidehts and prote

rovides that "

agreed by the

hell v. The DeAnnulment ofon Company vtee on the App127); Azurix ication for Antria NacionalNo. ARB/03

roup L.C. andn Annulment,ould be an exThe RepublicSubmitted byNuaman Soufc Committee y RL-132).

usticia tendrá uonstitucionalintroversias en

ncionadas en stitutional Chregulations, a

ches referred tnstitution."].

re that El Sa

urisdiction t

Law is there

tutionality o

adoran Cons

y asking the T

nnullable exc

e the contentctions

"[t]he Tribun

e parties." B

emocratic Repf the Award, Nv. The Argentplication for ACorp. v. The

nnulment of thl de Alimentos/4, Decision od New Turbin, Oct. 19, 200

xcess of powec of Camerooy Klöckner Agfraki v. The Uon the Applic

una Sala de loidad de las leyntre el Órganla atribución

hamber, whichamparo proceto in Article 1

alvador has

the Tribunal

a grant of

of the actions

stitution to th

Tribunal to m

cess of its

t of the

nal shall dec

By invoking

public of ConNov. 1, 2006,tine Republic,Annulment oArgentine he Argentine s, S.A. and Inon Annulmen

ne, Inc. v. The09, para. 56 ers when the on, ICSID Casgainst the Arb

United Arab cation for

o Constitucioyes, decretos

no Legislativo7a. del Art. 1h shall hear anesses, habeas 138 and the

s of

he

make

cide a

ngo, , , f the

dalsa nt, e

se bitral

onal, a y

o y el 182 nd

jurisdicti

its disput

2

include a

internatio

is wrong

Article 2

2

procedur

applicabl

investor t

purposes

agreed to

under Ar

2

proceedin

foreign in

rules in th

Salvador

rights in

418 Tercer419 Memor420 As indSalvador h

ion under the

te.418

Pac R80.

a specific ref

onal arbitrati

because Art

2 of the Salv

This c81.

re initiated un

le law to dec

that invokes

of Article 4

o that choice

rticle 15.420

The m82.

ng under the

nvestors esta

he settlemen

r are subject

the subsoil a

o Expert Rep

rial, paras. 40

dicated above,has breached

e Investment

Rim, however

ference to wh

ion, there is

ticle 15 mus

vadoran Civi

contextual re

nder the Inv

cide the disp

jurisdiction

42 (first sente

of law as a

main reasons

e Investment

ablished in th

nt of dispute

to Salvadora

are expressly

port, paras. 26

02-404.

, in its Noticethe terms of

t Law, Claim

r, argues tha

hat the appli

no agreemen

t be viewed

il Code.

eading of Art

vestment Law

ute, to the ex

n under the In

ence) of the

condition to

that Salvado

t Law are: 1)

he Investme

s under the I

an law; and 4

y made subje

6-27.

of ArbitratioCAFTA and

136

mant agreed

at because A

icable law w

nt on the app

in context o

ticle 15 man

w of El Salva

xclusion of a

nvestment L

ICSID Conv

o perfect any

oran law mu

) the principl

nt Law; 2) th

Investment L

4) in particu

ect to Salvad

on Pac Rim reof the Salvad

to the applic

Article 15 of t

would be in a

plicable law

of the Investm

ndates that an

ador must ap

any other sy

Law is bound

vention and

y consent El

ust be the app

le of equality

he desire to

Law; 3) all in

ular, all inves

doran law.

equested that tdoran Investm

cation of Sal

the Investme

a dispute sub

.419 Pac Rim

ment Law, a

ny dispute se

pply Salvado

ystem of law.

d by that cho

must be pre

Salvador ma

plicable law

y between d

apply clear

nvestments l

stments relat

this Tribunal ment Law."

lvadoran law

ent Law doe

bmitted to

m's interpreta

as required b

ettlement

oran law as t

. Any foreig

oice of law fo

sumed to ha

ay have give

w in any

domestic and

and consiste

located in El

ted to minin

"[d]eclare th

w to

es not

ation

y

the

gn

or

ave

en

d

ent

l

g

at El

2

foreign in

between

provides

have the

exception

any other

than dom

as the rig

2

does not

from the

submittin

to interna

other han

2

the Salva

investor's

421 Articleinternatiowe will re422 ArticleConstitutiArt. 2 (RL

As sta83.

nvestors. In

domestic an

that: "Foreig

same rights

ns save for th

r law, create

mestic investo

ghts and obli

Befor84.

affect this c

rights of dom

ng a dispute

ational arbitr

nd, only has

In the85.

adoran court

s choice to ta

e 15 of the Invnal arbitration

efer to Article

e 2 of the Civiion, laws and L-124).

a) Thdem

ated earlier, E

n addition, A

nd foreign inv

gn investors

and obligati

hose set fort

s a specific e

ors, the right

igations of d

e the July 20

ase), one of

mestic inves

to the local

ration.421 A

one option:

case of a do

is bound to

ake the dispu

vestment Lawn. That amen

e 15 as the tex

il and Commeother norms

he principle omands that S

El Salvador'

rticle 5 of th

vestors. Un

and the com

ions as natio

th by law . .

exception w

ts and obliga

omestic inve

013 amendm

the exceptio

stors, was th

courts of El

domestic in

to resort to t

omestic inve

apply Salva

ute to intern

w was amendendment only axt stood when

ercial Procedof the juridic

137

of equality bSalvadoran l

s Investmen

he Investmen

nder the title

mmercial com

onal investor

. ." This me

where foreign

ations of for

estors.

ment of Artic

ons where th

at foreign in

Salvador, al

nvestor who h

the courts of

estor submitt

adoran law to

ational arbit

ed in July 201applies after in this arbitrati

ure Code manal order. See

between domaw must be

nt Law applie

nt Law estab

"Equality fo

mpanies in w

rs and compa

eans that, un

n investors w

eign investo

cle 15 of the

he rights of fo

nvestors, in a

lso had the o

has a dispute

f El Salvador

ting the dispu

o decide the

tration does n

13, by removiit entered intoon was initiat

ndates judgese Civil and Co

mestic and fothe applicab

es to both do

blishes a prin

or all investo

which they p

anies, with n

less the Inve

will be treate

ors will be ex

Investment

foreign inves

addition to th

option to sub

e with El Sa

r to resolve t

ute to a Salv

dispute.422

not change t

ing the refereo force. For eted.

s to rule accorommercial Pro

oreign investble law

omestic and

nciple of equ

ors," Article

participate sh

no other

estment Law

d differently

xactly the sa

Law (which

stors are diff

he option of

bmit the disp

alvador, on th

the dispute.

vadoran cour

A foreign

the applicabl

nce to ease of referen

rding to the ocedure Code

ors

uality

5

hall

w, or

y

ame

h

ferent

pute

he

rt,

le

nce,

e,

law to de

of forum

law in Ar

requires t

submit it

choose to

2

violated i

while a f

internatio

to the cou

2

El Salvad

to submit

to decide

2

submit it

ensure a

law must

the foreig

423 Tercer424 Civil a

ecide its disp

, not a choic

rticle 15, the

that the sam

s dispute to

o submit its d

The p86.

if a domestic

foreign inves

onal law if it

urts of El Sa

Articl87.

dor or to sub

t the dispute

e the dispute

The fo88.

s dispute to

predictable a

t be applied t

gn investor i

o Expert Rep

and Commerc

pute under th

ce of law. B

e principle of

e law must a

Salvadoran

dispute to Sa

rinciple of e

c investor co

stor would ha

t chose to ini

alvador.423

b) Ththe

le 15 gives a

bmit the disp

e to the court

.424

oreign invest

internationa

and consiste

to the same

is a domestic

port, paras. 32

cial Procedure

he Investmen

ecause there

f equality es

apply to a di

courts) as to

alvadoran co

equality betw

ould only hav

ave broader

itiate an inte

he objective oe applicable

a foreign inve

pute to intern

ts of El Salv

tor cannot ch

al arbitration

ent environm

dispute, no m

c court of law

2-36.

e Code, Art. 2

138

nt Law. Arti

e is no specif

stablished in

spute submi

o a dispute su

ourts or to in

ween domest

ve its disput

interpretatio

ernational arb

of consistenclaw

estor the cho

national arbit

ador, the dom

hange the ap

. Salvadoran

ment for inve

matter if the

w or an inter

2 (RL-124).

icle 15 gives

fic exception

Article 5 of

itted by a do

ubmitted by

nternational a

tic and foreig

te resolved a

ons and caus

bitration rath

cy also dema

oice to subm

tration. If th

mestic court

pplicable law

n law must s

estment in El

dispute sett

rnational arb

s foreign inv

n created for

f the Investm

mestic inves

a foreign in

arbitration).

gn investors

applying Salv

ses of action

her that to su

ands that Sa

mit its dispute

he foreign in

t must apply

w simply by

still apply to

l Salvador, th

tlement proc

bitration tribu

vestors a cho

r the applicab

ment Law

stor (who ha

nvestor (who

would be

vadoran law

available un

ubmit the dis

alvadoran law

e to the cour

nvestor choo

y Salvadoran

choosing to

o the dispute

he same bod

cedure chose

unal.

oice

ble

as to

can

w,

nder

spute

w be

rts of

ses

n law

. To

dy of

en by

2

Salvador

do not re

Salvador

investme

are subje

2

makes it

Law was

425 Civil C426 Tercerno deja dujurídico saal territorileyes, y ad427 Tercerconfirma parámetro

Articl89.

r are made su

side in El Sa

r, Pacific Rim

ent. Legal ex

ect to Salvad

The Ssubjecsystemmomestrictlyand th

Moreo90.

clear that th

s that all inve

the leglegislawith tsystemstandalaw. Cincorp

Code, Art. 22

o Expert Repuda de que loalvadoreño, eio de la Repúbdquirirán el d

o Expert Repque la intenci

os generales d

c) Alllaw

le 16 of the S

ubject to the

alvador.425 W

m voluntarily

xpert José R

doran law:

Salvadoran lect to the genem, in all wayent in which y obligated t

hey will acqu

over, Mr. Te

he unanimous

estments ma

gislative recator's intentithe general pm, in additioards of the SConcepts forporated.427

(RL-123).

port, para. 51 (s extranjeros

en todo lo queblica, estarán

derecho de ser

port, para. 53 (ión del legisla

de legalidad c

l investmentw

Salvadoran C

laws of El S

When Pacifi

y agreed to s

oberto Terce

egal system leral legality

ys it may be they arrive tto respect thuire the right

ercero explai

s understand

ade in El Salv

ord of the Inon has been

parameters on to the mor

Salvadoran coreign to Salv

(quoting Artiestán sujetos

e les fuere apln estrictamentr protegidos p

(emphasis adador ha sido qonfigurados p

139

ts located in

Civil Code p

Salvador, ev

c Rim decid

submit to Sa

ero confirms

leaves no doof the entireapplicable: "to the Repub

he authoritiest to be protec

ins that the l

ding of the le

vador would

nvestment Lathat foreignf legality setrals and goodommunity, p

vadoran regu

cle 96 of the a la legalidad

licable: 'Los ee obligados a

por ellas.'").

ded) ("el histoque las inverspor todo el or

El Salvador

provides that

en when the

ded to make

alvadoran law

s that foreign

oubt that foree Salvadoran"Foreigners,blic's territors and to obeycted by them

legislative hi

egislators tha

d be subject t

aw confirmsn investors ht up by the ed habits accoprotected un

ulations were

Constitution)d general de lextranjeros, da respetar a la

orial legislatisiones extranjrdenamiento j

r are subject

t all investme

e owners are

its investme

w in all aspe

n investors, l

eigners are n legal , from the ry, will be y the laws,

m."426

istory of the

at enacted th

to Salvadora

s that the ave to comp

entire legal ording to the

nder positive e not

) ("El sistemala totalidad de

desde el instanas autoridades

ivo de la Ley jeras tienen qujurídico, adem

to Salvadora

ents located

foreigners t

ent in El

ects of its

like Pacific R

Investment

he Investmen

an law:

ply

e

a legal salvadoel ordenamiennte en que llegs y a obedecer

de Inversioneue cumplir co

más de la mor

an

in El

that

Rim,

Law

nt

oreño nto garen r las

es on los ral y

2

agrees th

Law.428

2

the explo

applicabl

7 of the M

concessio

2

are no di

applicabl

foreigner

courts wi

sense to p

specifica

about tha

buenas coincorpora428 Tercer429 Tercerpara nacioMinería d

As a r91.

hat Salvadora

Articl92.

oitation of th

le secondary

Mining Law

ons, regardle

The d93.

fferent in thi

le laws are th

rs," and "any

ith jurisdicti

provide that

ally to investm

at investmen

ostumbres segron concepto

o Expert Rep

o Expert Reponales como pde que deban c

result, any in

an law will a

d) Allto

le 7.b) of the

he subsoil, an

y laws. In th

specifically

ess of their n

dispute settlem

is regard. Th

hose of the S

y claim from

on will be ju

Salvadoran

ments relate

nt.

gún la norma ds extraños a l

port, para. 29.

port, paras. 42para extranjerconocer los tr

nvestor choo

apply to its in

l investmentSalvadoran l

e Investment

nd makes the

his case, the a

y states that t

nationality, a

ment proced

hus, in accor

Salvadoran l

m a foreigner

udged on the

law applies

ed to mining

de la comunida normativida

2-43 ("las leyeros" y "cualquribunales com

140

osing to inves

nvestment an

ts related to mlaw

t Law provid

ese investme

applicable se

the holders o

are subject to

dures include

rdance with

egal system,

arising unde

e basis of Sal

to Pacific R

rights, and t

dad salvadoread salvadoreñ

es aplicables suier pretensió

mpetentes será

st and establ

nd its rights

mining right

des a limitati

ents subject t

econdary law

of exploratio

o the laws of

ed in Article

Article 7 of

, both for na

er the Minin

lvadoran law

Rim's investm

then apply a

eña, protegidaña.").

son las del orón de un extraá juzgada en b

lish rights in

under the In

ts in the sub

ion for inves

to the Const

w is the mini

on licenses or

f El Salvado

e 15 of the In

f the Mining

ationals as w

ng Law to be

w."429 It wou

ments in El S

a different law

as en la ley po

rdenamiento sanjero surgidabase al derech

n El Salvador

nvestment

soil are subj

stments relat

titution and

ing law. Art

r exploitatio

r.

nvestment La

Law, "the

well as for

e heard by th

uld make no

Salvador, and

w to a dispu

ositiva. No se

salvadoreño, ta bajo la Ley ho salvadoreñ

r

ect

ted to

ticle

on

aw

he

o

d

ute

e

tanto de

ño.").

2

exploitat

2

secondar

provision

establish

other leg

2

Investme

the holde

investme

2

Claimant

requirem

above, un

deposits,

in law. I

subsoil b

investme

that it ow

430 Tercer431 Tercer

3.

Artic94.

ion of the su

In the95.

ry law is the

ns of the Min

es that the M

al provision

As ex96.

ent Law imp

ers of explor

ent being pro

The fi97.

t cannot mak

ments of the M

nder the Min

and thus an

In addition, A

belongs to the

ent, and it is

wns the mine

o Expert Rep

o Expert Rep

The Investrelated to t

le 7.b) of the

ubsoil are lim

case of the

Mining Law

ning Law wi

Mining Law i

s.430

plained in th

oses an oblig

ration license

otected by th

irst effect of

ke any claim

Mining Law.

ning Law, Pa

ny claim for e

Article 7.b) o

e State." Th

therefore utt

eral deposits

port, paras. 76

port, paras. 63

tment Law imthe exploitat

e Investment

mited by the

exploitation

w. Article 4

ill apply pref

is the specia

he Expert Re

gation to com

es and explo

he Investmen

f Claimant's o

ms under the I

. In this part

ac Rim did n

expropriatio

of the Invest

hat article wa

terly disinge

that lay in th

6-77.

-69.

141

mposes a sigtion of the su

t Law provid

Constitution

n of the subso

of the Salva

ferentially, a

al law for the

eport of José

mply with th

oitation conc

nt Law.431

obligation to

Investment L

ticular case,

not and could

n of these de

tment Law is

as already in

enuous for Pa

he subsoil.

gnificant limubsoil

des that inve

n and applica

oil for miner

adoran Civil

and Article 7

e subject are

é Roberto Te

he requireme

essions as a

o comply wi

Law if it has

as amply de

d not have p

eposits is co

s very clear

n the law wh

ac Rim to co

mitation on in

estments reg

able seconda

ral rights, the

Code states

72 of the Min

a, and it prev

ercero, Artic

ents of the M

condition to

th the Minin

s not compli

emonstrated

property righ

ompletely wi

when it state

hen Pac Rim

ome to this T

nvestments

garding

ary laws.

e applicable

that the

ning Law its

vails over an

le 7 of the

Mining Law o

o their

ng Law is tha

ed with the

in Section I

hts over the

ithout any ba

es that "the

made its

Tribunal alle

self

ny

on

at

II

asis

eging

2

with the r

comply w

explorati

Rim cann

2

Law, in c

of jurisdi

concessio

3

3

under the

relation t

Investme

432 Miningextranjeroforma reccontratos mismos, r

The se98.

requirement

with the requ

ion licenses i

not base its c

The fi99.

combination

iction for dis

ons.

Artic00.

JURI

Art. 7nationof theclaimscontraapplicthey wSan S

There01.

e Investment

to a mining e

ent Law, and

g Law, Art. 7 os, quedan sujurrir a reclamrespectivos q

renuncian a su

econd effect

ts of the Min

uirements in

in Guaco, H

claims on the

inal, and per

with Article

sputes relate

le 7 of the M

ISDICTION

. The Mininnal or foreign Republic, as in the diploacts must estcation, interpwaive their dalvador.432

fore, as Mr.

t Law of El S

exploitation

d Article 7 of

(RL-7(bis)) (

jetos a las leymaciones por lque en todo lou domicilio y

t of these two

ning Law to o

the Mining

uacuco, Pue

ese allegatio

rhaps the mo

e 7 of the Mi

d to mining

Mining Law p

N

ng License orn, are subjec

and are absolomatic protetablish that inpretation, perdomicile and

Tercero con

Salvador in r

concession,

f the Mining

("Los titulareyes, Tribunalela vía de prote

o relativo a la se someten a

142

o articles is t

obtain a min

Law and in

eblos, Santa R

ons under the

ost important

ining Law, i

exploration

provides:

r Concessionct to the lawslutely precluection venuen everythingrformance o

d submit them

ncludes in hi

relation to a

that dispute

g Law, to the

s de Licenciaes y Autoridadección diplomaplicación, in

a los Tribunal

that, because

ning exploita

the Mining

Rita, and Za

e Investment

t effect of Ar

is that they p

licenses and

n Holders, bes, Courts anduded from re; and the resg related to tor terminationmselves to th

is report, to t

mining exp

e is referred t

e exclusive ju

as ó concesiondes de la Rep

mática; debiennterpretación,les de San Sal

e Pac Rim d

ation conces

Regulations

amora/Cerro

t Law.

rticle 7.b) of

provide a spe

d mining exp

e they d Authoritiesorting to

spective the n of same, he Courts of

the extent a

loration lice

through Arti

urisdiction o

nes Mineras, pública, no pundo establece, ejecución o lvador.").

did not comp

sion, and did

to obtain th

Colorado, P

f the Investm

ecific limitat

ploitation

s

f

dispute arise

ense, or in

icle 7.b) of th

of the courts

sean nacionaludiendo de ninerse en los terminación d

ply

d not

he

Pac

ment

tion

es

he

of

les ó nguna

de los

El Salvad

Investme

referred t

Salvador

of the Inv

3

Law of E

grant it a

limitation

ends if th

period ru

by the tim

Environm

exploitat

B

3

based on

mentions

Although

433 Tercer434 This coVI.B.1 be435 Civil C

dor.433 As a

ent Law to de

to in Article

ran courts to

vestment La

4.

Anoth02.

El Salvador i

an environme

ns in Salvad

he claimant d

uns from the

me Pac Rim

ment unlawfu

ion concessi

B. Pac Rsuppo

Claim03.

alleged viol

s in passing t

h Pac Rim m

o Expert Rep

onclusion is felow.

Code, Arts. 22

a consequenc

ecide this di

7.b) of the I

resolve min

w.434

A three-yethe applica

her conseque

is that Pac R

ental permit

oran law. Pu

does not init

date of the a

initiated this

fully failed to

ion was time

Rim has notort of a claim

mant has invo

lations of tha

the articles o

made a passin

port, paras. 70

further explain

231(2), 2253,

ce, the Tribu

spute, becau

Investment L

ning disputes

ear statute ofation for the

ence of the fa

Rim's claims r

for exploita

ursuant to S

iate its claim

alleged unlaw

s arbitration

o grant the e

e-barred.

t alleged anym of breach

oked the Salv

at law. In its

of the Investm

ng reference

0-82.

ned in the add

2083 (RL-12

143

unal lacks ju

use the Minin

Law) establis

s, thus overri

f limitations El Dorado c

fact that this

related to th

tion are time

alvadoran la

m within the

wful act.435

in April 200

nvironmenta

y facts and h of Articles

vadoran Inve

s 333-page m

ment Law th

to a breach

ditional objec

23) .

urisdiction un

ng Law (the

shes the exc

iding the gen

applies to Cconcession

case proceed

he Ministry o

e-barred und

aw, a claiman

applicable s

As describe

09, its claim

al permit nec

has not mas 5 or 6 of th

estment Law

memorial, ho

hat it alleges

of Articles 5

ction to jurisd

nder Article

e relevant sec

clusive jurisd

neral provisi

Claimant's cl

ds only unde

of Environm

der the releva

nt's right to

statute of lim

ed in Section

m that the Min

cessary for i

de any arguhe Investme

w and must m

owever, Pac

s El Salvador

5 (equality fo

diction include

15 of the

condary law

diction of the

ions of Artic

aims related

er the Invest

ent's failure

ant statute o

initiate an ac

mitations, and

n VI.B.2 belo

nistry of

t to obtain th

uments in ent Law

make its clai

Rim only

r has breach

for all investo

ed in subsecti

e

cle 15

d to

tment

to

f

ction

d the

ow,

he

ms

hed.

ors)

ion

and 6 (no

argument

discrimin

3

opposite.

complete

requirem

Therefor

Investme

C

3

for a lega

experts e

away.438

make a c

3

them and

regard to

436 Memor437 TinettiConstitucderecho")require a cReport, Se438 Ayala/

on-discrimin

t that it has b

nated upon b

And it04.

. Salvadoran

e its applicat

ment it could

e, Pac Rim c

ent Law, and

C. The fathe In

Under05.

ally justified

explain, for a

Pac Rim wa

laim for exp

First, 06.

d El Salvado

o alleged min

rial, para. 659

i Expert Repoión . . . implic

) ["expropriaticoercive deprection 10.1.a.

/Fratti de Veg

nation),436 Pa

been treated

based on nati

t could not b

n Governme

ion. They ev

not meet, an

cannot possi

d any purport

facts allegednvestment L

r Salvadoran

d reason with

an expropriat

as not depriv

propriation u

with regard

r has not dep

ning rights, A

9.

ort, para. 38 ("ca privar coacion in accordrivation of the.

ga Expert Rep

ac Rim has n

less prefere

ionality, resi

be any other

nt officials w

ven sought a

nd waited wh

bly make an

ted claim un

d by Pac RimLaw

n law, exprop

h payment of

tion to take p

ved of any p

under Article

to the prope

prived Pac R

Article 10 of

"expropriacióctivamente a ance with whe ownership o

port, Section 1

144

not presented

ntially than

idence, race,

way. In fac

went out of t

a change in t

hile Pac Rim

n argument o

nder these tw

m cannot su

priation is th

f fair compen

place, a spec

property righ

e 8 of the Inv

erties that Pa

Rim of its titl

f the Mining

ón de conformuna persona d

hat the term mof property or

10.1.a.

d any eviden

domestic inv

, gender, or r

ct, the record

their way to

the law to as

m tried to com

of breach of A

wo articles m

upport a clai

he taking of a

nsation.437 A

cific property

hts by El Salv

vestment Law

ac Rim does

le to those p

g Law clearly

midad a lo quede la titularid

means under or of a right"];

nce and has n

vestors, or th

religion.

d demonstrat

try to help P

ssist Pac Rim

mplete other

Articles 5 or

must be dismi

im of breac

a property ri

As El Salvad

ty right must

vador and th

w.

own, Pac Ri

properties. S

y states that

e se entiende pdad de un bienour Constitutio

Ayala/Fratti

not made any

hat it has bee

tes the exact

Pac Rim

m with one

r requiremen

r 6 of the

issed.

ch of Article

ight by the S

dor's legal

t be taken

herefore cann

im still owns

Second, with

only mining

por ésta nuesn o de un on . . . would de Vega Exp

y

en

t

nts.

e 8 of

State

not

s

g

tra

ert

exploitat

concessio

somethin

expert, D

applicatio

Administ

the Minin

considera

Salvador

establish

cannot as

Salvador

Salvador

3

does not,

439 Miningentre vivoserver comby an inteof being a440 Tercerpodría suscomo tal, otorguen esperanzaPRES hadparametercompensa441 Tinetti442 Section

ion concessi

on, or even a

ng that can b

Dr. Tinetti, if

on, it should

trative Litiga

ng Law to ha

ation.442 Pac

r when said a

rights and p

sk this intern

r to compens

ran law to a c

Finall07.

, and never d

g Law, Art. 1os, previa automo garantía eer vivos act, wa security for

o Expert Repstentarse la exsino una simpcerteza de gan

as.") ["Much ld no right perrs to ensure thate simple hop

i Expert Repo

n II.A above.

ions are real

a "vested rig

e expropriat

f Pac Rim dis

d have broug

ation Jurisdi

ave its appli

c Rim then c

application w

protect its int

national arbit

sate it for an

concession.

ly, because th

did, have pro

0 (RL-7(bis))orización del n operacione

with the prior mining opera

port, para. 21. xigencia de luple esperanzanancias futuraless can a demr se, but a merhe certainty opes."].

ort, paras. 42-4

property rig

ght" to a conc

ted.440 More

sagreed with

ght its claim t

iction.441 Pa

cation for an

chose not to

was not adm

terests under

tration Tribu

alleged expr

he mineral d

operty rights

) ("la concesióMinisterio; ps mineras.") [authorization

ations."].

See also Ayaucro cesante, pa de obtener laas no concret

mand for lost re hope of obtf future earni

44.

145

ghts.439 Pac

cession. A h

eover, as exp

h the Ministr

to the Salvad

ac Rim first f

n exploitatio

fix its applic

itted. It did

r the laws of

unal constitu

ropriation of

deposits in th

to the mine

ón es un derepor consiguien["a concessionn of the Minis

ala/Fratti de Vpues como sea concesión, ntadas. Es claroprofits be sustaining the congs not yet at

Rim did not

hope to obta

plained by Sa

ry's processi

doran Supre

failed to com

on concession

cation and no

not take the

f El Salvador

uted under th

f its (non-ex

he subsoil be

ral deposits

cho real e inmnte, la aludidan is a real protry; conseque

Vega Expert Re ha enfatizadno contando co que no puedstained, sinceoncession, witttained. It is c

t have an exp

ain a concess

alvadoran C

ing of its con

eme Court un

mply with the

n even admi

ot to seek re

e appropriate

r. As a resu

he Investmen

xistent) "righ

elong to the

it claims. T

mueble transfa concesión eoperty right thently, said con

Report, § 10.3do PRES no tecon parámetrden indemniz, as has been thout having clear that one

ploitation

sion is not

Constitutiona

ncession

nder the Law

e requiremen

itted for

ecourse in El

e steps to

ult, Pac Rim

nt Law of El

ht" under

State, Pac R

The Constitut

ferible por acts susceptible

hat is transferrncession is ca

3.c ("menos aenía un derechros objetivos qzarse las simp

emphasized, met the objeccannot

al law

w of

nts of

l

l

Rim

tion

to de rable

apable

aún ho que

ples

ctive

of El Salv

before Pa

in the sub

provides

exploitat

with the p

limited in

grant con

mineral d

and phys

experts c

susceptib

3

the subso

Article 1

deposits

443 Constitpara su ex444 InvestmRepúblicasiguientesexplotació445 Miningen el subs446 Ayala/susceptibl

vador, Artic

ac Rim made

bsoil belong

that "[t]he s

ion."443 Acc

provisions o

n the followi

ncessions for

deposits exis

sical state, ar

confirm: "Th

ble to private

Thus, 08.

oil as an exp

0 of the Min

but not own

tution, Art. 10

xplotación.").

ment Law, Ara y en las leyes: . . . b) El suón").

g Law, Art. 2 suelo del terri

/Fratti de Vegle de propieda

cle 7.b) of the

e its investm

exclusively

subsoil belon

cordingly, A

of the Consti

ing activities

r its exploita

sting in the s

re the proper

he deposit is

e ownership.

Pac Rim's a

lorer is man

ning Law on

ership) to th

03 (RL-121)

rt. 7 (RL-9(bies secundariasubsuelo perten

(RL-7(bis)) (torio de la Re

ga Expert Repad privada.").

e Investmen

ment in El Sa

y to the State

ngs to the Sta

Article 7 of th

tution of the

s and terms

ation."444 An

subsoil of the

rty of the Sta

a good in th

."446

argument tha

ifestly contr

ly grants a r

he holder of a

("El subsuelo

is)) ("De confs, serán limitanece al Estado

("Son bienes epública, cual

port at 18 ("El.

146

nt Law, and A

alvador, all d

. Article 10

ate, which m

he Investmen

e Republic an

… b) the sub

nd Article 2

e territory of

ate . . . ."445

he public dom

at it somehow

rary to Salva

eal property

an exploitati

o pertenece al

formidad a lo adas las invero, el cual pod

del Estado, tolesquiera que

l yacimiento e

Article 2 of t

declare that t

03 of the Con

may grant co

nt Law prov

nd secondary

bsoil belong

of the Minin

f the Republ

The Salvado

main, belong

w obtained p

adoran law.

y right (the ri

ion concessi

l Estado el cu

establecido ersiones en las

drá otorgar con

odos los yacimsea su origen

es bien de dom

the Mining L

the mineral d

nstitution of

ncessions fo

ides that "[i]

ry laws, inve

gs to the Stat

ng Law prov

lic, regardles

oran adminis

ging to the S

property righ

As already d

ight to explo

on, and an e

ual podrá otorg

en la Constitu actividades yncesiones par

mientos minen, forma y est

minio público

Law, all in e

deposits loca

El Salvador

or its

]n accordanc

estments will

e, which ma

vides that "[a

ss of origin,

strative law

tate, not

hts to deposi

described,

oit mineral

explorer only

gar concesion

ución de la y términos ra su

erales que existado físico").

o del Estado,

effect

ated

r

ce

l be

ay

a]ll

form

its in

y has

nes

sten

no

a right to

Consequ

subsoil.

3

importan

there is n

property

Article 8

Because

mineral d

Law.

3

Law.

D

3

assessed

El Salvad

Investme

violation

expropria

447 See SeExpert Re448 Tinetti449 Tinetti

o apply for a

ently, Pac R

Althou09.

nt to note tha

no concept o

right, there

of the Inves

Pac Rim did

deposits it cl

As a r10.

D. Pac Rintern

As ex11.

pursuant to

dor and there

ent Law is th

ns of that law

ation under c

ction II.A.1.a

eport at 10.

i Expert Repo

i Expert Repo

concession.

Rim cannot m

ugh Pac Rim

at, as Salvado

f indirect ex

can be no ex

stment Law m

d not have a

laims, it cann

result, Pac R

Rim would nnational law

plained in S

Salvadoran

e is no relev

he only sourc

w, and not on

customary in

a above; Ayal

ort, paras. 33-4

ort, para. 38.

447 Pac Rim

make any cla

m has no clai

oran Constit

xpropriation i

xpropriation

must be base

concession,

not support a

Rim has no re

not have beew in any eve

ection IV.A

law because

ant bilateral

ce of jurisdic

n other sourc

nternational

la/Fratti de Ve

40.

147

m never held

aim for expro

ims of expro

tutional law

in Salvadora

under Salva

ed on proper

a right to a

a claim of br

ecognizable

en able to sunt

, Pac Rim's c

e the case is b

or multilate

ction, Claim

ces. But even

law, such a

ega Expert Re

anything mo

opriation for

opriation, dir

expert Dr. T

an law.448 W

adoran law.44

rty rights hav

concession,

reach of Arti

claims unde

ustain a clai

claims in thi

based solely

eral investme

mant's claims

n if Pac Rim

claim would

eport, § 3; Tin

ore than exp

r deposits loc

rect or indire

Tinetti explai

Without a dep

49 Thus, a c

aving been ta

or a propert

icle 8 of the

er the Salvad

im for expr

is arbitration

y on the Inve

ent treaty. B

must be bas

m could bring

d also fail.

netti Expert R

ploration lice

cated in the

ect, it is also

ins in his Re

privation of

laim under

aken away.

ty right to th

Investment

doran Investm

opriation un

n must be

estment Law

Because the

sed on allege

g a claim for

Report, § 2.2;

enses.

eport,

a

e

ment

nder

w of

ed

r

Otto

3

law is to

cannot be

Thus, the

concerns

rights du

occurred

3

proprieta

Professor

are about

by the mu

450 BayindARB/03/2Ukraine, Ian expropthe legal mcase"); SwARB/09/1these circuexpropriasuch that 451 Genera452 Genera453 ZacharDugan et a vested pmay, at le

1.

The fi12.

"identify the

e an expropr

e distinguish

interference

uly held by th

."452

Under13.

ary rights cla

r Zachary D

t property, an

unicipal law

dir Insaat Tur29, Award, AICSID Case N

priation unlessmaterialisatiowisslion DOO16, Award, Juumstances thetion case is bthe court's fai

ation Ukraine

ation Ukraine

ry Douglas, Tal., Investor-S

property right east in the firs

Pac Rim hinternation

irst step in as

e assets alleg

riation of som

hed Generati

e in rights in

he Claimant

r internation

aimed by a cl

ouglas expla

nd property

w of the host

rizm Ticaret Vug. 27, 2009,No. ARB/00/9s the complai

on of the ClaimO Skopje v. Thuly 6, 2012, pe Claimant haased, i.e., thailure to so ord

e v. Ukraine,

e v. Ukraine,

The InternatioState Arbitrator a legitima

st instance, tur

had no valid nal law

ssessing the

gedly exprop

mething to w

ion Ukraine

n property, it

at the partic

nal law, this "

laimant is go

ains: "[i]nves

is about spe

state. Gener

Ve Sanayi A.S para. 442 (A9, Award, Sepnant demonstmant's allegedhe Former Yugara. 320 (Autas not provent it had a cleader constitute

para. 22.1 (C

para. 6.2 (CL

nal Law of Intion 441 (200ate expectationrn on the lega

148

mining right

existence of

priated."450

which the Cl

v. Ukraine t

t is importan

cular momen

"meticulous"

overned by t

stment dispu

ecific rights o

ral internatio

S. v. Islamic RAuthority RL

pt. 16, 2003, ptrates the exisd investment goslav Repubthority RL-1

n the juridical ar right to recod an expropri

L-193).

L-193) (emph

nvestment Cla8) (Authorityn regarding aal status of tha

ts capable of

f an expropr

Indeed, it is

aimant neve

tribunal held

nt to be metic

nt when alleg

" assessment

the municipa

utes are abou

over tangible

onal law cont

Republic of PaL-133). See al

para. 8.8 (CLstence of propis a fundamen

blic of Maced134) ("the Trib

fact on whichover the purciation.").

hasis added).

aims, para. 10y RL-135) ("

a particular rigat property un

f being expr

riation under

axiomatic th

er had a legit

d that "[s]inc

culous in ide

gedly exprop

t of the exist

al law of the

ut investmen

es and intang

tains no sub

akistan, ICSIDlso Generatio

L-193) ("Sinceprietary rightsntal aspect of

donia, ICSID Cbunal is of thh the second hase price in

01 (2009) (RL"Whether an ight (contractunder national

ropriated und

r internationa

hat "[t]here

timate claim

ce expropriat

entifying the

priatory acts

tence of

e host state.45

nts, investme

gibles cogni

stantive rule

D Case No. on Ukraine Ine there cannos in the first pf the merits inCase No.

he view that, inlimb of its that proceedi

L-25); Christoinvestor posseual or otherwilaw.").

der

al

m."451

tion

e

53 As

ents

izable

es of

nc. v. ot be place, n this

n

ing

opher esses ise)

property

rights com

municipa

3

ban" alle

and silve

rights. In

a hodgep

concessio

discovery

laws dati

As expla

cannot ha

because C

of Salvad

3

mineral d

Claimant

Huacuco

Claimant

454 Dougla455 Dougla456 Memor457 Memor458 Memor

law."454 Co

mprising the

al law of pro

Here, 14.

gedly impos

er exploitatio

nstead, Claim

podge of reas

on; its prior

y of mineabl

ing back to 1

ined at lengt

ave expropri

Claimant ha

doran law.

As als15.

deposits thro

t could not a

, and Pueblo

t also held no

as, para. 101

as, para. 102

rial, para. 633

rial, para. 449

rial, paras. 45

onsequently,

e investment

operty."455

Claimant fa

sed by El Sa

on concessio

mant tries to

sons, includi

exploration

le ore deposi

1881 and 192

th in Section

iated Claima

s failed to sh

so explained

ough explora

acquire new e

os after the o

o right to ex

(RL-25).

(RL-25).

3 and Section

9.

57-468.

"[w]heneve

t, or to whom

ails to show t

lvador const

n.456 But Cl

concoct a "r

ing the fact t

in the area f

its.457 Claim

22 in arguing

n II above, no

ant's right to

how a legitim

d in Section I

ation licenses

exploration r

original El D

xplore in San

n IV.

149

r there is a d

m such rights

this sine qua

titutes an unl

laimant can p

right" to the

that it submi

for which it s

mant even att

g that it had

one of these

the exploita

mate right to

II, Claimant

s. Pursuant

rights to are

Dorado explo

nta Rita beca

dispute abou

s belong, the

a non. It arg

lawful expro

point to no c

exploitation

itted an appl

seeks the exp

tempts to res

a right to th

e arguments a

ation concess

o the exploita

did not acqu

to Article 19

as of the exp

oration licens

ause its origin

ut the scope o

ere must be a

gues that a "d

opriation of

concession g

n concession

ication for th

ploitation co

suscitate rep

he exploitatio

are availing.

sion under in

ation conces

uire any vali

9 of the Min

pired license

ses expired i

nal explorat

of the proper

a reference t

de facto min

its right to a

granting it su

n on the basi

he exploitati

oncession; an

pealed minin

on concessio

. El Salvado

nternational

ssion on the b

id rights to th

ning Law,

es in Guaco,

in January 2

ion license

rty

to a

ing

a gold

uch

s of

ion

nd its

ng

on.458

or

law

basis

he

005.

expired i

in accord

Regulatio

Cerro Co

somehow

the basis

constitute

3

Governm

constitute

constitute

regulator

under int

State acti

internatio

459 Section460 The nasection, Ehas been acould not about thesregarding 461 See Ian(explainin

n July 2009

dance with A

ons. It was a

olorado beca

w managed to

of an exprop

e property ri

2.

Even 16.

ment's morato

e expropriati

es an exprop

ry action am

ternational la

ion.461 Since

onal law is th

n II.B.4 above

ature and reasEl Salvador citan expropriateven show a

se cases' findiissues other t

n Brownlie, Png that exprop

and it failed

Article 27 of

also impossi

ause it never

o show that

priation clai

ights in mine

Pac Rim hconstitutes

if Claimant

orium in the

ion under in

priation, Clai

ounts to an i

aw refers to

e the only di

hat there is n

e.

ons for El Sates cases for tion under intebreach under

ings on the cothan those sp

Principles of Ppriation conno

d to submit a

the Mining

ible for Claim

even applied

it had acquir

m under inte

eral deposits

has failed to s expropriati

had acquired

issuance of

nternational l

imant asks th

indirect expr

the fundame

ifference bet

no formal tra

alvador's moratheir discussioernational lawr such standarontent of a Staecifically refe

Public Internaotes deprivati

150

a timely appl

Law and Ar

mant to acqu

d for those r

red valid exp

ernational la

s under Salva

establish thaion under int

d valid right

f environmen

law.460 By a

he Tribunal

ropriation. I

ental depriva

tween direct

ansfer of title

atorium are exon of the fact

w. El Salvadords. El Salvadate's obligatioerred to in thi

ational Law 50ion of a perso

lication for t

rticles 11 and

uire explorat

rights. In an

ploration lic

aw because e

adoran minin

at El Salvadoternational la

ts to mineral

ntal permits f

asserting that

to consider w

Indirect or re

ation of a pro

t and indirect

e or control

xplained abovtors used to deor does this ondor, howeverons under cusis section.

08-09 (6th edon's use and en

the extension

d 17 of the M

tion rights in

ny case, even

enses, these

exploration l

ng law.459

or's regulatoaw

deposits in

for metallic

t El Salvado

whether this

egulatory ex

operty's use

t expropriati

in the prope

ve in Section etermine whenly to show th

r, does not expstomary intern

d. 2003) (Autnjoyment of h

n of those rig

Mining

n Zamora an

n if Claimant

could not fo

licenses do n

ry conduct

El Salvador

mining does

or's moratoriu

s governmen

xpropriation

as a result o

ion under

erty under an

III. In the prether or not thhat Claimant press any viewnational law

thority RL-13his property).

ghts

d

t had

orm

not

, the

s not

um

ntal

of

n

resent here

ws

36) .

indirect e

reduces t

3

whether r

considers

extent of

investor;

considera

of Claim

3

asks to w

CMS Gas

whether t

can show

462 See Pa(1985) (A463 Vaugh(AuthoritInternatio139). 464 See CM12, 2005, UNCITRA

expropriation

the value of

Intern17.

regulatory c

s (a) the econ

f the measure

and (c) the

ations demon

ant's rights.

The fi18.

what degree t

s Transmissi

the enjoyme

w that the Sta

mela B. Gann

Authority RL

han Lowe, Regty RL-138); Sonal Investme

MS Gas Transpara. 262 (A

AL, Final Aw

n, an exercis

an investme

national arbit

onduct cons

nomic impac

e's interferen

character of

nstrates that

a) Thinv

irst inquiry i

the investme

ion v. Argen

ent of the pro

ate's regulati

n, The U.S. Bi

L-137).

gulation or ExSuzanne A. Snt Agreement

smission Comuthority RL-

ward, Sept. 3,

se of legitim

nt is not an e

tration tribun

titutes indire

ct on the inv

nce with the

f the measure

El Salvador

he moratoriumvestment

nto whether

ent's econom

ntina tribunal

operty has be

on destroyed

ilateral Inves

xpropriation?pears, The Quts, 13(4) J. of

mpany v. Arge-140); Ronald2001 (CL-16

151

ate non-disc

expropriator

nals have set

ect expropria

vestor of the

"reasonable

e. As shown

r's moratoriu

m did not de

government

mic value was

l put it, the e

een effective

d or radically

stment Treaty

? 55(1) Curreuest for Policf Int'l Econom

entine Republd S. Lauder (U68).

criminatory p

ry act.462

t out three co

ation.463 Th

allegedly ex

e investment-

n below, an a

um does not

estroy the ec

t regulation

s diminished

essential que

ely neutraliz

y diminished

Program, 21

ent Legal Probcy Space in a mic L. 1037, 1

lic, ICSID CaUnited States)

police power

onsideration

e fact-specif

xpropriatory

-backed exp

assessment o

constitute an

conomic valu

amounts to

d by the regu

estion is "to e

zed."464 Unle

d the econom

1 Stan. J. Int'l

blems 447, 46New Generat

1051 (2010) (A

ase No. ARB/) v. The Czec

r that merely

ns for assessi

fic inquiry

measure; (b

ectations" o

of these thre

n expropriat

ue of Claima

expropriatio

ulation. As t

establish

ess a claiman

mic value of

L. 373, 399

61 (2002) tion of Authority RL

01/8, Award,ch Republic,

y

ing

b) the

f the

e

ion

ant's

on

the

nt

f its

L-

May

investme

indirect e

3

in finding

mining p

step in as

deprived

thereto…

that exce

this signi

complain

effect an

3

"radically

control o

OceanaG

a share sw

465 Pope &(AuthoritUNCITRAAmerica, 466 Glamis467 Glamis468 Glamis469 See Du470 Oceanaand Pacifi

ent to such an

expropriation

The G19.

g that a serie

project in the

ssessing a cl

of the econo

…had ceased

eeded $20 mi

ificantly pos

ned of measu

expropriatio

Here, 20.

y" diminishe

of its investm

Gold acquired

wap equival

& Talbot Inc. ty RL-141); GAL, Final AwUNCITRAL,

s Gold v. USA

s Gold v. USA

s Gold v. USA

ugan et al. at 4

aGold, Pacifiic Rim Minin

n extent that

n can be fou

Glamis v. Un

es of governm

e United Stat

aim for indir

omical use a

to exist."467

illion after th

itive valuati

ures did not c

on of Claima

Claimant ha

ed the value

ment during E

d the 80% of

ent to a sum

v. The Gover

GAMI Investmward, Nov. 15, Award, May

A, paras. 357,

A, para. 357 (R

A, para. 536 (R

457 (RL-135)

c Rim Miningng Corp., Med

t it, for all pr

und.465

ited States tr

mental delay

tes were not

rect expropr

and enjoyme

After findin

he permit de

on…the firs

cause a suffi

ant's investm

as offered no

of its investm

El Salvador's

f Claimant's

m of C$10.2 m

rnment of Canments, Inc. v. , 2004, para.

y 14, 2009, pa

360 (RL-142

RL-142).

RL-142).

).

g Acquisitiondia Release, "

152

ractical purp

ribunal, for e

ys and denia

expropriator

riation analyz

nt of its inve

ng that the c

elays and den

st factor in an

icient econo

ment."468

o indication t

ment in El S

s moratorium

shares it did

million.470 T

nada, NAFTAThe Governm126 (RL-40);

aras. 357, 360

2).

n PresentationOceanaGold

poses, confisc

example, de

als of environ

ry.466 In the

zes whether

estments, as

claimant's pro

nial, the tribu

ny expropria

mic impact t

that the mor

Salvador. C

m.469 This is

d not already

The correspo

A, Interim Awment of the Un; Glamis Gold0 (Authority

n, Oct. 2013 (Eand Pacific R

cated the pro

eemed this fa

nmental perm

e tribunal's o

"the Claima

if the rights

oject had ret

unal held tha

ation analysi

to the Imper

ratorium des

Claimant has

s evident fro

y own in No

onding amou

ward, June 26United Mexican

d, Ltd. v. UniRL-142).

Exhibit R-14Rim Mining C

operty, no

actor disposi

mits for a go

opinion, the i

ant was radic

s related

tained a valu

at "[i]n light

is is not met

rial Project t

troyed or

retained ful

om the fact th

vember 201

unt in US do

6, 2000, para. n States, ted States of

41); OceanaGComplete Plan

itive

old

initial

cally

ue

t of

: the

o

l

hat

3 in

ollars

102

Gold n of

was US$

million fo

as "an es

exciting e

into an un

Director

3

Novembe

land prop

concessio

investme

3

claimant'

Arrangem142). 471 Oceana472 Oceana

9.6 million o

for 100% of t

tablished hig

exploration t

nderexplore

& CEO of O

I am vemplodeveloPhilipjourneCompminessustainstakehthat ex

Clearl21.

er 2013. W

perty rights i

on in the futu

ent, the claim

The se22.

's reasonable

ment," Nov. 27

aGold and Pa

aGold and Pa

on Nov. 27,

the shares. O

gh grade gol

targets in El

d but geolog

OceanaGold

very pleasedoyees to Oceoped over th

ppines providey with the mpany has a los in partnershnable manneholders in Elxists at El D

ly, Pac Rim'

When it entere

it had acquir

ure. Becaus

m that it amo

b) Claexpmin

econd factor

e investment

7, 2013 ("Oce

ac Rim Comp

ac Rim Comp

2013 (for 80

On that occa

ld-silver reso

l Salvador pr

gically highly

noted in par

d to welcomeeanaGold. I bhe past twentdes for a stromany stakehong and succhip with locaer and we lol Salvador toorado for th

s investment

ed into the a

red and the h

se the morato

unted to exp

aimant had npect that El Sning laws

r at issue in a

t-backed exp

eanaGold and

lete Plan of A

lete Plan of A

153

0% of the sh

asion, Ocean

ource," whic

rovides Ocea

y prospectiv

rticular:

e Pacific Rimbelieve that oty-three yearong platformolder groups

cessful track al communitok forward t

o unlock the e people of E

t in El Salva

greement wi

hope of being

orium did no

propriation f

no investmenSalvador wo

an alleged in

pectation tha

d Pac Rim Co

Arrangement (

Arrangement (

hares), which

naGold descr

ch along with

anaGold wit

ve region."47

m shareholdeour companyrs in New Ze

m to begin thes in El Salvarecord of op

ties in a safeto working wsignificant oEl Salvador.

ador still had

ith OceanaG

g able to obt

ot destroy th

fails as a mat

nt-backed reould not refo

ndirect expro

at its investm

mplete Plan o

(R-142).

(R-142).

h implies a v

ribed the El

h "Pacific Ri

th a first-mov

1 Mick Wilk

ers and y strengths ealand and the successful ador. Our perating golde and with our keyopportunity .472

d value as rec

Gold, Pac Rim

tain an explo

e value of C

tter of law.

easonable exorm its enviro

opriation per

ment would n

of Arrangeme

value of US$

Dorado Proj

im's stable o

ver advantag

kes, Managi

he

d

y

cently as

m still had th

oitation

Claimant's

xpectation to onmental an

rtains to a

not be disturb

ent") (Exhibi

$12.0

ject

of

ge

ing

he

nd

bed

t R-

as a resul

specific a

3

of genera

compens

governm

refrain fr

3

grounds t

promises

described

misleadin

character

assured t

of.475

3

stabilizat

473 See, e.gAward, A474 MethanChapter D475 See MaAward, Dsimilarly administraand KonyARB/02/5

lt of the Stat

assurances to

In Me23.

al internation

atory nor co

ment to the th

rom such reg

The F24.

that the claim

s of the Mexi

d Mexico's r

ng, perhaps

rize them as

he claimant

For th25.

tion agreeme

g. Metalclad

Aug. 30, 2000

nex CorporatD, para. 7 (RL

arvin Roy FelDec.16, 2002,

strict standardation on whic

ya Ilgin Elektr5, Award, Jan

te's regulator

o that effect

ethanex v. Un

nal law, a no

ompensable "

en putative i

gulation."474

Feldman v. M

mant had fai

ican governm

egulatory ac

intentionally

expropriator

that it would

he Total S.A.

ent was dispo

Corporation (Authority R

tion v. UnitedL-20) (emphas

ldman Karpa paras. 132-13d, holding thach the Claimarik Üretim ve n. 2007, para.

ry actions.473

has proven d

nited States,

on-discrimin

"unless spec

investor con

Mexico tribun

iled to show

ment that we

ctions as "arb

y so in some

ry under inte

d not institut

v. Argentina

ositive in its

v. The UnitedRL-143).

d States of Amsis added).

v. The United33, 149 (Authat "legitimate ants rely to assTicaret Limit241 (CL-86)

154

3 Whether o

dispositive f

for example

atory regula

ific commitm

ntemplating i

nal dismissed

that he had

ere subseque

bitrary, " "in

e instances,"

ernational la

te the regula

a tribunal, th

s holding tha

d Mexican Sta

merica, NAFT

d Mexican Stahority RL-14expectations sert a right thted Širketi v. R.

or not a State

for several tr

e, the tribuna

ation for a pu

ments had b

investment th

d an indirect

made his inv

ently breache

nconsistent,

and without

aw because M

atory measur

he fact that A

at the regulat

ates, ICSID C

TA, Final Awa

ates, ICSID C44). The PSE by definition

hat needs to beRepublic of T

e has furnish

ribunals.

al establishe

ublic purpose

een given by

hat the gove

t expropriati

vestment in

ed. Even tho

" "ambiguou

t "transparen

Mexico had n

res that claim

Argentina ha

tory action c

Case No. ARB

ard, Aug. 3, 2

Case No. ARBEG v. Turkey tn require a proe observed."

Turkey, ICSID

hed promises

ed that as a m

e is neither

y the regulat

ernment wou

ion claim on

reliance on

ough the trib

us and

ncy," it did n

not specifica

mant compla

ad not signed

complained o

B(AF)/97/1,

2005, Part IV,

B(AF)/99/01,tribunal appliomise of the PSEG Globa

D Case No.

s or

matter

ting

uld

n the

bunal

not

ally

ained

d a

of

,

, ed a

al Inc

did not am

certain re

expectati

3

backed e

concessio

change it

expropria

3

state has

complain

between

typically

explained

476 Total S2010, para477 See Du478 MethanSaluka Inv(RL-74); LUNCITRAMedioambMay 29, 2Partial Aw

mount to an

egulatory con

ions that law

In this26.

xpectation –

on. Claiman

ts laws to ac

ation under i

The fi27.

indirectly ex

ned of, includ

the protectio

not conside

d, "[p]ropert

S.A. v. The Ara. 197 (Autho

ugan et al. at 4

nex Corp. v. Uvestments BVLauder v. CzeAL, Partial Abientales Tec2003, para. 11ward, Sept. 13

expropriatio

nduct milita

ws or regulati

s case, this fa

– and much l

nt did not hav

commodate

international

c) Thfin

inal factor th

xpropriated

ding whethe

on of foreign

red to consti

ty is a social

rgentine Repuority RL-145

440 (RL-135)

USA, Part IV,V v. The Czechech Republic,

Award on the Mcmed S.A. v. T19 (CL-197); 3, 2001, para.

on. 476 The a

ates against th

ions would n

factor is even

less a right –

ve a legal rig

Pac Rim's a

l law.

he regulatorynding of no in

hat internatio

an investor's

er it featured

n investment

itute expropr

institution t

ublic, ICSID C5).

).

, Chapter D, ph Republic, U, para. 198 (CMerits, Nov.

The United MeCME Czech R 603 (Author

155

absence of su

he finding th

not change o

n stronger. C

– to an enviro

ght to deman

application.

y nature of Endirect expro

onal tribunal

s rights is the

physical for

ts and domes

riation. As P

that serves so

Case No. ARB

para. 7 (RL-2UNCITRAL, PCL-168); S.D. 13, 2000, parexican States,Republic B.Vrity RL-146)

uch an agree

hat a claiman

or be more st

Claimant had

onmental pe

nd that El Sa

The morator

El Salvador's opriation

ls have consi

e character o

rce.478 Give

stic public w

Professor An

ocial functio

B/04/01, Dec

20); Feldman Partial Award Myers, Inc. v

ra. 281 (CL-2, ICSID Case

V. v. The Czec).

ement promi

nt had legitim

tringently ap

d no reasona

ermit and an

alvador igno

rium is thus

moratorium

idered in ass

or nature of t

en the necess

welfare, regu

ndrew Newc

ons" and thus

cision on Liab

v. Mexico, pad, Mar. 17, 20v. Governmen30); Tecnicas

e No. ARB(AFh Republic, U

ising to main

mate

pplied.477

able investm

exploitation

ore its laws o

not an

m supports a

sessing whet

the conduct

sary balance

ulatory policy

combe has

s cannot be u

bility, Dec. 27

ara. 106 (RL-006, para. 255nt of Canada,s F)/00/2, Awa

UNCITRAL,

ntain

ment-

n

or

ther a

y is

used

7,

144); 5

ard,

in a mann

interfere

3

power in

Tecmed v

its sovere

those sub

whatsoev

3

in interna

the norm

fide regu

Republic

3

Salvador

expropria

Second, a

479 AndrewDispute M480 See, e.gLauder v. Mexico, pMuthucum(Authoritnon-comp481 Tecmed482 Saluka483 Lauder

ner detrimen

and regulate

Intern28.

a bona fide

v. Mexico tri

eign powers

bject to its po

ver."481

Simila29.

ational law t

mal exercise o

lations that a

c tribunal.483

Claim30.

r would repre

atory. First,

any mining r

w Newcombe

Management,

g., Feldman vCzech Repub

para. 119 (CLmaraswamy Sty RL-148) ("pensable.").

d v. Mexico, p

a v. Czech Rep

r v. Czech Rep

ntal to public

e such behav

national tribu

and non-dis

ibunal, for ex

within the f

owers as adm

arly, the Salu

that States ar

of their regul

are aimed at

mant has faile

esent the rar

Claimant ha

rights Claim

e, The BoundaJuly 2007, at

v. Mexico, parblic, para. 198-197); CME v

Sornarajah, Th"The starting

para. 119 (CL

public, para. 2

public, para.

c order and s

vior.479

unals have re

scriminatory

xample, held

framework o

ministrator w

uka v. Czech

re not liable

latory power

t the general

ed to demons

e circumstan

ad no rights

mant obtained

aries of Regu13 (Authorit

ra. 106 (RL-18 (CL-168); Sv. Czech Repuhe Internationpoint must al

L-197) (emph

255 (RL-74).

198 (CL-168

156

safety withou

efused to fin

manner exp

d that it is "u

f its police p

without entitl

h Republic tr

to pay comp

rs, they adop

welfare."482

strate that a

nces in whic

that could h

d or hoped to

latory Expropty RL-147).

144); Saluka vS.D. Myers v. ublic, Partial Anal Law on Folways be that

hasis added).

).

ut the possib

d that a Stat

propriated an

undisputable

power may c

ling them to

ribunal held

pensation to

pt in a non-d

2 So, too, did

moratorium

ch regulatory

have been aff

o obtain in E

priation in In

v. Czech RepuCanada, paraAward, para. oreign Investmthe regulator

bility that the

te executing

n investor's r

e" that "the S

cause econom

o any compen

that "[i]t is n

a foreign inv

discriminator

d the Lauder

m on metallic

y conduct sho

fected by a m

El Salvador w

nternational L

ublic, para. 25a. 281 (CL-23 603 (RL-146ment 385 (2dry interferenc

e State woul

regulatory

rights.480 Th

State's exerci

mic damage

nsation

now establis

vestor when

ry manner b

r v. Czech

mining in E

ould be deem

moratorium.

were to be

Law, Transnat

55 (RL-74); 30); Tecmed v6). See also d ed. 2004) e is presumpt

ld

he

ise of

to

shed

n, in

ona

El

med

tional

v.

tively

exercised

Section I

obligatio

health, cu

"the State

environm

3

activities

discussed

assess an

this conte

power un

El Salvad

potential

internatio

3

investme

their busi

Managem

for the fa

484 Constitgoce de la485 Constitdiversidad

d in accordan

III above, the

n of the Stat

ulture, econo

e's duty to pr

ment, to guar

As Cl31.

s in particula

d in Section

nd manage th

ext, El Salva

ndertaken ou

dor and the C

harm arisin

onal law.

In con32.

ent arbitratio

iness ventur

ment v. Mexi

ailure of an i

tution, Art. 1 a libertad, la s

tution, Art. 1d e integridad

nce with the

e very first a

te to secure f

omic well-be

rotect natura

rantee sustain

aimant was

ar were a sou

III, there wa

he environm

ador's morato

ut of a bona f

Constitution

g from such

nclusion, we

ns are not in

es or to bail

ico tribunal,

nvestor's fla

(RL-121) ("e

salud, la cultu

17 (RL-121) d del medio am

State's envi

article of the

for the inhab

eing and soc

al resources,

nable develo

well aware,

urce of great

as concern th

ental havoc

orium was a

fide concern

al requireme

activities. I

note that int

ntended to pr

out an inves

for example

awed busines

es obligación ura, el bienest

("Es deber dembiente, para

157

ronmental la

Salvadoran

bitants of the

cial justice."4

as well as th

opment."485

concerns ab

controversy

hat the Minis

that gold mi

an appropriat

n regarding th

ent that the G

It does not, t

ternational t

rotect invest

stor from its

e, refused to

ss plan:

del Estado astar económico

el Estado prota garantizar el

aws and regu

Constitution

e Republic, t

484 The Con

he diversity

bout metallic

y and social t

stry of Envir

ining activiti

te, non-discr

he impact of

Government

therefore, co

tribunals hav

tors from com

poor judgm

make the re

segurar a los ho y la justicia

teger los recul desarrollo so

ulations. As

n establishes

the enjoymen

nstitution also

and integrity

c mining in g

tension in E

ronment was

ies were like

riminatory, e

f metallic mi

minimize an

onstitute expr

ve repeatedly

mmercial ris

ment. The Wa

espondent sta

habitantes de social").

ursos naturaleostenible.").

s discussed in

s that "it is th

nt of liberty,

o notes that

y of the

general and i

l Salvador.

s ill-equippe

ely to wreak

exercise of p

ining activiti

nd mitigate

ropriation un

y held that

sk inherent in

Waste

ate compens

la República

s, así como la

n

he

,

it is

its

As

ed to

. In

police

ies in

any

nder

n

sate

a, el

a

3

realize it

regulator

could hav

calculate

with the

accommo

rights req

expropria

486 Waste 2004, paraARB/97/7insurance Republic oan insuranconsequen

it is noreflectof a focompecircumfor itsuptake

Here t33.

s El Dorado

ry conduct, a

ve been affe

d risk to exp

limits of Sal

odate Claima

quired to dev

ation even if

Managementa. 177 (RL-767, Award, Nopolicies agai

of Chile, ICSnce against bunces of their o

ot the functited in Articloreign investensating for mstances, fous success on e and contra

too, El Salva

Project. Th

as demonstra

cted by the m

pand the scop

lvadoran law

ant, Claiman

velop its proj

f this Tribun

t, Inc. v. Unite6). See also Ev. 13, 2000, pinst bad businID Case No. usiness risk anown actions a

on of the intle 1110 to elitor, or to plathe failure ounded on toounsustainab

actual perform

ador should

his is so not o

ated in Sectio

moratorium,

pe of its proj

w in the hope

nt alone mus

ject. Claima

al were aske

ed Mexican SEmilio Agustínpara. 64 (Autness judgmentARB/01/7, And the Tribunas experienced

158

ternational laiminate the n

ace on Mexicof a businesso narrow a cle assumptiomance.486

not be made

only because

on III, but al

, as demonst

ject beyond

es that El Sal

st bear the co

ant would no

ed to decide

States, ICSID n Maffezini v.hority RL-14ts."); MTD Eq

Award, May 2nal considers td businessme

aw of expropnormal commco the burdens plan whichclient base anons about cu

e to compens

e the morato

lso because

trated in Sec

its ability to

lvador woul

onsequences

ot be able to

such a claim

Case No. AR The Kingdom49) ("Bilateraquity Sdn. Bh

25, 2004, parathat the Claim

en.").

priation as mercial riskn of

h was, in the nd dependen

ustomer

sate Pac Rim

orium was le

Pac Rim had

tion II. Hav

o develop it i

d change its

s of its failur

support a cl

m under inter

RB/AF/00/3, Am of Spain, ICal Investment hd. and MTD a. 178 (RL-46mants should

s

nt

m for its failu

gitimate

d no rights th

ving taken th

in accordanc

laws to

re to obtain t

laim of

rnational law

Award, Apr. 3CSID Case Nt Treaties are Chile S.A. v.

6) ("BITs are nbear the

ure to

hat

he

ce

the

w.

30, No.

not

not

V. D

A

3

asks for d

Rim had

failed to

establish

investme

that El Sa

latter of w

compens

sake of c

right to c

3

show a c

the applic

(3) the va

implemen

interest.

3

Claimant

even if th

DAMAGES

A. Pac R

Despi34.

damages in e

no right to a

meet the req

ed that the m

ent after Mar

alvador brea

which is inap

ation. Whil

ompleteness

compensation

In the35.

ausal link be

cable law in

aluation met

nted in a ser

1.

As El 36.

t's attempt to

hese rules we

Rim is not en

ite the inhere

excess of $3

an exploitati

quirements u

moratorium d

rch 2008. A

ached its obli

pplicable to

e it is unnec

s El Salvado

n under Salv

sections tha

etween any u

this arbitrat

thods used b

riously flawe

There is noRim, and tthis arbitra

Salvador ha

o invoke inap

ere applicab

ntitled to co

ent factual an

00 million.

on concessio

under the Mi

destroyed or

s a matter of

igations und

this matter).

cessary to pro

r will set for

vadoran law

at follow, El

unlawful con

tion is Salva

y Pac Rim's

ed manner; a

o causal linktherefore Pacation

as explained,

pplicable gen

le, they wou

159

ompensation

nd legal wea

Factually, E

on or to the e

ning Law. A

r radically di

f law, Claim

der domestic

. It follows

oceed any fu

rth further re

or general p

Salvador wi

nduct by El S

doran law w

valuation ex

and (4) Claim

k between Elc Rim canno

, these proce

neral princip

uld not provi

n

aknesses in P

El Salvador h

exploration

Accordingly

iminished th

mant has com

law or rules

that Claiman

urther under

easons why C

principles of

ill show that

Salvador and

which provid

xperts are in

mant is not e

l Salvador's ot be compen

eedings are g

ples of intern

ide a basis fo

Pac Rim's ca

has already s

areas it claim

y, Claimant h

e value of C

mpletely faile

s of internati

nt is not enti

these circum

Claimant do

f internationa

t: (1) Claima

d any harm t

des a basis fo

ncorrect and

entitled to pr

conduct andnsated for an

governed by

national law

or its claim f

ase, Claiman

shown that P

ms because i

has not

Claimant's

ed to establis

ional law (th

itled to any

mstances, for

oes not have

al law.

ant has failed

to Pac Rim;

or compensat

have been

re-judgment

d any harm tony damages

y Salvadoran

must fail. B

for

nt

Pac

it

sh

he

r the

any

d to

(2)

tion;

o Pac in

law.

But

compens

for dama

3

link has b

unlawful

3

factual an

caused it

487 Articleprinciple: the internthe subjecrather thanInternatioStates for U.N. Doc79(bis)). Tribunals damages w488 Memor489 Borzu 171-172 (Internatio490 See e.gTrade Ban(1987) (Aenjoymeninactive cis not conconduct aJudgmentwere sevemight havtowards in

ation. Unde

ages caused b

Claim37.

been met.488

l acts of El S

The d38.

nalysis in tha

s damages.49

e 31(1) of the

"The responsationally wroct matter of ren any and all

onal Law ComInternational. A/56/10 (20See also Bin 253 (2006) (

which are leg

rial, para. 664

Sabahi, Com(2011) (Authonal Investmen

g., Otis Elevatnk of Iran), A

Authority RLnt of its properompany and t

nvinced that thattributable to t of 20 July, 1eral causes actve been one onsolvency; wh

er internation

by an interna

mant appears

However, C

Salvador.

determination

at a claiman

90 While fac

ILC's Draft A

sible State is ongful act." Teparation is, gconsequence

mmission on thlly Wrongful 001) ("ILC Dr

Cheng, GeneAuthority R

gally regarded

4.

mpensation andority RL-151nt Law 135-1

tor CompanyAward No. 304L-153) ("the T

rty rights in Ithe changed che Claimant hIran…"). Se989 I.C.J. Reting together f the factors ihich state of a

nal law, a St

ationally wro

to assume (w

Claimant ha

n of causatio

t must estab

ctual proxim

Articles on thunder an obli

The Commentglobally, the ines flowing frohe work of itsActs, with coraft Articles")eral Principles

RL-150) ("… td as the conse

d Restitution 1). See also S136 (2008) (A

. v. The Islam4-284-2, 14 I

Tribunal holdsran Elevator, circumstanceshas establisheee also Case Ceports 15, parathat led to the

involved. Buaffairs it seem

160

ate is only u

ongful act.48

without any

s not proven

on is both a f

lish that the

mity is necess

e Responsibiligation to maktary explains tnjury resultinm an internats fifty-third seommentaries"), Comment (s of Internatiothe duty to mquences of an

in Investor-SSergey RipinsAuthority RL

mic Republic oran-US Claim

s that a multipamong them

s of the Iraniad that the infr

Concerning Ela. 101 (Authoe disaster to E

ut the underlyims to have atta

under an obli

87

explanation

n that its alle

factual and a

respondent'

sary, it is not

lity of States ke full reparathat "[t]his ph

ng from and ationally wronession, "Draft U.N. GAOR

(9) to Article onal Law as A

make reparation unlawful ac

tate Arbitratisky and Kevin

L-152).

of Iran and Bams Tribunal Rplicity of facto

m its position aan elevator mfringement of lettronica Sicority RL-154ELSI. No douing cause wasained even pr

igation to ma

n) that the req

eged damage

a legal inquir

s unlawful a

t sufficient t

contemplatesation for the inhrase is used ascribable to tngful act." Rept Articles on R

R, 56th Sess., 31, at 92 (Au

Applied by Con extends onl

ct.").

on: Principlesn Williams, D

ank Mellat (foRep. 283 (198ors affected tas a minority

market. Howethese rights w

cula S.p.A. (U4) (concludinubt the effect s ELSI's headrior to the req

ake reparatio

quisite causa

es were cause

ry.489 It is a

act actually

to meet the

s this fundamenjury caused bto make clear

the wrongful eport of the ResponsibilitySupp. No. 10

uthority RL-ourts and ly to those

s and PracticeDamages in

formerly Fore87) , para. 47 the Claimant'sshareholder iver, the Tribuwas caused by

USA v. Italy), g that "[t]here

t of the requisdlong course quisition.").

on

al

ed by

ental by r that act,

y of 0,

e

eign

s in an unal y

e sition

requirem

injury is

3

engaging

published

Nordzuck

the secon

failing to

by not "c

pre-contr

arising fr

and its "l

491 HofflanRep. 41 (1evidence aHoffland'shave occuCanada, U492 The Ro(Authoritinternatioof Tanzanfor any viof the BIT493 Nordzu(Authorit494 Nordzu

ment of causa

considered t

Accor39.

g an obligatio

d decision of

ker's failure

nd Partial Aw

o finalize the

communicat[

ractual phase

rom a "set-ba

loss of the op

Such pNordzinfringand Szany ev

nd Honey Co1983), at 2 (1attached theres loss only in

urred. The saUNCITRAL,

ompetrol Groty RL-156) ("nal wrong giv

nia, ICSID Caiolation of theT and the loss

ucker v. The Rty RL-157).

ucker v. Polan

ation. The le

too unforese

rdingly, a Sta

on to pay co

f Nordzucke

to acquire tw

ward, the trib

e sales "withi

[ing] transpa

e" of the sale

ack of at lea

pportunity."4

presentationzucker wouldgement of thzczecin Grouvent and that

. v. National I983) (Authoreto that proxithe sense tha

les were thus Second Parti

up N.V. v. Ro"there is no gving rise to Stase No. ARB/e BIT…will os sustained by

Republic of P

nd, para. 39 (

egal aspect o

eeable, indire

ate may be i

mpensation

r v. Poland i

wo Polish su

bunal decide

in a reasonab

arently with t

es procedure

st half of a y

494 The tribu

n of Norduckd have acquihe BIT. It alup to Nordzut no event, o

Iranian Oil Crity RL-155)mate cause h

at had there bea 'cause, but

ial Award, Oc

omania, ICSIDeneral rule retate responsib/05/22, Awardonly be due if y BGT.").

Poland, UNCI

RL-157).

161

of causation i

ect, or remot

international

due to the ab

illustrates su

ugar compan

ed that Polan

ble time and

the candidat

e.493 Nordzu

year," "costs

unal rejected

ker's damageired the two lso assumes ucker would

other than the

Co., Award No) ("we think itas not been aleen no oil, annot the proxi

ct. 21, 2002, p

D Case No. Aequiring damability."). See d, July 24, 20

f there is a suf

TRAL, Third

imposes lim

te from the h

lly responsib

absence of ca

uch a situatio

nies through

nd violated th

d uselessly pr

te investor d

ucker claime

for the usel

d the entire c

es assumes thGroups but that the sale

d have gone e breach of t

o. 22-495-2, 2t is clear fromlleged. The s

nd thus no cheimate cause.'"para. 140 (CL

ARB/06/3, Awage as a constalso Biwater

008, paras 779fficient causal

d Partial and F

mits on damag

harm.491

ble without n

ausation.492

on. The disp

a privatizati

he Germany

rotracting [th

during the las

ed damages o

less follow-u

claim, stating

hat for Poland's

e of Gdańsk through in the BIT whic

2 Iran-US Clam the pleadingsales of oil weemicals, the lo"). See also SL-236).

ward, May 6, tituent elemenGauff Ltd v.

9, 787 (RL-35l link between

Final Award,

ges where th

necessarily

The recently

pute arose ou

ion process.

y-Poland BIT

he process]"

st period of t

of €153.7 mi

up of the pro

g:

s

ch

aims Tribunags and the ere a 'cause' ooss would no

SD Myers Inc.

2013, para. 1nt of an United Repub

5) ("Compensn the actual b

Nov. 23, 200

he

y

ut of

In

T by

" and

the

illion

ocess"

al

of t . v.

89

blic sation

breach

09

34

to prove

had incre

to sell the

having be

of those i

34

the breac

Bahloul c

to ensure

Neverthe

breaches

495 Nordzu496 Nordzu497 Mohampara. 96 (A498 Al-Bah

the Arcaused

These

The re40.

it would hav

eased the pri

ese Groups t

een no inves

investments.

Simila41.

ch committed

case, the trib

e the issuanc

eless, no com

and the alle

Claimhave bno defupon eprobabcompawouldno pro

ucker v. Polan

ucker v. Polan

mmad AmmarAuthority RL

hloul v. Tajiki

rbitral Tribud the sale to

e assumption

equisite caus

ve acquired t

ce of its offe

to it and was

stment in the

."496

arly, too man

d by the Stat

bunal had fou

e of licenses

mpensation w

eged damage

mant asks thebeen able to finite offer oexploration hbilities wereany seems tod have been aoven experie

nd, paras. 48-

nd, para. 60 (

r Al-Bahloul vL-158).

istan, para. 95

unal found PoNordzucker

ns are inaccu

sal connectio

the compani

er. The tribu

s free to refu

ese two Grou

ny unsubstan

te and the lo

und Tajikist

s pursuant to

was found to

es:

e Tribunal to acquire fina

of financing,he would ha

e low and theo have foundable to explo

ence in this f

-49 (RL-157)

RL-157).

v. Tajikistan,

5 (RL-158) (e

162

oland to havr to fail.

urate...495

on was missi

es in the abs

unal conclud

use its consen

ups, Nordzuc

ntiated assum

ss of the alle

an liable und

o four hydroc

o be owing du

accept the aancing for th just express

ave found hyere is no evidd hydrocarbooit and sell tfield.)498

.

SCC Case No

emphasis in or

ve committed

ing in that ca

sence of Pola

ded that "Pol

nt to the sale

cker cannot

mptions "des

eged future c

der the Ener

carbon explo

due to insuffi

assumption the exploratiosions of interydrocarbons dence that anons so far) anthe oil (altho

o. 064/2008,

riginal).

d, could have

ase. Nordzu

and's breach

land had no

e or to the in

claim damag

stroys the ca

cash flows."

rgy Charter T

oration agree

icient ties be

that he woulon (but he harest), that (although thny other

and that he ough he had

Final Award,

e

ucker was un

h if for exam

legal obligat

nvestment. T

ges for the lo

ausality betw

497 In the Al

Treaty for fa

ements.

etween the

d ad

he

, June 8, 2010

nable

mple it

tion

There

oss

ween

l-

ailing

0,

34

mineral d

El Salvad

no factua

wrongful

by Presid

between

Claimant

principle

necessari

acts prior

to the pre

mining ri

the explo

with at le

acquire a

other dep

Claimant

deposit.

discovere

further ex

explorati

explorati

As de42.

deposits and

dor. But eve

al causation b

l act compla

dent Saca in

President Sa

t now admits

on May 7, 2

ily predates

r to March 2

ess in March

ights to all th

oitation conc

east two requ

an environme

posits in the

t's applicatio

The other de

ed or sufficie

xplore in the

ion. Second

ion licenses t

scribed in Se

two early ex

en if for the

between Pac

ined of by C

March of 20

aca's press st

s that it was

2007 and thu

Claimant's s

2008. More

h 2008, the u

he deposits f

cession appli

uirements co

ental permit

concession a

on, the Pre-F

eposits (Bals

ently drilled

e application

, the Coyote

that had exp

ection II, no

xploration ar

sake of argu

c Rim's alleg

Claimant is th

008. Claima

tatement and

specifically

us admits tha

self-imposed

fundamental

unapproved E

for reasons u

ication had n

ontained in A

. Thus, Clai

application a

Feasibility St

samo, South

d to be includ

n area and no

era and Nanc

ired on Janu

163

one of the los

reas can be t

ument El Salv

ged damages

he alleged an

ant has not an

d any injury

told of the m

at any allege

d prohibition

lly, regardle

EIA, and the

unrelated to a

not been gran

Article 37.2 o

imant had no

area. In add

tudy only pu

h Minita and

ded in the ap

o right to any

ce Dulce dep

uary 1, 2005

sses Pac Rim

traced back t

vador comm

s and any act

nnouncemen

nd cannot es

to Claimant

moratorium

ed injury from

n on making

ss of Preside

e moratorium

any alleged

nted due to C

of the Minin

o rights to th

dition to the i

urported to ju

Nueva Espe

pplication. C

y deposits di

posits were w

and therefor

m claims in r

to any unlaw

mitted a wron

t of El Salva

nt of a morat

stablish any

t. It must be

based on the

m that mora

any claims f

ent Saca's al

m, Pac Rim s

act by El Sa

Claimant's fa

ng Law as w

he Minita dep

incomplete n

ustify mining

eranza) had e

Claimant had

iscovered thr

within the are

re neither Pa

relation to th

wful conduct

ngful act, the

ador. The all

torium on m

causal link

e recalled tha

e precaution

atorium

for damages

lleged statem

still lacked v

alvador. Firs

ailure to com

ell as failing

posit or any

nature of

g the Minita

either not be

d no right to

rough illega

ea of the ori

ac Rim nor a

he six

t of

ere is

leged

mining

at

ary

for

ment

valid

st,

mply

g to

een

l

ginal

an

affiliated

Mining L

without r

Simply p

34

never po

Salvador

Mining L

State.499

property

exploitat

any kind

exploitat

Because

the subso

cannot be

legally ow

34

causal lin

the Tribu

Salvador

to have e

499 Otto Epara. 68; A

d company co

Law. Third,

renewing it.

put, El Salva

In add43.

ssessed a co

ran law. Acc

Law and Reg

The conces

right to extr

ion concessi

related to th

ion concessi

Claimant's c

oil, El Salvad

e compensat

wn.

Pac R44.

nk between t

unal would h

ran law or to

explored, com

xpert Report Ayala/Fratti d

ould legally

Claimant al

Fourth, Pac

dor cannot h

dition to the

mpensable r

cording to E

gulations pro

sion holder,

ract minerals

ion to begin

he mineral de

ion, Pac Rim

claims to inju

dor could no

ted for the al

Rim's failure

the alleged h

have to make

actual even

mpleted a Fe

at 8-9. See a

de Vega Expe

acquire exp

lowed its ex

c Rim never

have caused

complete lac

real property

l Salvador's

ovide that ow

as distingui

s from the un

the extractio

eposits in El

m would still

ury are base

ot have cause

lleged loss o

to establish

harm and the

e several unr

ts that have

easibility Stu

also Tinetti Exert Report at 9

164

loration lice

xploration lic

acquired any

damage to r

ck of mining

y right in the

mining law

wnership of m

shed from th

nderground d

on of minera

l Salvador. B

not own the

d on an alleg

ed the damag

of property th

a legal right

e damages cl

reasonable as

transpired.

udy, acquired

xpert Report, 9, 33.

enses coverin

cense to Sant

y rights to Z

rights Pac Ri

g title, Claim

mineral dep

expert, Jam

minerals in t

he holder of

deposits. Pa

als and thus n

But even if C

e mineral dep

ged property

ge claimed b

hat it did not

t to the depo

laimed. To a

ssumptions t

For example

d the surface

paras. 8, 21,

ng the same

ta Rita to lap

Zamora/Cerro

im did not po

mant, as a ma

posits accord

mes Otto, the

the ground r

an explorati

ac Rim never

never had pr

Claimant hel

posit in the s

y right to min

by Pac Rim.

t own or that

sits severs a

award dama

that are eithe

e, Claimant w

e rights over

31-32; Terce

areas under

pse in 2009

o Colorado.

ossess.

atter of law,

ding to

Constitution

remain with t

ion license, h

r obtained an

roperty right

ld a valid

subsoil.

neral deposi

Claimant

t it could nev

any possible

ages to Claim

er contrary t

would have

r the requeste

ro Expert Rep

the

n,

the

has a

n

ts of

its in

ver

mant,

to

had

ed

port,

concessio

even clai

deposits.

this hypo

sought (w

there are

have any

procure b

infrastruc

to apply

would sti

Coyotera

January 2

clock to l

legally ac

found aft

associate

tribunal d

basis of a

34

claims. C

500 Pac Ri

on area and c

im a property

Even then,

othetical wor

which at the

still a large

y rights to mi

bids and hire

cture as well

for renewals

ill not have c

a and Nance

2005 would

legally acqu

cquired, ther

ter exploring

ed with Pac R

determines a

a speculative

In sum45.

Claimant has

m Internal M

completed th

y right to exp

Pac Rim's r

rld Pac Rim

time its offi

number of s

inerals. To b

e contractors

l as obtain pe

s for Santa R

conferred an

Dulce depos

violate Salv

uire rights to

re is no guar

g those areas

Rim's claim.

a breach of a

e claim.

m, the lack o

s no valid rig

Memo re Surfa

he necessary

ploit the Min

rights would

had actually

cers stated w

speculative e

begin extrac

s, order mach

ermits by the

Rita within th

ny property r

sits after the

vadoran law.

Zamora/Cer

rantee that ec

s. There are

As the Nor

a legal obliga

of factual cau

ghts to the d

ace Owner Au

165

y studies to r

nita, South M

have been l

y met the req

was "nearly (

events that w

tion, Pac Rim

hinery, and c

e Governme

he appropria

rights. Furth

e expiration o

Claimant w

rro Colorado

conomically

simply too m

rdzucker and

ation has occ

usation warra

deposits and

uthorization (C

remedy the d

Minita, Bals

limited to the

quirements to

(if not totally

would have h

m would hav

construct the

ent. Similarl

ate time to ex

hermore, assu

of the origin

would also ha

o. And even

y mineable m

many unsub

d Al-Bahloul

curred, it can

ants the reje

has failed to

C-291).

deficiencies

amo, and Nu

e minerals ex

o obtain the

y) [an] impo

had to occur

ve had to sec

e plant and s

ly, Claimant

xplore the ar

uming any r

nal exploratio

ave had to w

n if these lice

minerals wou

stantiated as

l cases recog

nnot award d

ection of Pac

o allege any w

in its EIA to

ueva Esperan

xploited. If

concession

ossible task")

for Claiman

cure financin

surrounding

t would have

rea but this

right to the

on licenses i

wind back th

enses had be

uld have been

ssumptions

gnize, even i

damages on

c Rim's dama

wrongdoing

o

nza

f in

it

),500

nt to

ng,

e had

n

e

een

n

f a

the

ages

g by

El Salvad

legal cau

B

34

based cla

Salvador

Instead, C

guise of c

Investme

unconvin

34

claims th

wrong, a

with Clai

neverthel

Conventi

applicatio

Rim claim

any even

501 Memor502 Memor503 Memor

dor. Natural

usation. With

B. The a

1.

In an 46.

aims in their

r's Investmen

Claimant has

customary in

ent Law. Pac

ncing, contra

To est47.

hat the partie

s El Salvado

imant's asser

less attempts

ion which pr

on of domes

ms that the r

nt.503

rial, paras. 64

rial, paras. 64

rial, paras. 64

lly, having fa

hout causatio

applicable la

Salvadoran

earlier phase

entirety. Al

nt Law, Claim

s focused its

nternational

c Rim's justi

adictory, and

tablish the ap

es have not a

or has alread

rtion that thi

s to derive su

rovides for, i

stic laws and

remedies for

42-643.

42-643.

43, 654-655.

failed to prov

on, there can

aw on dama

n law is the

e of these pr

lthough the T

mant has squ

s efforts on r

law that can

ifications for

d without any

pplicability

agreed on the

dy explained

is arbitration

upport for it

in the absenc

d internationa

r damages un

166

ve factual ca

n be no entit

ages

applicable la

oceedings, t

Tribunal kep

uandered thi

re-introducin

nnot apply to

r importing p

y basis.

of internatio

e application

above in Se

n is governed

s tenuous po

ce of an agre

al law as ma

nder domesti

ausation, Cla

tlement to da

aw in this ar

the Tribunal

pt the door o

is opportunit

ng its failed t

o this case th

principles of

onal law in th

n of a substan

ection IV.A,

d by Salvado

osition from

eement betw

ay be applica

ic and intern

aimant has fa

amages.

rbitration

rejected Pac

open to claim

ty to continu

treaty claims

hat proceeds

f internation

his arbitratio

ntive law. N

but it is also

oran law.501

Article 42(1

ween the part

able.502 Des

national law

ailed to estab

c Rim's CAF

ms under El

ue with its ca

s through the

only under t

nal law are

on, Pac Rim

Not only is th

o inconsisten

Claimant

1) of the ICS

ties, the

spite this, Pa

are consiste

blish

FTA-

ase.

e

the

his

nt

SID

ac

nt in

34

Salvador

Salvador

34

Law, the

Investme

claiming

mining th

Pac Rim

no time d

3

de Vega,

under Sa

504 Memor505 ParagrInvestmendiscriminabothered tResponde506 Memor507 Ayala/derecho q

As de48.

ran law is the

r, including l

2.

Pac R49.

Constitution

ent Law, Cla

that Preside

hat effective

admits that

does Claiman

As ex50.

the need to

lvadoran law

Thereis advState'sand thcontemcompe

rial, para. 692

aph 659 of Cnt Law and thation) and 8 (to explain how

ent's Breaches

rial, para. 639

/Fratti de Vegque se ve afec

monstrated i

e applicable

legal princip

Salvadoranlosses

Rim seeks dam

n, and gener

aimant articu

ent Saca's sta

ly prevented

Salvadoran

nt suggest th

plained by E

provide for

w:

fore, expropversely affects decision bahe prior existmplated in thensation.507

2.

laimant's Memhe Constitutio(compensationw El Salvados.

9.

ga Expert Repctado por la in

in Section IV

law in this a

les on dama

n law provid

mages due t

ral principles

ulates a singl

atements rep

d the compan

law establish

hat Salvador

El Salvador's

fair compen

priation presuted by the goased on groutence (or subhe Constituti

morial states on of El Salvan for expropr

or has allegedl

port at 47 ("Pontervención es

167

V.A above, i

arbitration, th

ages.

des a basis fo

o alleged bre

s of internati

le breach on

ported in the

ny and its su

hes an oblig

an laws prov

s administrat

nsation in the

upposes the overnment inunds contempbsequent in tion and in th

"Respondent ador, includingriation)." Desly violated th

or tanto, la exstatal, la deci

in light of th

he Tribunal

or compensa

eaches unde

ional law."50

the grounds

press allege

ubsidiaries fr

gation to com

vide inadequ

tive law exp

e event of an

e existence ofntervention,

mplated by ththose cases ehe Law) of fa

t has acted in g under: Articspite this baldose standards

xpropiación prsión adoptada

he parties' ag

must apply

ation for Cla

er "the Foreig

04 With resp

s of expropri

edly announc

rom enjoying

mpensate an i

uate compen

perts, Ayala M

n expropriati

of a right thathat is, the e legal systeexpressly fair

a manner concle 5 (equal p

d assertion, Cls. See Memor

resupone la ea por el Estad

greement that

the laws of E

aimant's alleg

gn Investme

pect to the

iation,505

ced a ban on

g their rights

injured party

nsation.

Muñoz and F

ion is recogn

at

em

ntrary to the protection), 6 laimant has nrial, Section V

existencia de do con fundam

t

El

ged

nt

n

s.506

y. At

Fratti

nized

(non-not V:

un mento

Jurisprud

integralid

maximum

other wo

expropria

such loss

razonabl

3

have any

failed to

this cann

expropria

Salvador

3

been exp

damages

valuation

mineral d

would be

en una cauexpresamoriginal). 508 Ayala/509 Ayala/510 Ayala/511 Otto E

dence establi

dad"). For a

m amount of

rds, the law

ated property

ses must be f

le").509 Com

Howe51.

y rights capab

acquire any

not be equate

ated.510 The

r.

Even 52.

propriated, it

based on th

n goes agains

deposits in th

e entitled to

usa prevista pente previstos

/Fratti de Veg

/Fratti de Veg

/Fratti de Veg

xpert Report,

ishes that co

an expropria

f compensati

provides for

y. Damages

foreseeable a

mpensation is

ever, El Salv

ble of being

property rig

ed with being

erefore, Pac R

assuming th

s damages c

e estimated

st a basic ten

he subsoil.51

125% of the

por el ordenams en la Consti

ga Expert Rep

ga Expert Rep

ga Expert Rep

, Question 1.

mpensation

ation based o

ion at 125%

r compensati

s for lost pro

and reasonab

s, however, l

ador's admin

expropriated

ghts. All tha

g granted a c

Rim is not en

hat Claimant

laim is still f

amount of m

net of the Co

1 If its inves

e declared va

miento jurídicitución y en la

port at 51.

port at 48.

port at 50.

168

must be fair

on a public u

of the value

ion at a 25%

fits, as Claim

bly certain ("

limited to the

nistrative law

d. In the abs

at existed wa

concession.

ntitled to com

had acquire

fundamental

minerals cont

onstitution w

stment had b

alue of the ex

co y la existena Ley) de una

r, current and

utility, the Ex

e declared to

% premium o

mant notes, a

"previsible c

e maximum

w experts no

sence of a co

as the hope o

That is, a m

mpensation

ed a concessi

lly flawed. P

tained in the

which declare

been expropr

xpropriated p

ncia previa (oa justa indemn

d full ("justi

xpropriation

o the tax auth

over the decl

are also avai

con un grado

125% of de

oted that Pac

oncession, P

of obtaining a

mere hope can

under the la

ion and the c

Pac Rim has

e subsoil. Cl

es that the St

riated, at mo

property, bu

o posterior en nización.") (e

icia, actualid

Law sets a

horities.508 I

lared value o

ilable; howe

o de certeza

eclared tax va

c Rim did no

Pac Rim had

a concession

nnot be

aws of El

concession h

s quantified

laimant's

tate owns

ost Pac Rim

ut not the val

los casos

emphasis in

dad e

In

of the

ver,

alue.

ot

n but

had

its

lue of

the miner

compens

quantifia

Pac Rim

could pro

pursuant

3

expropria

internatio

capable o

3

dispute.

events. T

establish

sources, h

proceedin

3

apply to

states:

512 Ayala/513 Tercer514 Memor

ral resources

ation for los

able with a re

would only

ove and that

to Article 17

Thus, 53.

ation. There

onal law. Bu

of being exp

3.

Princi54.

But Claiman

These princip

State respon

however, are

ngs, they wo

First, 55.

disputes betw

/Fratti de Veg

o Expert Rep

rial, para. 649

s. Furthermo

st profits wou

easonable de

have been a

were registe

7 of the Inve

the laws of

e is no legal j

ut Claimant

ropriated. T

Claimant wof internat

iples of custo

nt's recourse

ples, embod

nsibility to m

e not applica

ould not give

Claimant's r

ween States

ga Expert Rep

port, para. 62.

9.

ore, without

uld not be av

egree of certa

able to recov

ered as inves

estment Law

El Salvador

justification

simply has n

This fact rem

would not betional law

omary intern

e to these pri

died in the IL

make full rep

able to this a

e Claimant th

reliance on th

. For examp

port, § 10.3.c.

169

t an operating

vailable beca

ainty, and w

ver the amoun

stments with

w.513

provide ade

n or need to r

no right to co

mains unchan

e entitled to

national law

inciples to su

LC Draft Art

paration for a

arbitration an

he remedy it

hese legal au

ple, Article 3

g mine or a

ause such lo

would be pure

unts legitimat

h the Nationa

equate comp

resort to gen

ompensation

nged under in

compensatio

have no role

ustain its dam

ticles and the

an internatio

nd even if th

t seeks.

uthorities is

33(1) of the I

record of pr

osses are not

ely speculati

tely invested

al Investmen

pensation for

neral principl

n because it

nternational

on under gen

e to play in d

mages claim

e Chorzów F

onally wrong

hey were rele

misplaced b

ILC Draft A

oduction,

foreseeable

ive.512 Rath

d that Pac Ri

nt Office (ON

r an

les of

has no right

law.

neral princip

deciding this

m is futile in a

Factory case

gful act.514 B

evant to thes

because they

Articles expre

or

her,

im

NI)

ples

s

all

e,

Both

se

essly

3

suffered

the violat

to a Stat

noted tha

individua

Thus, Cla

follows t

3

internatio

standard

only one

515 ILC DrState actobilateral owhether aaccount. 516 Case CJudgment517 Factor518 El SalvheightenePoland's ceven again519 Memor

The oowed command cocircum

Simila56.

by a State an

tion of whic

te, which rig

at the harm s

al is never th

aimant incor

hat Claiman

Secon57.

onal law with

of compens

decision for

raft Articles,

or invoking Stor regional invand to what ex

Concerning tht (Sept. 13) at

ry at Chorzów

vador submitsed damages foconduct was nnst compensa

rial, paras. 65

bligations ofto another S

munity as a wontent of themstances of t

arly, the PCI

nd a private

h rights caus

hts may also

suffered by S

herefore iden

rrectly relies

nt is not entit

nd, Claimant

hout regard

ation under A

r its extraord

Art. 33, at 94tate responsibvestment protxtent non-Stat

he Factory at 28 (CL-225)

w (Germany v

s that the Choor an unlawfunot an expropation. See Fa

58-660. Claim

f the responsState, to sevewhole, depene internationathe breach.51

IJ in the Cho

entity. The

ses damages

o be infringe

States and in

ntical in kind

s on rules go

tled to comp

t suggests tha

to domestic

Articles 5, 6

dinary propo

4 (RL-79(bis))bility on its owtection agreemte entities are

Chorzów (Ge) (emphasis ad

v. Poland) at 2

orzów Factoryul expropriatiopriation but rctory at Chor

mant has inco

170

sible State seeral States, onding in partial obligation15

orzów Factor

PCIJ observ

s are always

ed by the sam

ndividuals is

d with that w

verning the

ensation on

at the Tribun

laws, or in t

6, and 8 of th

osition to app

). Subparagrawn account unments. Howee entitled to in

ermany v. Poldded).

28 (CL-225).

y case is also on. Memorialather a seizurrzów (German

orrectly cited t

et out in thisor to the intericular on then and on the

ry case disti

ved: "Rights

in a differen

me act."516 T

different: "T

which will be

relations bet

the basis of

nal apply gen

the alternativ

he Investmen

ply internatio

aph (2) recognder, for examever, those prinvoke State re

land), 1928 P

inapplicable l, para. 647. re of propertyny v. Poland)

to Article 9, i

s Part may bernational e character

inguished be

or interests

nt plane to r

The Court, in

The damage

e suffered by

tween States

f these legal a

neral princip

ve, due to a l

nt Law.519 C

onal law dire

gnizes the posmple, a humaimary rules wesponsibility o

P.C.I.J (Series

to support PaThe PCIJ em

y that could no) at 46 (CL-22

instead of Art

e

etween injuri

of an indivi

rights belon

n particular,

suffered by

y a State."517

s. It clearly

authorities.5

ples of

lacuna in the

Claimant cite

ectly withou

ssibility of a nan rights treatywill determineon their own

s A) No. 17,

ac Rim's claimmphasized that

ot be expropr25).

ticle 8.

ies

dual,

nging

an

7

18

e

es to

ut

non-y or e

m for t riated

reference

erroneou

Furtherm

Claimant

omission

unlawful

3

these inte

law is ap

in the po

would no

concessio

requirem

so. The F

lacked cr

520 In Wenbrought utreatment on the groapplicablemade a chConventioArticle 42Committeequates trthat whenalien to thapplying tARB/98/4521 Ayala/522 Memor

e to Salvador

us approach w

more, assumin

t has not stat

n that would

l expropriatio

In any58.

ernational la

plied, the Tr

sition it wou

ot as of Marc

on regardles

ments for an e

Feasibility S

rucial studies

na Hotels v. Eunder the UK-

provision andounds that intee law which inhoice on the aon. The Com2(1) but was oee decided thereaties with don a tribunal aphe domestic sythe investmen4, Decision on

/Fratti de Veg

rial, para. 655

ran law. Un

would also o

ng a lacuna

ted a claim u

impose an o

on.521

y event, Pac

aw principles

ribunal must

uld have enjo

ch 2008 (mu

s of Presiden

exploitation

Study remain

s, and Pac R

Egypt, the resp-Egypt BIT. Ed for committer alia the tribn its view wa

applicable lawmmittee made only tasked we tribunal hadomestic law. pplies the law ystem of this nt treaty. Seen Annulment,

ga Expert Rep

5.

nsurprisingly

offend the ag

exists, the T

under Article

obligation on

Rim would

s. According

t compensate

oyed but for

uch less some

nt Saca's alle

concession a

ned stalled an

Rim did not h

pondent brougEgypt had beeting an exprobunal had ma

as Egyptian law so it was com

clear that it wwith deciding id not exceeded

As the Commembodied in country." Th Wena Hotels, Feb. 5, 2002

port at 54.

171

y, Claimant h

greement of t

Tribunal need

es 5 or 6 and

n El Salvado

not be entitl

g to Claiman

e Pac Rim fo

El Salvador

e later date)

eged stateme

and did not h

nd unfinishe

have ownersh

ght an applicaen found liabpriation. Egy

anifestly exceaw. The ad hompelled to in

was not elaborif the tribunald its powers bmittee stated, a treaty to w

hus, the tribuns Ltd. v. Arab2, paras. 37-46

has misinterp

the parties to

d not resort t

d there was n

r to compen

led to damag

nt, whether S

or the damag

r's wrongful

have obtain

ent. Pac Rim

have any rea

ed, the Envir

hip rights ov

ation to annulble for breachiypt argued thaeeded its poweoc Committee

nterpret Articlrating precisel had manifesby applying th"[t]his treaty

which Egypt isnal had given

b Republic of E6 (Authority

preted this c

o apply Salv

to internation

no illegitima

nsate Claiman

ges even on t

Salvadoran o

ges it suffere

acts.522 How

ned an exploi

m had not m

asonable pro

ronmental Im

ver the land

l the award. ing the fair anat the award ser by failing te found that tle 42(1) of thee conclusions stly exceeded he BIT becau

y law and pracs a party it is nn effect to EgyEgypt, ICSID

y RL-159).

ase.520 Such

vadoran law.

nal law beca

ate act or

nt for an

the applicati

or internation

ed by placing

wever, Claim

itation

et the legal

ospect of doi

mpact Study

above its

The case wasnd equitable should be annto apply the the parties hade ICSID on the meaniits powers. T

use Egyptian lctice evidencenot applying ryptian laws byD Case No.

h an

ause

ion of

nal

g it

mant

ng

s

nulled

d not

ing of The law es rules y

proposed

areas (na

explorati

outcome

allowed t

under gen

C

3

Consultin

methods

errors Cl

submits t

as a basis

3

("FTI") t

breaches

claim of

3

analysis.

assumpti

523 Expert2013 (Am

d concession

amely Huacu

ion licenses.

of Claimant

to lapse or it

neral princip

C. Pac R

In this59.

ng used to qu

selected by

aimant's exp

that these err

s for awardin

1.

Claim60.

o provide a

by El Salva

$301 million

The a61.

Claimant in

ons:

In Cla"El D

t Report of Ho

mended Aug.

. Nor could

uco, Guaco a

Finally, non

t's careless m

ts failure to a

ples of intern

Rim's quant

s section, El

uantify Claim

Claimant's d

perts have m

rors render C

ng compensa

Valuation

mant has enga

quantificatio

ador. FTI ha

n.

ssumptions u

nstructed its

aimant's but-orado Projec

oward N. Ros16, 2013) ("F

d Claimant ha

and Pueblos)

ne of El Salv

management

acquire mini

national law,

um analysis

Salvador wi

mant's minin

damages exp

made in the im

Claimant's va

ation.

methods and

aged Howard

on of damag

as applied thr

underlying F

damages ex

-for scenarioct" and relate

sen and JenniFTI Expert Re

172

ave been leg

) that overlap

vador's alleg

of the Santa

ing rights to

, Claimant w

s is seriously

ill explain: (

ng interests i

perts are with

mplementatio

aluation enti

d assumption

d Rosen and

es sustained

ree methodo

FTI's calcula

xperts to prov

o, Pac Rim wed mineral e

fer Vanderhaeport"), para. 3

gally permitt

pped with th

ged bad acts

a Rita explor

Zamora/Cer

would not be

y flawed

(1) what valu

in El Salvad

hout legal ba

on of these m

irely useless

ns used by C

d Jennifer Va

d by Claiman

ologies result

ations are rea

vide a valua

would have dexploration l

art, FTI Consu3.6. See also

ted to hold n

he original ex

would have

ration licens

rro Colorado

e entitled to c

uation metho

dor; (2) why

asis; and (3)

methods. El

s such that it

Claimant's ex

anderhart of

nt as a result

ting in an am

ason enough

ation based o

developed anicenses.523 H

ulting, on Damo Memorial, p

new licenses

xpired

changed the

e that was

o. Thus, eve

compensatio

ods FTI

the valuation

what signifi

l Salvador

cannot be u

xperts

f FTI Consul

of the allege

mended total

h to reject its

on three fault

nd operated tHowever, it

mages, Mar. 2para. 662.

over

e

en

on.

n

ficant

used

lting

ed

l

s

ty

the is

28,

524 For exaMinita deFeasibilityClaimant 525 Expert("Navigan526 FTI Ex527 See Me528 MemorThe TribuknowledgTribunal tthat it woufrom seek

improhave cPac Rgranteexplorand Nit thenhave ealso cbeforethe apscenarexploirequirwith nconcluClaim

The vstateman earcorporagreesClaimacknothat thexploicondu

ample, the Feposit and, accy Study did nlacked surfac

t Report of Brnt Expert Rep

xpert Report,

emorial, para

rial, para. 298unal will recalge of the allegto survive theuld not seek c

king damages

oper to assumcommenced

Rim had not med an Exploiration licens

Nance Dulce n allowed to enabled it toontrary to Ce March 11, pproval of thrio, there is nitation concerements of Ano allegationudes "a reaso

mant's interes

aluation datement by Presrlier date worate nationals that an earl

mant, the corrowledged thahe processingitation would

ucted).528

easibility Studcording to Cla

not cover the Nce rights to th

rent C. Kaczmport"), para. 9

para. 2.1.

s. 665-666.

8. Claimant nll that in the j

ged measures e abuse of procompensationfor measures

me that as of immediately

met (and waitation Conceses, Claimandeposits), haexpire (Sant apply for a

Claimant's ass2008 because EIA that ono moratoriuession applic

Article 37.2 an of Governmonably inforsts in the Min

e is the day iident Saca.52

ould have beelity) when itlier date shorect date wouat the Ministg of environd be halted u

dy had been paimant, the SoNueva Esperae entire area o

marek and Kir3 (emphasis a

now admits thurisdictional until March 2

ocess objection for measuress implemented

173

f the valuatioy. This assus unlikely toession for Elt could not lad not explota Rita) or nlicense (Zamsertion that ise it capture

occurred prioum on metalcation is refuand Claimanment interferrmed buyer ineral Deposi

immediately26 This dateen appropriat requested auld be used.uld be May ters of Econonmental permuntil the Stra

put on hold inouth Minita aanza, Coyoterof the request

ran P. Sequeiradded).

hat it was infophase of this

2008. It is clen. To avoid hs taken prior d before that

on date constumption is fao meet) the lel Dorado.524

legally posseored another never acquiremora/Cerro Cit is not seeks losses arisi

or to this datllic mining, tused for nonnt's only validrence. Undeis unlikely toits."525

y preceding te is wrong. Eate such as 2an environme. Even using7, 2007 (i.e.omy and the

mits for metaategic Enviro

ndefinitely andand Balsamo dra or Nance Dted concessio

ra, Navigant

ormed of the marbitration, C

ear now that Chaving its clato March 200date.

truction of thactually incoegal requirem With respe

ess certain lilicense area

ed mining rigColorado). Tking damageing from the

te. Under thethe EIA is un

n-complianced exploratioer this scenaro ascribe any

the March 1Even Claima2004 (prior toental permitg the events ., when Claim Environmen

allic mining onmental As

d would havedeposits. But

Dulce depositson.

Consulting In

moratorium oClaimant profClaimant hid

aim dismissed08. Thus, Cla

he mine couorrect becausments to be

ect to the icenses (Coya it did hold tghts that woThis scenari

es for breache alleged dele correct butnder reviewe with the legn license exprio, Navigany value to

1, 2008 ant implies tho its change .527 El Salvaas describedmant nt announceexploration ssessment w

e only coveredt the incompls. Further,

nc., Jan. 10, 2

on May 7, 200fessed to havethis fact from

d, Claimant staimant is barr

uld se

yotera that uld o is

hes ay in t-for , the gal pires

nt

hat of

ador d by

ed and

was

d the lete

2014

07. e no

m the tated red

3

assumpti

First, it u

reserves

variants o

South Mi

comparab

approach

propertie

following

529 FTI Ex530 Ayala/531 Memor532 The Monly inclu533 FTI Ex534 FTI Ex

The stto assuarbitrathis arcompe

Claim62.

ons. FTI ap

uses the Disc

for the Mini

of market-ba

inita, Nance

ble public co

h to estimate

es which hav

g section, the

xpert Report,

/Fratti de Veg

rial, para. 669

Minita deposit ude resources

xpert Report,

xpert Report,

tandard of coume that FMations. Claimrbitration is bensation is li

mant's experts

pplies an Inco

counted Cash

ita deposit re

ased method

Dulce, Coy

ompanies an

the value of

ve no provab

ese approach

para. 2.1.

ga Expert Rep

9.

is the only de.

para. 6.24.

para. 6.25.

ompensationMV is the relmant's intellbeing conduimited to 12

s proceed to

ome-based a

h Flow (DCF

eported in th

ds to estimate

yotera and Nu

nd transaction

f the Santa R

le mineral re

hes are not a

port at 51.

eposit that con

174

n is fair markevant standaectual shortc

ucted under t5% of the va

calculate da

approach and

F) method (a

he Pre-Feasib

e the value o

ueva Espera

ns.533 FTI a

Rita and Zam

esources.534

appropriate i

ntains both re

ket value ("Fard because icut is erronethe laws of Ealue declared

amages base

d two Marke

an income-b

bility Study.5

of the resour

anza deposits

also uses the

mora/Cerro C

However, a

n this case.

eserves and re

FMV").529 Cit has been u

eous becauseEl Salvador. d to tax auth

ed on these e

et-based app

ased approa

532 Second,

rces in the M

s on the basi

comparable

Colorado exp

as will be ex

esources. The

Claimant appused in othere it ignores th As such,

horities.530

erroneous

proaches.531

ach) to value

FTI applies

Minita, Balsam

is of allegedl

e transactions

ploration

xplained in th

e other depos

pears r hat

the

two

mo,

ly

s

he

its

3

concern:5

approach

3

approach

more on

Rosen an

because t

date may

reasoning

3

Valuation

Petroleum

dependin

standards

value exp

classifica

535 El Salvturned int536 FTI Ex537 FTI Ex538 FTI Ex

2.

In its r63.

535 (1) Incom

h. However,

The co64.

h determines

an asset than

nd Vanderha

the costs inc

y not reflect t

g goes again

In its r65.

n of Mineral

m ("CIMVA

ng on the stag

s, on page 24

ploration, an

ation of the B

vador notes thto an operatin

xpert Report,

xpert Report,

xpert Report,

Pac Rim ucase

a) FT

report, FTI e

me-based app

it only emp

ost approach

value "base

n it would co

art, a cost-ba

curred by Pac

the business'

nst the valuat

report, FTI s

l Properties p

AL").538 The

ge of develo

4 of the FTI

nd in some ca

Balsamo, So

hat valuation ng mine.

para. 6.18(iii

para. 6.15.

para. 6.20.

used the wron

TI's analysis i

explains that

proach, (2) M

ploys the firs

h is a kind of

ed on the prin

ost them to c

sed approach

c Rim to adv

' ability to ge

tion standard

states that it

produced by

CIMVAL s

opment. The

report clearl

ases, minera

outh Minita, N

of a going co

).

175

ng valuation

ignores a thi

t there are th

Market-based

t two approa

f asset-based

nciple that a

construct the

h might prod

vance the Mi

enerate futur

ds FTI purpo

has referred

y the Canadia

standards rec

e summary c

ly indicates

al resource p

Nance Dulc

ncern is a fal

n methods to

ird valuation

hree main ap

d approach,

aches.

d approach.

a notional pu

e asset thems

duce a less re

ineral Prope

re cash flow

orts to have f

d to the Stand

an Institute o

commend va

chart, replica

that the cost

roperties. D

e, Coyotera

se premise sin

o calculate da

n method

pproaches to

and (3) Cos

As FTI exp

urchaser wou

selves."536 A

eliable resul

erties before

ws.537 Howev

followed.

dards and Gu

of Mining, M

aluation appr

ated from the

t approach sh

Despite FTI's

and Nueva E

nce none of th

amages in th

value a goin

st-based

lains, the co

uld not spend

According to

lt in this case

the valuatio

ver, this

uidelines for

Metallurgy a

roaches

e CIMVAL

hould be use

s own

Esperanza

he deposits w

his

ng

st

d

o

e

n

r

and

ed to

were

deposits

as "explo

mining in

3

of Navig

compens

which ha

"most oft

a comme

these dep

3

amounts

explained

tax autho

if there is

to the tax

FTI's fail

539 El Salvmerely poagree with540 See Na541 Naviga542 Naviga543 Ayala/

as "mineral

oration prope

nterests.539

By co66.

ant Consulti

ation, the co

ave no define

ften sold or p

ercial discov

posits is a sig

Simila67.

invested, the

d, the Expro

orities in assi

s no tax decl

x authorities.

lure to apply

vador is not suoints out the inh FTI's classif

avigant Exper

ant Expert Re

ant Expert Re

/Fratti de Veg

resource pro

erties" under

ontrast, El Sa

ing ("Naviga

ost-approach

ed resources

purchased for

ery is ultima

gnificant fac

arly, by prov

e cost appro

priation Law

igning the am

laration). Th

.543 Given th

y this third m

uggesting thanconsistency fication of the

rt Report, para

eport, para. 16

eport, para. 17

ga Expert Rep

operties" and

r CIMVAL,

alvador's valu

ant"), have c

h would be b

.540 Navigan

r no upfront

ately made."

ctor affecting

viding comp

ach is thereb

w uses the ow

mount of com

he property h

hat Salvador

method of val

at the CIMVAin Claimant's

e deposits and

a. 161. See a

61, n.166.

7.

port at 51.

176

d Santa Rita

FTI fails to

uation exper

oncluded tha

etter suited i

nt observes t

consideratio

541 This is b

g their value

ensation for

by endorsed

wner's estim

mpensation

holder is enti

ran law is the

luation is a m

AL Standards s valuation apd properties.

also Ripinsky

and Zamora

apply the co

rts, Brent Ka

at should Cl

in this case f

that early ex

on, but rathe

because "[t]h

."542

r an expropri

under Salva

mate of the pr

due (or the o

itled to up to

e applicable

major error.

should be apppproach. Nor

& Williams a

a/Cerro Colo

ost approach

aczmarek an

laimant be en

for the explo

xploration pr

er contingent

he early, unc

iated investm

adoran law.

roperty's valu

original cost

o 125% of th

law in these

plied in this ar does El Salv

at 135-136 (R

orado proper

h to any of its

nd Kiran Seq

ntitled to

oration prope

roperties are

t considerati

certain stage

ment based o

As previous

ue presented

t of the prope

he value decl

e proceeding

arbitration butvador necessa

RL-152).

rties

s

queira

erties

ion if

of

on the

sly

d to

erty

lared

gs,

t rily

3

applies to

mineral r

As the ap

including

premised

establish

principle

3

cash flow

sum of fu

the prese

assumpti

and risks

of the DC

544 Ripinsk545 ILC Dr

The D68.

o value the M

reserves and

pplicable law

g the amount

d on a differe

the amount

s of internat

Incom69.

ws expected

uture cash fl

ent value by u

ons and subj

s (e.g., techn

CF approach

difficuestablanalyzwhichrates, intereadopt althouthere h

ky & William

raft Articles,

b) Th

Discounted C

Minita depos

comparable

w in this arbi

t of compens

ent standard

of compens

tional law wh

me-based app

to be genera

ows projecte

using a disco

jective judgm

ical, financia

h:

ulties can arilish capital vzes a wide rah have a signcurrency flust rates and oa cautious a

ugh income-bhas been a d

ms at 195 (RL

Comment (26

he basis of FT

Cash Flow (D

sit. FTI uses

es approache

itration, Salv

sation. Thus

of compens

ation in this

hich Pac Rim

proaches, suc

ated in the fu

ed to a speci

ount rate.544

ments must b

al and geopo

ise in the appvalue in the cange of inhenificant impauctuations, inother comm

approach to tbased metho

decided prefe

L-152).

6) to Article 3

177

TI's DCF cal

DCF) Appro

s the DCF m

es to calculat

vadoran law

s, the applica

ation (i.e., fa

arbitration.

m incorrectly

ch as the DC

uture. Simpl

ific period of

As a forwa

be made abo

olitical). Th

plication of compensatiorently specu

act upon the nflation figurercial risks).the use of thods have beeerence for as

36, at 103-104

lculation lac

ach is one o

method to qua

te the minera

determines

ation of these

air market va

FTI's propo

y claims are

CF method, r

ly stated, the

f time and th

ard-looking v

out future rev

e ILC Draft

the DCF meon context. Tulative elemeoutcome (e.

ures, commod. This has le

he method. Hen accepted isset-based m

4 (RL-79(bis)

cks foundatio

f the two me

antify the va

al resources

all aspects o

e methods, w

alue), is inap

osed method

relevant in t

reflect the pr

e DCF metho

hen discount

valuation too

venues, mar

Articles rec

ethod to The method ents, some o.g. discount dity prices, ed tribunals Hence, in principle,

methods.545

)) (emphasis

on

ethods FTI

alue of the

in the depos

of this case,

which are

ppropriate to

ds also fail un

this case.

resent worth

od calculates

ts them back

ol, a number

rket conditio

ognize the li

f

to

added).

sit.

o

nder

h of

s the

k to

r of

ons

imits

A valuati

and may

tribunal m

3

earnings

generated

must be a

Contrary

valuing "

has been

3

interferen 546 See e.g255, at 25certainty, America),cessans mFinance vrules of thdamages c("Tribunaelements.547 See als548 Memor549 World Committe6(i) (Authproven reexplains: income-prowner is aparticular greatly exis not applegitimate

ion based on

be considere

must not awa

Tribun70.

potential.547

d by the DCF

a going conc

y to Claimant

"both going c

endorsed by

In Me71.

nces by loca

g., Rudloff Ca58 (Authority

and cannot b, PCA Case II

must be the dirv. Iran, Awardhe law of intercan be award

als have been ").

so Ripinsky &

rial, para. 670

Bank, Legal ee and Guidelhority RL-16cord of profit"This methodroducing capaa function of tcaution shou

xaggerate theipropriate for spely accrue und

n numerous u

ed overly sp

ard compens

nals have tre

7 Without a

F approach a

cern to estab

t's assertion,

concerns and

y the World

etalclad v. M

al governmen

ase (Merits), Uy RL-160) ("Dbe recovered fI U.N.R.I.A.Arect fruit of thd, July 14, 19rnational resped."); ILC Drreluctant to p

& Williams at

0 (emphasis a

Framework flines on the Tr62) (stating thtability, on thd is regarded aacity becausethe cash that

uld be observeir claims of copeculative or der the laws a

unsupported

peculative. It

sation for sp

eated historic

record of pa

are much too

lish future p

the DCF m

d greenfield

Bank FDI G

Mexico, for ex

nts with the c

US-VenezuelaDamages to bfor an uncertaA. 1079, Awahe contract an987, 15 Iran-Uponsibility of raft Articles, Cprovide compe

t 211 (RL-152

added).

for the TreatmTreatment of Fhat compensate basis of the as appropriate

e it recognizesthe enterpriseed in applyingompensation indeterminat

and regulation

178

d assumption

t is well esta

peculative da

cal profits as

ast performan

o speculative

profits with a

ethod is not

investments

Guidelines549

xample, the t

claimant's ef

a Mixed Claimbe recoverableain loss."); Shard, July 24, 1nd not too remUS CTR 189,

States is that Comment (27ensation for c

2).

ment of ForeigForeign Direction may be ddiscounted c

e for valuing s that the econe can be expeg this methodfor lost futurete damage, orns of the host

ns lacks the r

ablished in in

amages.546

s the best ev

nce or curren

e and uncert

any reasonab

widely acce

s."548 This n

9 and interna

tribunal foun

fforts to esta

ms Commisse must be shoufeldt claim (

1930, at 1099 mote or specul

para. 238 (CLt no reparation7) to Article 3claims with in

gn Investmenct Investment:determined "focash flow valu

enterprises wnomic value octed to produ

d as experience profits. Comr for alleged pcountry."

requisite leve

nternational

vidence of a b

nt performan

tain. Accord

ble degree of

epted in inter

notion of a "g

ational jurisp

nd the Respo

ablish a haza

ion, (1903-5)own with a rea(Guatemala, (Authority R

lative."); AmoL-228) ("Onen for speculat36, at 98 (RL-nherently spec

nt, Report to th: Volume II (1for a going coue"). Page 26with a firmly eof such an ent

uce in future. ce shows that mpensation uprofits which

el of certaint

law that a

business' fut

nce, the resu

dingly, a bus

f certainty.

rnational law

going concer

prudence.

ondent liable

ardous waste

) IX U.N.R.I.Aasonable degrUnited StatesRL-161) ("lucoco Internatioe of the best stive or uncert-79(bis)) culative

he Developm1992) at 42, pncern with a

6 of the Reporestablished terprise to itsHowever, investors ten

under this metcannot

ty

ture

ults

iness

w for

rn"

e for

e

A.A. ree of s of crum onal ettled

tain

ent para.

rt

nd to thod

landfill.

analysis o

tribunal u

lost profi

never ope

3

a going c

market v

method o

taking."5

the future

report pro

economic

the time

tribunal c

3

Moldova

because i

not appro

revenues

550 Metalc551 BilounUNCITRA

The tribuna

of future pro

ultimately aw

its. It conclu

erative and a

Likew72.

concern, the

alue, which

of valuation

51 However

e profits of t

ojecting exp

c forecast of

of the expro

concluded th

Most 73.

case. The tr

it never open

opriate for a

has not bee

clad v. Mexico

e and MarineAL, Award on

l considered

ofits and (2)

warded dama

uded that the

any award ba

wise, the Bilo

most accura

in its nature

is often used

r, the panel d

the company

pected profits

f profits but r

priation, the

here was no b

recently, thi

ribunal in tha

ned or gener

business tha

n demonstra

o, para. 121 (R

e Drive Compn Compensat

d alternative

the value of

ages based o

e DCF analy

ased on futu

oune tribuna

ate measure o

e takes into a

d to calculate

determined th

y." The claim

s of the inve

rather a proj

e project rem

basis to calc

s notion of a

at case rejec

rated any rev

at never oper

ated. Use of

RL-143).

plex Ltd. v. Ghtion and Costs

179

methods of c

f Metalclad's

on the amoun

ysis was not a

ure profits wo

l noted that

of value of th

account futur

e the worth o

hat the claim

mant had sub

estment. The

ection inten

mained uncom

culate future

a going conc

cted a DCF c

venue. The p

rated and wh

f the DCF me

hana Investms, June 30, 19

compensatio

s actual inve

nts invested

appropriate b

ould be who

"[n]ormally,

he expropria

re profits. T

of the enterp

mant had not

bmitted a co

e tribunal did

nded to encou

mpleted and

profits.

cern was con

calculation to

panel stated:

here a satisfa

ethodology i

ments Centre a990, at 228 (A

on based on:

stments in th

in the proje

because "the

olly speculati

, in cases of

ated property

The discounte

prise at the ti

t provided "r

ontemporane

d not consid

urage invest

inoperative

nfirmed in th

o value an ai

: "the DCF m

actory basis

in these circ

and the GoverAuthority RL

: (1) a DCF

he landfill. T

ct rather tha

e landfill wa

ive."550

f expropriatio

y is its fair

ed cash flow

ime of the

realistic proo

ous financia

der the report

ors. Further

. Therefore,

he Arif v.

irport store

methodology

for its proje

umstances g

rnment of GhL-163).

The

an for

as

on of

w

of of

al

t an

r, at

, the

y is

cted

gives

ana,

an excess

damages

3

other min

Dolbear,

mines or

or operat

3

exploitat

practical

world:

552 Mr. Frpara. 576 553 Behre 554 Behre 555 Behre 556 Behre

sively specu

on a wasted

It is w74.

ning project

observe tha

advanced an

ting phases.5

In fac75.

ion concessi

standpoint,

There

No pr

Neitheeven b

The paccura

The mnot ye

Contr

Enviro

ranck Charles(Authority R

Dolbear Expe

Dolbear Expe

Dolbear Expe

Dolbear Expe

ulative outcom

d cost basis.

without dispu

for that mat

t during the

ny project to

553

t, the El Dor

ion, without

the project w

was no infr

re-operationa

er the procesbegun to be b

roposed minacy;554

mine plan waet been starte

act bids had

onmental ris

s Arif v. RepuRL-164).

ert Report, pa

ert Report, pa

ert Report, pa

ert Report, pa

me."552 Con

ute that Pac R

tter, into ope

relevant per

o the comple

rado project

a Feasibility

was not even

rastructure (e

al work had b

ssing plant nbuilt;

ning process

as still at the ed;555

not been pro

sks had not b

blic of Moldo

ara. 89.

aras. 32-33.

aras. 32-33.

aras. 32-33.

180

nsequently, t

Rim never b

eration. El S

riod (or any t

etion of a fea

was nowher

y Study, and

n fully devel

e.g. roads, br

been comple

nor project in

and costs w

pre-feasibili

ocured;556

been adequat

ova, ICSID C

the tribunal c

rought the E

Salvador's M

time since),

asibility stud

re near opera

d without sur

loped on pap

ridges, camp

eted (e.g. rem

nfrastructure

were not stud

ity level and

tely studied;

ase No. ARB

calculated th

El Dorado pr

Mining expert

Pac Rim nev

dy, let alone t

ational witho

rface area rig

per, much les

p) on the site

moval of ove

e (e.g. tailing

died to a high

d detailed en

;557 and

B/11/23, Awar

he claimant's

roject, or any

ts, Behre

ver operated

the construc

out a valid

ghts. From a

ss in the real

e;

erburden);

gs ponds) ha

h degree of

ngineering ha

rd, Apr. 8, 20

s

y

d any

ction

a

l

ad

ad

013

Thus, not

of develo

certainty

3

based on

with esta

future pro

with a re

no record

in SPP v.

in its infa

the SPP a

DCF met

insufficie

tribunal f

557 Behre 558 Behre 559 Asian AJune 27, 1560 SoutheAward on561 Wena H(Authorit

Claim

t only did Pa

opment that l

.

Tribun76.

inadequate

ablishing this

ofitability of

asonable deg

ds of profits,

. Egypt deem

ancy and had

and Metalcla

thod on the g

ent basis to e

further quest

Dolbear Expe

Dolbear Expe

Agricultural P1990, para. 10

ern Pacific Prn the Merits, M

Hotels Limitety RL-167).

mant had not

ac Rim have

lost profits c

nals have dis

economic da

s proposition

f the shrimp

gree of certa

, but also inc

med the DCF

d very little h

ad decisions

grounds that

establish lost

tioned wheth

ert Report, § 7

ert Report, pa

Products Ltd.03 (Authority

roperties (MidMay 20, 1992

ed v. Arab Rep

finalized fin

e no record o

cannot be pro

splayed a sim

ata and unpe

n. In AAPL,

farm could

ainty because

curring losse

F method ina

history on w

s, the tribuna

t the claiman

t profits and

her Wena ha

7.

ara. 91.

. v. Republic oy RL-165).

ddle East) Lim2, para. 188 (A

public of Egyp

181

nancing arran

of earnings, b

ojected unde

milar relucta

erformed wo

the tribunal

be establishe

e the compan

es and under-

appropriate b

which to base

al in the Wen

nt's 18-month

the claiman

ad sufficient

of Sri Lanka,

mited v. Arab Authority RL

ypt, ICSID Ca

ngements.558

but the proje

er the DCF m

ance to order

ork. AAPL v

l held that ne

ed under the

ny was "not

-capitalized.

because the h

e its projecte

na Hotels cas

h period of o

nt had not co

funds to fina

ICSID Case

Republic of EL-166).

ase No. ARB/

8

ect was at su

method with

r damages fo

v. Sri Lanka

either the go

e claimant's D

only newly

."559 Similar

hotel develo

ed revenues.5

se561 decline

operations pr

ompleted ren

ance this wo

No. ARB/87/

Egypt, Case N

/98/4, Award,

uch an early s

h any degree

or lost profit

is often cred

odwill nor th

DCF project

formed and

rly, the tribu

opment was s

560 Followin

ed to apply th

rovided an

novations. T

ork.

/3, Final Awa

No. ARB/84/3

, Dec. 8, 2000

stage

of

ts

dited

he

tion

with

unal

still

ng

he

The

ard,

3,

0

3

damages

for lost p

financial

standards

required

sharehold

purpose o

award lo

3

implemen

Study ("P

amended

economic

sufficient

engineeri

valuation

using SR

562 AutopiARB/00/5563 Behre

The A77.

for lost prof

profits, the cl

plan of the

s for awardin

adjustments

der flows. F

of the agreem

st profits in t

Becau78.

nts the DCF

PFS") compl

d estimated v

c analyses re

t economic b

ing study,563

n uncertain a

RK's Pre-Fea

we woprojecof accindicaexperttypica

ista Concesion5, Award, Sep

Dolbear Expe

Autopista cas

fits that cann

laimant subm

concession a

ng lost profit

s if certain ev

Further, the c

ment which

the absence

use Pac Rim

approach ba

leted by SRK

value of $67.

ejected in the

basis to appl

3 to estimate

and inherentl

sibility Stud

ould note thactions. For ecuracy of theating a broadt report, Behally have an

nada de Venept. 23, 2003 (A

ert Report, pa

se provides a

not be justifi

mitted projec

agreement.

ts under Ven

vents occurre

claimant had

was to const

of a sufficie

never mana

ased on the f

K Consulting

.5-80.6 milli

e Biloune an

ly the DCF m

the present

ly speculativ

dy:

at it adds conexample, SReir capital cod range of pohre Dolbear aestimation a

ezuela, C.A. vAuthority RL

aras. 21-23.

182

a further exa

ied by econo

ctions of cas

The tribunal

nezuelan law

ed and could

d no record o

truct a bridg

ent degree of

aged to bring

financial mo

g in January

ion for the M

nd Autopista

method. The

value of futu

ve. Indeed, N

nsiderable unRK notes in thost estimate iotential valuealso notes thaccuracy of +

v. Bolivarian RL-168).

ample of a tri

omic projecti

sh flows incl

l found this e

w and interna

d not guaran

of profits and

ge. Therefor

f certainty.

g the mine in

odel containe

y 2005. Usin

Minita reserv

cases, the P

e use of the P

ure cash flow

Navigant exp

ncertainty totheir report this +/- 25 perces for the Rehat pre-feasib+/- 25 to 30 p

Republic of V

ibunal unwil

ions.562 To

luded in the

evidence fai

ational law b

ntee projected

d had not com

re, the tribun

nto operation

ed in the Pre

ng the PFS, F

ves. Howeve

PFS does not

PFS, in the n

ws renders C

plains the in

o the hat the levelcent, eserves. In ibility studiespercent.

Venezuela, IC

lling to awar

support its c

economic-

iled to meet t

because it

d amounts o

mpleted the

nal declined t

n, FTI

e-Feasibility

FTI arrives a

er, like the

t provide a

nature of a b

Claimant's

nherent limits

l

its s

SID Case No

rd

claim

the

of

main

to

at its

basic

s of

o.

Thus, the

through t

3

where a l

Tecmed,

million) a

the inves

return on

incongru

(approxim

the large

than US$

of FTI's c

3

Navigant

valuation

564 Naviga565 Tecmed566 Wena v567 See NOMoreoverClaimant.MINEC R

Givenfeasibthan thfeasib

e Pre-feasibi

the DCF met

Invest79.

large dispari

the tribunal

and the sum

stor's estimat

n the Claiman

uence betwee

mately US$8

difference b

$300 million

calculations.

Navig80.

t performed

n of the Mini

ant Expert Re

d v. Mexico, p

v. Egypt, Awa

OA, para. 128r, less than $3 See e.g., pag

Resolutions N

n the uncertability study, Fhe DCF valu

bility studies

lity Study pr

thod.

tment tribun

ity exists bet

viewed the v

s sought bas

te was "likel

nt's investme

en the amoun

8.8 million)

between the

n claimed in

.

gant's analys

a reasonable

ita reserves.

eport, para. 16

para. 186 (CL

ard at 918-91

8(2). Howeve34 million wage 4 of exhibi

No. 368-MR (J

ainty of the pFTI's DCF vuation of othhave been c

rovides a les

nals have also

tween the am

vast differen

sed on its DC

y to be incon

ent."565 Sim

nt requested

as one of the

US$77 milli

damages rai

is casts furth

eness check

Applying F

64.

L-197).

9 (RL-167).

er, Claimant hs registered wit C-12 showiJuly 30, 2008

183

projections cvaluation is inher gold mincompleted.56

ss certain eco

o viewed wit

mounts inves

nce in the am

CF calculatio

nsistent with

milarly, in We

(GB£ 45.7 m

e reasons to

ion allegedly

ises legitima

her doubt as

of FTI's DC

FTI's 12% co

has not providwith El Salvading total amou

8) and No. 387

ontained in tnherently lees for which

64

onomic basi

th skepticism

sted and prof

mount invest

on (US$52 m

h the legitim

Wena Hotels th

million) and

deny an awa

y invested by

ate concerns

to the reliab

CF calculatio

ost of capital

ded any evidedor's Nationalunts registere7-MR (Aug.

the pre-ss reliable

h detailed

s to generate

m claims for

fits allegedly

ted by the cla

million) as an

mate and genu

he tribunal r

d Wena's stat

ard of lost pr

y Claimant56

as to the spe

bility of FTI'

n by compar

l to discount

ence to suppol Investment ed as of Septe13, 2008) (C-

e lost profits

r lost profits

y foregone.

aimant (US$

n indication

uine estimat

referred to th

ted investme

rofits.566 He

67 and the m

eculative nat

's DCF valua

ring it to SR

t SRK's net

ort this assertiOffice (ONI)

ember 5, 2008-12).

s

In

$4

that

es on

he

ent

ere

more

ture

ation.

RK's

on. by

8.

present v

values th

This expo

Navigant

valuation

3

its damag

basis is c

3

Rim's oth

publicly

(using th

value the

concessio

deposits

568 Naviga569 After aNavigant companie570 Naviga

value of $ 16

he Minita res

accordbetweMarchtime pReservmarke

onential incr

t concludes t

n conclusion

In the81.

ges, Pac Rim

contrary not

As pre82.

her mining in

traded price

e price of a r

e resources in

on applicatio

in the new e

ant Expert Re

analyzing the finds that the

es increased b

ant Expert Re

6.9 million, r

serves within

ding to FTI, een 676 perch 2008 even period. Thusves has increet changes.56

rease in valu

that there is

."570

absence of

m's claim for

only to Salv

c) FTval

eviously men

nterests: (1)

of a compar

recently pur

n the Minita

on area (the B

exploration li

eport, para. 16

increase in ve index of goldy just 99%.

eport, para. 16

results in an

n a range of $

the value ofcent and 826

though the ps, according eased seven f

68

ue is not expl

no "realistic

a history of

lost profits

vadoran law b

TI's market-blue

ntioned, FTI

the Compar

rable compa

chased comp

a deposit, the

Balsamo, So

icense areas

67.

alue of publicd companies

69.

184

implied valu

$ 67.5 millio

f the Minita R6 percent betwproject had nto FTI, the vfold in a per

lained by inc

c market fact

earnings or

is not reason

but also inte

based method

I employs tw

rable Trading

any) and the

parable com

e late-discov

outh Minita a

that overlap

cly traded golincreased 124

ue of $ 8.7 m

on to $ 80.6

Reserves haween Januarnot advancedvalue of the riod of 3 yea

creased gold

tors which ca

credible eco

nably certain

ernational law

ds do not pro

wo market-b

g Multiples A

Comparable

mpany). FTI

ered deposit

and Nueva E

pped with th

ld companies 4% while the

million. By c

million. Na

as increased ry 2005 and d during thisMinita

ars due to

d prices.569 T

an explain F

onomic analy

n. To award

w.

ovide accura

ased approac

Approach (u

e Transaction

uses both ap

ts located in

Esperanza de

e expired lic

over the samindex of gold

contrast, FTI

avigant obser

s

Therefore,

FTI's inflated

yses to suppo

d damages on

ate estimates

ches to valu

using the

ns Approach

pproaches to

the exploita

eposits), and

cense areas (

me period, d and silver

I

rves:

d

ort

n this

s of

e Pac

h

o

ation

d the

(the

Nance D

companie

propertie

3

similar b

In some c

transactio

comparab

flows, bo

approxim

3

multiple

resource

Esperanz

company

gold equi

Colorado

basis.

571 RipinskCompensato Internaindicationownership572 Ripinsk573 Ripinsk

ulce and Co

es, FTI uses

es (Santa Rit

Marke83.

usinesses, bu

circumstanc

ons approach

ble assets, st

ook value or

mation of val

In this84.

based on a t

deposits (th

za deposits).

y to value the

ivalent resou

o), it identifie

ky & Williamation Standar

ational Glossan … by using p interests, se

ky & William

ky & William

yotera depos

the Compar

a and Zamor

et-based app

usiness own

es, the multi

hes) can be u

tandardized t

revenues."57

lue since no

s case, FTI id

transaction p

e Minita, Na

Under the C

e resources f

urces. For th

ed seven com

ms at 193 (RLrds, Valuationary of Busines

one or more mcurities, or in

ms at 213 (RL

ms at 214 (RL

sits). Unabl

rable Transa

ra/Cerro Col

proaches dete

nership intere

iples method

used to estim

through the

72 However

two busines

dentified sev

price per oun

ance Dulce,

Comparable

for each depo

he exploratio

mpanies and

L-152). See aln Methods andss Valuation Tmethods that

ntangible asse

L-152).

L-152).

185

e to identify

ctions Appro

lorado) whic

ermine the v

ests, or secur

d (such as th

mate the valu

use of a com

r, the multipl

sses are ident

ven compara

nce of gold e

Coyotera, B

Trading Mu

osit on the b

on properties

d applied a m

lso Mark Kand Expert EvidTerms ("[a] gcompare the

ets that have b

y any compar

oach alone t

ch lack prov

value of a bu

rities that are

e comparabl

ue of a busin

mmon variab

les method p

tical.573

able transact

equivalent re

Balsamo, Sou

ultiples Appr

basis of an en

s (Santa Rita

multiple base

ntor, Valuatiodence 10 (200general way of

subject to simbeen sold.").

rable publicl

to value the e

en resources

usiness by co

e sold on the

le trading an

ness from the

ble such as e

provides only

tions and has

esources for t

uth Minita an

roach, FTI f

nterprise val

a and Zamor

ed on a price

on for Arbitra08) (Authoritf determiningmilar business

ly traded

exploration

s.

omparing it t

e open mark

nd comparab

e "prices of

arnings, cash

y an

s determined

the mineral

nd Nueva

found one

lue per ounc

ra/Cerro

e per hectare

ation: ty RL-169) cig a value ses, business

to

ket.571

ble

h

d a

e of

iting

3

sufficient

of differe

mineral p

structure

crucial to

3

State Res

3

approach

574 KantorWilliams that no twConsequeshe wishe575 ILC Dr576 ThomaInvestmen

Valua85.

tly similar to

ences in char

projects or p

and timing.

o the reliabil

This l86.

sponsibility:

WheretradedWhereare nodeterm

Schol87.

hes:

First, uniquSecontransainvolvcompaintereinstabthe tim

r at 119 (RL-1note "that mu

wo firms are idently, a biasedes to arrive at.

raft Articles,

as W. Wälde ant Law, Trans

ation based o

o the assets u

racteristics a

roperties suc

Indeed, "th

ity of the me

imitation ha

e the propertd on an opene the propertot the subjectmination of v

arly commen

almost all ofe assets for w

ndly, for the actions in othving compararable; adjusst premium,

bility makes tming of the e

169). Citing tultiples are eadentical, decidd analyst can c." Ripinsky &

Comment (22

and Borzu Sanational Disp

on comparab

used as comp

among the as

ch as differe

he choice of

ethod."574

as been expla

ty in question market, valty interests it of frequentvalue is mor

ntary is equa

f the recent awhich there same reason

her countriesrable assets astment for quand risk arethe market vexpropriator

to the observaasy to misuse ding which fichoose a grou

& Williams at

2) to Art. 36,

abahi, Compenpute Managem

186

bles is only re

parables and

ssets. Sever

ent markets, g

the compara

ained in the c

on or comparlue is more rin question at or recent me difficult.57

ally cautious

and prospectis no establi

n, proxies fors by other coare never likuality, time, e inevitable. value dependy events…"5

ations of Profor manipulat

irms are compup of comparat 214-215 (RL

at 103 (RL-7

nsation, Damment, Feb. 10

eliable if the

d if it is feasi

al factors ca

geographic l

able compan

commentary

rable propertreadily determare unique or

market transa75

s about mark

tive takings ished comper market val

ompanies at kely to be ful

location, str Thirdly, ma

dent to a larg576

fessor Aswathte when compparable involvable firms thaL-152).

79(bis)).

mages and Val, 2007, at 16

e asset being

ible to adjus

an affect the

location, siz

ny and the 'm

y to the ILC D

ty is freely rmined…. r unusual…o

action, the

ket-based va

involve etitive markelue, such as other times lly rategic arket ge extent upo

h Damordaranparable firms ves a degree oat support a v

luation in Int(Authority R

g valued is

st for the effe

comparabili

e, capital

market multip

Draft Article

or

luation

et.

on

n, Ripinsky aare used. Givof subjectivity

valuation that

ternational RL-170).

ects

ity of

ple' is

es on

and ven y. he or

3

based val

Claims T

for the pu

submitted

based on

companie

performa

rejected t

same ind

3

accepted

rejected b

found tha

or any pu

comparab

that it "[h

conseque

due to CM

577 PhelpsNo. 217-9578 CMS v579 CMS v

Intern88.

luations to e

Tribunal ("IU

urpose of ma

d forecasts o

comparison

es. It also co

ance with the

this evidence

dustry was no

Simila89.

by tribunals

both the com

at the shares

ublic market

ble. With re

has] not been

ently, "it wou

MS on that b

s Dodge Corp99-2, 10 Iran-

v. Argentina, A

v. Argentina, A

national tribu

establish com

USCT") had

anufacturing

of the busine

ns with the ac

omputed an

e performanc

e, implicitly

ot sufficientl

arly, the com

s in investme

mparable stoc

of the busin

) and the com

espect to the

n provided w

uld be a mos

basis."579

p. and OverseUS Claims T

Award, paras

Award, para.

unals have de

mpensation. F

to evaluate d

g and selling

ess' projected

ctual perform

earnings mu

ce of a group

recognizing

ly comparab

mparable sale

ent treaty ca

ck prices and

ness at issue

mpany propo

comparable

with any sign

st speculativ

as Private InvTribunal Rep.

. 411-417 (RL

414 (RL-140

187

eclined on a

For example

damages cla

various wir

d earnings w

mance of thr

ultiplier by c

p of U.S. pub

g that the per

ble to the clai

es transactio

ses. For ins

d comparabl

(which was

osed for stoc

e sales transa

nificant evid

ve enterprise

vestment Corp121 (1986), p

L-140).

0).

number of o

e, in Phelps D

aimed for a b

re and cable

which it deter

ree non-Irani

comparing th

blicly traded

rformance of

imant's busin

on approach

tance, in CM

le sales price

not publicly

ck price com

action approa

dence of such

to try and d

rp. v. The Islaparas. 29-30 (

occasions to

Dodge v. Ira

business esta

products.577

rmined to be

ian wire and

he business' p

d corporation

f foreign com

ness in Iran.

has not been

MS v. Argent

e approaches

y traded on a

mparison wer

ach, the tribu

h transaction

determine the

amic Republic(Authority R

o use market-

an the Iran-U

ablished in Ir

The claima

e reasonable

d cable

projected

ns. The IUS

mpanies in t

.

n widely

tina the tribu

s.578 The pan

a stock excha

re not

unal determi

ns" and

e compensat

c of Iran, AwaRL-171).

-

U.S.

ran

ant

SCT

the

unal

nel

ange

ined

ion

ard

3

Republic

tribunal r

adequate

"[c]ondit

comparab

which the

disapprov

the Kyrg

approach

a spot pri

discussed

3

comparab

seven tra

property

because o

propertie

3

the probl 580 Sistem Award, Se581 Sistem 582 OccideThe Repub173).

The co90.

c. The disput

rejected the c

basis for the

tions in the K

ble with the

e claimant's

vingly to the

yzstan mark

h involves a l

ice and gold

d in the next

Finall91.

ble sales app

ansactions id

presents a u

of its expres

es which like

In sum92.

lem with app Mühendislik

ept. 9, 2009, p

v. Kyrgyz, pa

ental Petroleublic of Ecuad

omparable tr

te arose from

comparables

e application

Kyrgyz hotel

comparators

expert repor

e 30% discou

ket stating th

large measur

d grade adjus

t section, ove

ly, the Occid

proach which

dentified by t

unique set of

s recognition

e mining proj

m, market-ba

plying a com

k Inşaat Sanaypara. 162 (Au

ara. 162 (RL-

um Corporatidor, ICSID Ca

ransaction ap

m a joint ven

s valuation s

n of the 'mul

l sector in th

s in Ireland,

rt made refer

unt applied t

at this "reinf

re of specula

stment in its

erstates the v

dental tribun

h it found to

the responde

f value param

n that the co

jects are sub

ased method

mparative-bas

yi ve Ticaret Authority RL-

172).

ion and Occidase No. ARB/

188

pproach was

nture to build

stating that it

ltiple deals' a

he period in q

Sweden, the

rence.580 Sp

to the multip

forces the vi

ation."581 Li

comparable

value of the

al declined t

o be unreliab

ent were of "

meters."582 T

omparables m

bject to diffe

dologies suff

sed valuation

A.Ş. v. Kyrgyz-172).

dental Explora/06/11, Award

s also rejecte

d and operat

t was "not pe

approach." I

question are

e UK, the US

pecifically, th

ples in order

iew that the v

ike the exper

transaction

deposits.

to award com

le. The tribu

"no assistanc

This decision

method was

erent "value p

fer from the s

n in this case

z Republic, IC

ration and Prod, Oct.5 2012

ed in Sistem

te a hotel in B

ersuaded tha

It explained

not so obvio

SA, and the

he tribunal p

to account f

valuation ba

rts in Sistem

approach w

mpensation b

unal conclud

ce" because "

n is particula

less practica

parameters."

same shortco

e is that no t

CSID Case N

oduction Com2, para. 787 (A

v. Kyrgyz

Bishkek. Th

at there is an

that

ously

other States

pointed

for condition

ased on this

m, FTI has ap

which, as will

based on the

ded that the

"each oil and

arly notewor

al for oil and

"

oming. Tha

two mining

o. ARB(AF)/

mpany (OPECAuthority RL

he

n

s" to

ns in

pplied

l be

e

d gas

rthy

d gas

at is,

/06/1,

C) v. L-

propertie

exercise

structure

basis of c

3

legal and

riddled w

3

Claimant

Transacti

mineral r

areas. FT

explorati

Brent Ka

report an

mistakes

report for

583 See Kacentral chcomparabcomparabbut, in thecompany

es are the sam

because each

, risks, regul

comparables

Thus, 93.

d practical po

with errors.

3.

As the94.

t's mining in

ion and the C

resource dep

TI concludes

ion areas is $

aczmarek and

nd have ident

have been b

r a fuller acc

antor at 121-1hallenge for arble company ability exists ine real world oat the heart o

me. Basing c

h project has

latory enviro

s extremely d

the use of th

oint of view.

Pac Rim amanner

e Tribunal m

nterests: the D

Comparable

posits, and th

s that the ove

$ 284.9 milli

d Kiran Sequ

tified serious

briefly summ

count of thes

122 (RL-169) rbitrators – finas a basis for n the hypothetof arbitration, of the dispute.

comparisons

s unique feat

onment, loca

difficult if no

he DCF and

. As shall be

applied the w

may recall, FT

DCF method

Trading Mu

he comparab

erall value o

ion (amende

ueira of Nav

s errors in th

marized in th

se errors.

("The very tinding sufficiearriving at thtical world pano other ente").

189

s on other go

tures, in term

ation, manag

ot impossibl

other metho

e seen below

wrong valuati

TI utilizes th

d to value the

ultiple Appro

le transactio

of the minera

d mid-point

vigant Consu

heir valuation

his section, th

itles of these ment comparabe value of the

age of theoretierprise likely w

old mining p

ms of the siz

gement, etc.

le.583

ods in this ca

w, FTI's appl

tion methods

hree valuatio

e Minita res

oaches to va

on approach

al resource d

range). El S

ulting ("Navi

n calculation

he Tribunal i

methods for vbility to justifye business beiical economiswill be precis

projects is no

ze of resourc

This makes

ase is questio

lication of th

s in a serious

on methods t

erves, the C

alue the resou

to value the

deposits and

Salvador's v

igant"), have

ns. While th

is directed to

valuing businy employing ting appraisedsts and universely comparab

ot a useful

ces, capital

s valuation o

onable from

hese methods

sly flawed

to value

omparable

urces in the

exploration

the early

valuation exp

e reviewed F

hese various

o the Naviga

nesses disclosthe value of th

d. Perhaps idenrsity professoble with the

n the

a

s is

six

perts,

FTI's

ant

e the he ntical

ors

3

the basis

model,584

costs, op

the value

revised to

related to

3

substanti

slightly i

584 FTI Ex585 FTI hareal modeFTI correcmillion re586 Navigatook three587 Naviga

FTI u95.

for its DCF

4 FTI adjust

erating costs

e of the Mini

o between $6

o their projec

Navig96.

ially overstat

ncreased its

First, doing error cCorrebetwe

Seconcommadditifeasibcommresults$10.1

xpert Report,

ad incorrectly el (i.e., revenucted this error

eduction in FT

ant Expert Ree years to com

ant Expert Re

a) FTis e

sed the finan

calculation.

ted the mode

s) as of the v

ita reserves w

67.5 million

ction of gold

gant identifie

te the value

value):

FTI deducteso, FTI trea

caused FTI tcting for this

een $10.4 mi

nd, the modemenced as of

onal time Pability study, tmence mine d

s in a reductmillion (or

para. 6.27.

applied nomiue and costs ar by using rea

TI's valuation

eport, para. 17mplete the det

eport, para. 17

TI's implemenerror-ridden

ncial model c

. After revi

el to reflect m

valuation dat

was between

n and $80.6 m

d prices.585

ed five errors

of the Minit

ed depreciatiated depreciato dramaticas error aloneillion and $1

el unrealisticf the valuatioac Rim woulto obtain an developmenttion in value about 13%).

inal gold and are projected nal gold and silconclusion.

71. Navigant tailed feasibili

72.

190

ntation of th

contained in

ewing and c

market cond

te. After app

n $79.7 milli

million in Au

s or unsound

a reserves (a

ion from incoation as a taxally overstatee reduces the2 million (o

ally assumeson date and dld have needexploitationt. Conservatof the Minit

.587

silver prices net of inflatiolver prices. T

notes that theity study and

he DCF appr

n SRK's 2005

conducting a

ditions (e.g. m

plying the m

ion and $92.

ugust 2013 a

d assumption

and one erro

ome taxes inx credit rathee the value oe value of theor 13-18%).5

s that mine ddoes not conded to compln concessiontively adjustta reserves o

in the DCF mon) so nominaThe result of t

e reduction incommence d

roach for the

5 Pre-Feasib

a due diligen

metals prices

model, FTI de

8 million. T

after FTI dis

ns that cause

or that would

nstead of preer than a tax

of the Minitae Minita res86

developmentnsider the siglete a detaile, and to secuting for a 12 of between $

model. The Dal prices shouthis correction

n value woulddevelopment.

e Minita rese

bility Study a

ce of the

s, developme

etermined th

This sum wa

scovered an e

e FTI to

d have actual

e-tax incomex deduction. a reserves. erves by

t could havegnificant ed (bankableure contracto

month delay$8.7 million

DCF model is uld not be usedn was a $12

d be greater if

erves

as

ent

hat

as

error

lly

e. By This

e

e) ors to y and

a d.

f it

3

reliability

588 Naviga589 Appen590 Navigabecause thmore unceconsidereadded). 591 Naviga592 Naviga593 Naviga

Third,Capita40 basmilliothe bacapitaFeasibmillio

Fourthfuturemillio

Fifth, originDoublcorrec$2.5 m

Sixth,projecUS comininunderreserv

The to97.

y of FTI's D

ant Expert Re

ndix 4 to FTI E

ant Expert Rehey reflect prertain, Navigad to account f

ant Expert Re

ant Expert Re

ant Expert Re

, FTI makes al (WACC):sis points wh

on (or 3%).58

asis of a hybral structure, wbility Study,on and $8.3 m

h, FTI overses contract pron.591

despite condnal SRK Conle counting wcted this erromillion.592

, FTI makes cts the futureonsumer pricng costs increstates minin

ves.593

otality of the

CF analysis.

eport, para. 17

Expert Repor

eport, para. 17ojections in thant recommenfor the greate

eport, para. 17

eport, para. 17

eport, para. 17

at least two (1) FTI withich wrongly88 (2) FTI unrid debt and which FTI ad589 the valuemillion.590

tated gold prrice. The im

ducting a dunsulting finanworking capor, the value

unsound asse capital andce index (CPease at rates g costs and t

ese errors and

. Moreover,

73, n.185.

rt.

75. Navigant he Pre-Feasibnds "an additi

er level of unc

76.

77.

79.

191

errors in calthout explany increases tnderstated thequity invesdmits is app

e of the Mini

rices in the pmpact of this

ue diligence, ncial model.

pital decreaseof the Minit

sumptions red operating cPI) of 2.5% e

much highethereby over

d incorrect a

, FTI relies e

notes that thebility Study. Bional project-certainty in FT

lculating thenation roundthe value of he WACC bystment. If n

propriate for ita reserves d

projection byerror is a re

FTI fails to . Working ces the value ta reserves w

egarding inflosts for the m

even though er than the Crstates the va

assumptions

exclusively o

e discount ratBecause these-specific risk TI's cash flow

e Weighted As the discounthe Minita ry including do debt is incprojects witdecreases by

y relying on eduction in v

detect an ercapital is couof the projec

would have i

lation. FTI umine to growhistoric evidPI. FTI's usalue of the M

completely

on the DCF a

te would still e cash flow ppremium wou

w projections"

Average Cosnt rate down

reserves by $debt financincluded in thethout a Banky between $7

the wrong value of $3

rror in the unted twice. ct. Had FTIincreased by

unreasonablyw at the longdence showsse of the CPIMinita

undermine t

approach an

be understateprojections areuld need to be" (emphasis

st of n by $2 ng on

e kable 7.9

I y

y g-run s that I

the

nd

ed e e

does not

respectfu

3

subject c

transactio

America

3

Transacti

projects/p

prices on

on its ass

grade pro

4

results in

narrowin

more com

of other f

594 Naviga595 Naviga596 Naviga597 Naviga

test or valid

ully submits

The p98.

ompany can

ons over a fo

was deemed

Navig99.

ions Approa

properties;59

n the date of

sumption tha

ojects.597

First, 00.

n non-compa

ng the search

mparable tran

factors such

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

date their resu

that the Trib

b) FTflawres

urchase pric

n be used to e

our-year peri

d comparabl

gant identifie

ach: (1) FTI's

95 (2) FTI in

the transacti

at high grade

FTI's flawed

arable projec

h parameters

nsactions. I

as mining c

eport, paras. 1

eport, paras. 1

eport, para. 13

eport, paras. 1

ults with ano

bunal should

TI's implemenwed and sig

source depos

ce of a recent

estimate the

iod (2004-20

e to the min

es three main

s poorly-reas

ncorrectly ca

ion;596 (3) FT

e gold depos

d implement

cts/properties

to transactio

nstead, Claim

onstruction c

46-149.

46-149.

32.

29, 139.

192

other valuati

d disregard F

ntation of thnificantly ov

sits

tly acquired

value of the

008) where t

eral resource

n errors in FT

soned search

alculates a "P

TI increased

its command

tation of FTI

s. FTI appli

ons in Latin

mant should

costs, cash o

ion method.5

FTI's DCF va

he Comparabverstates the

company th

e subject com

the project o

es in the six

TI's implem

h parameters

Price Ratio"

d the valuatio

d a higher pr

I's Comparab

es an overly

America, th

d have filtere

operating co

594 Therefor

aluation calc

ble Transactie value of the

hat is compar

mpany. FTI

or property a

mineral reso

mentation of t

s yielded non

" to adjust fo

on multiple b

remium than

ble Transact

y-restrictive a

hereby exclu

ed transactio

sts, permittin

re, El Salvad

culation.

ions Approae mineral

rable to the

identified se

acquired in L

ource deposi

the Compara

n-comparabl

or different sp

by 300% bas

n lower gold

tion Approac

approach

ding potenti

ons for a vari

ng/licensing

dor

ach is

even

Latin

its.

able

le

pot

sed

d

ch

ially

iety

g

process,

and reser

resources

mineral r

and Nanc

FTI's imp

transactio

4

the value

stage pro

refuted b

value of

companie

out that t

uncertain

environm

Lastly, it

comparab

price.

598 Naviga599 Naviga600 Naviga601 Naviga

and environm

rves. This po

s) have been

resources in

ce Dulce) to

plementation

ons based on

Secon01.

e of the mine

ojects increas

by its own ev

gold compan

es increase b

the value of j

nty of minera

mental conce

t bears menti

ble transacti

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

mental cons

osition is, ho

n proven to b

six deposits

compare it t

n of this met

n their degre

nd, the "Price

eral resource

se at the sam

vidence.600 N

nies increase

by only 0.29

junior minin

al recovery,

erns, securing

ioning that h

ons, there w

eport, para. 14

eport, paras. 1

eport, paras. 1

eport, para. 13

iderations.59

owever, misi

be economica

(Minita, Ba

to projects/p

thodology is

ee of compar

e Ratio" adju

es. The adju

me rate as inc

Navigant furt

e at a lower r

% for every

ng companie

technical ba

g project fin

had FTI chos

would have b

47.

32-138.

32-134.

37.

193

98 Further, F

informed be

ally viable.

alsamo, Sout

properties wi

its failure to

rability with

ustment lack

stment assum

creases in go

ther confirm

rate than gol

1% increase

s will be mo

arriers to dev

nance, and co

sen a shorter

een no need

FTI did not d

ecause miner

It would ov

th Minita, Nu

ith defined r

o assign wei

the six mine

ks support an

mes that the

old prices.599

ms through sta

ld prices; sp

e in gold pri

ore affected b

velopment, p

onstruction d

r time frame

d to apply an

distinguish b

ral reserves (

erstate the v

ueva Espera

eserves. A f

ghts to the c

eral resource

nd significan

value of late

9 But Claim

atistical anal

ecifically, th

ces. Naviga

by other fact

permitting de

delays) than

for its searc

adjustment

between reso

(unlike mine

value of the

anza, Coyote

further flaw

comparable

e deposits.

ntly overstate

e-exploratio

ant's assertio

lysis that the

he value of g

ant also poin

tors (includi

elays,

by spot pric

ch for

for the spot

ources

eral

era

in

es

n

on is

e

gold

nts

ing

ces.601

4

mineral r

Claimant

Unfortun

selected,

price rati

transactio

4

overall ef

analysis

4

traded co

the value

to the six

the multi

Compara

4

disregard

602 Naviga603 Navigatransactioprice ratiovaluation than to Pi

Third,02.

resource dep

t increases th

nately, Claim

the two tran

ios but the tr

ons.602 Henc

In sum03.

ffect of over

should be di

The co04.

ompany appr

e of the subje

x mineral res

iple for Cerro

able Transac

Navig05.

ded for four r

ant Expert Re

ant Expert Ren has a gold g

o. FTI does nmultiple nor nos Altos.

, FTI's high

posits. Unab

he valuation

mant's assum

nsactions wit

ransaction w

ce, FTI's exo

m, Claimant'

rstating the v

ismissed.

c) FTout

omparable tr

roach, uses t

ect company

source depos

o Negro is ro

tion Approa

gant shows th

reasons:

eport, para. 14

eport, para. 15grade of 4.17

not, as Navigadoes it demon

gold grade a

ble to identify

multiple of

mption is not

th the highes

with the lowe

orbitant gold

s illogical se

valuation mu

TI's Comparatlier that infl

rading multi

the publicly t

y. FTI only i

sits: Andean

oughly twice

ach.603

hat the multi

42.

52. Althoughg/t, the price

ant points outnstrate that th

194

adjustment fu

fy any projec

the lower gr

borne out by

st gold grade

st gold grade

d grade prem

earch parame

ultiples of tra

able Tradinglates the valu

iples method

traded price

identified on

Resource's C

e as high as

iple derived

h the Pinos Ale ratio for Cer, explain whyhe six mineral

further distor

cts with a com

rade projects

y its own evi

e had the low

e had the hig

mium lacks ri

eters and inf

ansactions.

g Multiples Aue of the min

d, as known

of a compar

ne publicly tr

Cerro Negro

the highest m

by FTI is an

ltos project serro Negro is 1y Cerro Negrol deposits are

rts the value

mparable go

s by a factor

idence. Of t

west valuatio

ghest price r

igorous anal

flated adjust

Accordingly

Approach relneral resourc

as the comp

rable compa

raded compa

o project in A

multiple calc

n outlier and

elected by FT1,850% higheo has such a me more similar

of the six

old grade,

r of 300%.

the transactio

on multiple a

ratio of all th

lysis.

tments have

y, Claimant's

lies on a singce deposits

arable publi

any to estima

any compara

Argentina. Y

culated in FT

d should be

TI as a comparr than Pino A

massively higr to Cerro Neg

ons

and

he

the

s

gle

cly

ate

able

Yet

TI's

rable Altos' gher gro

4

companie

companie

ounce, si

4

10% wei

weightin

of betwee

such, the

outlier.

604 Naviga605 Naviga606 Naviga607 Naviga608 Naviga609 Naviga

First, gold d

Seconvaluatwould

Third,only cdepos

Fourthalreadsynergand ha

Furthe06.

es. Navigan

es. This inv

ignificantly b

FTI im07.

ghting to the

g of the com

en $194.8 m

Tribunal sh

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

at the date odeposit.604

nd, Cerro Netion date, And nearly doub

, Cerro Negrcompleted a its.606

h, FTI incorrdy inflated vagies.607 Howas been debu

ermore, FTI'

nt's conducte

vestigation re

below FTI's

mplicitly rec

e comparabl

mparable tran

million and $2

hould attribut

eport, para. 15

eport, para. 15

eport, para. 15

eport, para. 15

eport, paras. 1

eport, para. 15

of the valuati

egro's valuatindean Resouble the comp

ro had a pre-pre-feasibili

rectly appliealue) to acco

wever, Navigunked.608

's multiple is

ed a prelimin

esulted in va

multiple of

cognizes the

e publicly tr

nsaction appr

223.2 millio

te no weight

52.

55.

56.

57.

09-113.

59.

195

ion, the Cerr

ion multiple urces announpany's total r

-feasibility sity study for

ed a 30% conount for contgant explains

s out of line

nary search o

aluation mult

$378 per oun

unreliability

raded compa

roach) in arr

on for the min

t to FTI's cal

ro Negro pro

is skewed bnced results oresources.605

study in progone of the s

ntrol premiutrol, liquiditys that this ec

with more c

of potentially

tiples in the

unce.609

y of this meth

any approach

riving at an o

neral resour

lculation wh

oject was not

because just of a drilling 5

gress. By cosix mineral r

um to the muy and post-aconomic theo

comparable p

y comparabl

range of $25

hodology by

h (compared

overall valua

rces in the six

hich is based

t a high grad

prior to the program tha

ontrast, Pac Rresource

ultiple (over acquisition ory is outdat

publicly trad

le publicly tr

5 to $44 per

y applying a

d to a 90%

ation conclu

x deposits. A

d on a single

de

at

Rim

this

ted

ded

raded

low

usion

As

4

areas. It

calculate

and Zam

4

opinion,

explorati

may be c

speculati

results sh

over 2,00

4

appropria

explorati

the Mine

assess the

4

parties fo

610 Naviga611 Naviga

FTI im08.

identifies se

s a transacti

ora/Cerro C

Navig09.

a price per h

ion propertie

confined to a

ive to award

how the enor

00%! Even a

Conse10.

ate method t

ion expenditu

eral Property

e value of th

When11.

or the shares

ant Expert Re

ant Expert Re

d) FTexp

mplements th

even transact

on value per

olorado had

gant disagree

hectare valua

es. This is es

a narrow or l

compensatio

rmous range

after outliers

equently, Na

to value the e

ures for a giv

y.611 Because

hese properti

e) Othsub

n based on fu

or assets of

eport, para. 16

eport, para. 16

TI utilizes theploration are

he Comparab

tions of early

r hectare. Ba

a value of $

es with the v

ation multipl

specially so

imited portio

on on the ba

e of price per

s are exclude

avigant deter

early explora

ven property

e this inform

ies.

her valuationbstantially ov

ull informatio

f the subject

61.

61.

196

e wrong valueas

ble Transact

y stage explo

ased on this

$1.795 millio

valuation met

le is not a re

for undergro

on of the sur

asis of the siz

r hectare from

ed, the range

rmines that th

ation areas.

y for their co

mation was n

n evidence dverstated

on, arms-len

company ca

uation metho

tion Approac

oration prop

multiple, FT

on as of 10 M

thod selecte

eliable indica

ound mines w

rface area.610

ze of the exp

m $68 to $1

e is still clos

the Cost App

The Cost A

ontribution to

not available,

demonstrates

ngth transact

an provide an

od to value t

ch for the ea

perties in Lat

TI determine

March 2008.

d by FTI. In

ator of value

where the en

0 It would b

ploration are

,507, reflect

se to 100%.

proach would

Approach ana

o the explor

, Navigant w

s that FTI's v

tions or offer

n objective a

the early

arly explorat

tin America

ed that Santa

n Navigant's

e for early

ntire resourc

be entirely

eas. FTI's ow

ting a spread

d be a more

alyzes the

ation potent

was unable to

valuation is

rs made by t

and reliable

tion

and

a Rita

s

ce

wn

d of

ial of

o

third

indication

and the e

parent co

Second, P

(the mon

additiona

Capital.

4

valuation

reserves

valuable

the capita

in line w

reasonab

4

informati

Pac Rim'

greater th

premium

4

value of

612 Naviga613 Naviga614 Naviga

n of value.61

early explora

ompany, in th

PRMC cond

nth before the

al valuation e

Navig12.

n of PRMC c

yet FTI has

mineral reso

al expenditu

ith its develo

le.613

Navig13.

ion about the

's mining int

han the value

m that FTI sug

While14.

a business, t

ant Expert Re

ant Expert Re

ant Expert Re

12 There ar

ation areas. F

he 30 days le

ducted a priv

e valuation d

evidence and

gant shows th

conducted by

applied the m

ources; (2) th

ures for the p

opment peer

gant contend

e market's as

terests in El

e ascribed by

ggests to acc

e these mark

these values

eport, para. 23

eport, paras. 1

eport, para. 10

re two source

First, the adj

eading up to

vate placeme

date) that ind

d instead rel

here are thre

y Scotia Cap

multiple imp

he valuation

project; and (

rs" which ind

ds that the sh

ssessment of

Salvador. T

y the market

count for lac

et sources of

are less relia

3.

19-122.

08.

197

es of evidenc

justed public

o the valuatio

ent of new PR

dicated a val

ies on an ina

ee flaws in th

pital: (1) the

plied by that

n was based o

(3) the valua

dicates that t

are price and

f the value o

These indicia

t. This prem

ck of control

f information

able in this c

ce of the val

cly traded pr

on date was

RMC comm

lue of $86.7

apposite valu

he FTI's relia

valuation w

t valuation to

on lower ope

ation indicate

the publicly

d private pla

of PRMC, an

a show that F

mium is even

l.614

n are norma

case. Naviga

lue of the mi

rice of PRM

approximate

mon shares in

million. FT

uation condu

ance on the O

was based on

o the less eco

erating costs

ed that Pac R

traded value

acement prov

nd by extensi

FTI's valuati

n out-of-step

ally useful in

ant posits th

ineral depos

MC, Pac Rim'

ely $88 milli

n February 2

TI rejects this

ucted by Sco

October 200

the Minita

onomically

s and unders

Rim was "tra

e of PRMC w

vide useful

ion the value

ion is 325%

with the 30%

n evaluating t

hat these mar

its

's

ion.

008

s

otia

07

tated

ading

was

e of

%

the

rket

sources l

public wa

not appea

improper

for an ex

announce

a concess

shares of

this misin

4

deposits

Deposits

D

4

fully com

law."619

the award

and comp

615 Naviga616 Naviga617 Naviga618 Naviga619 Memor620 FTI Ex

ikely oversta

as not inform

ar that it was

rly obtained

xploitation co

e publicly th

sion.616 As s

f PRMC and

nformation."

Navig15.

and explorat

s to be next

D. Claimcomp

Pac R16.

mpensate the

Claimant se

d at the 12-m

pounding co

ant Expert Re

ant Expert Re

ant Expert Re

ant Expert Re

rial, para. 688

xpert Report,

ate the value

med about th

s public know

by a related

oncession wa

he results of d

such, Naviga

d the private p

"617

gant conclud

tion areas, "

to nil and th

mant is not eensation

Rim claims th

m for Respo

eeks interest

month LIBO

onvention sw

eport, para. 18

eport, para. 18

eport, para. 10

eport, para. 19

8.

paras. 6.137-

e of the mine

he legal statu

wledge that

company or

as irreparabl

drilling cond

ant posits th

placement o

des that based

we would e

he Early Ex

entitled to p

hat it "is enti

ondents' wro

on the amou

R rate comp

wells Pac Rim

86.

87.

03.

92 (emphasis

6.138.

198

eral deposits

us of Pac Rim

the explorat

r had not bee

ly deficient.6

ducted on th

at "the mark

overstate the

d on the lega

xpect the fa

xploration A

prejudgment

itled to an ad

ngful breach

unt claimed f

pounded on a

m's damages

added).

s and explora

m's mining i

tion licenses

en obtained

615 Rather, P

he properties

ket value imp

value of the

al and factua

air market v

Areas to be d

t interest be

dditional awa

hes of its dom

from the val

an annual ba

claim by $1

ation propert

nterest. In p

s had expired

at all, or tha

Pac Rim con

that lacked

plied by the

e Mineral De

al issues faci

value of the

de minimis.

ecause it is n

ard of intere

mestic laws

luation date u

asis.620 This

16.2 million.

ties because

particular, it

d, had been

at the applica

ntinued to

valid license

publicly trad

eposits due t

ing the mine

Mineral

."618

not entitled

est in order to

and internat

until the dat

rate of inter

. Claimant

the

does

ation

es or

ded

to

eral

to

o

tional

te of

rest

however,

establish

4

Draft Art

these ina

which as

automati

entitleme

when nec

that "[i]n

compens

decisions

injured S

depends

necessary

where it

4

courts an

special re

interest.6

621 ILC Dr622 ILC Dr623 ILC Dr624 See e.g174); Nor

, has not esta

ed any entitl

In fac17.

ticles for its

pplicable ru

discussed a

c entitlemen

ent to interes

cessary in or

nterest is not

ation in ever

s and practic

State has no a

on the circum

y in order to

is deemed n

Furthe18.

nd tribunals h

easons justif

25

raft Articles,

raft Articles,

raft Articles,

g., Case of therwegian Shipo

ablished any

lement to co

t, Claimant s

entitlement

les of intern

above govern

nt to interest.

st: "Interest o

rder to ensur

an autonom

ry case."622

ce is towards

automatic en

mstances of

ensure full r

ecessary by

ermore, in ci

have traditio

fying it.624 S

Article 38, at

Comment (1)

Comment (7)

e S.S. Wimbleowners' Claim

y entitlement

ompensation)

starts from a

to interest.

ational law.

ns the relatio

. However, e

on any princ

re full repara

mous form of

It goes on to

s greater ava

ntitlement to

f each case; i

reparation."6

the Tribunal

ircumstance

onally declin

Similarly, inv

t 107 (RL-79(

) to Article 38

) to Article 38

edon, 1923 P.Cms (Norway v

199

t to interest (

).

a flawed prem

Claimant's p

The ILC Dr

ons between

even under t

ciple sum due

ation."621 Th

f reparation,

o explain tha

ilability of in

the paymen

n particular,

623 Therefor

l to give full

s when inter

ned to award

vestment trib

(bis)) (empha

8, at 107 (RL-

8, at 108 (RL-

C.I.J. (Series . United State

(nor, as expl

mise. It cite

position is, h

raft Articles

States, make

these rules th

e under this

he Comment

nor is it a ne

at: "Although

nterest as an

nt of interest

, on whether

re, interest w

l reparation t

rest has been

compound i

bunals have

asis added).

-79(bis)) (em

-79(bis)) (em

A) No. 1 (Aues of America

lained above

es to Article

however, unf

s on State Re

es clear that

here is no au

chapter shal

tary to this A

ecessary part

h the trend o

n aspect of fu

t. The award

r an award of

will only be a

to the injure

n awarded, in

interest in th

also awarde

mphasis added

mphasis added

ug. 17) at 32 (a), PCA Case

e, has Claima

38 of the IL

founded und

esponsibility

there is no

utomatic

ll be payable

Article clarifi

t of

of internation

ull reparation

ding of intere

f interest is

awarded in c

d party.

nternational

he absence o

ed simple

d).

d).

(Authority RI U.N.R.I.A.

ant

LC

der

y,

e

fies

nal

n, an

est

cases

f any

RL-A.

4

compoun

internatio

interest, i

307, Awa(Spain v. 176); StarGovernme314-24-1,Company,Bank MarRL-178); 180-64-1,awarded cRepublic oRep. 181 Republic oITL 65-16InternatioCompany,(1990), pa625 Arif v. rate); RosI2010, paraLIBOR); June 30, 2per annumNo. ARB/the simpleICSID Casimple intThe Unite(AuthoritExploratioFinal Awaat 2.75% CME Cze2003, paraFeldman vMexican Tsimple int(RL-166) developm626 Memor

Indeed19.

nding interes

onal law, it c

in the absenc

ard, Oct. 13, 1United Kingdrrett Housingent of the Isla, 16 Iran-US C, Inc. v. The Mrkazi, Award Sylvania Tec

, 8 Iran-US Ccompound intof Iran and Ir(1984) at 8 (Aof Iran and th67-3, 13 Iran-onal Systems &, the Islamic Rara. 123 (Aut

Moldova, parInvestCo UK a. 692 (AuthoSAIPEM S.p.

2009, para. 21m); Duke Ener/04/19, Aware active rate oase No. ARB/terest of 5%);ed Mexican Stty RL-187) (ton and Produard, July 1, 20and simple poch Republic Ba. 647 (Authov. Mexico, paTreasury Certterest on the a(the tribunal

ment costs).

rial, para. 689

d, Claimant'

st is misplace

cannot be sai

ce of special

922, at 341 (A

dom), PCA Cag Corporationamic RepublicClaims TribunMinistry of PoNo. 225-89-3

chnical Systemlaims Tribunaterest"); R.J. Rranian TobacAuthority RLhe National Ir-US Claims T& Controls CRepublic of Irthority RL-18

ra. 633(h) (RLK Ltd. v. The R

ority RL-183A. v. The Peo

12 (Authoritrgy Electroqud, Aug. 18, 2

of the Ecuado/05/17, Award; Archer Danitates, ICSID Ctribunal awaruction Compa004, para. 217ost-judgment B.V. (The Netority RL-189

ara. 211 (RL-1tificates); Autaverage lendinawarded sim

9.

s reliance on

ed.626 The C

id that an inj

l circumstan

Authority RLase II U.N.R.I

n, Starrett Sysc of Iran, Bannal Rep. 112 ost, Telegraph3, 11 Iran-USms Inc. v. Theal Rep. 298 (Reynolds Tob

cco Company L-180); Anacranian Coppe

Tribunal Rep. Corporation v.ran, Award N82).

L-164) (tribunRussian Feder3) (tribunal orople's Republity RL-184) (tuil Partners a008, para. 49

orian Central Bd, Feb. 6, 200iels Midland Case No. ARded simple in

any (OPEC) v7 (Authorityinterest 4% c

therlands) v. T9) (the tribuna144) (tribunaltopista v. Venng rate of five

mple interest at

200

n the ILC Dr

Commentary

jured State h

nces which ju

L-175); BritisI.A.A. 615, Atems, Inc., Sta

nk Markazi Ira(1987), para. h and TelephoClaims Tribu

e Government1985) at 15 (A

bacco Compan(ITC), Awardonda-Iran Incer Industries C199 (1986), p. National Ira

No. 464-494-3

nal awarded iration, SCC Crdered the resic of Bangladthe tribunal awand Electroqu1 (AuthorityBank); Deser08, para. 298 (Company and

RB(AF)/04/05nterest rate forv. The Republ RL-188) (tri

commencing The Czech Real awarded siml ordered the rnezuela, parase principle Bat the rate of 5

raft Articles

y explains: "g

has any entit

ustify some e

sh Claims in

Award, May 1arrett Housinan, Bank Omr 370 (Authorone, The Natiunal Rep. 3 (1t of the IslamiAuthority RLny v. The Govd No. 145-35c. v. The GovCompany, Intpara. 142 (Auanian Gas Co3, 24 Iran-US

interest on a sCase No. 079/spondent to padesh, ICSID Cwarded simpluil S.A. v. Repy RL-185) (thrt Line LLC v.(Authority Rd Tate & Lyle, Award, Novr U.S. Treasulic of Ecuadoribunal awarde30 days after

epublic, UNCmple interest respondent to

s. 396-397 (Ranks in the co

5% on the Cla

for support

given the pre

tlement to co

element of c

the Spanish Z

1, 1925, at 65ng Internationran, Bank Merity RL-177)ional Iranian1986), para. 1ic Republic ofL-179) ("the vernment of t-3, 7 Iran-US

vernment of thterlocutory Authority RL-ompany, NatioS Claims Tribu

simple basis a/2005, Final Aay simple inte

Case No. ARBle interest at apublic of Ecuahe tribunal app. The Republi

RL-186) (the e Ingredients v. 21, 2007, pury bills); Occr, LCIA Caseed simple prethe award un

CITRAL, Finaon the fixed

o pay simple iRL-168) (the trountry); SPP aimant's capita

for

esent state o

ompound

compounding

Zone of Moro0 (Authority

nal, Inc. v. Thellat, Award N; McCollough Oil Company

114 (Authoriof Iran, AwardTribunal has

the Islamic S Claims Tribuhe Islamic

Award, Award181); onal Iranian Ounal Rep. 47

at the EURIBAward, Sept. erest on the aB/05/7, Awara rate of 3.375ador, ICSID Cplied interest ic of Yemen, tribunal awarAmericas Inc

para. 300 cidental e No. UN 346e-judgment intntil payment);al Award, Marate of 10%);interest on ribunal orderev. Egypt, paraal invested an

f

g as

occo y RL-he No. h & y and

ity d No. never

unal

d No.

Oil

BOR 12, ctual

rd, 5% Case at

rded c. v.

67, terest ;

ar. 14, ;

ed a. 257 nd

an aspect

Claimant

could jus

4

compens

627 ILC Dr

t of full repa

t does not pr

stify compou

El Sal20.

ation or the

raft Articles,

aration."627 H

rovide the sli

und interest i

lvador theref

payment of

Comment (9)

Having focu

ightest scinti

in this case.

fore respectf

interest.

) to Article 38

201

sed on its 'en

illa of eviden

fully submits

8, at 109 (RL-

ntitlement' to

nce as to any

s that Claim

-79(bis)).

o compound

y special cir

mant is not en

d interest,

cumstances

ntitled to

that

VI. J

A

4

However

maintain

reserves

Centre ha

Investme

4

arbitratio

the waive

Internatio

and the p

causes of

demonstr

proceedin

finds itse

Investme

Claimant

that Claim 628 Claima

URISDICT

A. Reser

El Sal21.

r, El Salvado

ing that this

its rights und

as jurisdictio

ent Law of E

In par22.

on proceedin

er required b

its rigcourt settlemallegeconsti

onal arbitrati

proceeding u

f action but b

rated by the

ng under the

elf in exactly

ent Law proc

t's decision t

mant has sub

ant's Consent

TIONAL ISS

rvation of ri

lvador has fu

or would like

Tribunal lac

der the ICSI

on and that th

El Salvador.

rticular, El S

ng under the

by CAFTA.

ht to initiateunder the lawment proceded in PRC's Nitute a breach

ion is a "disp

under the Inv

based on the

simple fact t

e Investment

y the same ci

ceeding befo

to bring both

bjected El Sa and Waiver,

SUES

ights with re

ull confidenc

e to emphasi

cks jurisdicti

ID Conventio

he Tribunal

alvador mai

Investment L

In its waive

e or continuew of any Par

dures, any proNotice of Arh referred to

pute settlem

vestment Law

e same measu

that the CAF

t Law contin

ircumstances

ore one tribun

h proceeding

alvador to tw

Updated Exh

202

egard to jur

ce that it wil

ize that it file

ion to decide

on with rega

has compete

ntains that P

Law of El S

er, Pac Rim r

e before any rty to CAFToceeding wirbitration, dao in Article 1

ent procedur

w were two d

ures. The ex

FTA proceed

nues unaffect

s that would

nal and its C

gs before the

wo proceedin

hibit 1 to Noti

risdictional

ll prevail on

es this Coun

e this dispute

ard to the Tri

ence to decid

Pac Rim wai

alvador whe

renounced

administratiTA, or other ith respect toated April 3010.16 of CAF

re," and the

distinct proc

xistence of tw

ding was dis

ted by that d

d have existe

CAFTA proc

same tribun

ngs in violat

ice of Arbitra

issues alrea

the merits o

nter-Memori

e. Accordin

ibunal's find

de this dispu

ived its right

en it signed a

ive tribunal odispute

o any measur0, 2009, to FTA.628

proceeding u

ceedings, inv

wo separate

smissed in it

dismissal. El

d if Claiman

ceeding befo

nal does not

tion of the w

ation, June 4,

ady decided

of this disput

al while

ngly, El Salv

ding that the

ute under the

t to initiate a

and submitte

or

re

under CAFT

volving diffe

proceedings

s entirety an

l Salvador n

nt had filed i

ore another.

change the f

waiver.

2009 (R-1).

d

te.

vador

e

an

ed

TA

erent

s is

nd the

now

its

fact

4

Canadian

number,

Conventi

the Denia

is betwee

became a

Salvador

under the

4

Tribunal,

cannot be

rights un

Tribunal

B

4

property

stated in

explorati

related to

notwithst

courts of

In add23.

n investor us

no physical

ion. El Salv

al of Benefit

en a Canadia

a Contracting

r and a nation

e ICSID Con

There24.

, El Salvado

e interpreted

der the Conv

.

B. Addit

1.

In its 25.

rights over m

its Memoria

ion licenses.

o property rig

tanding Arti

f El Salvador

dition, El Sal

sing a shell c

address, and

vador believe

ts provision

an investor a

g State to the

nal of anothe

nvention.

fore, althoug

r would like

d as an explic

vention with

tional objec

Jurisdictioreserved to

Memorial on

mineral depo

al are directly

As indicate

ghts alleged

cle 15 of the

r.

lvador does

company wit

d not even a

es that the ve

under CAFT

and El Salvad

e ICSID Con

er Contractin

gh El Salvad

e to emphasiz

cit or implic

h regard to th

tions to juri

on for Pac Rio Salvadoran

n the Merits

osits discove

y related to t

ed in subsect

ly acquired u

e Investment

203

not see how

th no employ

desk in its n

ery same fac

TA inevitabl

dor. This di

nvention and

ng State. As

dor will not r

ze that its co

it acceptanc

he objections

isdiction

im's claims rn courts

, Pac Rim ha

ered during e

the rights it h

tion IV.A.3 a

under the rel

t Law, those

w a dispute in

yees, no ban

name, is bein

cts that led to

ly lead to the

ispute was in

d therefore w

s such, this d

raise these is

ontinued app

e of jurisdic

s to jurisdict

related to mi

as stated its

exploration.

had or did n

above, to the

levant explo

claims can

nitiated in 20

nk account, n

ng arbitrated

o the success

e conclusion

nitiated long

was not a dis

dispute does

ssues again b

pearance in th

ction, or as a

tion already

ining rights i

claims in ter

Thus, Pac R

not have unde

e extent Pac

oration licens

only be mad

009 by a

no telephone

d under the IC

sful invocati

n that this dis

before Cana

spute betwee

not belong

before this

his proceedi

waiver of it

submitted to

is exclusivel

rms of allege

Rim's claims

er the releva

Rim's claim

ses, and

de before the

e

CSID

ion of

spute

ada

en El

ing

ts

o the

ly

ed

s as

ant

ms are

e

4

Article 1

with the

submittin

subject to

of El Salv

exploitat

laws. W

is the Mi

4

4

the exten

license o

629 Investm630 Miningextranjeroforma reccontratos mismos, r

This a26.

5 of the Inve

State to the c

ng their dispu

o specific lim

vador.629 Ar

ion of the su

ith regard to

ining Law.

Under27.

The MforeigRepubthe dipestablinterptheir dSalvad

Thus, 28.

nt a dispute a

r exploitatio

ment Law, Ar

g Law, Art. 7 os, quedan sujurrir a reclamrespectivos q

renuncian a su

arbitration pr

estment Law

courts of El

utes to intern

mitations in a

rticle 7.b) of

ubsoil is one

o exploitation

r the heading

Mining Licengn, are subjecblic, and are plomatic prolish that in evretation, per

domicile anddor.630

as Salvador

arises under t

on concession

rt. 7 (RL-9(bi

(RL-7(bis)) (jetos a las ley

maciones por lque en todo lou domicilio y

roceeds only

w, both dome

Salvador an

national arbi

accordance w

f the Investm

such area lim

n of the subs

g "Jurisdictio

nse or Concect to the lawabsolutely p

otection venuverything rerformance ord submit them

ran law expe

the Investme

n related to m

is)).

("Los titulareyes, Tribunalela vía de prote

o relativo a la se someten a

204

y under the I

estic and fore

nd foreign inv

itration. Som

with the Con

ment Law pro

mited by the

soil for mine

on," Article

ession Holdews, Courts anprecluded froue; and the rlated to the ar terminationmselves to th

ert José Robe

ent Law of E

mining, that

s de Licenciaes y Autoridadección diplomaplicación, in

a los Tribunal

nvestment L

eign investo

vestors are g

me areas of i

nstitution an

ovides that i

e Constitutio

eral rights, th

7 of the Min

ers, be they nnd Authoritieom resortingrespective coapplication, n of same, thhe Courts of

erto Tercero

El Salvador i

t dispute is re

as ó concesiondes de la Rep

mática; debiennterpretación,les de San Sal

Law of El Sa

ors may subm

given the add

investment,

nd applicable

investments

on and applic

he applicable

ning Law pro

national or es of the g to claims inontracts mus

hey waive f San

concludes i

in relation to

eferred throu

nes Mineras, pública, no pundo establece, ejecución o lvador.")

alvador. Und

mit their disp

ditional opti

however, ar

e secondary

regarding

cable second

e secondary

ovides:

n st

n his report,

o an explorat

ugh Article 7

sean nacionaludiendo de ninerse en los terminación d

der

putes

ion of

re

laws

dary

law

, to

tion

7.b)

les ó nguna

de los

of the Inv

courts of

4

licenses a

and trum

related to

Law will

Law is th

provision

On the co

exploitat

as explai

with the r

concessio

4

Law take

of the pre

applies b

limitation

631 Tercer632 Tercer633 Tercer634 Tercer

vestment La

f El Salvador

This p29.

and exploita

mps the provi

o mining. A

l apply prefe

he special law

ns.633 The In

ontrary, Arti

ion of the su

ned by Mr. T

requirement

ons as a limi

This s30.

es precedenc

eferential ap

by operation

n in its text.

o Expert Rep

o Expert Rep

o Expert Rep

o Expert Rep

w, and Artic

r.631

provision in

ation concess

sions of Arti

rticle 4 of th

erentially.632

w for the sub

nvestment La

icle 7 of the

ubsoil to the

Tercero, Art

ts of the Min

itation on the

specific limit

ce over the g

pplication of

of law and i

But in any e

port, paras. 70

port, para. 76.

port, para. 77.

port, paras. 63

cle 7 of the M

the Mining L

sions must b

icle 15 of th

he Salvadora

Article 72 o

bject area of

aw does not

Investment L

terms of the

ticle 7 of the

ning Law on

eir investme

tation on jur

eneral provi

the provisio

it is not nece

event, Articl

0-82.

-69.

205

Mining Law,

Law mandat

e heard by th

e Investmen

an Civil Cod

of the Minin

f mining, and

include any

Law specific

e Constitutio

e Investment

the holders

ents.634

risdiction in

isions of Art

ons of the Mi

essary for Ar

le 7 of the In

, to the exclu

ting that disp

he courts of

nt Law, in sit

de states that

ng Law itself

d that it prev

y such provis

cally limits i

on and applic

Law impose

of exploratio

disputes rela

ticle 15 of th

ining Law.

rticle 15 to e

nvestment L

usive jurisdi

putes related

f El Salvador

tuations whe

the provisio

f confirms th

vails over any

sion making

investments

cable second

es an obligat

on licenses a

ated to minin

he Investmen

Therefore, th

expressly ack

aw expressly

ction of the

d to explorati

r prevails ov

ere the dispu

ons of the M

hat the Minin

y other legal

it a special

related to th

dary laws. T

tion to comp

and exploita

ng in the Mi

nt Law by vi

he limitation

knowledge th

y limits

ion

ver

ute is

ining

ng

l

law.

he

Thus,

ply

ation

ining

rtue

n

his

investme

secondar

4

Article 7

Investme

Article 2

foundatio

of arbitra

the host S

4

jurisdicti

Investme

Mining L

Salvador

consent C

El Salvad

which Cl

with rega

consent,

635 See, e.gDisputes bConventioof the Cen636 Christo830, 831 (

ents regardin

ry laws, whic

Mr. T31.

the Mining

ent Law in th

5 of the ICS

on for arbitra

ation, investm

State and by

Here, 32.

ion. Claiman

ent Law of E

Law and the

r established

Claimant alle

dor with resp

laimant mad

ard to being

the Tribunal

g., Report of between Stateon, Regulationtre.").

oph Schreuer,(P. Muchlinsk

ng exploitatio

ch in this cas

Tercero's dete

Law preclud

he present di

SID Convent

al jurisdictio

ment arbitrat

y the investor

there is no s

nt purports to

El Salvador.

Civil Code,

would be re

eges under th

pect to dispu

de its investm

able to resol

l lacks jurisd

the Executivees and Nationn and Rules,

, Consent to Aki et al. eds., 2

on of the sub

se is the Min

ermination th

de the exerci

ispute has co

tion. It is un

on.635 As exp

tion is alway

r is an indisp

showing that

o bring this c

But as is ev

the dispute

esolved in Sa

he Article 15

utes related t

ment, Claima

lve its disput

diction ration

e Directors onnals of other Spara. 23 ("Co

Arbitration, in2d ed. 2009)

206

bsoil to the te

ning Law.

hat the terms

ise of intern

onsequences

niversally rec

plained by D

ys based on a

pensable req

t El Salvado

case before t

vident from t

plainly falls

alvadoran co

5 of the Inve

to mining. B

ant has no ba

te before an

ne materiae

n the ConventStates, Mar. 1onsent of the p

n The Oxford(CL-40) (emp

erms of the C

s of Article 7

ational arbit

for the cons

cognized tha

Dr. Christoph

an agreemen

quirement for

r consented

the Tribunal

the Investme

within a cat

ourts only. T

estment Law

Because this

asis for claim

internationa

to hear this

tion of the Se8, 1965, reprparties is the

d Handbook omphasis added)

Constitution

7.b the Inves

tration jurisd

sent requirem

at party cons

h Schreuer, "

nt. Consent t

r a tribunal's

to the Tribu

on the basis

ent Law itsel

tegory of ma

Therefore, th

w is specifica

was the lega

ming any rig

al tribunal. I

case.

ettlement of Inoduced in thecornerstone o

of Internationa).

n and applica

stment Law

diction under

ment include

ent provides

"[l]ike any f

to arbitration

s jurisdiction

unal's

s of the

lf, as well as

atters that El

he general

ally withheld

al framework

ht or expecta

In the absenc

nvestment e ICSID of the jurisdic

al Investment

able

and

r the

ed in

s the

form

n by

n."636

s the

l

d by

k in

ation

ce of

ction

t Law

4

explorati

State. Th

refer to th

State. Pa

because P

during th

Mining L

4

claimant

statute of

responsib

breach; a

make a c

arbitratio

provides

or fraud a

637 Mining638 Civil Cprescriptioand rightsbeen exerlapso de t639 Civil C

El Sal33.

ion licenses a

he "contracts

he concessio

ac Rim neve

Pac Rim is a

he life of tho

Law applies:

2.

Pursu34.

does not ini

f limitations

bility in Salv

and b) extra-

ase for expr

on are for ext

that, for ext

are time-bar

g Law, Art. 7

Code , Art. 22on). See alsos of others reqrcised." / "[l]aiempo, duran

Code, Art. 208

lvador notes

and an appli

s" referred to

on contract th

r obtained a

a holder of ex

se licenses, t

Pac Rim is

Pac Rim's concession

ant to Salvad

itiate its claim

depends on

vadoran law:

contractual r

opriation wh

tra-contractu

tra-contractu

rred after thre

(RL-7(bis)) (

231(2) (establo Civil Code, quires only tha prescripciónnte el cual no

83 (RL-123).

that because

ication for a

o in the seco

hat a conces

concession

xploration li

the jurisdicti

"subject to t

claims relatn are time-ba

doran law, a

m within the

the type of c

: a) responsib

responsibilit

here there is

ual responsib

ual responsib

ee years, cou

("sujet[o] a la

ishing that anArt. 2253 (pr

hat a certain pen que extinguese hayan ejer

207

e Claimant d

concession,

ond part of A

ssion holder

and therefor

icenses maki

ional provisi

the laws, Co

ted to its apparred

a claimant's r

e applicable

claims. The

bility genera

ty. Setting a

none, the cl

bility. Articl

bility, "the ac

unted from t

as leyes, Tribu

n action is timroviding that "eriod of time e las accionescido dichas a

did not have

there were n

Article 7 of th

would sign w

re never sign

ing claims o

ion in the fir

ourts and Aut

plication for

right to initia

statute of lim

ere are only t

ated as a con

aside the fact

laims Pac Ri

le 2083 of th

ctions grante

the day of pe

unales y Auto

me-barred whe"[t]he prescrielapse during

s y derechos aacciones. ") (R

a concessio

no written co

he Mining L

with the repr

ned such con

over rights al

rst part of Ar

thorities of t

the El Dorad

ate an action

mitations.638

two types of

nsequence of

t that Pac Ri

im has allege

he Salvadora

ed by this tit

erpetration o

oridades de la

en it is extingiption that extg which such ajenos exige sRL-123).

on, but only

ontracts with

Law appear t

resentative o

ntract. Howe

llegedly acqu

rticle 7 of th

the Republic

do exploitati

n ends if the

The applic

f civil

f a contractu

im is trying t

ed in this

an Civil Cod

le for damag

of the act."639

a República…

guished by tinguishes actactions have

solamente cie

h the

o

of the

ever,

uired

he

c."637

ion

able

ual

to

de

ges

9

…").

tions not

erto

4

law does

of the Civ

initiate a

affected p

dispute a

4

Environm

exploitat

languishe

inexperie

argues th

its "prim

Permittin

from obta

4

time limi

Environm

had failed

640 Civil C641 Memor642 Memor643 Memor644 Memor

The ti35.

not require

vil Code pro

claim was b

party.640 Th

are irrelevant

In this36.

ment never ru

ion concessi

ed due to per

ence of the te

hat the other

ary focus rem

ng process th

aining the ex

Even 37.

it to run, the

ment had 60

d to do so.64

Code, Art. 225

rial, para 9.

rial, para. 199

rial, para. 320

rial, para. 179

ime limit sta

actual know

ovides that th

born and not

hus, under Sa

t. The three

s arbitration,

uled on its a

ion. Pac Rim

rsistent pers

echnical staf

issues with

mained on sh

hrough MAR

xploitation c

though actua

record show

business day

4 Pac Rim w

53 (RL-123).

9.

0.

9.

arts from the

wledge of the

he time limit

from the tim

alvadoran law

years run fr

, Pac Rim's c

application fo

m complains

onnel chang

ff charged w

its concessio

hepherding t

RN."642 Acc

concession w

al knowledg

ws that Pac R

ys to issue a

wrote to the

208

occurrence

e alleged bre

t is to be calc

me when the

w, Claimant

rom the date

claims are ba

or an environ

s that its "app

ges within th

with evaluatin

on applicatio

the slow-mo

ording to Cl

was the lackin

ge of the alle

Rim knew in

a decision reg

Minister of E

of the allege

each by the a

culated from

e alleged wro

t's arguments

of the allege

ased on its c

nmental perm

plication for

e Ministry, u

ng the permi

on would hav

oving ED Mi

laimant, the

ng environm

ged wrongd

n December 2

garding the e

Environmen

ed wrongful

affected party

m the time th

ongful act w

s about when

ed unlawful

complaint tha

mit for the E

r an environm

understaffing

it application

ve easily bee

ining Enviro

only thing th

mental permi

doing is not r

2004 that th

environment

nt:

act. Salvad

y. Article 22

hat the right t

as known by

n it knew it h

act.

at the Minist

El Dorado

mental perm

g, and

ns."641 Claim

en resolved,

onmental

hat prevente

it.643

required for t

e Ministry o

tal permit an

doran

253

to

y the

had a

try of

mit . . .

mant

but

ed it

the

of

nd

4

reiteratin

4

environm

Rim, ther

permit fo

to initiate

Decembe

Salvador

44

claim for

the time p

645 Letter 646 Memor(C-139)).

On SeStudyreferehave aevaluaMinisdelay,

In July38.

ng its compla

GivenEIA eexpedBarrerEnviroand deprojec

Thus, 39.

mental permi

refore, had a

or its propose

e a legal acti

er 2007. By

r's alleged un

Pursu40.

r damages. C

prescribed b

from PRES to

rial, para. 221

eptember 8, ty for the "EL

nced Ministalready passation. Howevtry. Our com, given that i

y 2005, Pac

aint that the d

n that more thevaluation prdite the EIA ara, the long Eonmental Peelaying the ict.646

the act that

it within the

a right to init

ed exploitati

ion under Sa

April 2009,

nlawful act w

ant to Articl

Claimant's fa

by the law ex

o MARN, De

1 (quoting Le

two thousanL DORADO"try. At presened since the ver, no decis

mpany wouldit is causing

Rim wrote t

delay was ca

han ten monrocess, I respapproval proEIA evaluatiermit for the investment in

allegedly ha

period estab

tiate a claim

ion project s

alvadoran law

, when Pac R

were time-ba

le 2083 of th

ailure to exe

xtinguished s

ec. 15, 2004 (R

etter from Fred

209

nd four, the E" Project wasnt, more thandate it was s

sion has beed like to knous harm at p

to the Minist

ausing it har

nths have paspectfully reqocess. As I hion process El Dorado Mn, and the de

armed Claim

blished by la

based on th

ince Decemb

w started run

Rim initiated

arred under S

he Civil Code

ercise the rig

such right th

R-55).

d Earnest to M

Environments submitted

an sixty businsubmitted fo

en issued to uow the reasonpresent.645

ter of Econo

rm:

ssed since thquest your ashave told Minand the granMine Projectevelopment

mant, i.e., the

aw, had occu

he lack of iss

ber 2004. T

nning in Dec

d this arbitrat

Salvadoran L

e, Pac Rim h

ghts afforded

hrough presc

Minister Yola

tal Impact to the aboveness days or your us by the ns for the

omy, request

he start of thessistance to nister Hugo

nting of the t is harming of, the

e non-issuanc

urred in Dece

suance of the

The three yea

cember 2004

tion, claims

Law.

had three yea

d by Salvado

cription. The

anda de Gavid

e-

ting her help

e

ce of the

ember 2004.

e environmen

ars for Pac R

4 and ended

based on El

ars to initiate

oran law with

erefore, Pac

dia, July 19, 2

p and

. Pac

ntal

Rim

in

l

e a

hin

Rim

2005

could not

initiated

44

objection

filing of t

were dec

additiona

with the

time."647

agreemen

reviewin

44

request th

prelimina

concurren

647 The Re

t bring claim

the present a

3.

In acc41.

ns "as early a

the counter-

cided by the

al objections

case, El Salv

It was not u

nt on the app

g the subject

Takin42.

hat the Tribu

ary matter. I

ntly with the

epublic of El

ms related to

arbitration pr

Conclusion

cordance wit

as possible"

memorial."

Tribunal in J

s to jurisdicti

vador reserv

until Claima

plicable law,

t of applicab

ng into accou

unal suspend

Instead, El S

e merits.

Salvador's M

the non-issu

roceedings.

n on additio

th ICSID Arb

and "no late

El Salvador

June 2012. A

ion, stating t

ves the right t

ant filed its M

, that these n

ble law.

unt the advan

d the proceed

Salvador pro

Memorial on O

210

uance of the

nal objection

bitration Rul

er than the ex

r raised obje

At the time,

that "to the e

to raise addi

Memorial on

new objectio

nced stage of

ding on the m

oposes that th

Objections to J

environmen

ns to jurisdic

le 41(1), El

xpiration of t

ctions to jur

El Salvador

extent the Tr

itional objec

n the Merits,

ons to jurisdi

f the arbitrat

merits to dec

he Tribunal c

Jurisdiction, O

ntal permit b

ction

Salvador is r

the time lim

risdiction in

r reserved th

ribunal decid

ctions at the a

alleging tha

iction were i

tion, El Salv

cide these ob

consider the

Oct. 15, 2010

y the time it

raising these

mit fixed for t

2010, which

he right to ra

des to contin

appropriate

at there was n

dentified wh

vador does no

bjections as a

ese objection

0, para. 467.

t

e

the

h

ise

nue

no

hile

ot

a

ns

VII. C

44

Law and

44

and actio

44

Claimant

Claimant

Dorado—

failed to

an exploi

prevent C

ownershi

Claimant

(somethin

not receiv

choice to

environm

exploitat

concessio

claim to

Claimant

648 Pac Ri

CONCLUSI

El Sal43.

is not entitle

In Sec44.

ons, has no m

First, 45.

t has still not

t's principal

—is utterly w

comply with

itation conce

Claimant fro

ip or authori

t admitted w

ng Claimant

ve the reque

o ignore the r

mental permi

ion concessi

on. Since C

injury relate

t's claims rel

m Internal M

ON

lvador has sh

ed to any co

ction II, El S

mining rights

following up

t refuted, El

claim—it's a

without merit

h two additio

ession admit

m obtaining

ization for th

was "nearly (i

t admits it be

ested exploita

requirements

it, Claimant w

ion under the

laimant had

ed to resourc

lated to the o

Memo re Surfa

hown that Cl

mpensation.

Salvador dem

s on which to

p on the argu

Salvador ha

alleged entitl

t. Notwithst

onal requirem

tted for cons

g an exploitat

he land in the

if not totally

egan to prep

ation conces

s of the Min

would not h

e law and th

no concessi

es in the req

one deposit f

ace Owner Au

211

laimant has

.

monstrated th

o base its cla

uments raise

as proven, an

lement to a

tanding the m

ments of the

ideration. E

tion concess

e entire requ

y) impossible

are in 2006

ssion. El Sal

ning Law. Th

ave been abl

erefore does

on and no ri

quested conc

for which it r

uthorization (C

no valid clai

hat Pac Rim,

aims.

ed in the Pre

nd confirmed

12.75 km2 ex

missing envi

Mining Law

Each failure w

sion. In othe

uested conce

e"648 to obtai

and abandon

lvador is not

hus, even if

le to meet th

s not have, a

ight to receiv

cession area.

requested an

C-291).

ims under th

, due to its o

liminary Ob

d with exper

xploitation c

ironmental p

w to have its

was alone su

er words, wit

ssion area (s

in); or 2) a f

ned in 2009)

t to blame fo

Claimant ha

he requireme

and never had

ve a concess

These facts

n exploration

he Investmen

own decision

bjections whi

rt testimony,

concession a

permit, Claim

s application

ufficient to

thout either

something

feasibility stu

), Claimant c

or Claimant's

ad acquired a

ents for an

d, a right to

sion, it has n

s dispose of

n concession

nt

ns

ich

, that

at El

mant

n for

1)

udy

could

s

an

a

o

n

(Minita)

resources

44

lacking le

2005, Cla

It had no

applicatio

concessio

Esperan

Claimant

all or par

area of th

old licen

44

allegation

precludes

expire. F

rights in

to substa

44

conclusiv

Counter-

. They also

s in the area

Secon46.

egal merit. F

aimant had n

authorizatio

on. Thus, an

on must fail

za, South M

t and its subs

rt of the area

he original li

ses expired (

Claim47.

n that the Go

s Claimant a

Finally, El S

the Zamora

antiate claims

Thus, 48.

vely showing

Memorial de

demonstrate

of the reque

nd, El Salva

Following th

no continuin

on to continu

ny claims rel

for this addi

Minita, and B

sidiaries wer

a of the expir

icenses for w

(Coyotera a

mant allowed

overnment h

and its subsid

alvador has

a/Cerro Col

s for any of t

in Section I

g that Pac R

emonstrated

e that Claima

ested conces

dor has show

he expiration

ng rights rela

ue exploring

lated to the u

itional reaso

Balsamo dep

re precluded

red licenses.

which Claima

and Nance D

d its Santa R

had impeded

diaries from

confirmed th

orado explo

these early e

II, El Salvado

im had no ri

d that Claima

212

ant could ha

sion.

wn that Claim

n of the origi

ated to the de

g under the g

unauthorized

on. This incl

posits. Addi

d from obtain

Therefore,

ant sought to

Dulce) must a

Rita explorati

its explorati

obtaining a

hat there is n

oration licens

exploration a

or provided

ights on whi

ant's claims f

ave no rights

mant's additi

inal explorat

eposits in the

guise of havin

d exploration

ludes claims

itionally, un

ning new exp

any claims r

o obtain new

also fail.

ion license t

ion activities

new license

no evidence

se areas. Cl

areas.

evidence an

ch to base it

fail for multi

s with respec

ional claims

tion licenses

e expired ex

ng a pending

n in the area

related to th

nder the Mini

ploration lic

related to de

w exploration

to expire in 2

s. The Mini

e after letting

of Claimant

laimant, ther

nd expert test

ts claims. Th

iple addition

ct to any othe

s are similarl

s on January

xploration are

g concession

a of the reque

he Nueva

ing Law,

enses coveri

eposits in the

n rights after

2009 with no

ing Law

g the first lic

t ever having

refore, has fa

timony

he rest of the

nal reasons:

er

ly

y 1,

eas.

n

ested

ing

e

r the

o

cense

g any

ailed

e

44

starting w

"formalit

Governm

requirem

not resolv

local com

though it

nationalit

649 Memorthe reason

In SecmoratfurtheThus, in anybecausuch a

In SecInvestto supClaimits claobtainnot codo anygoodwwas ca

In Secin anycompeapplicdeposto a va

From 49.

with its actio

ty" with whi

ment grant it

ments or even

ved environm

mmunities. I

t 1) misled th

ty; and 2) in

rial, para. 454nable understa

ction III, El Storium was aer showed th

Claimant wy event, the duse, as mentioa decision.

ction IV, El tment Law.

pport a claimmant has not aim under Arning a conceompensable. ything possibwill towards aused by its

ction V, El Sy event, its qensated for acation. Nor cits in the subalid exploita

every angle

ons in El Salv

ch it should

a huge conc

n submitted t

mental conc

In this arbitr

he Tribunal r

nsisted on a m

4 ("Pac Rim fanding that th

Salvador shoa legitimate eat the Minist

was not entitldecision to soned above,

Salvador shoClaimant ha

m under Articshown that trticle 8, for ession regard Likewise, Cble to help, ithe companown bad de

Salvador shoquantum calca concessioncan it be combsoil, becausation concess

, Claimant's

vador, Claim

not have to

cession even

the required

erns about it

ation, Claim

regarding its

merits proce

filed its Concehe application

213

owed that, gexercise of ttry had unreed to an envuspend mini Pac Rim ha

owed that itas not allegecles 5 or 6 ofthe Governmexpropriationdless of its faClaimant's aincluding ch

ny, is not comcisions, and

owed that Claculation is sen it failed to mpensated fose these belosion.

claims have

mant has sho

comply.649

though it 1)

documentat

ts project or

mant demand

s knowledge

eding to pro

ession Applicn procedure w

iven circumthe precautioesolved concvironmental ping activitiesad no rights t

did not breaed any facts of the Investm

ment depriven, must fail.

ailure to comassumption thhanging its lampensable. A

not by El Sa

aimant has neriously flawobtain becauor alleged prong to the St

e no basis in

own that it co

In El Salvad

) had not me

tion under th

gained socia

ds that the Tr

e of a dispute

ovide evidenc

cation with Mwas a formality

mstances in Eonary principcerns about Ppermit for exs did not impthat could be

ach its obligaor presentedment Law. Ined it of any p

Claimant's mply with thehat the Goveaws, becauseAny loss Claalvador.

no right to cowed. Claimause of its defroperty righttate until ext

the facts or

onsiders the

dor, it deman

et the substan

he Mining La

al license to

ribunal comp

e at the time

ce and exper

MINEC in Decy") (emphasis

l Salvador, aple. El SalvaPac Rim's EIxploitation. pact Pac Rime affected by

ations under d any argumen addition,

property righhope of

e Mining Lawernment woue of previousaimant suffe

ompensationant cannot beficient ts over minetracted pursu

the law. Ind

law a mere

nded that the

ntive

aw; and 2) h

operate in th

pensate it ev

it changed i

rt testimony

cember 2004 s added).

a ador IA. But,

m y

the ents

ht, so

w is uld s

ered

n and, e

ral uant

deed,

e

had

he

ven

its

with

showing

changed

unreason

4

in its 333

interest o

had no ri

under the

lack of sp

that asser

4

"extraord

and could

Investme

in their e

650 Pac Ri

its complian

its argument

nable.

El Sal50.

3-page Mem

of brevity, El

ights on whic

e Investment

pecific refere

rtion or argu

Claim51.

dinary profit

d not possibl

ent Law. Cla

ntirety.

m 2002 Prese

nce with the

t to assert th

lvador notes

orial and acc

l Salvador h

ch to base it

t Law, and E

ence to any

ument, and E

mant's gamble

s"650—failed

ly show, tha

aimant's clai

entation to Sh

Mining Law

hat it did not

that Claima

companying

as limited its

s claims, El

El Salvador i

allegation or

El Salvador r

e in El Salva

d because of

at El Salvado

ims under th

hareholders at

214

w but provide

have to com

ant makes ma

g witness stat

s response to

Salvador did

is not respon

r argument, h

reserves all o

ador—its att

f its own bad

or violated an

he Investmen

t 1 (C-218).

ed nothing o

mply. Claim

any unfound

tements and

o conclusive

d not breach

nsible for Cla

however, do

of its rights i

tempt to stak

d decisions.

ny obligation

nt Law of El

of the sort; b

ant's demand

ded assertion

d expert repo

ely showing

h obligations

aimant's alle

oes not imply

in this regard

ke large claim

Claimant ha

ns to Claima

Salvador mu

but rather

ds are

ns and argum

rts. In the

that Claiman

s to Claimant

eged losses.

y acceptance

d.

ms and make

as not shown

ant under the

ust be dismi

ments

nt

t

The

e of

e

n,

e

issed

VIII. C

4

El Salvad

Salvador

for its cla

Claimant

Salvador

been initi

4

in this arb

Salvador

Claimant

A

4

exploitat

concessio

showed t

been gran

back up i

how, and

concessio

651 NOA,

COSTS

Claim52.

dor into gran

r. Even so, C

aims. But C

t initiated thi

r has been fo

iated nor gon

This T53.

bitration bec

r will highlig

t has relied o

A. Claim

Claim54.

ion concessi

on."651 In th

that Claiman

nted a conce

its original a

d when it fulf

on.

paras. 2, 65, 9

mant initiated

nting a conce

Claimant wa

laimant's ev

is arbitration

orced to spen

ne forward.

Tribunal sho

cause Claima

ght just a few

on to get to t

mant's "perf

mant began th

ion for El Do

he Preliminar

nt was not en

ession due to

assertions, C

filled the leg

96.

d this arbitrat

ession Claim

s obligated t

ver-changing

n without reg

nd its limited

ould order Cl

ant brought

w examples o

this point in

fected right

his arbitratio

orado and ha

ry Objection

ntitled to a m

o its failure to

laimant has

gal requirem

215

tion because

mant knew it

to know and

g arguments,

gard for the b

d resources in

laimant to re

and insisted

of the misrep

the arbitratio

" to a conce

on claiming t

ad "met all o

n phase of th

mining conce

o comply wi

changed its

ments for an a

e it thought i

did not qual

d understand

both factual

bases of its c

n proceeding

eimburse El

d on continui

presentation

on.

ession

that it had a

of the require

his arbitration

ession and in

ith the legal

story, contra

application f

it could intim

lify for unde

the factual a

l and legal, s

claims. As a

gs that shoul

Salvador for

ing its meritl

s and incons

"perfected r

ements to re

n, however,

n fact could n

requirement

adicting itse

for a mining

midate and co

er the laws o

and legal bas

show that

a result, El

ld never hav

r all of its co

less claims.

sistencies tha

ight" to an

ceive the

El Salvador

not have law

ts. Unable t

lf on whethe

exploitation

oerce

of El

ses

ve

osts

El

at

r

wfully

to

er,

n

4

evidence

the conce

4

factual al

the requi

requested

Claimant

comply w

applicatio

requested

652 Rejoinwill produthat are ne653 Transc654 In its Mland owneRim Inter655 Rejoin

Claim55.

and expert t

ession.652 A

WhenprudenconfidpresenTom Senvirofeasibor maidenti

But C56.

llegations. O

rement to pr

d concession

t knew the re

with them.655

on requirem

d exploitatio

nder (Preliminuce evidence ecessary to es

cript of Hearin

Memorial, Claers" was one rnal Memo re

nder (Prelimin

mant survived

testimony pr

At the hearing

n we get to thnt for us to gdent that we nted to you. Shrake, fromonmental expbility studieske a site visify precisely

Claimant did

On the contr

rovide owner

n.654 Its own

equirements

5 Because C

ents, it shou

on concession

nary Objection– including establish its cla

ng on Prelimi

aimant introduof the "main tSurface Own

nary Objection

d the Prelimi

roving its co

g, Claimant a

he merits, anget to the mewill be ableWe will do t

m Pacific Rimperts, from e. In fact, we it to figure othe trajector

not fulfil thi

ary, Claiman

rship or auth

n documents

for an explo

Claimant is s

uld never hav

n.

ns), para. 132expert evidencaims.").

inary Objectio

uced an internthings . . . lac

ner Authoriza

ns), para. 49.

216

inary Object

ompliance wi

asserted:

nd we do belerits of this c to rebut all this throughm engineers,experts in mimight even

out where thery or the line

is promise. I

nt now admi

horization fo

confirm the

oitation conc

olely respon

ve pursued c

2 ("At the appce – to demon

ons, May 31,

nal memo in cking in our reation (C-291).

tion phase by

ith the legal

lieve it is appcase, we inteof the factua

h fact testimo, from Pacifiining, from ewant to take

e mine is ande of the mine

It has not reb

its that it kne

or the surface

e facts presen

cession and s

nsible for its

laims asserti

propriate timenstrate the pro

2010, at 153:

which it admequest for the.

y promising

requiremen

propriate andend to and aral allegationony from Mric Rim experts in e a site visit d perhaps e shaft.653

butted any o

ew it had no

e land in the

nted by El S

simply "cho

failure to m

ing that it w

e in this arbitropositions of

:13-154:3 (em

mitted that "aue exploitation

to provide

nts to apply f

d re

ns r.

of El Salvado

t complied w

e area of the

alvador:

se" not to

meet the

was entitled to

ration, ClaimaSalvadoran la

mphasis added

thorization ofn concession."

for

or's

with

o the

ant aw

d).

f the " Pac

B

4

right, but

knew of

4

showing

hide the r

Decembe

identifica

Counter-

even fore

Claimant

the Unite

have the

4

656 See NOMinisterioinvestmenResponde("Pac Rimmining, w657 It shouAbuse of InvestmenJurisdictio658 Counteresulting iMarch 20manifestediscrete m659 Letter

B. Claim

Claim57.

t also manag

a possible di

In the58.

that the disp

real reason w

er 2007, Clai

ation of the "

Memorial on

eseeable any

t was forced

ed States,659

impact it sh

Havin59.

OA, para. 7 (so de Medio Amnts" in 2004-2ent's Objectionm Cayman haswhich Presiden

uld be noted thProcess undent Law based onal Objectio

er-Memorial (in loss or dam08. To the ex

ed by the earlimeasure in bre

from Claiman

mant's acces

mant not only

ged to keep t

ispute with E

jurisdiction

pute existed

why it chang

imant relied

"measure at

n jurisdiction

y earlier than

to admit tha

that admissi

ould have.

ng gotten to t

stating that Clmbiente y Rec2006); Claimans to Jurisdics maintained nt Saca first a

hat the Tribuner CAFTA and

on these misrns, June 1, 20

(Jurisdiction)mage is Respoxtent that ban ier failures to each of CAFT

nt's counsel to

ss to ICSID

y insisted on

this arbitratio

El Salvador.

n phase, Claim

before its ch

ged nationali

on a tactica

issue"656 and

n, Claimant

n March 2008

at by late 200

ion came too

the merits, C

laimant's claimcursos Naturaant Pac Rim Ction, Dec. 31consistently t

announced in

nal decided nd did not evenrepresentation012, paras. 2.

, para. 376 ("ondent's de famay have preact, those fai

TA obligation

o El Salvador

217

arbitration

pursuing an

on going bas

mant could n

hange of nati

ity from the

al shifting of

d its explana

insisted that

8, after the c

07 it had hir

o late and am

Claimant now

ms were baseales ('MARNCayman LLC, 2010 ("Counthat the measuMarch 2008.

ot to grant Eln consider thins by Claima110–2.111.

The act suppocto ban on me-dated the Milures only bens with the ann

r's counsel, Ap

n

n arbitration

sed on misre

not contest t

ionality in D

Cayman Isla

f positions, re

ation of when

t a dispute b

change of na

red internatio

mid too many

w freely con

ed on "measurN') and MINECC's Counter-M

nter-Memoriaure at issue is.").

l Salvador's juis objection u

ant. Decision

orting Pac Rimining as annoMarch 2008 anecame recogninouncement.

pr. 22, 2011,

based on a n

epresentation

the overwhel

December 20

ands to the U

epeatedly ch

n the dispute

between the p

ationality.658

onal arbitrati

y inconsisten

ntradicts its p

res taken . . . C, against Cla

Memorial in Ral (Jurisdictios El Salvador'

urisdictional ounder the Salv

on the Respo

im Cayman's ounced by Prennouncement izable as appl").

at 1 (R-128).

non-existent

ns about whe

lming eviden

007. To try t

United States

hanging its

e arose.657 I

parties was n

Even thoug

ion counsel

nt statements

prior testimo

through the aimant's esponse to

on)"), para. 40's de facto ban

objection on vadoran ondent's

claims of breesident Saca iand been lications of a

.

en it

nce

to

s in

In its

not

gh

in

s to

ny:

02 n on

each in

"I was paGovernmbetween tfurther frSalvadoraDayton anlevels in texpressed2007 andto conducbe forthcomy many"Only aftwe had bereasons –ever get tdispute wthat momit did not financingstatement

4

admits th

metallic m

Salvador

Salvador

at least se

4

after adm

660 First S661 Memor662 Witnes663 Memor

Jurisarticularly sur

ment is now clthe parties inom the case. an officials pnd well into the Salvadord support for

d 2008, assurect extraction oming. I reca

y trips to El Ster we recogneen facing w

– and that, forthe permits –

with El Salvadment. I can say

occur until ag and Presidet."662

Contr60.

hat it has bee

mining expl

r conducted a

r's assertions

even months

Never61.

mitting that it

hrake Witnes

rial, para. 298

ss Statement o

rial, para. 300

sdiction Pharprised to lealaiming that

n 2006. In fac. . . From my

prior to the 202008, officiaan Governmour project,

ed us that theactivities at Eall numerous

Salvador."660 nized that the

were due purer political rea

– did we concdor. I cannot y with certainafter the Febrnt Saca's Ma

ary to Claim

en aware, sin

oration and

a Strategic E

in the jurisd

s before its c

rtheless, Cla

t had been ex

ss Statement,

8 (emphasis a

of Catherine M

0.

ase arn that the there was a d

ct, nothing coy meetings w002 merger wals at the highent repeatedland, particul

e permits necEl Dorado wsuch meetin

e regulatory dly to politica

asons, we miclude that we

precisely identy, howeverruary 2008 arch 2008

mant's prior te

nce May 200

exploitation

Environment

dictional stag

change of na

imant contin

xpressly told

paras. 89-90.

added).

McLeod-Seltz

218

dispute ould be with with hest ly larly in cessary

would ngs on

"[Owhcommeandde comactisucEstAsswa

delays al ght not had a entify r, that

"Asby awawaresoenvpol

estimony to

07 at the late

would be pr

tal Evaluatio

ge: Claimant

ationality in D

nues to contr

d in 2007 tha

zer, Dec. 31,

O]n 7 May 20hich representmpanies in theeting was cod also the MiGavidia. At

mpanies wereivity in the c

ch time as an tratégica (Strsessment or 's conducted.s Mr. Shrakethis point [Mare that the ds political anolved by meavironmental alitical means

this Tribuna

st, that no en

rocessed for

on. Thus, Cl

t knew it had

December o

radict itself i

at all mining

2010, para. 3

Merits Pha007, a meetintatives of all he country weonvened by Minister of Ecothis meeting

e informed thcountry would Evaluación rategic Envir'EAE') of the"661

e and Ms. CoMay 2007], thdelay PRES fnd would therans of techniassessment, b."663

al, Claimant

nvironmenta

r anyone unti

laimant now

d a dispute w

f 2007.

in its Memor

g activities w

38 (emphasis

ase ng was held tthe mining ere invited. T

Minister Gueronomy, Yolang, the mininghat all miningd be halted uAmbiental

ronmental e mining indu

olindres affirmhe Claimant wfaced at MARrefore not beical but only thro

now openly

al permits fo

il after El

confirms El

with El Salva

rial. Shortly

were being ha

added).

to

The rrero nda g

until

ustry

m, was RN

e

ough

y

r

l

ador

y

alted

until a St

from earl

resolved

Claimant

4

had a dis

before Cl

nationalit

statemen

saving th

C

4

presented

dispute a

presentin

4

reaching

of 1881 a

refers to

664 Memor665 Memor666 Decisio667 Memor

trategic Envi

lier phases o

based on "ex

t's bald asser

If Cla62.

pute with El

laimant hire

ty from the C

nt of March 2

he time and e

C. New f

El Sal63.

d an inaccura

actually arose

ng new and f

For in64.

such a conc

and 1922 to

as mere "for

rial, para. 298

rial, para. 322

on on the Res

rial, paras. 49

ironmental A

of this procee

xpress assur

rtion contrad

imant had no

l Salvador (w

d internation

Cayman Isla

2008), this ar

expenses tha

frivolous ar

lvador is bei

ate account o

e. In this ph

frivolous arg

nstance, Clai

clusion by ex

interpret the

rmalities").66

8.

2.

spondent's Jur

99-503.

Assessment c

eding that it

rances" from

dicting its ow

ot misrepres

which it now

nal arbitratio

ands to the U

rbitration co

at will be spe

rguments on

ng forced to

of the facts r

hase, Claima

guments.

mant asserts

xtrapolating

e requiremen

67 El Salvad

risdictional O

219

could be con

thought the

m the Govern

wn admission

sented to the

w admits was

on counsel, s

United States

ould have bee

ent on the me

n the merits

o argue the m

regarding its

ant is again in

s that mere d

and linking p

nts in Article

dor has alrea

Objections, Jun

nducted,664 C

problems w

nment "throu

ns cannot ch

Tribunal th

s May 2007

seven month

s, and ten mo

en resolved

erits phase.6

merits of this

s rights in El

ncreasing th

discovery of

provisions in

e 37 of the 19

ady explained

une 1, 2012, p

Claimant rep

with its applic

ughout 2007.

hange reality

he actual date

at the latest,

hs before it ch

onths before

in the jurisd

666

s case only b

l Salvador an

he costs for a

deposits con

n the revoke

995 Mining

d that the old

aras. 2.96-2.1

peats its claim

cation would

."665 But

y.

e when it kne

, five months

hanged

e President S

diction phase

because Claim

nd the time t

all involved b

nfers rights,

ed mining co

Law (which

d mining cod

100.

m

d be

ew it

s

Saca's

e,

mant

the

by

odes

h it

des

are irrele

in force w

4

land own

metallic m

and "or"

the conse

provision

authoriza

metallic,

4

submitted

working

D

4

should be

the legal

4

incurred

mining e

nationalit

668 Memor

evant and the

when Claima

Equal65.

nership requi

minerals."668

means "and

equences of

ns of the Min

ation require

undergroun

These66.

d was actual

on the Feasi

D. Concl

Notwi67.

e paid hundr

requirement

Claim68.

in this arbitr

xploitation c

ty to gain ju

rial, paras. 56

ey were purp

ant made its

lly surprising

irement] is n

8 According

." There is n

its failure to

ning Law, as

ement applie

nd, or open-p

e arguments,

lly the requir

ibility Study

lusion on co

ithstanding i

reds of millio

ts to have th

mant must be

ration becau

concession it

urisdiction un

60-564.

posefully rev

investment

gly, Claiman

not an applic

g to Claiman

no basis for t

o comply wit

s confirmed

s to all appli

pit).

as well as C

red Feasibili

y until 2009,

osts

its utter failu

ons of dollar

e rights it cl

ordered to r

se Claimant

t knew it did

nder CAFTA

220

voked by the

in El Salvad

nt argues in i

cable require

nt and its exp

this nonsens

th the applic

by El Salvad

ications for e

Claimant's as

ity Study, ev

are frivolou

ure to suppor

rs in spite of

aims to have

reimburse El

1) initiated

d not have a

A for a pre-ex

e new Mining

dor.

its Memorial

ement for exp

pert John Wi

se. It is simp

ation require

dor's experts

exploitation

ssertion that

ven though it

us.

rt its claims,

f the fact tha

e in El Salva

l Salvador fo

and continu

right to rece

xisting dispu

g Law of 19

l that "Articl

ploitation co

illiams, "and

ply a last dit

ements. Und

s, the land ow

concessions

the Pre-Fea

t admittedly

, Claimant in

at it has neve

ador.

or all the cos

ued this arbitr

eive; 2) chan

ute; 3) hid fa

95, the only

le 37(2)(b) [

oncessions fo

d" means "or

ch effort to a

der the clear

wnership or

s (metallic, n

sibility Stud

was still

nsists that it

er complied w

sts and expen

ration about

nged its

acts from the

y law

[the

or

r"

avoid

r

non-

dy it

with

nses

t a

e

Tribunal

frivolous

4

needed th

much mo

complica

concessio

grant Cla

4

Arbitratio

reimburs

to otherw

669 El Salvwell as th

to avoid a fi

s arguments

All of69.

hroughout th

ore expensiv

ate the simpl

on and its su

aimant the co

El Sal70.

on Rules and

e El Salvado

wise cover al

vador will pree consideratio

finding of Ab

in an attemp

f this, along w

his proceedin

ve than it nee

le issue of its

ubsequent fai

oncession to

lvador theref

d Article 61(

or's legal fee

ll the costs an

esent a detaileons regarding

buse of Proc

pt to keep thi

with Claima

ng, have unn

eded to be. C

s failure to m

ilure to conv

o which it wa

fore requests

(2) of the IC

es and disbur

nd expenses

ed descriptiong interest, at th

221

ess; and 4) o

is arbitration

ant's propens

necessarily p

Claimant's st

meet the requ

vince the Go

as not entitle

s that, in acc

CSID Conven

rsements, tog

s of this proc

n of the costs he end of the

once caught

n alive.

sity to chang

prolonged thi

trategy from

uirements to

overnment to

ed.

cordance wit

ntion, the Tr

gether with i

ceeding.669

and legal feemerits phase

red-handed,

ge its accoun

is arbitration

m the beginni

obtain an ex

o change or i

th Article 28

ribunal order

interest, and

s incurred in .

, continues to

nt of the facts

n, making it

ing has been

xploitation

ignore its law

8(1) of the IC

r Claimant to

d order Claim

this arbitratio

o add

s as

n to

ws to

CSID

o

mant

on, as

IX. REQUEST FOR RELIEF

4 71. El Salvador respectfully requests that the Tribunal:

• Issue an Award stating that it lacks jurisdiction under the Investment Law of El Salvador and dismissing all claims for lack of jurisdiction;

• Should the Tribunal find that it has jurisdiction over any claim, for the reasons stated above, issue an A ward dismissing all claims for lack of factual and legal merit;

• Order Claimant to pay all costs and expenses of all phases of this arbitration, and reimburse El Salvador for its legal and expert fees and costs for all phases ofthis arbitration, plus interest from the time of the Award until payment is made, in an amount and at a rate to be established at the appropriate time; and

• Grant El Salvador any other remedy that the Tribunal considers appropriate.

Dated: January 10, 2014

Lie. Luis Antonio Martinez Gonzalez Fiscal General

Lie. Benjamin Pleites Mazzini Secretario General

Fiscalia General de Ia Republica de El Salvador

Respectfully submitted,

Derek C. Smith Luis A. Parada Erin Argueta Christina L. Beharry Tafadzwa Pasipanodya Constantinos Salonidis Gisela Paris Foley Hoag LLP

Mario Enrique Saenz Humberto Saenz Marinero Geraldina Mendoza Parker Manuela de la Helguera Saenz & Asociados, El Salvador

ATTORNEYS FOR THE REPUBLIC OF EL SALVADOR

222

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