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HomeTopicsBusinessCosta Rica doesn't need to pay mining company, international court rules

Costa Rica doesn’t need to pay mining company, international court rules

Costa Rica will not be required to compensate mining company Infinito Gold for the cancellation of the Crucitas mining project, the International Centre for Settlement of Investment Disputes ruled Friday.

The decision was announced by President Carlos Alvarado, who said Costa Rica “must remain free from open-pit mining.”

The dispute in question has spanned decades. In 2008, President Óscar Arias issued an executive decree allowing Infinito Gold (through its local subsidiary, Industrias Infinito) to begin construction of an open-pit gold mine at Crucitas in northern Costa Rica.

Arias’s decree deemed the mine “in the public interest” despite a 2002 court ruling that had established a moratorium on open pit mining. Costa Rican courts in 2010 voided Infinito Gold’s authorization due to environmental concerns.

Since then, the region has been harmed by illegal gold miners eager to cash in on the area’s massive quantities of the precious metal. Infinito Gold had hoped to extract 800,000 ounces of gold over 12 years at their Crucitas mine.

A lengthy legal battle

In March 2014, after Infinito definitively lost a legal battle in Costa Rica courts, the company filed a request for arbitration before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

Infinito had been seeking approximately $300 million in damages and lost profits, including interest, plus attorney fees and other expenses related to the arbitration.

The sought-out amount also included several million dollars it was ordered to pay by a Costa Rican court for restoration and reforestation of the mining site, located in northern Alajuela province near the border with Nicaragua.

At the heart of Infinito’s claim before the ICSID was the allegation that, despite continuous controversy over the mine, the Costa Rican government had made numerous assurances — across several administrations — that the project could go forward.

Infinito says it spent approximately $81 million developing the Crucitas gold mine between 1993 and 2013.

In its claim, Infinito blames much of its legal woes in Costa Rica on anti-mining activists and politicians, suggesting that they unduly influenced court and government decisions. (The Costa Rican conservation community saw the end of Crucitas as a major victory for the environment and the country’s green image.)

When it first brought the case before the ICSID, the company argued that Costa Rica had violated four of its obligations under the Costa Rica-Canada Promotion and Protection of Investments treaty. The company claimed that Costa Rica:

  1. Unlawfully expropriated Infinito’s investment by annulling the project’s approvals;
  2. Breached its obligation to provide fair and equitable treatment to Infinito’s investments, including the firm’s “legitimate expectations that it would be treated by Costa Rica in a consistent and predictable manner”;
  3. Failed to provide Infinito’s investments with “full protection and security”; and
  4. Breached the most-favored nation clause of the bilateral investment treaty by shirking “its obligation to do ‘what is necessary’ to protect Infinito’s investments.”

Per a government statement, Friday’s ICSID ruling says Costa Rica “did not deny justice” to Infinto Gold and that while Costa Rica should have “considered” how a ban on open-pit mining would have impacted Infinito Gold, the country does not owe compensation for the decision.

This is a developing story and will be updated. 

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