Romania - Resource Exploitation - Gold Mining

Environmental Protection versus Investment Law – The Goldmine in Roșia Montană, Romania

Romania: Roșia Montană in Transylvania © Photo: CIEL
Romania: Roșia Montană in Transylvania © Photo: CIEL

Romania - Resource Exploitation - Gold Mining

Environmental Protection versus Investment Law – The Goldmine in Roșia Montană, Romania

For two decades, community members in Roșia Montană and the surrounding villages in Romania have fought against the construction of Europe's biggest goldmine. And they have been successful. In the face of political resistance and several legal proceedings, Romania acknowledged the major risks for the environment and cultural heritage as well as property rights.

Canadian-British mining company Gabriel Resources is now suing Romania in an investor-state dispute settlement (ISDS) case for a compensation of US$3.3 billion. ECCHR is supporting the residents of Roșia Montană so that their rights are considered in the proceedings.

Case

In November 2018, ECCHR together with its partner organizations ClientEarth and the Center for International Environmental Law (CIEL) assisted with the filing of a petition to intervene as amici curiae.

The submission – on behalf of Romanian organizations Alburnus Maior, Independent Center for the Development of Environmental Resources (ICDER) and Greenpeace Romania – explains the need to consider the rights of the local residents as well as the extraordinary cultural, archaeological and regional significance of the region in and around Roșia Montană.

Context

For 20 years, a tug-of-war battle has ensued between the Canadian-British investor Gabriel Resources and community members of Roșia Montană, Romanian civil society and the Romanian state.

Plans for the mine in Roșia Montană in Transylvania would have seen open-pit gold mining with the use of cyanide, a highly toxic substance linked with serious environmental risks. Residents of three villages would have had to be resettled while four mountains were due to be leveled. The planned mining also threatened one of Romania's most important archaeological sites. The settlement proceedings are the last step in the legal dispute over the mining project.

Principles

Q&A on the legal issues behind the case

Roșia Montană is a gold mining project in Romania which involves plans to exploit the gold reserves in the surroundings of the village of Roșia Montană. As Roșia Montană is located in a region abundant in water with rivers flowing into the Danube, the project was linked with serious environmental risks from the beginning. Residents and environmentalists have been opposing the plans – they fear forced relocation, environmental harm and the destruction of one of the country's most important archaeological sites.

The Canadian-British corporation Gabriel Resources is the main investor in the project, owning 81% of the Romanian Roșia Montană Gold Cooperation (RMGC) which was intended to operate the mine and received an exploration license for this purpose in 1999. The remaining 19% of RMGC is held by another Romanian corporation, Minvest Roșia Montană.

The Roșia Montană project primarily affects the residents of the three villages which would have to be relocated to allow for the construction of the mine. However, the environmental risks are much more extensive. The project foresaw the construction of a reservoir to collect 200 tons of wastewater containing cyanide. This alarmed local residents and environmentalists, particularly since in 2000, a gold mining accident in northwest Romania caused an environmental catastrophe. Cyanide leaked from the Baja Mare mine, contaminating the water relied of by 2.5 million people and killing 1,200 tons of fish.

Those opposed to the project also point to corruption, a lack of transparency and no chance to participate in important political decisions. Due to these grievances, those directly affected consider that the behavior of both Gabriel Resources and the Romanian state violates basic democratic standards. As such Romanian society as a whole is affected – and mobilized. This is demonstrated by the more than 100,000 supporters of the "Salvati Roșia Montană" (Save Roșia Montană) initiative and the tens of thousands of participants in demonstrations against the project up to 2013, making it the largest social movement in Romania since 1989.

The International Center for Settlement of Investment Disputes (ICSID) is an institution for the arbitration of disputes between investors and states based at the World Bank in Washington DC. The ICSID itself is not a court or arbitration tribunal, but it provides an institutional framework and procedural rules for conducting investor-state arbitration. The disputing parties agree on three arbitrators for each individual case.

The primary goal of the civil society opposition so far was to stop the mining project because of the above mentioned problems and risks. In the ICSID proceedings, another goal is to prevent burdening the Romanian state budget with compensation payouts of US$3.3 billion and to ensure that there will be no compromise that continues to neglect the rights of residents and the protection of the environment. Additionally, the proceedings should clarify that corporations can only be afforded the protection of international investment law if they adhere to national laws and international standards. Moreover, the case could set a precedent for a stronger recognition of human rights and environmental standards in investment disputes.

Gabriel Resources wants the arbitration tribunal to declare that the conduct of the Romanian state amounts to a violation of the Romanian-Canadian Bilateral Investment Treaty (BIT) and to award compensation of US$3.3 billion plus interest.

The parties to the legal dispute at the ICSID are Gabriel Resources (as the investor) and the Romanian state. Usually, ICSID proceedings are initiated following a petition by the investor. The arbitration tribunal should constitute itself within 90 days after this petition. The further proceedings depend on the agreements between the parties. Before issuing a decision, the tribunal can order preliminary measures, hold oral hearings and receive evidence.

Generally, ICSID proceedings do not consider concerns of third parties. Together with the lack of transparency, this is one of the major points of criticism of ICSID proceedings: the interests of those directly affected by the respective investment are not heard, let alone taken into consideration. For example, those affected by a construction project are not heard in the proceedings. This is also the case if it is to be expected that the state will not advocate for the interests of the affected population, for example if the government discriminates against minorities or if it does not consider the concerns of the population for other reasons.

However, according to Article 37 of the ICSID Arbitration Rules and the provisions in individual investment treaties, third parties can be admitted to the proceedings and make submissions as so-called non-disputing parties. The Canadian-Romanian Bilateral Investment Treaty (BIT) provides that the proceedings should be open to the public (Annex C Article I). Regarding third party submissions, the BIT stipulates that these shall be admitted if they are helpful for the tribunal, contain information beyond that submitted by the parties, if the submitting persons have a significant interest in the case or if there is a public interest (Annex C Article III).

The position of a non-disputing party is similar to that of an amicus curiae in other proceedings.

The arbitration tribunal decides exclusively on the basis of the law agreed on by the parties (Article 42 ICSID Convention), usually the applicable Bilateral Investment Treaty (BIT) and the ICSID procedural rules. BITs are international treaties concluded between individual states which are meant to ensure non-discrimination between investors from the state parties to the treaty and investors from third countries. In addition, they are meant to minimize political risks for investors. For this purpose they stipulate that under certain conditions, the revocation of permits or a change in the law to the disadvantage of the investor can lead to valid compensation claims.

Which BIT applies depends on the country of origin of the investor and on the country in which the investment is taking place. ICSID proceedings are only possible if there is a BIT between the home state and the host state which protects the investor. Between Gabriel Resources and Romania, applicable rules include the Canadian-Romanian BIT and the ICSID arbitration rules.

Other norms of public international law, such as UN human rights covenants or international environmental law can also be taken into consideration by arbitration tribunals. Often the BITs themselves point to general international law in addition to the treaty itself. Even if this is not the case, tribunals can, in accordance with Article 31(3)(c) of the Vienna Convention on the Law of Treaties, use additional norms of international law in interpreting the BITs. These norms can include the UN human rights covenants and international environmental law. However, so far this has been the exception in the practice of the ICSID tribunals.

ICSID awards are binding and directly enforceable in the national jurisdiction of the state parties. An additional review of the legality on the domestic level is only possible under exceptional circumstances. While the parties can petition the tribunal for an annulment, there are strict conditions for this. Moreover, this remedy is not available to third parties. So far, no decision has ever been annulled due to a lack of consideration of environmental or human rights standards.

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glossary

An amicus curiae brief is a submission to a court setting out a legal position.
Corporate investments in a foreign country are regulated by a global web of international investment agreements. These agreements – which are made between states – offer legal protection to investments in one state by individuals or companies of a foreign state.

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