How Much Does Gold-Plated Corporate Sovereignty Cost? $1 Billion Or About 2% Of A Developing Country's GDP
from the taking-from-the-poor,-giving-to-the-rich dept
Last week we wrote about the rising threat of corporate sovereignty, known more obscurely as "investor-state dispute settlement", that allows companies to sue countries for alleged loss of future profits. Just how grave that threat is for developing nations can be gauged by the following, reported by Tico Times:
Canadian gold-mining company Infinito Gold Ltd. announced its intentions to go forward with a $1 billion lawsuit against Costa Rica over the retracted Las Crucitas open-pit gold mining concession in northern Costa Rica, in a statement released on Friday.
The contract was withdrawn for largely environmental reasons:
Costa Rica and the Canadian mining company have been ensnarled in a protracted legal battle over the canceled Las Crucitas project in Cutris de San Carlos, Alajuela, since environmentalists and locals decried the loss of virgin forest and health concerns over leeching chemicals contaminating drinking water.
Initially, the company fought the decision using local courts, but when it lost there, it made use of corporate sovereignty to take its complaint to a supra-national tribunal, the World Bank's International Centre for Settlement of Investment Disputes (ICSID):
Infinito has been rattling its saber over a potential ICSID arbitration after the company lost its appeal in Costa Rica's Constitutional Chamber of the Supreme Court, known as the Sala IV, in November 2010.
Now, $1 billion is a lot of money by anyone's reckoning. But for a country like Costa Rica, whose Gross Domestic Product (GDP) is estimated to be around $46 billion for 2012, an award of $1 billion against it would represent about 2% of the country's entire annual economic activity, in a land where 25% of the population live below the poverty line.
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Filed Under: corporate sovereignty, costa rica, investor state dispute settlement, isds, trade agreements
Companies: infinito gold
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World Bank...
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And you expect this corporation to do ... what?
What are alternatives? Hire private army? When some Costa Rica decides to screw a megacorp, and my retirement money depends on stock/profits of said megacorp - I don't like it.
Do you suggest that if Canadian company wants to extract settlement from Costa Rica's government, the only "legitimate" option is for Canada to invade Costa Rica? You didn't like an idea of "court battle", so I guess you probably prefer a real one?
Or should Canadian citizens just cover the losses?
You seems to forget, that suing is preferable, civilized form of conflict resolution; as opposed to plain old shooting each other.
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Re: And you expect this corporation to do ... what?
If every court in a country says that what a company is demanding is unrealistic, or would harm those living in the countries, then tough.
If what a company demands would require the relaxing, or effective(with regards to them anyway) repeal of health and safety laws, then a court telling them to take a hike is completely justified in doing so.
You mention 'what if my retirement money depends on their profits?', well what about the retirement or safety of the people in the country being threatened? I'd say their rights take priority over yours, given you stand to lose some money, they stand to lose a lot more.
Yes suing is preferable to shooting, but even more preferable is a country being able to enforce their own health and safety laws to protect their citizens, without having to worry about some corporation throwing a childish fit anytime they get told 'No', and threatening to sue the country until they do what's being demanded of them.
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Re: Re: And you expect this corporation to do ... what?
This is about losing "expected profits", which is ridiculous.
They go there, say "we have gold ore here, we expect to gain 1b$ from it (amount pulled from thin air), and if you don't ignore your laws and let us do what we want, we sue you for it.
I mean, this is as ridiculous as a bank robber suing the country for lost expected profits when he get caught.
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Re: Re: Re: And you expect this corporation to do ... what?
Same applies for oil wells and coal seams, no one 'goes in blind' or 'on spec' anymore. Only an idiot would do that, or assume other would do that. Your not an idiot are you ?
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Re: Re: Re: Re: And you expect this corporation to do ... what?
The only thing that counts is the real work they done. If the government take the test drill results, that's expropriation, and is cause for ISDR. If the government takes over their mine site, taking their equipment and buildings, that's expropriation.
Denying them permission to destroy the environment and health of people is not expropriation, and environmental and healthcare laws should always be enforced, regardless of corporate profits.
"Your not an idiot", no, you're not an idiot..
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Re: Re: Re: And you expect this corporation to do ... what?
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Unless the plan is to send the water to the CEO and corporate officers, I doubt they will balk at that. Since they are likely hiring a good deal of workers from the area to run the mine, forcing the workers to drink the water they are already drinking will likely not have much effect. Outside contractors and initial first line management may be foreigners.
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Costa Ricans won't work at the mine. They're too scared of the rebel forces out in the jungle. Everyone knows the revolutionary forces are targeting the mine.
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Re: Re: Re: Re: Re: Re: And you expect this corporation to do ... what?
They don't have to be Costa Ricans, I am sure there are plenty of Nicaraguans and El Salvadorans who would be chomping at the bit for the job. However, an empty stomach will make a man do all manner of jobs just to fill that stomach once in a while.
Besides, the way these systems work, the corporation likely would pay the rebel forces in the jungle for protection, or at least pay local goons to protect the mine. Cheaper than bringing in workers and having to pay the ransoms.
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“Luckily, most of the dead mine workers will be foreigners.”
This is Central America.
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Re: Re: And you expect this corporation to do ... what?
Care to comment ?
If they approved the study, who is then breaking health and safety laws ?? the company or the people who approved the companies actions ?
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Re: Re: Re: And you expect this corporation to do ... what?
The mine was closed after the approval of an amendment to the mining law which banned open-pit mining in the country.
Tough luck. Many bars and pubs were shut down under the Probation, just for one example. You couldn't expect to excepted from law just because you begun operating _before_ the law passed.
The company has already invested $92 million and it claims to have lost $1 billion in potential profit.
This is exactly what I'm talking about.
The company should (somewhat) rightly claim on the 92M investment it _already_ done.
But what the fuck is this about the 1b it _expected_ to gain?! They did not done the work. They did not spend the money on the work, so why are they want to be paid for the resources they did not produce? Because it would have been nice?
Returning to the previous example: A liqueur shop should've sued the govt for lost profits too? They made investment, they expected profits, and they denied it because of a change in laws. If yes, how much profit are they entitled? 1 years? 2? Would that estimation include price fluctuations and other economical variables, or we should accept the word of the company that they didn't pulled the amount from their back side?
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Re: Re: And you expect this corporation to do ... what?
"
then DONT APPROVE the project in the first place, certainly don't lead the company on, with licenses and approvals, then bow to local public pressure take the money already spend and screw over the company.
There is a right way and a wrong way, they did it the wrong way.
lets get the facts right please, the Government APPROVED the mine, accepted the money and investments up till then, allowed the company to believe they were approved, (THEY WERE) that is a tacit contract, then the Government acted against its own approvals (after the investments have been made).
It's always much clearer if you equip yourself with the real facts regarding the issue. As opposed to a biased commentary of the events.
And it's easy to do !!!.
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Re: Re: Re: And you expect this corporation to do ... what?
The government approves a lot of stuff (ala NSA) that end up getting cut (hopefully) when the public finds out what is going on. Corruption is big in some governments (I'd say all governments, but I'd be talking out of my rear since I am not familiar with all governments and am only familiar with some.)
Government employees/politicians make lots of backroom deals that serve themselves and are later scrutinized and rejected by the public. Even in my local government, three politicians are now standing trial for corruption charges because they accepted gifts from contractors in order to win building contracts, which in turn bilked a ton of money from the people (and when found out, the contracts were squashed and the companies in question fined, and some of the officers looking at jail time.) One of our representatives ended up in jail for accepting favors and bribes (which the public later discovered,) and the mayor of a sister city quit because he was thinking with his lower brain and abusing his position to try to get sexual favors from his staff and the public.
Governments approve stuff that, by mandate of the people, they didn't have the authority to approve.
It's always much clearer if you equip yourself with the real facts regarding the issue. As opposed to a biased commentary of the events.
I like the fact that you yell about other people not supplying facts when your own comments are rather fact-less. Pot, meet kettle.
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if 'health and safety' laws were not met, why did the country approve the studies done ?
Would that not be not meeting the laws ?
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Imagine someone coming to your house, interested in buying your car. After he writes up the paperwork, you change your mind. In this world apparently he should be able to sue you for 'loss of expected profits'.
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Re: And you expect this corporation to do ... what?
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Re: Re: And you expect this corporation to do ... what?
Companies need some level of consistency, if a country approves a project, and issues the appropriate licenses and permits.
Then simply "goes back" on that approval that is a problem, and a problem that cannot be satisfactory in a court in the country under question.
It is appropriate that if a country and international company should ever want to work together, then some common rules need to be established.
If there were issues with the environmental studies deny the contract at that point, but don't approve the studies, issue a permit and approval, then take it away because you get some backlash..
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Re: Re: Re: And you expect this corporation to do ... what?
Companies need to assess risk. One risk is in dealing with fickle governments. If Costa Rica wants to keep companies away by making it difficult or risky to do business there, that should be their business. If some companies do better than others because they're more cautious or better at analyzing risk, that's fine too. I don't see the problem.
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Re: Re: Re: And you expect this corporation to do ... what?
Why not? Unless what you mean by "satisfactory" is "in favor of the corporation". Why shouldn't a country be able to renege on a deal if they want to?
Yes, and those common rules are called "the laws of the country the corporation wants to operate in." If the corporation doesn't like the laws or the way the country acts toward the company, they don't have to do any further business there.
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they can, !!! as long as they are willing to pay the fine for their actions.
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Re: And you expect this corporation to do ... what?
So in other words, it doesn't matter how immoral megacorp is acting, or how many laws it's violating, just as long as you're making money off of said law breaking and immorality?
You wouldn't happen to be one of the people who ran Enron and sold all their stock for millions right before it went bankrupt, or perhaps be Bernie Madoff now would you? By your logic they're all perfectly moral people who were just doing what was necessary to make themselves money.
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Rigged laws.
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But they didn't, instead the accepted the money, allowed the company to do studies that were APPROVED, and issued the approvals.
Then they wanted to play "takebacksies", sorry does not work that way..
No, instead they let this company spend 100million dollars, approved everything, then screwed them.
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if they were smart enough they would not accept the money, and not approve the project in the first place.
They did not do this, so you, you would think they would eventually 'smarten up'. Not take the money, approve the project then screw the company.
There is a right and a wrong way to do things, this is the wrong way.
And if they have to pay a big fine they might think twice about taking the money, then cancelling the contract, and rejecting their OWN approvals.
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And now the truth of it.
Have a look at the original article TD has linked too, and have a look at the site of the proposed mine, and ask yourself "Is this virgin rain forest?".
If you answered "yes" go see an eye doctor, if that is "virgin rain forest" masnick has never illegally downloaded ANY file in his entire life, and he works for Disney !!!
Secondly, If Costa Rica did not want them to buy the equipment and infrastructure to mine, THEY SHOULD NOT OF ISSUED A MINING PERMIT !!!!
They would have rejected the environment impact statement and studies, end of story.
BUT NO, they did not do that, they let this company spend their money, do the studies (that were accepted and APPROVED, by the Government).
No the Government approved everything, accepted the license fees, accepted and approved the studies, and allowed that company to invest time, effort and money, WITH GOVERNMENT SUPPORT.
So what happens is 'environmentalists and 'locals'', complained, (did they also do any environmental studies?), and the Government BACK FLIPED.
SO how is anyone expected to be able to conduct business in a Country that does not abide by it's own rules.
So this company did everything "BY THE BOOK" and got all the necessary approvals from the Government, then that Government gets some pressure from another group, and "the book" gets thrown out the window.
I wonder why those details did not come to light in the TD article ?
If you want to have a comparison of "virgin rain forest" and the site for the mine, have a look in the background of the picture on the Tico article, can you pick the difference ?
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Re: And now the truth of it.
Now: some docs are exchanged, money change hands in worst case.
Maybe next time Costa Rica's government will act more responsively when issuing mining permits? Maybe more detailed contracts will get written? Who knows? What we do know - is that _war_ is not expected here. It's a good thing.
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"It could have been worse" is not the same as "this is good".
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On that note, talk about a strange mix of personal biases this place has. Libertarian on speech and privacy, but old school trade protectionist, which even most modern "liberals" quietly acknowledge is intellectually bankrupt. (Remember Clinton signed NAFTA after Bush largely negotiated it, and socialist Europe stood with Bush and Obama both to promise the global recession wouldn't unravel 60 years of trade progress) Economists argue many things, but (basically) free trade ain't one.
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Re: Re: Re: And now the truth of it.
You should read it again. Or stop trolling, depending on whether you misunderstood accidentally or on purpose.
"Last week we wrote about the rising threat of corporate sovereignty, known more obscurely as "investor-state dispute settlement", that allows companies to sue countries for alleged loss of future profits."
The problem isn't the fact that companies can sue, it's that they can sue for loss of potential future profits.
Author didn't mention investments like this can take totally impoverished nations and give them something to start with
That's irrelevant. It's up to Costa Rica to decide whether the project is worth it or not.
Libertarian on speech and privacy, but old school trade protectionist
I would be interested to see a reference to a TechDirt article in favor of trade protectionism, because this site seems to me to be totally opposed to protectionism and in favor of generally free markets.
(Remember Clinton signed NAFTA after Bush largely negotiated it, and socialist Europe stood with Bush and Obama both to promise the global recession wouldn't unravel 60 years of trade progress)
There was a recent article here that mentioned what a disaster NAFTA was, did you see it?
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Re: Re: Re: And now the truth of it.
http://www.techdirt.com/blog/?tag=trade+agreements
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Re: And now the truth of it.
I don't think this would be any news if they were suing for return of their investment, especially on the cost of permitting. A company has to take some risk in the assessment phase, but the other parties (whether they be nations, corporations, or individuals) should be making terms in good faith.
For all your random caps-locking and confusing the word "of" instead of "have," you miss the point that this is not about corporate/nation-state disputes; this is about the folly of suing over expected future profits.
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"In 2008, the company obtained a mining license after then-President Óscar Arias (2006-2010) and his environment minister, Roberto Dobles, declared the project of “national interest." The decree gave permission to the Canadian company to remove trees in a 62-hectare forested area ahead of mine development.
The Administrative Appeals Court later ordered the Public Ministry to open a criminal investigation of Arias for having signed off on the project while environmental studies were still incomplete."
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sniff sniff
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Re: sniff sniff
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Q: Is there a "public-state dispute settlement" system?
A: No! - You a terrorist or something?
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wow
But now thanks to WTO "rules" they can sue for "expected profits"!? That is INSANE. How about I sue you for the expected profit I would make by occupying your house, but you told me I can't occupy it because you are living there? Can I then sue you because I didn't get free housing when you denied my "expectation"? The tilt towards corporate "rights", which is really the tilt towards total corporate domination of everyone and everything on the planet, must stop.
Its a virus and it appears unstoppable. When the earth is a wasteland and billions are dead from environmental devastation will the corporations finally have enough "profit". Profit is evil. Its made either by exploiting people, exploiting the earth or what are called economic "rent", which is basically setting up a toll booth on a key piece of infrastructure humanity is currently relying on for prosperity and charging everyone a toll to use it. No one should be allowed to exploit people, rape the earth and set up arbitrary toll booths on the things we need to live. Money and profit are a disease. Humanity needs to figure out a better way to motivate itself or there will be no future. Wage and debt slavery are not, despite what the billionaires and their lackeys tell you, the penultimate human achievement. Far from it.
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More GLOBALIST TYRANNY.
The Rich will always seize more power until stopped. The only non-violent way to stop them is with steeply progressive tax rates, especially on unearned income.
02:33:53[c-090-8]
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Re: More GLOBALIST TYRANNY.
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Not a problem
Naturally, Costa Rica has some sort of revolutionary movement hiding out in the jungles. This is Central America.
Naturally, mining operations use and store explosives.
Therefore, the mine will be a target for the revolutionaries. They will seek to raid the mine in order to capture the explosives for their own use.
Of course, the Costa Rican army will guard the mine—and its store of explosives. But it is a poor country, and the army is not very capable. Thus, they will need a helicopter or three to help guard the mine. And, naturally, more money for regular small arms and ammunition and uniforms and training. They will need all these things.
Oh, and yes, the politicians will need bribes. Don't look so shocked. After all, you are asking the politicians to set aside the decision of the Costa Rican courts. So they will need something to look out for their own interests. Not excessive amounts.
And then, one day, after the wheels have been greased—still, one day, the rebels will swoop in out of the jungle and seize the store of explosives at the mine. Oh, it will be terrible. A terrible disaster.
Luckily, most of the dead mine workers will be foreigners.
This is Central America.
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WoW...
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Whatsup Canada!!
Why do we the people not stand up to these bullies in their home countries and show them that if they bully the weak and the poor of the world with the intention of raping their economies that there are still people willing to step up and confront the bully. Will Canadians step up and let the bully Infinito know that they should back down. What about you greedy investors that want a huge return on shady projects. Are you going to support such unethical behavior just so you can enjoy a few extra dollars of return?
If we take this right of corporations to sue for future profits and apply it to 'average joe' then when a company lays off workers or commits massive fraud (like the banks) and causes massive job loss average joe should be able to sue for lost earnings. Would that not be fair? Just imagine how the capatilist pigs would spit and sputter "but..but..but.. you are harming our right to future profits!!" and cry foul and say "there is no such right to future earnings".
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Re: Whatsup Canada!!
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Affected countries should heavily consider dropping out of any trade agreement that forces them to do this.
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So it's either both groups working on expected profits, which is not so bad, and again you can get quite an accurate idea of the yield of a mine before you mine it.
The 'expected profit would probably be accurate
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