By Jed Koball | Mission Co-worker Peru
Protecting the sovereignty of the nation to establish environmental protections is paramount to the work of our Joining Hands partners. For this reason they continue to advocate for the removal of foreign investor privileges such as investor-state dispute settlement found in most trade agreements, like the TPP. Photo by Jed Koball.
A report earlier this week from the nationally distributed paper La Republica, claims that The Renco Group, Inc. has once again filed an investment dispute arbitration against the State of Peru in the World Bank’s arbitration forum the Investment Center for the Settlement of Investment Disputes (ICSID). To date the ICSID data base of arbitration cases does not verify this claim, as all cases and relevant documents must be posted for access by the public. What can be confirmed, however, is that earlier this week the State of Peru retained the services of the Washington, DC legal firm White & Case, the same firm that defended Peru in its arbitration with The Renco Group, Inc. from 2011-2016. That case was decided in Peru’s favor as the case was dismissed on a technicality; however, provisions were made that would allow The Renco Group to re-file its case against Peru at a future time. In fact, immediately upon receiving the decision last year, legal representation for The Renco Group claimed it would indeed sue Peru again in the same forum.
As the filing of the case cannot yet be verified, Peru’s obtaining counsel may be seen as a preemptive act in anticipating an arbitration to be filed soon. Last week the State of Peru officially approved new and relaxed air quality standards that will impact the town of La Oroya, Peru where Renco’s former investment, the La Oroya Metallurgical Complex operated by Doe Run Peru, is located. In 2009 Renco claimed its investment went bankrupt due to unreasonable environmental regulations that were too costly. Doe Run Peru eventually lost its operating license leading to its bankruptcy. Renco subsequently filed an investment dispute arbitration against Peru, claiming its enforcement of such environmental regulations were unfair treatment according to its interpretation of investment right clauses within the US-Peru Free Trade Agreement. This case was decided in Peru’s favor in 2016 on the technicality that Renco had not withdrawn other legal cases against Peru in Peruvian domestic courts, as is required to file arbitration in ICSID. Now that Renco has withdrawn those cases, it is now free to sue Peru again in ICSID. And the recent relaxing of environmental regulations in La Oroya may be further evidence and motive to file now, as Renco may claim that a possible future investor in the metallurgical complex in La Oroya, Peru will receive more favorable investment conditions than it did.
Peruvian President Pedro Pablo Kuczynski, who took office in 2016 a mere few days prior to the ICSID decision in favor of Peru, has made the selling and re-opening of the metallurgical smelter in La Oroya a top priority of his administration, claiming it will stimulate the Peruvian economy by allowing mining companies to export a refined product for greater income. Likewise he has argued that relaxing environmental standards in La Oroya would be necessary to sell the smelter and make it competitive on a global scale. Despite a strong and organized resistance to the new relaxed air quality standards by our Joining Hands partners in Peru, the new environmental norm was eventually passed last week. After three failed attempts at auctioning off the smelter earlier this year, the smelter will be put up for bid again in July of this year.