NAFTA Tribunal Dismisses Glamis Claim

Washington, DC -- June 9, 2009 -- A three-member NAFTA arbitration tribunal rejected a $50 million claim filed by the Canadian mining company, Glamis Gold Ltd., challenging certain actions taken by the Department of the Interior (DOI) and certain measures adopted by the State of California relating to land reclamation in connection with proposed open-pit mining operations. The Office of the Legal Adviser of the Department of State represented the United States in the case.

The claimant, Glamis, submitted its claim to arbitration in 2003, alleging that certain DOI actions and California measures relating to its proposed open-pit gold mine on federal lands in California made development of that project economically infeasible, and deprived it of the value of its investment in that project, in violation of NAFTA investment protections. The tribunal unanimously rejected Glamis’ claim and ordered Glamis to pay two-thirds of the arbitration costs.

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Background

The Glamis case concerns the claimant’s proposed development of the “Imperial Project,” a gold mining operation that was proposed to be located on federal lands in the environmentally sensitive California Desert Conservation Area. Glamis claimed that certain actions taken by the DOI during the permitting process, combined with reclamation requirements adopted by the State of California, made development of the project economically infeasible.

Concurrent with the DOI’s review of Glamis’ proposed Imperial Project, and in order to address concerns about the potential impact of open-pit metallic mines on the environment and Native American cultural resources, the State of California adopted measures requiring all future open-pit metallic mines to backfill and re-grade the large open pits left on mined lands. Glamis claimed that the actions taken by California, together with alleged delay by the DOI in its review of Glamis’ application, violated the provisions of NAFTA Chapter Eleven, which, consistent with international law, ensure a minimum level of treatment and prohibit uncompensated takings of property. Glamis alleged that the California measures were politically motivated and lacked any legitimate public policy basis.

The United States maintained that there was no undue delay in the DOI’s review of Glamis’ application and that the California reclamation requirements were supported by legitimate public policy goals of protecting the environment and Native American cultural resources.

The tribunal agreed with the United States and rejected Glamis’ claim in its entirety. It held that the actions and measures in question were supported by legitimate public policy goals and did not violate the minimum standard of treatment provision of the NAFTA or constitute an expropriation of Glamis’ investment.

The members of the tribunal are Michael K. Young, David D. Caron and Kenneth D. Hubbard.

The full text of the award, which the parties received yesterday, will be available on the State Department’s website at http://www.state.gov/s/l/c10986.htm once the parties make any required redactions of confidential information. Party submissions, amicus curiae submissions, hearing transcripts, and other arbitration documents in the Glamis case are also available on this website, subject to redactions of confidential information.

Source: State Dept.