Optimism and caution in Panama before arbitration for conflict with Canadian mining company FQM

Environmental activists and lawyers this Friday were cautious but optimistic about Panama’s chances of success in the face of the international arbitration initiated by the Canadian First Quantum Minerals (FQM), after the Panamanian Supreme Court declared unconstitutional this week the contract through which the largest mine of copper open pit of Central America.

Minera Panamá SA (MPSA), the FQM subsidiary that operates the Cobre Panamá mine “initiated arbitration before the International Court of Arbitration to protect its rights under the 2023 concession agreement that the government of Panama signed earlier this year with the company“, a process that “will take place in Miami, Florida“, the companies indicated this Friday in a statement.

They also reiterated that they have already presented to the Ministry of Commerce and Industry “a notice of intent to initiate arbitration to enforce your rights under the Canada-Panama Free Trade Agreement”.

The Panamanian specialist in international environmental law Joana Ábrego, lawyer at the Environmental Advocacy Center (CIAM), stressed to EFE that the same ruling that declared on November 27 the unconstitutionality of Law 406 of October 20, 2023, which gave birth to to the mining contract, “considers that this decision would not give rise to a claim from the company”.

That is so because with the ruling “The State’s police powers are being exercised to protect the well-being of its population, to protect the environment and the health of nearby populations.”.

The Canadian company bought at risk

A previous contract was also declared unconstitutional in 2017 by the Supreme Court in response to an appeal in that regard filed in 2009 by the CIAM.

At the time FQM acquires the concession “knew of the existence of the unconstitutionality lawsuit presented by the CIAM and another by Mr. Juan Ramón Sevillano. He took a risk“Abrego said.

“There is bad faith on the part of the company, they bought a contract that had a claim of unconstitutionality (the one from 2009) and they invested money knowing it“analyst José Stoute told EFE.

Both Stoute and the CIAM lawyer pointed out that clause 46 of the 2023 mining contract, “somehow safeguards the review processes of the integrity of the Constitution from arbitration processes”.

“No one can say what the (arbitral) decision will be, they are very complex and delayed processes, they are talking about more than 5 years, but the elements of the ruling itself (of unconstitutionality) are going to be an important factor in that decision.“added Ábrego.

A “comprehensive” defense team

The ruling that declared unconstitutional the law contract that renewed for 20 extendable years the concession for the exploitation of the Cobre Panamá mine, operated by Minera Panamá, indicated that this agreement approved on October 20 by the Government and Parliament violated 25 articles of the Constitution of the country.

This has unleashed distrust in the Government of Laurentino Cortizo regarding defense in international courts.

“We want a honest, upright team that defends national interests, we need transparency and that tells us, so that they can pass public scrutiny, who are the ones who are going to defend us“said constitutionalist Ernesto Cedeño.

Environmental activist Raisa Banfield told EFE that it affects the country “organize and generate audits to document damages and impacts” caused by the mine, which is located in the Central American Biological Corridor according to environmentalists.

The ruling of unconstitutionalityNot only does it give us tools to defend ourselves against FQM’s claims, but it also gives us tools to sue them.”Banfield added.

Federico Alfaro, who this Thursday resigned as Minister of Commerce and was the one who negotiated the ill-fated contract, said months ago that Panama was exposed to demands for up to US$ 100,000 million given the mining conflict, a figure that analysts have reduced to between 15,000 million. and 18 billion dollars and even less.