Rigged Rules: A Rogue Corporation in the World Bank's Rogue Tribunal

Robin Broad and John Cavanagh

On September 15, in a tribunal that few know exists, the fate of millions of people and hundreds of millions of dollars will be debated and decided in the next six months.

The tribunal is the World Bank Group’s International Centre for Settlement of Investment Disputes (ICSID). It sits in downtown Washington, D.C., behind security guards at the World Bank. At issue is the future of El Salvador, some 2,000 miles away, where a global mining company—Pacific Rim, now owned by Australian/Canadian corporation OceanaGold—wants to mine gold in ways that could well poison the river system serving over half the Salvadoran population.

The crime alleged by the mining company is that the government of El Salvador has not approved a mining license for it. But the real crime is that a foreign corporation is trying to stifle democracy in a country where a small landed oligarchy and U.S. intervention stifled it for so long.

We have just returned from El Salvador, from the small towns in the north where Pacific Rim started to dig exploration wells about a decade ago as gold prices began a steep rise. The farmers in this area, many originally well-disposed to the prospect of jobs in mining, became concerned as springs and other water sources dried up during Pacific Rim’s explorations. This prompted local people to visit mines in nearby Honduras. There, they saw polluted rivers and skin diseases, and heard of the social conflicts between those working in the mines and those suffering nearby. They discovered the poisonous nature of the cyanide used to separate the gold from the surrounding rock. And they learned the cyanide would release not only gold from the rock but also toxic arsenic.

The more they learned, the more many Salvadorans became concerned about these poisonous byproducts entering the watershed of the Rio Lempa, the huge river that is the lifeblood of this small nation.

And so, “yes to life and no to mining” became their rallying cry. Many in the area refused to sell their land to Pacific Rim, one of the requirements to get a mining license in El Salvador. And, as Pacific Rim campaigned to gain support, the conflict over mining deepened. According to the office of the government’s Ombudsman for Human Rights, at least five anti-mining activists were assassinated as a result of the conflict. Many more received chilling threats.

But still the opposition to gold mining grew into a strong national movement, the National Roundtable Against Metallic Mining (La Mesa). And, in an act of democratic accountability, the government listened to the majority wishes of its people and refused to approve the corporation’s inadequate environmental impact assessment. Indeed, three successive elected presidents of El Salvador—from conservative and progressive parties alike—have refused to issue any new gold mining permits.

That should have been enough to keep gold mining out of El Salvador. Yet the saga continues. Because of trade and investment laws and agreements that the United States has championed in recent decades, corporations that feel their future profits are being threatened by government actions can actually sue the governments.

Corporations typically bring such “investor-state dispute” cases to this little-known but extremely powerful tribunal in Washington—ICSID. In this case, Pacific Rim/OceanaGold sued the Salvadoran government for over $300 million even though the company never had an actual license to mine.

The “merit stage” of the hearings begins on September 15, 2014. It will be held in secret, without those whose lives will be determined by the ruling able even to listen to the proceedings. Three arbitrators will sit in judgment without clear rules on what kind of evidence they need consider or what legal precedents they must weigh. And, if either side disagrees with their ruling, there is no appeal allowed based on the legal merits.

Is this any way to decide the future of a country, its ecosystems, and its people? Indeed, this World Bank’s tribunal is being accused even by some insiders as biased in favor of corporations. “The system is broken,” announced a prominent lawyer who argues before ICSID panels, George Kahale III. Kahale went on to denounce the investment agreements that have empowered hundreds of corporations to pursue these ICSID cases as “weapons of legal destruction.”

The Pacific Rim v. Republic of El Salvador case demonstrates what is so wrong with similar investor-state clauses in new trade agreements that the Obama administration is negotiating with nations in the Pacific and in Europe. No country or its citizens deserve a future where key policies are decided by unaccountable arbitrators in a secret tribunal where neither democracy nor the environment appears to carry much—if any—weight.

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