The Peaceful Resistance La Puya has been fighting against the El Tambor mining project for 8 years. During this time they have suffered all kinds of physical and psychological attacks, as well as acts of defamation and criminalization. Now they face another threat: an international arbitration process against the State of Guatemala, which was initiated by the Kappes, Cassiday & Associates (KCA) mining company. This represents a new challenge for the Resistance, since this process does not allow for the participation of the population directly affected by the project. This legal process comes under the free trade agreement between the Dominican Republic, Central America and the United States (CAFTA-DR), which was signed by Guatemala in 2005, despite strong opposition from social organizations at the time for its incompatibility with the ILO’s Convention 169 among other reasons.1

Free Trade Agreements

From as far back as 1998 some extractive and mining companies have initiated processes of international legal arbitration against Latin American States, using supranational organisms that ensure the implementation of clauses from the free trade agreements. CAFTA-DR “grants transnational corporations a binding recourse to a perverse international arbitration system known as Investor Dispute Resolution - Investor State-State (ISDS). ISDS claims are heard in courts such as ICSID (International Center for Settlement of Investment Disputes) and have been widely condemned for privileging corporate interests to the detriment of local communities and the environment.” Within the framework of these agreements, companies do not have to exhaust the internal procedures of the countries before resorting to mechanisms for Dispute Resolution between Investors and the State (SCIE), such as ICSID, a branch of the World Bank.

The clauses contained in those treaties go beyond ensuring that companies have secure infrastructure and financial stability. Furthermore, they oblige States to "guarantee that the investments will enjoy legal certainty and that States receiving investment must have favorable legal systems that stimulate international free trade and can satisfy their demands. In this sense, prior to the entry of a diversity of extractivist companies, and within the framework of these clauses, States must advance legislative and regulatory changes that privilege foreign investment in an economic model that would contravene the self-determination and way of life of populations affected by these projects.

The KCA’s case against the Guatemalan State

On May 16, 2018, KCA presented its intention to bring a lawsuit against the Guatemalan State before ICSID, for an estimated US $300 million. According to KCA, the decisions made by both the Supreme Court of Justice (CSJ) and later by the Constitutional Court (CC) of Guatemala, revealed the unfair treatment the company received as a result of the order to suspend the El Tambor project. They argue that they were unaware the mining project had irregularities in its Environmental Impact Study (EIS), that the mandatory free, prior and informed consultation of the affected population was not complied with and, furthermore, that no construction license had been granted.

On the basis of this information, the relevant institutions - the Attorney General's Office (PGN), the Ministry of Energy and Mines (MEM), the Ministry of Finance (MINFIN) and the Ministry of Foreign Affairs (MINEX) - created an inter-institutional round-table. Officials from these entities approached this multimillion-dollar lawsuit from a purely technical standpoint, ignoring underlying issues such as the conflict created within the affected population and the violation of ILO Convention 169 which led to the cessation of activities at the mine. To avoid arbitration, the round-table proposed "a Confidentiality Agreement with transnational capital to address this State matter, that is, a matter of a public and national interest that may affect the communities which form part of the Peaceful Resistance, La Puya, as well as the Guatemalan population as a whole.” The content of the agreement is unknown but it was apparently insufficient to prevent the lawsuit, which was formalized on December 11, 2018, and the ICSID created the case Daniel W. Kappes and Kappes, Cassiday & Associates c. Republic of Guatemala (ICSID Case No. ARB / 18/43).

"By resorting to international arbitration, the company tried to pressure the Guatemalan judicial system to reach a settlement, dismiss the multiple legal problems and the social opposition that has prevented it from going ahead, evade the mining project’s illegalities and irregularities, as well as moves which sought to undermine the decisions of the CSJ and the CC, question the Peaceful Resistance La Puya and violate the human rights of the communities.”

The first ICSID hearing in this was held in Washington on December 16, 2019, where they addressed the preliminary objections raised by the State of Guatemala. On March 13 the ICSID arbitrators made the decision to admit the KCA lawsuit against Guatemala. The court argued that KCA and Mr. Kappes have the right, under the CAFTA-DR, to demand compensation from the State for the losses, as they cannot continue the project in Guatemala.

Citizen participation in the lawsuit 

The Peaceful Resistance La Puya, when faced with this process, which does not include the participation of the population affected by the mine, is learning about a new battlefield for which there are few precedents.

The best known and most relevant case in the region is the arbitration process that El Salvador won against the Pacific Rim mine in 2016. The mine used the same ICSID mechanism to sue El Salvador for $301 million, the equivalent to its projected loss following the Salvadoran declaration in 2008 which suspended open-pit chemical mining throughout the country. ICSID rejected the lawsuit. After the unanimous decision of the court, Salvadoran authorities declared that “this case sends a clear message and reminds us that States, and in this case the State of El Salvador, are exposed to this type of multimillion-dollar lawsuit. Therefore, work must be done to strengthen the country's institutions in defense of the environment.” Salvadoran civil society was not part of the process, but fortunately, the Salvadoran state remained firm in its commitment to suspend open-pit mining. 

The Peaceful Resistance La Puya is forming legal alliances and solidarity across national and international organizations and groups. According to the Resistance itself, their objective is to make their voices heard in this exclusionary procedure and to create an antecedent that favors, not only the Resistance itself, but many other community processes that defend land, territory and water against projects which exploit natural resources. In this way they seek to prevent supranational arbitration processes from becoming the Trojan horse of mining and extractive companies.

History of the Resistance

The Peaceful Resistance La Puya, located in the municipalities of San José del Golfo and San Pedro Ayampuc, in the department of Guatemala, was created in 2012, when community members became aware of activities that indicated the beginning of a mining project. Concern about the effects on health and the environment, led the community to organize and plan peaceful activities aimed at demonstrating the disagreement of the population with the El Tambor mining project, derived from Progress VII. In late 2008, the company Exploraciones Mineras de Guatemala (EXMINGUA) applied for a mining license (gold and silver), which was authorized by the MEM in November 2011 for a period of 25 years.

The Resistance installed a permanent protest camp in front of the entrance to the mine to express its rejection to the project, and this camp has been maintained to this day thanks to constantly rotating shifts taken on by the members of the neighboring communities. The attacks began immediately: threats and smear campaigns; an assassination attempt on the leader Yolanda Oquelí; assaults perpetrated by former military personnel linked to the mining company; leader arrests; and the murder of Fidel Santos Ajau. A violent eviction was carried out in 2014 and PBI observed a disproportionate use of force by the police, who were providing protection to the mining company. In addition, EXMINGUA workers sued nine members of La Puya for the alleged crimes of illegal detention, coercion and threats. These accusations were brought in front of two courts who reached the following conclusions: three leaders were convicted, the accusation was dropped without going to trial in two cases and the other four were acquitted.

In spite of the multiple aggression received, the Resistance has continued its struggle, also using legal channels, denouncing the violence against its members and imposing injunctions aimed at questioning the actions carried out by state authorities. Although their legal claims are not progressing, the injunctions were granted a provisional resolution by the higher courts in favor of the Resistance.

The CSJ ruled in favour of La Puya for the lack of free, prior and informed consultation and ordered the temporary suspension of mining work in February 2016. However, one month later, helicopters were observed in the area and mine workers were found removing minerals illegally, for which EXMINGUA was reported for the crime of “illegal exploitation of natural resources.” Despite the existence of clear evidence, the criminal prosecution has stalled and so far there has been no progress.

In January 2019, the then President, Jimmy Morales publicly attacked the CC, accusing it of closing mines, interrupting the construction of hydroelectric plants and "selectively supporting certain groups," who, according to his words "call themselves civil society." His speech did not take into account the absence of free, prior and informed consultation towards the affected communities, nor the environmental and social impacts generated by the exploitation of natural resources. In his address, he indicated that the State of Guatemala had received a demand requesting arbitration regarding the decisions of the high courts to suspend mining activities and indicated that it would be years before all Guatemalans could pay these indemnities to foreign companies. This was interpreted by different analysts as a warning message addressed to the various existing resistances in Guatemala.