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An international tribunal has declined to order Colombia to pay $700 million in damages to a Canadian precious metals company, despite finding three years ago that the country breached an underlying treaty. The tribunal's Monday decision included harsh criticism of third-party funding in investor-state cases by arbitrator Philippe Sands.

Colombia Dodges $700M Mining Claim : Tribunal's Findings on Liability

In a 2021 liability award, the tribunal concluded that Colombia knew about the need to protect high-altitude wetlands, known as páramos, when it granted a concession to Eco Oro Minerals Corp. in 2007. The arbitrators criticized Colombia for delaying the exact mapping of the páramos, emphasizing that no environmental licenses could be issued for mining projects near the Santurbán Páramo until the new boundaries were established.

The Final Award

The tribunal's final award, confidential but reviewed by Law360, concluded by a 2-1 margin that Eco Oro failed to prove it would have secured the necessary environmental license for its gold and silver mining project without Colombia's actions. The tribunal noted that Colombia's delimitation of the páramos was a lawful exercise of police powers and did not cause the total loss in value of Eco Oro's project.

"In this regard, the majority of the tribunal accepts that Colombia may be benefiting from its failure to issue a final delimitation of the Santurbán Páramo," the tribunal wrote. "However, Eco Oro accepts that the destruction to the value of the concession was caused by the challenged measures, which the majority found to be a lawful exercise of Colombia's police powers."

Colombia Dodges $700M Mining Claim : Dissent and Costs

Eco Oro's appointed arbitrator, Horacio A. Grigera Naón, dissented, stating he would have awarded damages. Philippe Sands, Colombia's appointed arbitrator, appended a declaration on costs, highlighting that Eco Oro incurred over $33 million in fees and costs, significantly higher than average for investor-state disputes. Sands criticized third-party funding, which he argued poses a risk of subverting the purpose of investor-state arbitration.

"Third-party funding is said by some to have an important role in ensuring that parties of limited means can pursue claims and vindicate their rights," Sands wrote. "That may be true in some cases, but in my view, that justification cannot be invoked in this one."

Eco Oro's Response

Eco Oro expressed its dissatisfaction with the award in a statement, calling it "deeply flawed" and inconsistent with an objective assessment of the evidence. The company is reviewing the award with its legal advisors and evaluating its options.

Background and Legal Representation

Eco Oro's case stemmed from Colombia's revocation of the company's rights for more than half of its concession area running through the páramo in 2016, rendering the Angostura project economically unfeasible. The company alleged Colombia's actions were arbitrary and destroyed the value of its investments.

Eco Oro is represented by Nigel Blackaby, Caroline Richard, and Lee Rovinescu of Freshfields Bruckhaus Deringer LLP, and Jose Vicente Zapata from Holland & Knight Colombia. Colombia is represented by its National Legal Defense Agency and Latham & Watkins LLP.

Colombia Dodges $700M Mining Claim : Similar Cases

Monday's award follows similar decisions by international tribunals earlier this year, nixing claims by Canadian mining companies Montauk Metals Inc. and Red Eagle Exploration Ltd. In 2021, the tribunal concluded that although Colombia had a legitimate interest in protecting the páramos, it still potentially owed damages to Eco Oro for blocking its mining project.