Peru is mounting a vigorous defense against Arizona-based mining giant Freeport-McMoRan Inc., arguing the company is abusing the annulment process in its quest to overturn a tribunal ruling that left $417 million in penalties and interest untouched.
In a Sept. 16 brief, released Tuesday, Peru told the International Centre for Settlement of Investment Disputes (ICSID) that Freeport’s allegations of a procedural misstep were baseless. The government insists arbitrators acted within their authority when they declined to rule on penalties and interest tied to unpaid royalties at the company’s Peruvian operation.
The Tribunal’s Call
The case stems from a previous ICSID ruling that dismissed Freeport’s challenge to Peru’s imposition of $942 million in taxes and royalties on Sociedad Minera Cerro Verde SAA, an open-pit mine in Arequipa, for the years 2006 through 2013. While the tribunal considered the taxes and royalties, it refused jurisdiction over the $417 million in penalties and interest on royalties and $245 million on tax-related penalties, citing the U.S.-Peru trade agreement’s carveout for taxation measures.
Freeport claims the tribunal contradicted itself—first taking jurisdiction over royalty-related penalties, then sidestepping them in its final award. Peru, however, called this argument a distortion.
“The company cannot cite a single line in which the tribunal affirmed jurisdiction over those claims—because there is none,” Peru argued.
