On Friday, 8 March 2024, the International Centre for Settlement of Investment Disputes (ICSID) adopted a long-awaited decision in Gabriel Resources v. Romania. In an unexpected win for the host country, the arbitrators acknowledged that environmental concerns could trump investor claims for compensation.
The case dates back to 1999, when the Romanian government granted a concession for gold and silver mining to Gabriel Resources, a Canadian mining company, and its Jersey affiliate. Romania has significant gold deposits in the Rosia Montana area of the Carpathian mountains.
Since the project would have created Europe’s largest open pit gold mine, involving the destruction of several villages, the razing of four entire mountaintops, and the widespread use of cyanide in an environmentally significant area, public opposition emerged soon enough. It ultimately forced a different Romanian government in 2014 to withdraw its support for the project. By then, Gabriel Resources had invested about US$700 million in Romania. The company promptly filed an investor-state dispute settlement (ISDS) procedure at ICSID, based on bilateral investment treaties (BITs) between Canada and Romania, as well as UK and Romania (Gabriel Resources Ltd. and Gabriel Resources (Jersey) v. Romania, ICSID Case No. ARB/15/31). The company claimed not only money spent but also lost future profits, Gabriel Resources ultimately demanded over US$6.6 billion from Romania, almost 3% of the country’s GDP. In 2021, while the case was still pending, UNESCO added the Rosia Montana area to its list of world heritage sites.
On 8 March, an ISCID panel rejected the investor's compensation claims. The panel's detailed reasoning has yet to be published, but experts are wondering whether it may mark a turning point in ISDS. Over the last twenty years or so, the ISDS system had picked up a bad reputation among environmental protection groups for regularly prioritizing the financial interests of the investors over the environmental interests of the host states, let alone the populations concerned. Stay tuned for further analysis…!
Details of the arbitration proceedings from 2015 to 2024 are available here: https://www.italaw.com/cases/8647
For further information and pictures of destroyed mountains, see, for example, https://www.bloomberg.com/news/articles/2024-03-09/romanian-gold-mine-canadian-developer-loses-damages-case-over-rosia-montana?embedded-checkout=true
For additional discussion, see also Chapter 3.6 of our open-access textbook!