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El Salvador mining case could affect business in Central America

A dispute between Pacific Rim Ming Corp. and El Salvador could set the bar for DR-CAFTA arbitration.

A Canadian mining company is seeking $77 million from the government of El Salvador in one of the first disputes to be arbitrated under the Dominican Republic and Central America Free Trade Agreement (DR-CAFTA).

Vancouver-based Pacific Rim Mining Corp. was issued exploratory permits to develop the El Dorado mine, which the company estimates will yield about half a billion dollars of high-grade gold. El Salvador, however, never issued the final exploitation permit required to begin extraction activities. Pacific Rim believes the decision was politicallyinfluenced, is not in accordance with El Salvador’s laws and is seeking compensation for the money it claims it lost waiting for the permit to issue.

Onshore Move

Perhaps the most glaring aspect of the case is the simple fact that Pacific Rim is a Canadian company, and Canada is not a signatory of DR-CAFTA. The company brought the dispute through a U.S. subsidiary, Pac Rim, which was based in the Cayman Islands until relocating to Nevada in 2007. 

Contributing Author

Steven Andersen

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