Gabriel Resources v. Romania: Local Residents as Third Parties in Investor-State Dispute Settlement?

by | Apr 19, 2019

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About Lisa Kadel and Christian Schliemann

Christian Schliemann Radbruch studied law in Berlin and Strasbourg. He worked as scientific research assistant at the Free University Berlin, where he completed his PhD on the rights of minorities and indigenous peoples to collective autonomy. Since 2014 he is Legal Advisor for the European Center for Constitutional and Human Rights in the Business and Human Rights Department. His work at ECCHR focused in particular on supply chain liability in the textile sector, agribusiness and highly hazardous pesticides, the regulation of the arms trade as well as international investment law’s impacts on human rights.

The Canadian corporation Gabriel Resources wanted to establish Europe’s largest gold mine in Rosia Montana, Romania. Local villagers and Romanian civil society resisted the corporation and the state, due to perceived disregard for their human rights and environmental concerns. After a long battle they prevented the project. As a response Gabriel Resources sued Romania for 3.3 billion US Dollars under the Canadian-Romanian Bilateral Investment Treaty before an ICSID tribunal.

The case shows a lack of participation options for those affected and problematizes international investment law’s lack of interaction with company obligations under international business and human rights standards.

Limits to participation

Even though the outcome of the proceedings may directly affect third parties, they are far from meaningfully influencing them. If Romania is ordered to pay compensation, this will deplete resources for public services, and if a settlement is reached, there is no guarantee that it will respect the rights of the local residents.

Romanian organizations have submitted an amicus curiae brief to the tribunal presenting the disregard of Gabriel Resources and the Romanian state for their rights. While the brief was accepted, the tribunal excluded testimonies and legal arguments contained in it. It considered that testimonies cannot form part of the evidence as they have not been tested in cross-examination. Concerning the legal arguments, the tribunal held that amici failed to show particular expertise on legal matters or expertise that is not already available to Respondent.

In practice, the exclusion of testimonies means that the voices of those affected will not be heard in any ICSID proceeding, since amici are never cross-examined. Legal arguments are excluded pursuant to the BIT, where only Canadian and Romanian persons are entitled to submit amicus briefs. Since the Romanian amici were assisted by foreign NGOs, who provided legal expertise, legal arguments were rejected. This severely limits the possibility for transnational cooperation in cases where specialized knowledge on international arbitration law is needed, but not necessarily a given among local organizations.

In addition, under the ICSID arbitration rules, the tribunal is not required to take the amici’s arguments into account. As a result, the applicants do not have real access to the tribunal. Considering that ICSID awards are automatically enforceable and aim to preclude recourse to national courts, the local residents right to a fair and public hearing (Art. 14 ICCPR) and the right to remedy (Art. 2(3) ICCPR) may be violated through their exclusion from both international and national remedies.

International Investment Law v. business and human rights

The amicus brief alleges that Gabriel Resources’ conduct contravenes international standards on companies’ human rights responsibilities, particularly the right to an adequate standard of living (Art. 11 ICESCR). Art. 11 includes the right to live somewhere in security, peace, and dignity. It should encompass security of tenure, understood as protection against forced evictions, harassment, and other threats. Adequate housing should be in a location that allows access to employment options, health-care services, schools, and other social facilities.

According to the amici, Gabriel Resources’ aggressive attempts to achieve the relocation of residents and its insufficient resettlement plan put undue pressure on community members to sell their houses and had a significant negative impact on the social fabric of Rosia Montana, resulting in a violation of the right to an adequate standard of living. The amici also highlight a lack of meaningful engagement with the community, as required by international standards. Only through legal action were several permits revoked, and public pressure prevented the adoption of a special law intended to enable the project. As a consequence, the state is now faced with the compensation claim.

Corporate human rights abuses are only reluctantly considered by investment tribunals, with Urbaser v. Argentina as recent exception. Yet, where companies don’t incur obligations, it is economically profitable to ignore human rights standards and sue the state for compensation if projects are stopped to safeguard the environment or the local population’s rights. Investment law should not condone corporations’ lack of due diligence and disrespect for human rights. The ICSID tribunal now has the possibility to take a step in this direction with significance beyond the particular case.

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