Bear Creek Mining Corporation v Republic of Peru1

A subset of investor–State arbitrations arise out of circumstances where there is a major backlash by a local population against an investment, and the host State, in responding to such concerns, takes actions, such as cancelling a permit, which prevent the future operations of a foreign investor.3 Such cases raise fundamental questions about the legitimate concerns, rights and responsibilities of local populations affected by investment activities, host State governments and foreign investors.4 The Award in Bear Creek Mining v Peru,5 rendered under the investment chapter of the Canada–Peru Free Trade Agreement,6 is another such dispute. As outlined below, the case concerned Peru’s revocation of an authorization for the foreign investor’s acquisition of concessions for a silver mine, in response to widespread protests. The Award runs to some 300 pages, and this comment will focus on two of its contributions that are of wider relevance. First, the Tribunal considered the relevant standard for determining whether the investor had obtained a social license and, in particular, what was required of the investor when consulting indigenous populations affected by its operations, referring to the international law framework governing the latter issue. Second, the Award is one of the first to apply an investment treaty that included criteria intended to distinguish indirect expropriations from legitimate regulation and a general exceptions clause based on Article XX of the General Agreement on Tariffs and Trade (GATT).7 Both of these types of provisions have been included in many investment treaties over the last decade in an effort to increase States’ policy space, but they are largely untested before arbitral tribunals.8 This case comment will suggest that the Bear Creek Award highlights important ambiguities that remain in relation to such provisions and demand further attention from treaty drafters and arbitrators.