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CAFTA

The US-Dominican Republic–Central America Free Trade Agreement (CAFTA-DR or CAFTA for short) was signed in 2004. It encompasses the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

The investor-state dispute settlement (ISDS) mechanism specified in CAFTA has provided US companies privileged means to challenge national laws and claim millions of US dollars in compensation in Central America.

As of end of 2019, CAFTA was invoked in 11 cases.

The most well-known cases include:

• TCW (US) vs. The Dominican Republic: case settled in 2009 for US$26.5 million to the investor, an investment management corporation.

• Railroad Development Corporation (US) vs. Guatemala: US$18.6 million awarded in 2012 to the investor in a dispute over a railroad contract.

• Pac Rim Cayman LLC (US) vs. El Salvador: In 2008, El Salvador denied a mining permit to Pac Rim (now OceanaGold) due to environmental concerns, and notably the impact on water resources. In 2012, the arbitral tribunal dismissed jurisdiction over the CAFTA claims but assumed jurisdiction of the claims under the domestic investment law. In October 2016, the tribunal decided that the company’s case was without merit.

Photo: Danny Hammontree / CC BY-NC-ND 2.0

(March 2020)

El Salvador freezes OceanaGold bank accounts, assets over $8 mln payment
Reuters | 19-Apr-2017
El Salvador froze bank accounts and assets belonging to OceanaGold Corp after the mining company refused to pay the country $8 million as mandated by an international court.
CAFTA , El Salvador , investor-state disputes | ISDS , mining , US
No more mining - Reflections from Pacific Rim Cayman v El Salvador (ICSID)
Lexology | 16-Feb-2017
Pac Rim Cayman raises interesting jurisdictional issues as well as environmental and social justice issues in the context of resource development in developing countries.
CAFTA , El Salvador , investor-state disputes | ISDS , mining , reformed ISDS , US
Free trade’s chilling effects
Taylor & Francis | 17-Oct-2016
The TPP threatens to extend the most draconian feature of the contemporary free trade model: private corporation’s ability to sue sovereign nations.
CAFTA , Central America , CPTPP , investor-state disputes | ISDS , NAFTA | USMCA , US
TECO subsidiary awarded $21 million
Business Observer | 2-Oct-2016
A TECO Energy subsidiary has won a $21.1 million award in a business claim against the government of Guatemala.
CAFTA , Guatemala , ICSID , investor-state disputes | ISDS
Victoria en arbitraje refuerza la seguridad jurídica del país
Listin Diario | 24-Jun-2016
A raíz de este proceso el Ministerio de Medio Ambiente y Recursos Naturales está revisando todos los procedimientos relativos a las autorizaciones ambientales con la finalidad de actualizarlos.
CAFTA , Dominican Republic , environment , investor-state disputes | ISDS
Rural communities’ struggle against US-owned mine continues in Guatemalan Supreme Court
Upside Down World | 21-Jun-2016
The long-running struggle of rural communities in Guatemala against the United States-based mining firm Kappes, Cassiday, and Associates (KCA) continues in Guatemala’s national courts.
CAFTA , Guatemala , investor-state disputes | ISDS , mining
Mining company threatens Guatemala with lawsuit in USA
Prensa Latina | 20-Jun-2016
The Guatemala Mining Explorations (Exmingua) threatens with filing a lawsuit against Guatemala after being forced to suspend operations by decree of the Constitutional Court .
CAFTA , Guatemala , investor-state disputes | ISDS , mining
Estado de Guatemala tendrá que pagar $21.1 millones a Teco Energy
Soy 502 | 11-Apr-2016
El Centro Internacional de Arbitraje Relativo a las Inversiones (CIADI) falló a favor de Teco Guatemala Holdings (TGH) para que la República de Guatemala le page a esa empresa 21. 1 millones de dólares más intereses.
CAFTA , Guatemala , ICSID , investor-state disputes | ISDS
Corporate bias at the World Bank Group
Bretton Woods Project | 30-Sep-2015
This briefing finds significant ICSID bias in favour of corporations and commercial interests by analysing ICSID overall and by looking at a specific case brought by a global mining corporation against El Salvador.
CAFTA , El Salvador , investor-state disputes | ISDS , mining
El Salvador vs Pacific Rim: the price of saying ‘no’ to a gold mine
The Argentina Independent | 29-Sep-2015
El Salvador is defending itself against a US$301m lawsuit filed after it blocked a mining project to protect the country’s heavy-polluted water supply. The imminent verdict will set a precedent amid a growing trend of companies suing governments when they can’t exploit their natural resources.
CAFTA , El Salvador , environment , investor-state disputes | ISDS , mining