By Devan Braun
In a recent post, Rightscapes analyzed the human right effects of arbitration mechanisms often included in bilateral and multilateral trade agreements. To illustrate these effects of these arbitration mechanisms, we used the example of Eco Oro, a Canadian mining company that had recently filed an arbitration request over actions taken by the Colombian Constitutional Court.
Since the publication of that post, the International Finance Corporation (“IFC) has announced its decision to divest from the Canadian company Eco Oro Minerals. The IFC’s announcement that it will sell off its 12.5% stake in Eco Oro comes about in the wake of the company’s recent filing requesting an arbitration proceeding over the project.
The Bank initially began a detailed review of the project after receiving a formal complaint to its independent investigation mechanism from several environmental groups, including the Washington-based Center for International Environmental Law (CIEL). The review of various environmental and social aspects of IFC’s investment in Eco Oro Minerals Corp. resulted in a 52-page report that confirmed that the project did not meet several of the Bank’s internal requirements, including an Environmental and Social Impact Assessment (“ESIA”). In its initial response to the report, IFC committed to continue monitoring the project, noting that the related ESIA had yet to be completed and that Eco Oro had suspended the project. After the report’s release, Eco Oro’s management confirmed that actions taken by the Colombian Constitutional court had rendered the project unviable, and that the company’s only path forward is the arbitration filing.
IFC’s divestment from its shares in Eco Oro confirms the potential negative impact of the project in Colombia, as the IFC’s spokesperson has stated that IFC will only invest in projects that have a positive impact on the development of Colombia. Its divestment lends further credence to Colombia’s decision to reject the mining project in the sensitive Angostura region, as it does not meet the required environmental and social frameworks required for such projects.