ARBITRATION UNDER THE RULES OF THE
INTERNATIONAL CENTRE FOR SETTLEMENT OF
INVESTMENT DISPUTES
LUPAKA GOLD CORP.
Claimant
VS.
REPUBLIC OF PERU
Respondent
REQUEST FOR ARBITRATION
21 October 2020
LALIVE
[Page 2]
[Page 4]
1 Lupaka Gold Corp. (“Lupaka” or the “Claimant") submits this Request
for Arbitration against the Republic of Peru (“Peru” or the “Respondent")
in accordance with Article 36 of the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States which
was signed on 18 March 1965 and is in force for both Canada and Peru
(the "ICSID Convention”) and Article 824 of the Free Trade Agreement
between Canada and Peru which was signed on 29 May 2008 and entered
into force on 1 August 2009 (the “FTA”).1
2 The present dispute arises out of Peru's breaches of the FTA in relation to
Lupaka's investments in Peru. The investments were made in certain
concession areas which were developed for the purposes of mining gold
(the "Project").2 As a result of these breaches, the Claimant lost its entire
investment.
3 The factual background to the Claimant's claims is summarised in
Section 3 of this Request for Arbitration. The Claimant has complied with
the relevant jurisdictional and other requirements under the FTA and the
ICSID Convention as set out in Section 4. Further, the Claimant explains
in Section 5 how the illegal acts of the Community of Parán are attributable
to Peru under international law. Section 6 summarises Peru's breaches of
the substantive standards under the FTA and, in Section 7, the Claimant
presents its procedural proposals as to the next steps in the proceedings, in
accordance with the Rules of Procedure for Arbitration Proceedings of the
International Centre for the Settlement of Investment Disputes (the
"ICSID Arbitration Rules"). The relief sought by the Claimant is set out
in Section 8.
1 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1. See, also, Canada-Peru ↩
Free Trade Agreement, additional background information in Government of Canada's
official website, at Exhibit CLA-2.
2 The concessions have the following names: Victoria Uno, Victoria Dos, Victoria Tres, ↩
Victoria Cuatro, Victoria Siete and Invicta II.
[Page 5]
4 The Claimant, Lupaka, is a mineral exploration and mining company duly
incorporated under the laws of British Columbia, Canada, with
incorporation number BC06169333 and listed on the TSX Venture
Exchange (CUSIP number 550435).4 The Claimant's registered address is
1569 Dempsey Road, North Vancouver, B.C., V7K 1S8, Canada.
5 As required by Rule 2(1)(f) of the Rules of Procedure for the Institution of
Conciliation and Arbitration Proceedings (the “ICSID Institution
Rules"), the Claimant has taken all necessary internal actions to authorise
the preparation and filing of this Request for Arbitration.5
6 LALIVE represents Lupaka in these proceeding.6 Correspondence
addressed to the Claimant in connection with this matter should be sent to:
Dr Marc D. Veit ([email protected])
Mr Timothy L. Foden ([email protected])
Mr Jaime Gallego ([email protected])
Mr Juan Pablo Charris ([email protected])LALIVE (London) LLP
9 Cloak Lane
London EC4R 2RU
United Kingdom
Tel: +44 20 3880 1540
7 The Respondent is the Republic of Peru, a sovereign State and a
contracting party to the ICSID Convention and the FTA. Article 843 of the
FTA requires that notices be delivered to the “Ministerio de Economía y
3 Certificate of Incorporation Kcrok Enterprises Ltd. dated 3 November 2000, at Exhibit ↩
C-1; Certificate of Change of Name from Kcrok Enterprises Ltd. to Lupaka Gold Corp.
dated 4 May 2010, at Exhibit C-2.
4 Lupaka Gold Corp. SEDAR profile, accessed on 26 August 2020, at Exhibit C-3. ↩
5 Lupaka Board of Director's Resolution authorising arbitration proceedings against Peru ↩
dated 1 October 2020, at Exhibit C-4.
6 Power of Attorney from Lupaka to LALIVE (London) LLP dated 27 September 2020, ↩
at Exhibit C-5.
[Page 6]
Finanzas". In the context of the consultations required by the FTA, the
Claimant has been in contact with:
Mr Ricardo Ampuero Llerena
Presidente de la Comisión Especial que Representa al Estado en
Controversias Internacionales de Inversión
Sede Central
Ministerio de Economía y Finanzas
Jr. Junín 319
Cercado de Lima
Republica del Perú
Tel: +51 1 311-5930
[email protected]
8 By letter dated 27 August 2020, the Respondent communicated the
appointment of Arnold & Porter Kaye Scholer LLP as the Respondent's
outside counsel, and requested that Mr Paolo Di Rosa and Mr Patricio
Grané Labat be copied by email on all correspondence at the following
addresses:7
9 This section begins with a brief overview of the activity which occurred in
the Project concession areas before Lupaka's investment (Section 3.1).
There then follows a summary of Lupaka's investments in Peru in the form
of the Project (Section 3.2). An overview follows of Parán's illegal actions
and the omissions of the police force and other government officials, which
give rise to the present dispute (Section 3.3), and which led inevitably to
Lupaka losing its entire investment in Peru (Section 3.4).
7 Letter from Peru to LALIVE (Oficio 262-2020-EF-CE-32) dated 28 August 2020, at ↩
Exhibit C-6.
[Page 7]
10 Mining activities within the area thereafter formed part of the Project date
back to the 1960s, although the concession areas (with their respective
titles) were not properly defined until 1996-1997 (with one being defined
in 2006). Various mining companies carried out exploration activities in
the area intermittently beginning in 1996.
11 During the years 2006-2008, Invicta Mining Corporation (“IMC”)
acquired the Project concessions. The concession areas covered some of
the communal lands of three communities: the Rural Community of Parán
("Parán" or "Community of Parán”), the Rural Community of Santo
Domingo de Apache (“Santo Domingo") and the Rural Community of
Lacsanga ("Lacsanga").
12 Peruvian law distinguishes between surface land and subsoil8 such that
within a concession area, a surface rights agreement is typically signed
with the owners of the land (whether it be private or communal) where a
miner intends to construct its mine infrastructure.9 In 2010, IMC reached
agreement with Santo Domingo, giving IMC full surface rights to pursue
mining activities.
8 Article 15 of Legislative Decree N° 109 published on 4 June 1992 states: "A mining ↩
concession is a different and separate immovable property from the surface area where
it is located. Its integral and accessory parts form part of its whole, even if they are
located outside the perimeter of the concession, unless the differentiation of the
accessory parts is agreed upon by contract."
9 Article 7 of Law No. 26505 of 14 July 1995 states the following in the relevant part: ↩
"Without the prior agreement with the owner of the land, no mining exploitation right
can be established."
[Page 8]
13 In October 2012, Lupaka became the owner of the Project concession areas
by acquiring Andean American Gold Corp. (“AAG”) which in turn wholly
owned IMC (except one share held by Mr Gordon Ellis, Lupaka's CEO):
LUPAKA GOLD
(British Columbia)
|
Lupaka Gold Peru |
100% |
Andean American |
|
99.99% |
||
|
Invicta |
||
|
100% |
||
|
Invicta Project |
14 Lupaka10 began to obtain authorisations from the relevant Peruvian
administrative authorities to develop the Project. In 2008, IMC had
submitted its Environmental Impact Assessment (“EIA") which the
Ministry of Energy and Mines (“MEM”) approved via Resolution No.
427-2009-MEM-AAM dated 28 December 2009.11 Lupaka then obtained
a further two-year extension to initiate the development activities
originally approved under the EIA via Resolution No. 375-2012-MEM-
AAM dated 14 November 2012.12
10 Any reference to Lupaka's acts as from October 2012 includes the acts of IMC. ↩
[Page 9]
15 In 2014, Lupaka applied for a mining plan approval from the MEM which
would allow it to build its mine infrastructure before exploitation could
commence. The MEM granted this approval through Resolution No.
0566-2014-MEM-DGM/V dated 11 December 2014.13
16 As noted, IMC had earlier concluded a full surface rights agreement with
Santo Domingo in 2010. Lupaka also needed, however, to obtain a surface
rights agreement with either Parán or Lacsanga in order to conduct mining
operations. Notably, Lupaka did not need a surface rights agreement with
both communities as Lupaka could locate its mine infrastructure and
upgrade the access road in either location.
17 Lupaka had initially negotiated with Parán, Peru's subdivision, during
2016, making multiple proposals. Although Lupaka obtained an
agreement in principle with Parán, the community assembly did not
approve it. Because of the deadlock with Parán, Lupaka began to negotiate
with Lacsanga to construct its mine infrastructure and an access road
within Lacsanga's area. Eventually, in July 2017, Lupaka secured an
agreement with Lacsanga. The Project was therefore to proceed on this
basis without a need for any further agreements with Parán.
18 In 2017, Lupaka applied for a mining operations certificate from the MEM
which would allow it to acquire and use explosives when building its mine
infrastructure on Lacsanga's land. The MEM granted Lupaka a mining
operations certificate on 30 November 2017.14 As part of this process,
Lupaka notified the MEM of the surface rights agreements it had reached
with Lacsanga.
19 In 2018, Lupaka invested significant amounts of money in the construction
of the mine and the access road. The completion of the construction works
occurred in September 2018. Hence, on 7 September 2018 Lupaka
requested that the MEM undertake an inspection of the completed works
11 Resolution No. 427-2009-MEM-AAM approving the EIA dated 28 December 2009, at ↩
Exhibit C-7.
12 Resolution No. 375-2012-MEM-AAM approving an extension to initiate development ↩
activities dated 14 November 2012, at Exhibit C-8.
13 Resolution No. 0566-2014-MEM-DGM/V approving Mining Plan dated 11 December ↩
2014, at Exhibit C-9.
14 Mining operations certificate (COM N° 072-2018-C) dated 30 November 2017, at ↩
Exhibit C-10.
[Page 10]
so that it could obtain an authorisation to exploit the mine.15 However,
Parán invaded and blockaded the mine before the inspection could take
place.16
20 On 14 October 2018, Parán, Peru's subdivision, illegally invaded the mine
and set up a permanent blockade on Lacsanga's land (Section 3.3.1).
Following Parán's invasion, the Peruvian police force, prosecutors and
central government officials took no action to remove Parán from the mine
or the blockade on Lacsanga's land (Section 3.3.2).
21 As noted above, Parán rejected Lupaka's efforts during 2016 to agree to a
surface rights agreement that would have seen Lupaka place its mine
infrastructure and upgrade an existing access road within its communal
lands. By 2018, however, Parán saw the benefits Lupaka's mine had
brought to the neighbouring communities of Santo Domingo and
Lacsanga. Parán, a subdivision of Peru, decided to take the mine by force
in order to extract as much economic benefit as it could for itself through
theft and extortion.
22 On 19 June 2018, Parán coordinated an armed invasion of the Project and
assaulted Lupaka's facilities, threatening the physical security of Lupaka's
personnel and causing damage to its property.17 With no assistance from
Peruvian police forces, Lupaka had to suspend its operations temporarily
until Parán's invaders withdrew shortly thereafter.
23 On 14 October 2018, the Community of Parán, directed gunmen to force
Lupaka's personnel from the Project's area including from its offices
located at the camp. The armed invaders then blocked illegally the access
route to the Project and forced Lupaka to evacuate workers and
15 Letter from IMC to the General Mining Directorate of the MEM dated 17 October 2018, ↩
at Exhibit C-11.
17 Letter from IMC to OSINERGMIN regarding Parán's illegal incursion dated 20 June ↩
2018, at Exhibit C-12.
[Page 11]
contractors. Notably, this access route is situated exclusively on
Lacsanga's, not Parán's, communal land.
24 Parán's blockade continued indefinitely. It set up camps and armed
checkpoints at different locations in the area surrounding the Project. The
Community of Parán's armed men opened fire on anyone attempting to
access the site. During this time, Parán upgraded the road from the mine
through Parán's land – using explosives and equipment stolen from
Lupaka's site – and helped itself to the stockpiled extracted development
ore that had been stored outside the mine portal, ready for shipment to
processing facilities.18 Parán went on to sell Lupaka's ore stockpile, which
had a substantial value.
25 Unfortunately, neither Peru's central nor regional governments took any
steps to restore Lupaka's rights to its investment.
26 Lupaka requested repeatedly the assistance of the Peruvian police forces
to remove the illegal blockade and restore law and order. Although the
police forces visited the blockade, they did not evict Parán's armed
invaders.
27 Lupaka submitted criminal complaints against Parán officials to the
relevant local prosecutors. Lacsanga community members also submitted
complaints concerning Parán's violent trespass onto Lacsanga property.
Ultimately, the relevant local prosecutors took no concrete action to evict
Parán's armed authorities.
28 Lupaka also requested repeatedly the assistance of the central
government.19 The MEM, the Ministry of Internal Affairs and the Office
18 Letter from IMC to the Director of the Office of Dialogue and Citizen Participation at ↩
the MEM dated 8 July 2019, at Exhibit C-13.
19 See e.g., Letter from IMC to the MEM enclosing letter to Parán dated 14 November ↩
2018, at Exhibit C-14; Letter from Lupaka Gold to the MEM regarding the illegal
blockade dated 6 February 2019, at Exhibit C-15; Letter from IMC to the Ministry of
Internal Affairs regarding Parán's illegal blockade dated 19 February 2019, at Exhibit
C-16; Letter from Lupaka Gold to the Ministry of Internal Affairs regarding breach of
[Page 12]
of the Presidency failed however to restore the mine to Lupaka. Instead,
these government organs organised several fruitless meetings with Parán
officials. These meetings dragged on for ten months without result, while
Parán's armed officials continued to hold the site and help themselves to
Lupaka's ore.
29 In the meanwhile, Parán continuously made demands to Lupaka for
compensation where none was due. Specifically, Parán sought payments
for land access as if Lupaka had utilised its land and made ransom demands
in respect of equipment left at the Project site by Lupaka and its contractors
during their flight. Lupaka did not cooperate and demanded continuously
that its rights to re-occupy the mine and continue with the Project be
enforced, to no avail. Indeed, at no point did Peru's central authorities
deploy the necessary police force to end the illegal occupation.
30 As noted, at the time of Parán's illegal invasion in October 2018, Lupaka
had completed the development of the mine and was on the verge of
exploitation. However, as a result of Peru's illegal actions as set out above,
Lupaka was unable to produce gold and its resulting cashflows that would
allow it to fulfil its financial obligations to its creditors. Specifically,
Lupaka was unable to service its obligations under a 2017 USD 15.6
million prepaid forward gold purchase agreement ("PLI Financing
Agreement”) with an affiliate of Pandion Mine Finance L.P. (“Pandion”)
named PLI Huaura Holding L.P. (“PLI Huaura").
31 In July 2019, Pandion transferred its interest in PLI Huaura to Lonely
Mountain Resources S.A.C. (“Lonely Mountain”), a Peruvian mining
consortium. Lonely Mountain then enforced its contractual rights under
the PLI Financing Agreement by seizing IMC's shares on 26 August 2019,
thus taking control of the Project.
32 Lonely Mountain's enforcement against IMC's shares was the
consequence of Peru's acts and omissions. It was publicly known that
agreement to stop blockade dated 28 February 2019, at Exhibit C-17; Minutes of
meeting between central government officials and IMC dated 27 May 2019, at Exhibit
C-18; Letter from IMC to the Director of the Office of Dialogue and Citizen
Participation at the MEM dated 8 July 2019, at Exhibit C-13; Letter from LALIVE to
Peru on behalf of Lupaka dated 6 August 2019, at Exhibit C-19.
[Page 13]
Lupaka would likely lose its investments if it could not resume mining
activities.20 Indeed, Lupaka had communicated this likely outcome to
Peruvian authorities at the time.21
33 All requirements under the FTA and the ICSID Convention to commence
this arbitration are met. Lupaka is an investor within the meaning of the
FTA and a national of an ICSID Contracting State other than Peru, in
accordance with the ICSID Convention (Section 4.1). Lupaka made an
investment protected under the FTA and the ICSID Convention (Section
4.2). Finally, the Claimant has complied with the conditions precedent to
the submission of a claim to arbitration under Articles 822 and 823 of the
FTA (Section 4.3).
34 Article 847 of the FTA defines an “investor of a Party" as follows in the
relevant part:
"(a) in the case of Canada:
[...]
(ii) a national or an enterprise of Canada,
that seeks to make, is making or has made an investment; ..."22
35 The same provision defines “enterprise of a Party" as follows:
20 See, for example, "Construction of Invicta has been paralysed for nine months", Minera ↩
Andina dated 5 July 2019, at Exhibit C-20.
21 See, for example, Letter from Lupaka Gold to the MEM regarding the illegal blockade ↩
dated 6 February 2019, at Exhibit C-15, p. 2.
22 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 165 (Art. 847). ↩
[Page 14]
"enterprise of a Party means an enterprise constituted or organized
under the law of a Party, and a branch located in the territory of a
Party and carrying out business activities there."23
36 In turn, the term “enterprise” has the meaning given in Article 105 (and a
branch of any such entity). Article 105 of the FTA provides the following
definition of “enterprise” as:
"any entity constituted or organized under applicable law, whether
or not for profit, and whether privately-owned or governmentally-
owned, including any corporation, trust, partnership, sole
proprietorship, joint venture or other association.”24
37 Lupaka is a corporation duly incorporated under the laws of British
Columbia, Canada (see Section 2 above) and has made an investment in
Peru. Lupaka therefore qualifies as an “investor of a Party” under the FTA.
It also qualifies as a “juridical person which ha[s] the nationality of
[Canada]", as required by Article 25(2)(b) of the ICSID Convention.
38 Article 847 of the FTA gives a definition of “investment”, in the relevant
part, as:
"(a) an enterprise;
(b) an equity security of an enterprise;
[...]
(e) an interest in an enterprise that entitles the owner to share in
income or profits of the enterprise;[...]
(g) real estate or other property, tangible or intangible, acquired in
the expectation or used for the purpose of economic benefit or
other business purposes; and
24 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 6 (Art. 105). ↩
[Page 15]
(h) interests arising from the commitment of capital or other
resources in the territory of a Party to economic activity in such
territory, such as under:(i) contracts involving the presence of an investor's
property in the territory of the Party, including turnkey
or construction contracts, or concessions, or(ii) contracts where remuneration depends substantially on
the production, revenues or profits of an enterprise.”25
39 Given that the term "investment" within Article 25 of the ICSID
Convention was left undefined intentionally, thereby leaving it to States to
agree on a definition, such term as understood in Article 847 of the FTA is
to be relied upon.
40 Lupaka invested significant financial resources in Peru for the evaluation,
acquisition, exploration and development of the Project. Specifically, the
Claimant's investment in the Project included the following elements, all
of which fall within the definition of “investment" in Article 847 of the
FTA:
a) a 99.999% interest in IMC, an enterprise incorporated under the
laws of Peru;b) six mining concessions in Peru which under Peruvian law, do not
have an expiry date;c) surface rights in the Project area allowing for mining activities to
be undertaken;d) Lupaka's attendant equipment and infrastructure including, among
other things, moveable and immoveable as well as tangible and
intangible property; ande) the expenses incurred by Lupaka for exploration drilling, assaying
and metallurgical tests among others.
25 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 166 et seq. (Art. 847). ↩
[Page 16]
41 Article 824 of the FTA provides, in the relevant part:
"... a disputing investor who meets the conditions precedent in
Article 823 may submit the claim to arbitration under:(a) the ICSID Convention, provided that both the disputing Party
and the Party of the disputing investor are parties to the
Convention."26
42 As set out in the sub-sections that follow, the Claimant has complied with
all the conditions precedent set out at Article 823 of the FTA. It has also
complied with the obligations to carry out consultations as per Article 822.
43 Article 823.1(a) of the FTA provides as follows:
"1. A disputing investor may submit a claim to arbitration under
Article 819 [Claim by an Investor of a Party on Its Own Behalf]
only if:"(a) the disputing investor consents to arbitration in accordance
with the procedures set out in this Section." 27
44 In relation to waiver, Article 823.1(e) and Article 823.5 of the FTA require
the following:
"(e) the disputing investor and, where the claim is for loss or
damage to an interest in an enterprise of the other Party that is a
juridical person that the investor owns or controls directly or
indirectly, the enterprise, waive their right to initiate or continue
before any administrative tribunal or court under the law of either
Party, or other dispute settlement procedures, any proceedings with
26 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 146 et seq. (Art. 824). ↩
27 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 143 (Art. 823). ↩
[Page 17]
respect to the measure of the disputing Party that is alleged to be a
breach referred to in Article 819, except for proceedings for
injunctive, declaratory or other extraordinary relief, not involving
the payment of damages, before an administrative tribunal or court
under the law of the disputing Party.[...]
5. A waiver from the enterprise under subparagraphs 1(e) or 2(e)
shall not be required only where a disputing Party has deprived a
disputing investor of control of an enterprise.”28
45 Article 823.3 of the FTA in turn requires that:
"3. A consent and waiver required by this Article shall be in the
form provided for in Annex 823.1, shall be delivered to the
disputing Party and shall be included in the submission of a claim
to arbitration."29
46 A consent and waiver document in accordance with the form provided at
Annex 823.1 is enclosed herewith.30
47 Article 823.1(b) and (c) of the FTA requires the following:
"(b) at least six months have elapsed since the events giving rise to
the claim;(c) not more than 39 months have elapsed from the date on which
the disputing investor first acquired, or should have first acquired,
knowledge of the alleged breach and knowledge that the investor
has incurred loss or damage thereby."31
28 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 144 et seq. (Arts. ↩
823.1(e) and 823.5).
29 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 145 (Art. 823.3). ↩
30 Consent and Waiver by Lupaka in accordance with Article 823 FTA dated 27 September ↩
2020, at Exhibit C-21.
31 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 143 (Art. 823.1 (b) ↩
and (c)).
[Page 18]
48 As noted at Section 3, the events giving rise to the claim span from June
2018 to August 2019. Accordingly, more than six months have elapsed
since the events giving rise to the Claimant's claims, described above in
Section 3, in accordance with Article 823.1(b) of the FTA.
49 Consistent with Article 823.1(c) of the FTA, not more than 39 months have
elapsed from the time when Lupaka acquired knowledge of Peru's
breaches of the FTA (namely arising from the events from June 2018 to
August 2019) and that it incurred loss or damage thereby.
50 Article 823.1 (d) refers to the requirement to file a Notice of Intent as
follows:
"(d) the disputing investor has delivered the Notice of Intent
required under Article 821, in accordance with the requirements of
that Article, at least six months prior to submitting the claim."32
51 Article 821 of the FTA provides:
"1. The disputing investor shall deliver to the disputing Party a
written notice of its intent to submit a claim to arbitration at least
six months before the claim is submitted. The notice shall specify:(a) the name and address of the disputing investor and, where a
claim is made under Article 820, the name and address of the
enterprise;(b) the provisions of this Agreement alleged to have been breached
and any other relevant provisions;(c) the issues and the factual basis for the claim, including the
measures at issue; and(d) the relief sought and the approximate amount of damages
claimed.
32 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 144 (Art. 823.1 (d)). ↩
[Page 19]
2. The disputing investor shall also deliver, with its Notice of Intent
to Submit a Claim to Arbitration, evidence establishing that it is an
investor of the other Party. "33
52 Lupaka delivered a Notice of Intent to Peru by letter dated 12 December
2019, which complied with the requirements set out in Articles 821 of the
FTA.34 Peru acknowledged receipt of the Notice of Intent on 27 December
2019.
53 Article 822 of the FTA provides as follows:
"1. Before a disputing investor may submit a claim to arbitration,
the disputing parties shall first hold consultations in an attempt to
settle a claim amicably.2. Consultations shall be held within six months of the submission
of the Notice of Intent to Submit a Claim to Arbitration, unless the
disputing parties otherwise agree.3. The place of consultation shall be the capital of the disputing
Party, unless the disputing parties otherwise agree.”35
54 In its Notice of Intent, Lupaka requested consultations with Peru.
55 Due to COVID-19 related restrictions imposed by Peru, the Parties were
unable to convene in Lima as per Article 822.3 of the FTA. Accordingly,
on 22 April 2020, the Parties held a videoconference. However, despite
the Parties' consultations at such time, and the further consultations
through correspondence thereafter, the Parties were not able to reach an
agreement to settle the dispute amicably.
33 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 142 (Art. 821). ↩
34 Lupaka's Notice of Intent to Submit Claims to Arbitration dated 12 December 2019, at ↩
Exhibit C-22.
35 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 143 (Art. 822). ↩
[Page 20]
56 More than six months have elapsed since the Claimant's Notice of Intent.
In light of the above, the requirements under Article 822 of the FTA have
been satisfied.
57 The illegal acts of Parán are attributable to Peru under international law. It
is a generally accepted rule of international law that States are responsible
for the acts and omissions of all its State organs and for the conduct of any
person or entity empowered to exercise elements of governmental
authority.36
58 The Constitution of Peru recognises the existence of rural and native
communities within its territory. They are described in Article 89 of the
Constitution as having legal existence and also being legal persons,
autonomous in their organisation, in their communal work and in the use
and free disposition of their lands, as well as in economic and
administrative matters, within a legal framework established by law.37
59 Pursuant to Article 2 of the General Law of Rural Communities (Law No.
24656 of 1987), rural communities are organisations of public interest,
with legal existence and legal personality comprised of families that
inhabit and control certain territories linked by ancestral, social, economic
and cultural ties which are expressed through communal ownership of the
land, communal work, mutual assistance, a democratic government and the
development of multi-sectorial activities.38
60 The General Law of Rural Communities is the subject of more detailed
regulation through Supreme Decree No. 008-91-TR of 1991. Article 2 of
that Decree states that a rural community's legal personality is recognised
following registration of an administrative resolution by the corresponding
regional government.39
61 Parán is recognised under Peruvian law as a rural community further to
Resolution No. 087-2000-AGUAD-Lima dated 10 November 2000 and its
36 See, Draft Articles on Responsibility of States for Internationally Wrongful Acts, ↩
International Law Commission, 2001, at Exhibit CLA-3, p. 2 et seq. (Arts. 4 and 5).
37 Political Constitution of Peru, 1993, at Exhibit C-23, p. 1 (Art. 89). ↩
38 Law No. 24656 dated 13 April 1987, at Exhibit C-24, p. 1 (Art. 2). ↩
39 Supreme Decree No. 008-91-TR dated 5 February 1991, at Exhibit C-25, p. 1 (Art. 2). ↩
[Page 21]
registration on 9 May 2001.40 As such, Parán has its own legal personality
and is empowered with governmental authority, having its own
governmental and administrative apparatus, economic autonomy and with
collective ownership of its land.
62 The acts which form one of the bases for Lupaka's claims are not the
isolated acts of individual Parán community members. They were acts of
Parán as a community with its own administrative apparatus and guided
by the community's elected leadership. It was this leadership and its
administration with whom Lupaka and other State instrumentalities
interacted during the relevant events. Therefore, as set out below at
Section 6, Parán's acts are attributable to Peru.
63 Through the actions and omissions described in Section 3.3 above, a legal
dispute has arisen which arises directly out of the investment made. In
particular, Peru breached its obligations under the FTA in relation to the
Claimant's investments. These include, but are not limited to:
a) Peru's obligation not to expropriate the Claimant's investments
without prompt, adequate and effective compensation under
Article 812 of the FTA (Section 6.1); andb) Peru's obligation to provide fair and equitable treatment, full
protection and security and most-favoured nation treatment under
Articles 804 and 805 of the FTA (Section 6.2).
64 As a result of Peru's actions and omissions, the Claimant suffered
significant losses (Section 6.3).
65 Peru unlawfully expropriated Lupaka's investment in breach of Article 812
of the FTA. Article 812 provides:
40 See, Directory of Rural Communities in Peru, Information System on Rural ↩
Communities in Peru (SICCAM), 2016, at Exhibit C-26, p. 283.
[Page 22]
"Neither Party may nationalize or expropriate a covered investment
either directly, or indirectly through measures having an effect
equivalent to nationalization or expropriation (hereinafter referred
to as 'expropriation'), except for a public purpose, in accordance
with due process of law, in a non-discriminatory manner and on
prompt, adequate and effective compensation.”41
66 Failure to comply with any of these four criteria set out in Article 812 of
the FTA renders any measure, the effect of which is tantamount to
expropriation, unlawful under the FTA.
67 Peru's actions and omissions described in Section 3.3 above resulted in the
complete destruction of Lupaka's investment in the Project. These actions
and omissions did not pursue any justifiable public purpose, nor did Peru
comply with due process or offer Lupaka prompt, adequate and effective
compensation. Peru's actions and omissions thus amount to an unlawful
expropriation in breach of Article 812 of the FTA.
68 Under Article 805.1 of the FTA, Peru has an obligation to accord fair and
equitable treatment (“FET”) and full protection and security ("FPS") to
Lupaka's investments in Peru. Article 805 of the FTA provides, in its
relevant part:
"1. Each Party shall accord to covered investments treatment in
accordance with the customary international law minimum
standard of treatment of aliens, including fair and equitable
treatment and full protection and security.2. The concepts of "fair and equitable treatment" and "full
protection and security" in paragraph 1 do not require treatment in
addition to or beyond that which is required by the customary
international law minimum standard of treatment of aliens."42
41 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 132 (Art. 812). ↩
42 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 126 (Art. 805). ↩
[Page 23]
69 As set out above, the FTA adopts the customary international minimum
standard of treatment of aliens. Notwithstanding, Article 804 of the FTA
contains a most-favoured nation (“MFN”) clause, which provides:
"1. Each Party shall accord to investors of the other Party treatment
no less favourable than that it accords, in like circumstances, to
investors of a non-Party with respect to the establishment,
acquisition, expansion, management, conduct, operation and sale or
other disposition of investments in its territory.2. Each Party shall accord to covered investments treatment no
less favourable than that it accords, in like circumstances, to
investments of investors of a non-Party with respect to the
establishment, acquisition, expansion, management, conduct,
operation and sale or other disposition of investments in its
territory.3. For greater certainty, the treatment accorded by a Party under
this Article means, with respect to a sub-national government,
treatment accorded, in like circumstances, by that sub-national
government to investors, and to investments of investors, of a non-
Party."43
70 To the extent that that the minimum standard is considered to be a less
stringent standard – which is denied – than a standalone reference to FET
and FPS, the Claimant relies on the MFN provision in order to import a
higher standard of protection from standalone references to FET and FPS
contained in another treaty entered into by Peru, as will be further
explained in the Statement of Claim. Without prejudice to the Claimant's
position in the Statement of Claim, the Peru-United Kingdom bilateral
investment treaty is relied upon in relation to Article 804 of the FTA.44
43 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, p. 125 (Art. 804). ↩
44 Article 2 of the Peru-United Kingdom bilateral investment treaty provides: "2. ↩
Investments of nationals or companies of each Contracting Party shall at all times be
accorded fair and equitable treatment and shall enjoy full protection and security in the
territory of the other Contracting Party. Neither Contracting Party shall in any way
impair by unreasonable or discriminatory measures the management, maintenance, use,
enjoyment or disposal of investments in its territory of nationals or companies of the
other Contracting Party. Each Contracting Party shall observe any obligation it may
have entered into with regard to investments of nationals or companies of the other
Contracting Party."
[Page 24]
71 Peru through the acts and omissions summarised in Section 3.3 above,
breached FET and FPS. In particular, but without limitation, Peru:
a) through the illegal acts of Parán, forcefully appropriated the
Claimant's investment and prevented the Claimant from accessing
the Project since 14 October 2018;b) failed to protect Lupaka's rights, including ownership rights and
rights deriving from Lupaka's previous exploration and
prospection activities on the land concerned by the mining
concessions; andc) failed to accord Lupaka, its personnel and its property physical
protection and security against violent acts stemming from
government and/or non-government actors.
72 Peru had the obligation to take measures to restrain Parán from taking
adverse actions against the Claimant's investment, irrespective of whether
Parán was acting as an instrumentality of the State or not.
73 Peru's breaches of the FTA caused Lupaka substantial losses and damage.
Primarily, these losses relate to the total loss of value of Lupaka's
investment in the Invicta Project, including its future profits. The losses
exceed an amount of USD 100 million and will be further quantified in the
course of the arbitration.
74 Article 826 of the FTA states:
"1. Except in respect of a Tribunal established under Article 829,
and unless the disputing parties agree otherwise, the Tribunal shall
comprise three arbitrators. One arbitrator shall be appointed by each
of the disputing parties and the third, who shall be the presiding
arbitrator, shall be appointed by agreement of the disputing parties.2. Arbitrators shall:
[Page 25]
(a) have expertise or experience in public international law,
international trade or international investment rules or the
resolution of disputes arising under international trade or
international investment agreements;(b) be independent of, and not be affiliated with or take instructions
from, either Party or the disputing investor; and(c) comply with any Code of Conduct for Dispute Settlement as
agreed by the Commission.3. The disputing parties should agree upon the arbitrators'
remuneration. If the disputing parties do not agree on such
remuneration before the constitution of the Tribunal, the prevailing
ICSID rate for arbitrators shall apply.4. The Commission may establish rules relating to expenses
incurred by the Tribunal.”45
75 The Claimant proposes that the Parties adopt the following slight
deviations from Articles 826 and 827 of the FTA:
a) that the President of the Arbitral Tribunal be appointed by agreement
of the two arbitrators appointed by the Parties, instead of by the
Parties themselves pursuant to Article 826.1 of the FTA, within 30
days of the appointment of the second arbitrator, and that the two
arbitrators may for this purpose consult with the respective Party that
appointed him/her; andb) that, in case the President of the Tribunal has not yet been appointed
within 90 days from the receipt of the Request for Arbitration in
accordance with Article 824 of the FTA, the Secretary-General of
ICSID appoint the President of the Tribunal after having consulted
the Parties, in line with Article 38 of the ICSID Convention, rather
than "in his or her discretion."
45 Canada-Peru Free Trade Agreement, 2009, at Exhibit CLA-1, pp. 147 et seq. (Art. ↩
826).
[Page 26]
76 In accordance with the above requirements, the Claimant herewith
nominates Jonathan D. Schiller as its party-appointed arbitrator. Mr
Schiller's contact details are as follows:
Jonathan D. Schiller
Boies Schiller Flexner
55 Hudson Yards, 20th Floor
New York, NY 10001
United States
Τ. +1 212 446 2388
E. [email protected]
77 To the best of the Claimant's information and belief, Mr Schiller is
independent of the Parties and available to act as arbitrator in the present
matter.
78 Further, the Claimant proposes that the Respondent appoints an arbitrator
within 30 days of the date of the notification of this Request for Arbitration.
The arbitrators appointed by the Parties would then liaise in order to
appoint the President of the Tribunal within a further 30 days (or the Parties
would liaise directly for the same period in case there is no agreement).
79 In accordance with the ICSID Secretariat's Releases of 13 and
19 March 2020 (“ICSID Makes Electronic Filing its Default Procedure"
and "Message Regarding COVID-19 (Update)"), the Claimant files this
Request for Arbitration electronically only. Hard copies will be made
available to the Respondent as a courtesy upon registration of the Request
for Arbitration.
80 Pursuant to Regulation 16 of the ICSID Administrative and Financial
Regulations, and the ICSID Schedule of Fees currently in force, this
Request for Arbitration is accompanied by a wire transfer order
demonstrating that the Claimant has paid ICSID's non-refundable lodging
fee of USD 25'000.46
81 The Claimant asks respectfully the Arbitral Tribunal:
46 ICSID Lodging Fee, Wire Transfer Order dated 19 October 2020, at Exhibit C-27. ↩
[Page 27]
a) to declare that the Republic of Peru has breached its obligation not to
expropriate Lupaka Gold Corp.'s investment under Article 812 of the
Free Trade Agreement between Canada and Peru;b) to declare that the Republic of Peru has breached its obligations to
accord full protection and security and fair and equitable treatment to
Lupaka Gold Corp. under Article 805 of the Free Trade Agreement
between Canada and Peru;c) to declare that the Republic of Peru has breached its obligations to
accord most-favoured-nation treatment to Lupaka Gold Corp. under
Article 804 of the Free Trade Agreement between Canada and Peru;d) to order the Republic of Peru to pay compensation for the loss and
damage sustained by Lupaka Gold Corp. as a result of the breaches by
the Republic of Peru of its obligations under the Free Trade Agreement
between Canada and Peru, in an amount in excess of USD 100 million,
to be further quantified during the course of the arbitration;e) to order the Republic of Peru to pay pre-award and post-award interest;
andf) to order the Republic of Peru to bear the costs of the arbitration and
compensate Lupaka Gold Corp. for all its costs and expenses incurred
in relation to the present arbitration, including the fees and expenses of
their counsel, in-house counsel, witnesses and experts.
82 Lupaka Gold Corp. reserves its right to further amend, develop and
quantify its claims and to present further argument and evidence in the
course of the arbitration, in accordance with the ICSID Convention and the
ICSID Arbitration Rules.
[Page 28]
83 For the reasons set out above, the Claimant requests respectfully that the
Secretary-General register this Request for Arbitration in accordance with
the ICSID Convention and the ICSID Institution Rules.
84 This Request for Arbitration is without prejudice to the Claimant's right to
set out its claims in full at a later stage of the arbitration as directed by the
Tribunal.
Respectfully submitted,
21 October 2020
For and on behalf of the Claimant,
Lupaka Gold Corp.
Counsel for the Claimant
Signature
LALIVE
Dr Marc Veit
Mr Timothy L. Foden
Mr Jaime Gallego
Mr Juan Pablo Charris
[Page 29]
LIST OF EXHIBITS
List of Claimant's fact exhibits
| C-1 | Certificate of Incorporation Kcrok Enterprises Ltd. dated 3 November 2000 |
| C-2 | Certificate of Change of Name from Kcrok Enterprises Ltd. to Lupaka Gold Corp. dated 4 May 2010 |
| C-3 | Lupaka Gold Corp. SEDAR profile, accessed on 26 August 2020 |
| C-4 | Lupaka Board of Director's Resolution authorising arbitration proceedings against Peru dated 1 October 2020 |
| C-5 | Power of Attorney from Lupaka to LALIVE (London) LLP dated 27 September 2020 |
| C-6 | Letter from Peru to LALIVE (Oficio 262-2020-EF-CE-32) dated 28 August 2020 |
| C-7 | Resolution No. 427-2009-MEM-AAM approving the EIA dated 28 December 2009 |
| C-8 | Resolution No. 375-2012-MEM-AAM approving an extension to initiate development activities dated 14 November 2012 |
| C-9 | Resolution No. 0566-2014-MEM-DGM/V approving Mining Plan dated 11 December 2014 |
| C-10 | Mining operations certificate (COM N° 072-2018-C) dated 30 November 2017 |
| C-11 | Letter from IMC to the General Mining Directorate of the MEM dated 17 October 2018 |
| C-12 | Letter from IMC to OSINERGMIN regarding Parán's illegal incursion dated 20 June 2018 |
[Page 30]
| C-13 | Letter from IMC to the Director of the Office of Dialogue and Citizen Participation at the MEM dated 8 July 2019 |
| C-14 | Letter from IMC to the MEM enclosing letter to Parán dated 14 November 2018 |
| C-15 | Letter from Lupaka Gold to the MEM regarding the illegal blockade dated 6 February 2019 |
| C-16 | Letter from IMC to the Ministry of Internal Affairs regarding Parán's illegal blockade dated 19 February 2019 |
| C-17 | Letter from Lupaka Gold to the Ministry of Internal Affairs regarding breach of agreement to stop blockade dated 28 February 2019 |
| C-18 | Minutes of meeting between central government officials and IMC dated 27 May 2019 |
| C-19 | Letter from LALIVE to Peru on behalf of Lupaka dated 6 August 2019 |
| C-20 | "Construction of Invicta has been paralysed for nine months", Minera Andina dated 5 July 2019 |
| C-21 | Consent and Waiver by Lupaka in accordance with Article 823 FTA dated 27 September 2020 |
| C-22 | Lupaka's Notice of Intent to Submit Claims to Arbitration dated 12 December 2019 |
| C-23 | Political Constitution of Peru, 1993 |
| C-24 | Law No. 24656 dated 13 April 1987 |
| C-25 | Supreme Decree No. 008-91-TR dated 5 February 1991 |
| C-26 | Directory of Rural Communities in Peru, Information System on Rural Communities in Peru (SICCAM), 2016 |
| C-27 | ICSID Lodging Fee, Wire Transfer Order dated 19 October 2020 |
[Page 31]
List of Claimant's legal authorities
| CLA-1 | Canada-Peru Free Trade Agreement, 2009 |
| CLA-2 | Canada-Peru Free Trade Agreement, additional background information in Government of Canada's official website |
| CLA-3 | Draft Articles on Responsibility of States for Internationally Wrongful Acts, International Law Commission, 2001 |