Petaquilla Minerals Ltd. v. Republic of Panama

At a glance

Parties

Petaquilla Minerals Ltd., on its own behalf and on behalf of its Panamanian subsidiary Petaquilla Gold S.A., v. the Republic of Panama

Case no.

ICSID Case No. ARB/24/12

Forum and rules

ICSID Convention arbitration; ICSID Arbitration Rules in force from 1 July 2022; seat Washington, DC; language Spanish

Treaty

Free Trade Agreement between Panama and Canada, signed 14 May 2010, in force 1 April 2013

Tribunal

Deva Villanúa (President), Carlos Paitán Contreras, Oscar M. Garibaldi

Sector

Mining (gold, copper)

Outcome

Procedural Order No. 5 (3 June 2025) rejected Panama's Rule 41 objection of manifest lack of legal merit and its request for security for costs. The case proceeds to the main phase. The published documents do not show a final award.

Amount

Panama sought security for costs of USD 5 M; refused. After-the-event insurance covers adverse costs up to USD 2 M. Costs of the preliminary phase: claimant USD 557,779.43, respondent USD 313,976.15. The decision on these costs was deferred.

The dispute

Petaquilla Minerals Ltd. says it holds, with others, an interest in the concessionaire of a 13,600-hectare gold, copper and minerals concession at Cerro Petaquilla, approved by Law 9 of 26 February 1997. It also held the smaller Molejón Concession, assigned to it in 2005. On 22 July 2015 the Ministry of Commerce and Industries issued Resolution 19, which terminated the Molejón Concession and transferred the installations built on it to the State free of charge. Panama's Supreme Court declared Law 9 unconstitutional on 21 December 2017 and confirmed this on 28 June 2021 with effect only for the future (ex nunc). Petaquilla claims that both measures breach the Panama–Canada FTA. Panama objected that the claims were time-barred under the three-year limitation period in Article 9.22.2(e) and (f). It also sought disclosure of the claimant's third-party funding arrangements and security for costs.

Key holdings

1. The Rule 41 objection is rejected. When the claimant learned of the breach and the loss under Article 9.22.2 turns on contested points: whether knowledge of the act or its effects matters, which Panamanian rules govern when Resolution 19 and the Supreme Court judgments took effect, and how publication in the Gaceta Oficial relates to entry into force. These are complex questions, largely of Panamanian law, which the Tribunal must take pro tem as the claimant presents them. The claim therefore does not manifestly lack legal merit. Procedural Order No. 5, ¶¶ 65–70
2. Panama's subsidiary request first made at the hearing was held inadmissible: it asked for a declaration that the claims cannot predate 13 May 2021 (Resolution 19) and 21 December 2021 (the Supreme Court judgment). A temporal limit on the claims falls outside a Rule 41 decision, but Panama may raise it again at the proper stage. Procedural Order No. 5, ¶¶ 71–73
3. Security for costs under Rule 53 is refused. Security is exceptional, and the mere existence of a third-party funder does not justify it. Panama did not show that the claimant is unwilling to pay an adverse costs award: an after-the-event insurance policy covers up to USD 2 M, the funder is solvent, and the claimant has paid all advances. The USD 2 M cover appears sufficient for now. Procedural Order No. 5, ¶¶ 92–101, 109
4. The claimant has a continuing duty to inform the Tribunal and Panama if the funding agreement ceases to be in force or if the validity or amount of the insurance changes. The Tribunal reserved the right to revisit its decision. Procedural Order No. 5, ¶¶ 104, 110, 124
5. On third-party funding disclosure, Panama's request was timely, because Rule 14 sets no deadline. Disclosure of all ultimate beneficial owners of the funder was not needed. The claimant was invited to ask the funder for the identity of the owner-controller of its parent and to report by 2 May 2025. Disclosure of extracts of the funding agreement on control and termination was refused, because that concern belongs to the security-for-costs request. Procedural Order No. 4, ¶¶ 31, 37–41, 46–47
6. The decision on the costs of the Rule 41 objection and the security request was deferred to a later stage to preserve collegiality. The Tribunal noted that Panama's main requests had failed, that the case was unsuited to Rule 41, and that the use of resources had not been efficient. Procedural Order No. 5, ¶¶ 120–122

Procedural history

1. 22 May 2024The claimant notifies a third-party funding agreement with Panabellum, LLC, whose sole shareholder is Parabellum Partners III, LP, a fund managed by Parabellum Capital LLC.
2. 10 December 2024Tribunal constituted.
3. 2 January 2025Panama files a Rule 41 objection of manifest lack of legal merit (time bar) and a request for disclosure of the funding agreement.
4. 29 January 2025Panama requests security for costs under Rule 53 and narrower funding information.
5. 6 February 2025Procedural Order No. 1 (procedural rules and calendar) and Procedural Order No. 2 (document production) issued.
6. 3 April 2025Procedural Order No. 3 on the organisation of the virtual hearing on the objection.
7. 22 April 2025Procedural Order No. 4 on the request for funding information: partly granted by way of invitation, partly refused.
8. 13 May 2025Virtual hearing on the Rule 41 objection.
9. 3 June 2025Procedural Order No. 5: the Rule 41 objection and the security-for-costs request are rejected, costs are deferred, and the claimant's time for its Memorial starts to run.

Tribunal, counsel and experts

Decided by

• Deva Villanúa President
• Carlos Paitán Contreras Co-arbitrator
• Oscar M. Garibaldi Co-arbitrator

For the claimant

Dechamps International Law

For the respondent

Ministerio de Economía y Finanzas, Oficina de Arbitraje de Inversiones

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Keywords

• manifest lack of legal merit
• ICSID Rule 41
• security for costs
• ICSID Rule 53
• third-party funding
• ICSID Rule 14
• after-the-event insurance
• limitation period
• time bar
• Panama–Canada FTA
• Article 9.22
• mining concession
• gold
• Molejón
• Cerro Petaquilla
• Law 9 of 1997
• unconstitutionality
• Gaceta Oficial

Summary generated with AI from the published documents — refer to the award for the authoritative text.