Red Eagle Exploration Limited v. Republic of Colombia

Case summary

At a glance

Parties: Red Eagle Exploration Limited (Canada) v. Republic of Colombia
Case no.: ICSID Case No. ARB/18/12
Forum and rules: ICSID Convention; ICSID Arbitration Rules 2006; place of proceeding Washington, D.C.
Treaty: Canada–Colombia Free Trade Agreement (signed 21 November 2008, in force 15 August 2011), Chapter Eight
Tribunal: Dr. Andrés Rigo Sureda (President), Mr. José A. Martínez de Hoz, Prof. Philippe Sands
Sector: Gold mining; páramo environmental protection
Outcome: The award is not among the published texts. José A. Martínez de Hoz's dissent of 23 February 2024 shows that the majority found no Treaty breach; he would have found a breach of Article 805.
Amount: The claim was for sunk costs plus interest, based on audited financial statements. The amounts are not stated in the documents provided.

The dispute

Red Eagle is a Canadian company. Between 2009 and 2013 it acquired mining titles in Vetas, Santander, for its Vetas Gold Project. Ten of its eleven titles overlapped the Santurbán páramo as delimited by Resolution 2090 of December 2014. Red Eagle argued that Colombia ignored grandfathering protections and mining stability rights through a series of measures: Resolution 2090/2014, letters from the national mining agency (ANM), Law 1753 of 2015, Constitutional Court Judgment C-035/16, Judgment T-361 of May 2017, and later restrictions, including an order to return the Real Minera area. It claimed indirect expropriation (Article 811) and breach of fair and equitable treatment (Article 805), and sought its sunk costs. Colombia replied that Law 1382 of February 2010 and other earlier laws already banned mining in páramos, and that Red Eagle never qualified for the transitional regime. It also raised objections to jurisdiction: conditions precedent and the 39-month limitation period, the temporal scope of the Treaty (ratione temporis), and a denial of benefits it notified on 19 April 2018.

Key holdings

Bifurcation refused. To justify bifurcation, an objection must be prima facie serious and substantial, capable of examination without prejudging the merits, and capable of disposing of all or an essential part of the claims. Between frivolous and serious there are degrees of seriousness that do not justify bifurcation. Decision on Bifurcation ¶¶ 41–44, 70
The objections on the Notice of Intent and the 39-month limitation period were not suitable for bifurcation. The Notice of Intent did identify a legal and factual basis for the claim. Both objections are intertwined with the merits. Even if they succeeded, the claims based on measures properly notified or not time-barred would remain. Decision on Bifurcation ¶¶ 50–55
The ratione temporis objection was joined to the merits. It is unclear whether the bans adopted before August 2011 applied to Red Eagle's investments. The measures that allegedly disregarded the grandfathering under Law 1382 date from Resolution 2090 of December 2014 onwards. The denial-of-benefits objection was also not bifurcated, because Colombia gave no evidence against Red Eagle's prima facie proof that Canadian nationals owned and controlled it. The request to split liability from quantum was premature, since a claim for sunk costs backed by audited accounts did not appear complex. Decision on Bifurcation ¶¶ 56–68
On document production, the Tribunal refused most of Red Eagle's broad requests for internal government documents. It ordered Colombia to produce, among other things, the documents Congress relied on to enact Law 1930, the documents on the four páramo delimitations, and documents on environmental management plans. It ordered Red Eagle to produce, among other things, the Cárdenas legal opinions, its tutela submissions in the T-361 proceedings, and the terms of service of its witness Ms. Vásquez. Requests on sale attempts and acquisition negotiations were refused as not relevant to a sunk-cost claim. Procedural Order No. 2, Annexes A and B
Colombia's request to strike exhibits not cited in Red Eagle's Reply was denied. The largest sets of documents were already known to Colombia, and fairness did not require removing them. Procedural Order No. 3 ¶¶ 4–6
Dissent: in Martínez de Hoz's view, Colombia breached Article 805 through the measures beginning with Resolution 2090. He considered sunk costs an inappropriate measure of compensation. The value of the lost opportunity to pursue the project, discounted for licensing risk, could not be assessed on the record, and a later quantum phase would have been needed had the Tribunal found a breach. Dissenting Opinion ¶¶ 170–174