The Renco Group, Inc., Doe Run Resources, Corp. v. Activos Mineros S.A.C.

At a glance

Parties

The Renco Group, Inc. and Doe Run Resources, Corp. (United States) v. Activos Mineros S.A.C. (Peru). The Republic of Peru was originally a co-respondent.

Case no.

PCA Case No. 2019-47 (the "Contract Case")

Forum and rules

PCA-administered arbitration under the UNCITRAL Arbitration Rules (2010, with Article 1(4) as adopted in 2013); seat London; hearings in Washington, D.C.

Treaty

Contract-based: Clause 12 of the Stock Transfer Agreement of 23 October 1997 and Clause 3 of the Guaranty Agreement of 21 November 1997. Coordinated with the treaty case Renco II (PCA Case No. 2019-46) under the Peru–United States Trade Promotion Agreement.

Tribunal

Judge Bruno Simma (Presiding Arbitrator), Prof. Horacio Grigera Naón, Mr. J. Christopher Thomas

Sector

Mining and metallurgy (La Oroya Metallurgical Complex); environmental liability

Outcome

Pending. The published documents are procedural orders only. The last of them (5 August 2024) followed the March 2024 hearing and the post-hearing briefs.

The dispute

Renco and Doe Run Resources took part in the 1997 privatization of the La Oroya Metallurgical Complex in Peru. Their affiliate Doe Run Peru (DRP) acquired Metaloroya under a Stock Transfer Agreement (STA) with Centromin, the predecessor of Activos Mineros. Peru guaranteed Centromin's obligations in a separate Guaranty Agreement. The claimants say that under Clauses 5 and 6 of the STA, Centromin/Activos Mineros, backed by Peru as guarantor, assumed liability for third-party claims arising from environmental contamination. They also say the respondents failed to remediate soil around La Oroya, and that the respondents must therefore defend and indemnify them in the St. Louis (Missouri) lawsuits brought by more than 2,000 residents of La Oroya. They also brought claims for contribution, unjust enrichment and subrogation under the Peruvian Civil Code, and claims based on pre-contractual liability and estoppel. The respondents argue that the claimants are not parties to the STA or the Guaranty and are not covered by the arbitration clauses or the indemnities. They also argue that the claimants were only guarantors under the STA's \"Additional Clause\", and that DRP's own standards and practices were less protective of the environment and public health than Centromin's. In 2023 the claimants confirmed that they no longer pursued claims against Peru in this case.

Key holdings

1. Bifurcation refused. All three of the respondents' objections (that the claimants are not parties to the agreements, that they are outside the arbitration clauses, and that their indemnity claims are inadmissible) are prima facie serious and substantial, and they could dispose of most of the claims. But they are intertwined with the merits. Bifurcation would therefore be inefficient if the objections failed. PO No. 3, ¶¶ 4.2–5.1
2. At the claimants' request, quantum was bifurcated into a separate phase. Remedies issues are not intertwined with the jurisdictional objections. Separating them also limits how much evidence from the St. Louis lawsuits must be produced now, so the respondents' request for a preliminary document production phase was denied. PO No. 4, ¶¶ 2.2–2.3
3. The respondents asked for summary dismissal after the claimants raised, and then withdrew, the argument that the STA requires an independent expert determination. That request was dismissed, as was their renewed request for bifurcation. There was no sufficient procedural or factual basis for dismissal, and circumstances had not changed enough to revisit PO No. 3. PO No. 9, ¶ 2.1
4. Parts of the claimants' Rejoinder on Jurisdiction were struck. Paragraphs 55–65 and 74–77 dealt with the merits (contract interpretation on liability) and were struck. Paragraphs 66–73, and the related parts of the Third Payet Report, dealt with admissibility and were admitted, because the orders had never said where admissibility issues fall. Since the claimants no longer pursued claims against Peru, the case was renamed The Renco Group, Inc. & Doe Run Resources, Corp. v. Activos Mineros S.A.C. PO No. 10, ¶¶ 2.9–2.13, 3.1–3.2
5. Before the hearing, the 2003 SVS Report was admitted as rebuttal evidence, because Mr. Dobbelaere first questioned the reliability of the emissions data in his second report. The blood lead level (BLL) reports were refused, because the claimants had had them since document production. The respondents' request to exclude a King & Spalding attorney from the hearing was rejected. PO No. 12, ¶¶ 2.6–2.12
6. After the hearing, the Tribunal held that the claimants breached the ban on new evidence in post-hearing briefs. It nonetheless requested several documents relevant to its questions, including filings on the status of the Missouri litigation. It rejected the respondents' request to strike new arguments, except for the claimants' argument based on Peru's positions before the Inter-American Commission on Human Rights, which it struck. PO No. 14, ¶¶ 2.5–2.8, 2.37, 3.1

Procedural history

1. 23 October 2018Notice of Arbitration filed against Peru and Activos Mineros under the STA and the Guaranty Agreement.
2. 10 June 2019Procedural Agreement: this case is coordinated with Renco II (PCA Case No. 2019-46) before the same tribunal.
3. 3 February 2020Procedural Order No. 1 sets the procedural rules and a calendar for the bifurcation phase.
4. 12–13 June 2020Hearing on bifurcation held by videoconference.
5. 29 July 2020Procedural Order No. 3: the respondents' request for bifurcation is dismissed.
6. 17 September 2020Procedural Order No. 4: quantum is bifurcated into a separate phase.
7. 25 August 2022Procedural Order No. 8 decides the document production requests.
8. 21 December 2023Procedural Order No. 10: parts of the Rejoinder on Jurisdiction are struck, and Peru is removed as a respondent.
9. 5–15 March 2024Hearing on jurisdiction and merits held at ICSID in Washington, D.C.
10. 5 August 2024Procedural Order No. 14 rules on post-hearing evidence and on the respondents' request to strike arguments. The published documents do not show a final award.

Tribunal, counsel and experts

Decided by

• Bruno Simma President
• Horacio A. Grigera Naón Co-arbitrator
• J. Christopher Thomas Co-arbitrator

For the claimant

King & Spalding LLP · Schiffer Hicks Johnson PLLC · The Renco Group / The Doe Run Company

For the respondent

White & Case LLP · Republic of Peru

Experts

José Antonio Payet Puccio (claimant) · Enrique Varsi Rospigliosi (respondent) · Rosalind A. Schoof (claimant) · John A. Connor (claimant) · Wim Dobbelaere (respondent) · Deborah M. Proctor (respondent) · Ada Carmen Alegre Chang (respondent)

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Keywords

• Renco
• Doe Run Peru
• La Oroya
• Stock Transfer Agreement
• Guaranty Agreement
• Centromin
• environmental contamination
• indemnity
• third-party claims
• St. Louis lawsuits
• Missouri litigation
• non-signatory
• scope of arbitration agreement
• bifurcation
• document production
• PAMA
• Peruvian law
• UNCITRAL Rules 2013

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