The Canadian firm Infinito Gold has ceased operations and requested the temporary suspension of arbitration against Costa Rica over the failed concession of the Crucitas gold mine.
The cessation of business operations due to lack of financial resources, announced in mid-July, when all its directors and managers resigned, could be the main reason for the decision to request the temporary suspension of the proceedings against Costa Rica over the Crucitas gold mine, for which $94 million was demanded for violations of the agreement for the promotion and protection of investments between Costa Rica and Canada.
After the final decision by the Constitutional Court dismissing their claims, Industrias Infinito has announced it will continue litigation in international tribunals.
"Industrias Infinito turned to international arbitration with the International Centre for Settlement of Investment Disputes and Investment Disputes (ICSID) in April, the company is asking the State to pay $1.092 billion in compensation for halting the mining concession", reported Nacion.com.
The First Chamber of the Supreme Court of Costa Rica has dismissed appeals filed by the company Industrias Infinito.
In November 2010 the Administrative Court ordered the cancellation of a mining concession to Industrias Infinito, a company that has invested $127 million in the project.
"The First Chamber ... decided to uphold all parts of the ruling, so that in addition to the cancellation of the operating permits, the decree that declared mining activity of public interest has been annulled and it was reiterated that legal proceedings should be initiated against several authorities such as the ex-president Oscar Arias", reported Elfinancierocr.com.
A 15-year, $127 million investment was suddenly halted by a court canceling a mining concession to Industrias Infinito in Costa Rica.
On Wednesday a court ruled that there were irregularities in the issuance of permits awarded to the Canadian mining company for exploiting a gold mine, and decided to annul the concession.
Representatives of the company, which has invested about $ 127 million in the project, reacted surprised, saying they did not understand the verdict when "the highest court (Constitutional Court) in the country endorsed the Crucitas project as environmentally, legally, constitutionally and socially viable.”
A local court ruled to annul the concession previously granted to Industrias Infinito, and ordered the company to pay compensatory damages.
The court ordered the Costa Rican State and Industrias Infinito to pay environmental damages.
An article in Elfinancierocr.com noted that the ruling is not definitive, as another court (Sala Primera), must first resolve an appeal by Industrias Infinito.
The Canadian ambassador to Costa Rica has warned of the damage to the country's international reputation if the project is cancelled.
Neil Reeder, Canadian ambassador, indicated that his government can vouch for the environmental responsibility of Canadian mining companies. Despite the project being financed by the private sector, the Canadian government maintains a close interest in the project, he added.
The Costa Rican government predicts possible damages payable to Industrias Infinito if the gold mining contract is cancelled.
Costa Rica’s courts have indicated to the president that she has the legal authority to cancel the Mina Crucitas mining contract, provided the government assumes responsibility for the case by providing compensation.
Nacion.com reports that, “the size of the compensation surprised Industrias Infinito’s head of corporate relations, Juan Carlos Obando, who thought the figure seemed high. However, later the company’s analysts calculated that a similar amount of $1.8 billion was possible, although Obando commented that the company does not expect this outcome”.
Attorneys, Alvaro Sagot and Mario Peña, presented an action against the unconstitutionality of the Government degree declaring the Crucitas mining project to be in the public interest.
The decree, 34801-Minaet, was published in July 2008 and was signed by President Oscar Arias and the minister of the Environment, Roberto Dobles.
In the lawyers' opinion, the decree overrides socio-environmental aspects, and hence is serious violation of the constitution.
The Supreme Court of Costa Rica has ordered the suspension of works at the Crucitas gold mine due to enviromental claims.
Infinito Gold Ltd, the company responable for the developmen of the mine, reported that the court had ordered them to stop works to clear the property while they review the case presented by a group of environmentalists.
The Canadian company had already started to clear the land last week, but had stopped the works until the court makes a decision. The court has not given a date for its final decision.