Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



U.S. Company Threatens to Use Investor-State Dispute Settlement Mechanism in U.S.-Peru FTA

This is the first case that I am aware of in which a U.S. company (investor) has threatened to use the investor-state dispute settlement mechanism in the United States - Peru free trade agreement (or any free trade agreement other than NAFTA for that matter).

According to Upside Down World, U.S. mining and metallurgical company, Doe Run, has filed a request for consultations with the Government of Peru under the Investment Chapter of the United States - Peru free trade agreement. The head office of Doe Run is located in St. Louis, Missouri.

The background facts involve law suits in the United States regarding environmental issues in Peru. In late 2010, a court in St. Louis, Missouri, where Doe Run's corporate offices are based, ruled that 11 lawsuits filed against the Renco Group and Doe Run by a group of citizens from La Oroya, Peru could go ahead in that venue. The plaintiffs are suing over injuries from lead exposure and environmental pollution caused by the smelter.

The company, Doe Run (and Renco Group) say tat they got involved in the project in Peru based on promises made by the Peruvian Government that they would undertake an environmental assessment at the mining site and clean up environmental hazards. The company alleges that the Peruvian Government has not honoured its promises and this has lead to the law suits.

The basis for the investor-state claim is that the investor received unfair treatment and lack of protection and security.

It is difficult to assess the merits of a claim without reviewing all the relevant documents. I have seen knee-jerk reactions in the past by people who are not privy to all the relevant information.

This will be an interesting case if it proceeds --- and it will likely proceed unless the Government of Peru makes the law suits go away. Stayed tuned ...

If you would like to read the Upside Down World article, please go to the following link - http://upsidedownworld.org/main/news-briefs-archives-68/2867-us-company-threatens-peru-with-free-trade-lawsuit

Cyndee Todgham Cherniak is a trade lawyer affiliated with McMillan LLP in Canada. She is also an adjunct law professor at Case Western Reserve University School of Law in Cleveland, Ohio and teaches a course on NAFTA and bilateral trading arrangements. In 2007, she completed a report of the Asian Development Bank on regional trading arrangements. She reviewed over 150 FTAs and RTAs for that report and presented on investment provisions and dispute settlement mechanisms in FTAs.

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