Mining can be a lucrative business for foreign direct investors. However, the risks and challenges that come with mining can never be completely eliminated. Many countries have laws and regulations that govern mining operations, but there are situations where mining concessions can be revoked or expropriated. In this blog post, we will discuss the steps that foreign direct investors can take when mining concessions are threatened or taken away. This article is meant to be a general guide in Mining: From Concession to Expropriation.
Consult with Governments
The first step is to consult with the government agency responsible for mining in the country where you operate. Consultations are important because they can help you to identify areas of potential conflict and develop strategies to address them. Consultations can also help you to understand the laws, regulations, and policies that govern mining in the country to avoid Expropriation. By building trust and communication with the government agency responsible for mining, you might be able to prevent or resolve disputes that may start from Concession and result in Expropriation
Negotiate for Compensation
If mining concessions are taken away, foreign direct investors may have a right to compensation. Compensation can be in the form of cash, assets, or payments in kind. However, compensation is sometimes difficult to negotiate, and disputes can arise. It is important to have a clear understanding of the applicable laws and regulations in the country where you operate. Ensuring that compensation negotiations are fair and transparent can also promote a more constructive relationship with the government.
Commence International Arbitration Proceedings under the proper Bilateral Investment Treaty
If compensation negotiations fail, foreign direct investors may wish to seek arbitration. Arbitration is a private means of resolving disputes without going to court. Arbitration can be less costly and less formal than court proceedings. Many countries have arbitration laws that can be used to resolve investment disputes. It is important to choose an arbitration institution that is experienced in dealing with investment disputes (i.e., ICSID).
Litigate (which is less favorable than arbitration)
Litigation is another means of resolving disputes, but it can be costly and time-consuming. If a foreign direct investor chooses to litigate a dispute, it is essential to have a qualified lawyer who is familiar with the laws and regulations that govern mining in the country. Litigation can be a long process, and even if a favorable judgment is obtained, enforcing a judgment may be a challenge.
Mining projects can be politically sensitive. As a result, disputes can escalate quickly and involve political interference. Foreign direct investors should be aware of political risks and how to mitigate them. It may be helpful to engage with local stakeholders and the community to build support for the mining project. Engaging with other foreign investors and multilateral organizations can also be helpful in building political support and promote best practices for sustainable mining operations.
Mining can be a profitable business for foreign direct investors, but it is not without risks. Mining concessions can be threatened or taken away due to various factors including environmental concerns and political risks. When confronted with a dispute over a mining concession, foreign direct investors can consider the several steps discussed above. By consulting with the government agency responsible for mining, seeking fair and transparent compensation, using arbitration or litigation, and mitigating political risks, foreign direct investors can protect their mining concessions and interests. With proper engagement and communication, disputes can often be resolved amicably and preserve the prospect of a profitable investment.
If your concession has been taken away Contact Our Office – Transnational Matters. Our team of attorneys will guide you in Mining: From Concession to Expropriation