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CAFTA

The US-Dominican Republic–Central America Free Trade Agreement (CAFTA-DR or CAFTA for short) was signed in 2004. It encompasses the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

The investor-state dispute settlement (ISDS) mechanism specified in CAFTA has provided US companies privileged means to challenge national laws and claim millions of US dollars in compensation in Central America.

As of end of 2019, CAFTA was invoked in 11 cases.

The most well-known cases include:

• TCW (US) vs. The Dominican Republic: case settled in 2009 for US$26.5 million to the investor, an investment management corporation.

• Railroad Development Corporation (US) vs. Guatemala: US$18.6 million awarded in 2012 to the investor in a dispute over a railroad contract.

• Pac Rim Cayman LLC (US) vs. El Salvador: In 2008, El Salvador denied a mining permit to Pac Rim (now OceanaGold) due to environmental concerns, and notably the impact on water resources. In 2012, the arbitral tribunal dismissed jurisdiction over the CAFTA claims but assumed jurisdiction of the claims under the domestic investment law. In October 2016, the tribunal decided that the company’s case was without merit.

Photo: Danny Hammontree / CC BY-NC-ND 2.0

(March 2020)

For the love of water: El Salvador’s mining ban
Counter Punch | 3-Sep-2015
Over 90 percent of El Salvador’s surface water is contaminated with industrial chemicals, making it unsuitable to drink even if the water is boiled, chlorinated or filtered beforehand. A new action plan for passing a nationwide ban has begun to unfold, as Salvadorans await the outcome of the Pacific Rime ICSID case.
CAFTA , El Salvador , investor-state disputes | ISDS , mining , water
El Salvador: “Arbitration with Pacific Rim has cost the State $12.6 million”
El Salvador | 28-Jul-2015
Luis Parada, a lawyer with the law firm Foley Hoag, is optimistic that the company, Pacific Rim, will not prevail in the proceedings.
CAFTA , El Salvador , ICSID , investor-state disputes | ISDS
El Salvador: “Arbitraje con Pacific Rim ha costado al Estado $12.6 millones”
El Salvador | 28-Jul-2015
El abogado de la firma Foley Hoag, Luis Parada, es optimista en que la empresa Pacific Rim, no ganará el litigio en el que exige a El Salvador $314 millones por no darle la concesión para extraer metales del subsuelo. Habla del avance y consecuencias que ha tenido este arbitraje para el país.
CAFTA , El Salvador , ICSID , investor-state disputes | ISDS
El Salvador: Prevén fallo favorable al país vs. Pacific Rim
El Salvador | 24-Jul-2015
El litigio entre El Salvador y la empresa minera Pacific Rim en un tribunal en Washington ha entrado ya a su etapa final y se prevé una sentencia a favor del país, afirmó ayer Luis Parada, el abogado defensor de El Salvador.
CAFTA , El Salvador , ICSID , investor-state disputes | ISDS
Bringing community perspectives to investor-state arbitration: the Pac Rim case
IIED | 27-Jun-2015
Civil society organisations can play an important role in carrying and strengthening community voices in arbitration processes, by making submissions to arbitral tribunals.
CAFTA , El Salvador , investor-state disputes | ISDS
Llevar las perspectivas de la comunidad al arbitraje entre inversionistas y Estados: el caso Pac Rim
IIED | 27-Jun-2015
Las organizaciones de la sociedad civil pueden desempeñar un papel importante representando y fortaleciendo las voces de las comunidades en los procesos de arbitraje, presentando escritos de alegaciones ante tribunales de arbitraje.
CAFTA , El Salvador , investor-state disputes | ISDS
ISDS cannot be fixed
Public Citizen | 12-Dec-2014
The European Commission’s claim that threats posed by the investor-state dispute settlement system can be fixed by “improving” ISDS provisions in trade pacts has already been proved false, says Public Citizen
CAFTA , Canada , EU , investor-state disputes | ISDS , NAFTA | USMCA , TTIP , US
What “free trade” has done to Central America
FPIF | 25-Nov-2014
Ten years after the approval of DR-CAFTA, we are seeing many of the effects that citizens who opposed the deal cautioned about., write Manuel Perez-Rocha and Julia Paley.
CAFTA , investor-state disputes | ISDS , mining , US
CAFTA investor rights undermining democracy and the environment: Pacific Rim mining case
Public Citizen | 23-Aug-2014
Pacific Rim Mining Corp., a Canadian-based multinational firm, sought to establish a massive gold mine using water-intensive cyanide ore processing in the basin of El Salvador’s largest river, Rio Lempa.
CAFTA , Canada , El Salvador , environment , investor-state disputes | ISDS , mining
Canadian miner’s complaint can proceed under El Salvador law
Reuters | 4-Jun-2012
Canadian company Pacific Rim can move forward under El Salvador law with a case against that country’s government for blocking a gold mining project, but cannot file suit under a regional trade agreement, a World Bank arbitration panel ruled.
CAFTA , Canada , El Salvador , environment , investor-state disputes | ISDS , mining