Glamis Gold, Ltd v. United States of America

Claim by Glamis Gold, Ltd., a Canadian company, that certain federal and state regulatory measures expropriated its mineral rights to mine gold in southeastern California, and that Glamis was denied “fair and equitable treatment” in its attempt to utilize those rights, in violation of United States’ obligations under NAFTA. The proposed mining project was controversial due to its location in an area sacred to Native American tribes, and the possible environmental and cultural impact of the mining project.

Date of the Ruling: 
Jun 8 2009
Arbitral Tribunal constituted under Chapter 11 of the North American Free Trade Agreement
Type of Forum: 

The case was filed against the US government by Glamis Gold, a Canadian mining company engaged in the mining of precious metals. The project area was located within the California Desert Conservation Area, and designated areas of special cultural concern, and near, though not on, the Quechan Indian Tribe’s reservation lands. California legislation prohibits both state agencies and private parties operating on public property from using the land in such manner that would cause severe or irreparable damage to any Native American sanctified cemetery, place of worship, religious or ceremonial site, or sacred shrine. California also effectuated new regulatory measures, which included requiring backfilling and grading for mining operations in the vicinity of Native American sacred sites. Glamis challenged the latter measures, contending they were arbitrary and discriminatory, designed to block their project rather than genuinely address environmental and cultural concerns associated with mining activities generally. Glamis also argued that the cost of complying with these measures reduced the project to a negative value, and therefore constituted expropriation, in violation of the North American Free Trade Association (NAFTA).

The Tribunal dismissed both of Glamis’ claims in favor of the US Government and the State of California.  In relation to the expropriation claim, the Tribunal held that Glamis' mining rights still retained significant value and the State actions fell short of expropriation. With respect to Glamis’ claim of arbitrary and discriminatory action, the Tribunal noted that, in 2001, the Free Trade Commission (“FTC”) stated, in its binding Notes of Interpretation, that “Article 1105(1) prescribes the customary international law minimum standard of treatment of [non-nationals] as the minimum standard of treatment to be afforded to investments of investors of another Party.” The tribunal concluded that the customary international law standard had not significantly changed from the “egregious and shocking” standard established in Neer v. Mexico, 4 R. Int’l Arb. Awards, 60-62 (Oct. 15, 1926). In this context, the Tribunal applied the Neer test to the challenged measures, and accordingly assessed whether there had been a gross denial of justice, manifest arbitrariness, blatant unfairness, a complete lack of due process, evident discrimination, or a manifest lack of reasons. Determining that this was not the case, the Tribunal rejected the claim that the measures were in violation of NAFTA’s fair and equitable treatment standard.  

Enforcement of the Decision and Outcomes: 

The Tribunal dismissed Glamis's claim in its entirety and ordered Glamis to pay two-thirds of the arbitration costs.  The Quechan tribe has continued its strong opposition to mining that injure Native American sacred sites and endanger the environment or public health and safety.

Groups involved in the case: 

Quechan Indian Nation, Indian Law Resource Centre, Friends of the Earth, Sierra Club, Earthworks, and Earthjustice.

Significance of the Case: 

Glamis Gold’s mining project in Southeastern California was opposed by the members of Quechan Indian Nation, who filed an amicus, arguing the mining project would damage historic resources and that the Nation’s ability to practice their sacred traditions as a living part of their community life and development would be lost. The case is particularly significant because the Tribunal in this international investment arbitration made the unprecedented decision of allowing an indigenous community to submit an amicus, thus increasing the overall participation and transparency of the Tribunal. This expanded the concept of potential third party interveners beyond civil society organizations. Moreover the Glamis decision sets a higher bar than past NAFTA tribunals have required for establishing violation of the ‘fair and equitable’ treatment requirement under NAFTA.   NATFA’s pro-government framework goes beyond U.S. law to maximize the ability to protect indigenous peoples’ rights, irrespective of the associated costs to the investor.

(Updated August 2015)