Summary
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.