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Panama has agreed to pay $26 million to settle a dispute with Dominion Mineral Corp. after losing an arbitration award in 2020 over the US mining company’s copper-gold exploration licences, according to La Estrella de Panamá.
The claim arose after the Panama refused to extend a mining exploration concession for the Cerro Chorcha project, held by Dominion’s local subsidiary Cuprum under a 2006 contract with Panama. The contract had an initial period of four years with the possibility of renewal for two additional 2-year terms.
However, the Ministry of Commerce and Industries in 2010 rejected Cuprum’s extension application after declaring Cerro Chorcha to be a “mineral reserve” area on which all exploration or extraction work was prohibited.
In 2016, the case was brought to the International Centre for Settlement of Investment Disputes (ICSID), which subsequently ruled that Panama was responsible for the “unlawful expropriation” of Dominon’s mining investments in the country.
As part of the 2020 ruling, Panama was ordered to pay $14.1 million, along with annual compound interest before and after the award, additional direct damages of $1.8 million, and annual compound interest post-award at a rate of LIBOR in dollars plus 4% until it makes the full payment, resulting in a total of $26,679,390.
According to Margie-Lys Jaime Ramírez, head of the Investment Arbitration Office at the Ministry of Economy and Finance (MEF), a payment of $26 million was agreed upon following a new round of negotiations with Dominion. The Minister of MEF had previously offered a one-time payment of $24 million, which the company rejected.
“Just as Dominion communicated at the end of the previous discussions, it is not interested in a discount to its award and does not agree to any 120-day delay in receiving payment, even if one were to be agreed upon,” stated Winston & Strawn LLP, the law firm representing Dominion.
However, the agreed upon $26 million payment could not be finalized for the fiscal year 2023, Jaime Ramírez said.
According to La Estrella de Panamá, funds for the $26 million payment were fully available until mid-September; however, due to inter-institutional needs, part of these resources, amounting to roughly $1.9 million, were transferred to the National Assembly, reducing the budgetary availability.
As a result, the MEF requested from the Budget Committee of the National Assembly a transfer of $2.1 million in favor of the Investment Arbitration Office of the Ministry of Economy and Finance to settle the payment agreed upon by the parties before the end of this year.
This budget transfer was approved by the legislative body on Nov. 21, after being presented by Deputy Minister of Finance Fausto Fernández, who explained that the $2.1 million was to complete a funding line that had already been previously approved, La Estrella de Panamá reports.
Dominion is one of several mining companies that have arbitration cases against Panama. The most prominent is Canada’s First Quantum Minerals, which is seeking at least $20 billion following the closure of its Cobre Panama mine last year. Canadian miners Petaquilla Minerals (2021) and Orla Mining (2024) also have arbitration cases launched.
