In a recent investment arbitration Award, in Cortec Mining v Kenya, an ICSID tribunal has declined jurisdiction over a claim brought by a trio of mining companies on the basis that the mining licences at issue had not been obtained lawfully due to the Claimants’ failure to obtain the required environmental impact assessments.
In its award of 22 October 2018, the tribunal held that the withdrawal of the Claimants’ mining licence by the Kenyan Government could not be challenged under the 1999 UK-Kenya bilateral investment treaty (“BIT“), as the relevant mining licence had not been obtained lawfully. Despite the fact that the BIT contained no express requirement of compliance with local law, the tribunal nevertheless held that the BIT and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1966 (the “ICSID Convention“) protect only lawful investments. The tribunal affirmed that a principle of proportionality should apply when assessing the impact of unlawful conduct on the right to bring a BIT claim, with minor omissions or inadvertent misstatements not precluding the BIT from applying. However, in this case, environmental considerations were of fundamental importance and non-compliance with the protective regulatory framework was a “serious matter” justifying the tribunal in declining jurisdiction.
The last few months have seen significant changes to mining regulations in various African states, giving rise to a concern that a regional trend of resource nationalism may be (re-)emerging. In this context it is important for companies associated with the mining sector to be aware of the protection international investment treaties may provide against the impact of resource nationalism on their assets, and how to maximise that protection before risks materialise. This bulletin briefly considers some of the last few months’ developments, before discussing how companies can use investment treaties to protect themselves against the risks they pose.
Kenyan MPs have voted in favour of leaving the International Criminal Court (ICC). The vote in the Kenyan National Assembly came just before the trials of President Uhuru Kenyatta and Deputy President William Ruto in the ICC for crimes against humanity. They are accused of having orchestrated the post-election violence in Kenya in 2007 and 2008. The motion was introduced by majority leader Aden Duale who gave reasons for withdrawing from the ICC that included defending Kenyan sovereignty as well as protecting Kenyan citizens. Withdrawing from an international treaty in this way and in this context could potentially damage Kenya’s reputation as a country that respects international law and human rights, and provoke some unease among investors looking to invest in Kenya. However, the prosecutions of the Kenyan President and Deputy President also prompted an extraordinary session of the African Union last weekend on “Africa’s relationship with the International Criminal Court” which raises the possibility of the relationship of the ICC with African Union nations being redefined altogether.