European miners and South Africa suspend proceedings
By Damon Vis-Dunbar
2 April 2009
(Note: a correction has been made to this article. An explanation is posted below).
A group of European’s with a stake in South Africa’s granite-quarrying sector and the Government of South Africa have agreed to suspend arbitration proceedings* for two months.
The claimants—several Italians and a Luxembourg corporation—allege that their interests in granite-quarrying companies were indirectly expropriated with the introduction in 2004 of the Mineral and Petroleum Resources Development Act (MPRDA).
The MPRDA forms part of South Africa’s efforts to increase participation by historically disadvantaged South Africans in the mining industry.
The claimants argue that their mineral rights have been “extinguished” under the MPRDA, only to be replaced with rights of lesser value when changed to mining licenses under the new regime.
Notably, the quarrying companies indirectly owned by the claimants have lodged their so-called old-order mineral rights for ‘conversion’ to new-order rights. The MPRDA requires lodgement by 1 May 2009. (The actual ‘conversion’, however, may take longer. Until the new order rights are issued, the rights holder continues to mine under the terms of the old-order rights.)
In an interview with ITN, co-counsel for the claimants, Peter Leon of the law firm Webber Wentzel, stressed that the process of ‘converting’ their mineral rights under the MPRDA was unrelated to their decision to request a stay in the proceedings. Rather, Leon said high-level negotiations between South African officials and the claimants have been in process for several months, and the parties felt that a stay in the proceedings would be advantageous in reaching a settlement.
However, in a statement, the Government of South Africa said it has “consistently maintained that the MPRDA conversion mechanism amply protects security of tenure of mining/prospecting rights and complies with South Africa’s commitments under international law.”
Counsel for South Africa said that South Africa firmly believes that the Claimants’ case has no merits.
“Whatever new order rights the Claimants’ South African companies may obtain, and the terms and conditions of such rights, will be determined in accordance with the MPRDA and the Mining Charter. The companies will receive the same substantive treatment as any old order rights holder in a similar position,” said Jonathan Gass, a senior associate with the law firm Freshfields Bruckhaus Deringer.
The suspension of the proceedings at the International Centre for Settlement of Investment Disputes (ICSID) came into effect on 28 March 2009 and runs until 28 May 2009.
On 27 March 2009, South Africa submitted a counter-memorial and objections to jurisdiction to the tribunal. The claimants submitted their memorial in July 2008. Hearings are currently scheduled for April 2010.
The dispute has drawn attention for its human rights implications, and civil society groups in South Africa have considered making amicus curiae (friend of the court) applications. As ITN reported in October, the ICSID Secretariat has prepared a two-page brief outlining the steps and criteria required of potential amici.
So far, however, there have not been any requests to make amicus curiae applications.
*Piero Foresti, Laura de Carli and others v. Republic of South Africa (ICSID Case No. ARB(AF)/07/1)
This article has been revised to reflect the following correction:
Correction: 3 April 2009
The original version of this article, published on 2 April 2009, did not reflect South Africa’s position with regards to the Claimants assertion that “settlement” negotiations are in progress. The following lines were added to the article as a result:
Counsel for South Africa stresses that South Africa firmly believes that the Claimant’s case has no merits.
“Whatever new order rights the Claimants’ South African companies may obtain, and the terms and conditions of such rights, will be determined in accordance with the MPRDA and the Mining Charter. The companies will receive the same substantive treatment as any old order rights holder in a similar position,” said Jonathan Gass, a senior associate with the law firm Freshfields Bruckhaus Deringer.
