The Philippines could pay $16 billion (about P800 billion) in taxpayers’ money if mining firms, whose mineral production sharing agreements (MPSAs) Environment Secretary Regina Lopez wants canceled, go into arbitration.
Lopez announced last Feb. 14 a list of 75 MPSAs for cancellation, saying these agreements covered areas within watersheds.
According to the Chamber of Mines of the Philippines (COMP), mining firms could file arbitration cases over these contracts for the development of mineral resources, wherein the other party is the government.
COMP noted “a good number” of mines ordered for closure or suspension involved companies from countries that have standing bilateral investment treaties (BIT) with the Philippines.
Lopez, who is in the United States on a retreat, separately announced last Feb. 2 she wanted 23 mines closed and five others suspended, allegedly for operating in watersheds as well as causing the siltation of bodies of water.
“The [bilateral agreements] ask host countries to provide certain protections for foreign investments, such as limiting expropriation of investments without due regard for international law standards,” the chamber said.
The group added that affected foreign investors, under the BIT, could claim for prompt, adequate and effective compensation for their capital investments, liabilities, other investments and advances stemming from the supposed arbitrary cancellation of the MPSAs.
“COMP, however, is optimistic that the principled intervention of the Minerals Industry Coordinating Council will prevent arbitration cases from being filed,” the group said.
Also last month, COMP chair Artemio F. Disini warned the government it could be swamped with hundreds of millions of dollars in suits from mining companies affected by Lopez’s actions.
Disini said there could be a repeat by “a hundredfold” of the compensation ordered by the Supreme Court following the fallout from the voided contract to build Terminal 3 of Ninoy Aquino International Airport by the Philippine International Air Terminals Co. Inc. (Piatco).
The Arroyo administration had scrapped the Piatco contract due to alleged irregularities and then proceeded to expropriate the terminal.