Mining Disputes: Resolving Through Arbitration

Mining projects often span jurisdictions, involve complex contractual relationships, and are exposed to volatile regulatory, environmental, and geopolitical factors. These dynamics make mining particularly susceptible to disputes—whether between joint venture partners, governments and investors, or service providers and concession holders. In recent years, arbitration has become the preferred mechanism for resolving such disputes. But why is this the case, and what should stakeholders keep in mind when navigating arbitration in the mining sector?

Why Arbitration is the Preferred Mechanism in Mining Disputes

Mining investments are high-stakes and long-term. Arbitration offers several advantages that align with the needs of the industry:

• Neutrality: Parties often come from different legal systems. Arbitration allows them to choose a neutral forum and applicable rules.
• Confidentiality: Mining disputes can involve sensitive financial, environmental, or political issues. Arbitration proceedings are private, protecting business reputations and strategic interests.
• Enforceability: Arbitral awards are generally easier to enforce internationally than court judgments, thanks to the New York Convention.
• Expertise: Parties can appoint arbitrators with specific expertise in mining, geology, engineering, or environmental regulations.

Common Types of Mining Disputes

Understanding the landscape of disputes helps in planning for, and responding to, potential conflicts. Common categories include:

• Joint Venture and Shareholder Disputes: Conflicts between co-investors over management, profit sharing, or exit strategies.
• Resource Nationalism: Governments seeking to renegotiate or terminate agreements, or imposing new taxes/regulations.
• Licensing and Permit Revocations: Sudden or unjustified withdrawal of exploration or extraction rights.
• Environmental and Community Issues: Disputes arising from alleged environmental damage or failure to consult indigenous communities.
• Contractual Breaches: Claims related to construction delays, equipment failures, or non-performance by suppliers.

Selecting the Right Arbitral Institution and Seat

Stakeholders must carefully choose the arbitral institution and seat of arbitration, as these affect procedure, enforceability, and neutrality. Common options include:

• ICSID (International Centre for Settlement of Investment Disputes): For investor-state disputes under bilateral investment treaties (BITs).
• LCIA (London Court of International Arbitration) and ICC (International Chamber of Commerce): Popular for commercial disputes between private parties.
• SIAC (Singapore International Arbitration Centre): Increasingly used in Asia-Pacific mining projects.

The choice of seat—London, Singapore, Paris, or Geneva, for instance—will determine the procedural law and potential judicial oversight.

Key Considerations for Mining Companies and States

• Dispute Prevention: Clear and well-drafted contracts, detailed dispute resolution clauses, and early legal consultation can prevent conflicts or contain them early.
• BIT Protections: Investors should structure investments to benefit from favorable BITs that include arbitration clauses.
• Evidence Preservation: Given the technical nature of mining, maintain meticulous records—core samples, survey data, permit filings, and correspondence.
• Community Engagement: Social license to operate is increasingly important. Failure to engage local communities can give rise to disputes with both governments and civil society.

Real-World Example

In Perenco v. Ecuador, a French oil and gas company invoked ICSID arbitration after Ecuador imposed a windfall tax and later expropriated its assets. The tribunal awarded Perenco over US$400 million, showcasing the power of arbitration to hold states accountable under international law—a precedent with implications for mining investors.

Final Thoughts

As the global demand for critical minerals grows, so too will the complexity and frequency of mining disputes. Arbitration offers a flexible, enforceable, and expert-driven path to resolution. For investors, host states, and service providers alike, understanding the arbitration process is not just prudent—it’s essential.

At RBN Chambers, we have extensive experience navigating mining-related arbitration across multiple jurisdictions. If you are facing a dispute or seeking strategic guidance, our team is ready to assist.