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Award of 8 June 2009, [2009] 48 I.L.M. 1039, ¶355 (ICSID).


Glamis claims that the United States expropriated rights possessed by Glamis to mine
gold in southeastern California.

The Glamis claim rested on a series of regulatory measures imposed by federal and
state agencies in response to concerns over the environmental and cultural impacts of
its mining project (the Imperial Project). The open pit mining project was controversial in
California, drawing particular opposition from the Quenchan Indian Nation due to its
location in an area sacred to the Native American tribe.

Glamis argued that federal mining agencies departed from well-established precedent
when they declined to approve Glamis’ plan of operation. Glamis also objected to
measures introduced by the State of California in 2003, which it claimed were arbitrary
and discriminatory, designed to block the Imperial Project rather than genuinely address
environmental and cultural concerns associated with mining activities generally.

In considering Glamis’ expropriation claim, the Tribunal extensively analyzed the value
of the mining project in light of the additional costs required to meet the environmental
criteria demanded by the State of California.

Glamis argued that the cost associated with completely backfilling the Imperial mine, as
required under the California measures, reduced the project to a negative value.
However, the Tribunal rejected Glamis’ valuation, concluding that the mining project
was valued at over US$20 million (Glamis had estimated the value of the project at
US$49 million without the backfilling measures prescribed in the California measures).


Whether or not the United States expropriated rights possessed by Glamis to mine gold
in southeastern California?



The Tribunal denies Glamis’ Article 1110 claim that its federally granted mining right
was expropriated on the ground that the right was never rendered substantially without
value by the actions of the U.S federal and State of California governments for the
reasons elaborated below.
a.) It is not contested in this proceeding that Glamis still formally possesses its
federally granted mining right. Glamis claims that, although it is still in possession
of the right as a formal matter, the value of that right was so diminished by
governmental action that it was expropriated in fact. A substantial portion of the
argumentation in this Arbitration was devoted to the value of the right that
allegedly was taken from Glamis. For Glamis, this argument was an assertion of
the compensation due to it. For the United States, this argument was an
assertion that Glamis in fact still possesses a valuable right and that in fact no
expropriation has occurred.

b.) In making its own evaluation of whether the Imperial Project retained value
following the California backfilling measures, for reasons discussed extensively in
the Award, the Tribunal starts with the values and methodologies offered by
Claimant for the several elements of its valuation, reviews them one-by-one with
Respondent’s objections to each, and makes adjustments that the Tribunal
considers appropriate in light of the facts presented. This approach—namely, the
Tribunal’s acceptance of Claimant’s assumptions as a starting point—is a best
case scenario for Claimant. In essence, this approach asks: “Even if the Tribunal
accepts Claimant’s pre-backfill measures valuation as correct and further accepts
Claimant’s characterization of the factors resulting in a reduced value, does a
review of the claimed reduction, and the resulting adjustments by the Tribuna
l, result in a radical diminution in the value of the Imperial Project?”

c.) Glamis argues in this proceeding that the Imperial Project, at the time of the
alleged expropriation, had a value of $49.1 million. The Tribunal concludes that,
when its adjustments are applied to Glamis’ valuation methodology, the post-
backfilling valuation of the Imperial Project should be in excess of $20 million. In
light of this significantly positive valuation, the Tribunal holds that the first factor
in any expropriation analysis is not met: the complained of measures did not
cause a sufficienteconomic impact to the Imperial Project to effect an
expropriation of Glamis’ investment.

The Tribunal thus holds that Glamis’ claim under Article 1110 fails.

Submitted by:

Immaculate G. Clark