Centerra Gold has been granted some interim relief in its ongoing arbitration against the Kyrgyz Republic and state-owned Kyrgyzaltyn JSC in relation to the Kumtor Gold Project.
An international arbitrator has found evidence that Canadian company Centerra had both made out a case for the arbitrator to take jurisdiction over the arbitration proceeding and been convincing regarding the merits of the case, unless proved otherwise.
The large mining operation has been the focus of a number of disputes between the company and the Kyrgyz government.
Centerra sought international arbitration in May 2016 following the Kyrgyz Republic’s string of penalties, fees and accusations of damaging the environment and violating business deals, all of which the company considers to be without merit.
In January this year Centerra filed a request for a partial award or interim measures against the government, and is seeking an award ordering the government withdraw or suspend its several claims and related decisions and court orders.
This followed a court order forcing Centerra subsidiary Kumtor Gold Company (KGC), to pay about $98 million in fees related to their mine waste, which was on top of an earlier court decision ordering KGC to pay a $10,000 fine.
The interim relief granted by the arbitrator this week includes, among other things:
· Orders the Kyrgyz Republic to give 30 days’ prior notice to the arbitrator and Centerra in the event of resumption of the claims brought by Kyrgyz Government entities in Kyrgyz courts relating to alleged environmental harm, dividends and land use, in order to allow Centerra to seek appropriate relief from the arbitrator;
· Directs the Kyrgyz Republic to give immediate notice to the arbitrator and Centerra if any procedural action is taken in the Kyrgyz court proceedings; and
· Orders the Kyrgyz Republic to use its best efforts to ensure that public officials, authorities, agencies, and instrumentalities of the Kyrgyz Republic comply with her decision.
In addition, the arbitrator found that Centerra had made out both (i) a prima facie case for the arbitrator to take jurisdiction over the arbitration proceeding; and (ii) a prima facie case on the merits of the case.
In a statement, Centerra said, “Such findings relating to jurisdiction and merits support Centerra’s long-standing view that the Kyrgyz court proceedings are disputes that should be brought in international arbitration and may not be brought before the courts of the Kyrgyz Republic. Centerra further believes that the court claims are without foundation or substance on the merits.
“Centerra will continue to pursue its claims in its main arbitration proceeding, which was commenced in May 2016 and remains ongoing. Responses to Centerra’s statement of claim are expected to be submitted by the Kyrgyz Republic and Kyrgyzaltyn in September 2017.
“In the meantime, Centerra and the Government of the Kyrgyz Republic continue discussions with a view to settling all outstanding matters relating to the Kumtor project.”