Summary of El Salvador’s Rejoinder on the Merits (11 July 2014) in Pac Rim Cayman LLC v The Republic of El Salvador
The Rejoinder is a 218-page document that chronicles, documents, and analyzes Pac Rim’s interactions and activities in El Salvador since it entered El Salvador in 2002 as well as the Salvadoran government actions and policies vis-a-vis Pac Rim and mining overall. It provides meticulous details of who did or said what and when, supported by 712 footnotes. Among the sources are Pac Rim CEO Tom Shrake’s emails to Pacific Rim’s Board of Directors and others in Pac Rim. The Rejoinder is, of course, impossible to encapsulate in a couple of pages. I strongly encourage interested parties to read (or skim) at least the first 35.5 pages (Introduction and Statement of Facts) which summarize the key points of the full rejoinder. It is a fairly easy and fascinating read (I say this as a non-lawyer). One can also complement the opening sections by reading those subsequent sections that expand upon points of interest to a given reader. (Note that the Rejoinder – found via hyperlink and also attached — is a searchable pdf, meaning that one can type in a name or phrase or date and immediately find all mentions in the text.)
- The document refutes Pac Rim’s argument that it was taken by surprise when it did not get an exploitation concession (that is, authorization to mine) from the Republic of El Salvador. As the document makes clear, Pac Rim knew this was a possibility shortly after submitting its application for a concession, by early 2005 (pp.31-32). The Rejoinder refers to evidence on the record that Pac Rim was repeatedly notified of problems with its application from 2005-2007. This was well “before then-President Saca confirmed in 2008 that mining had to be studied before exploitation could be allowed.” (Quote is from p.29; see also pp.58, 103, 105, 119, among many others).1
- The document refutes Pac Rim’s argument that either it believed it had successfully completed all requirements for an exploitation concession or that any omissions would not be a problem, detailing the three “independent requirements” for such a concession that Pac Rim lacked and Pac Rim’s clear knowledge of these deficiencies (p.29). Prior to the Rejoinder, public documents such as Debunking Eight Falsehoods of Pacific Rim/OceanaGold have detailed some of these omissions and especially the fact that Pac Rim did not get government approval for its Environmental Impact Study (EIS). The Rejoinder explains in even more detail the limitations of the EIS submitted by Pac Rim and particularly its failure to cover the full area where Pac Rim hoped to mine. So too does the document reiterate the fact that Pac Rim did not submit the required feasibility study. (The 3rd requirement is covered in Point #3.)
- Expanding on point #2, the Rejoinder provides especially damning evidence concerning the third missing requirement: Pac Rim was not even close to meeting the requirement that it held titles to (or permission to mine in) all the land for which it requested a concession, and Pac Rim was well aware of this. The lack of land titles, stressed in the Rejoinder, also demonstrates that, contrary to Pac Rim’s claims, the majority of the local population was not – and is not – supportive of Pac Rim’s plans to mine in Cabañas. The fact that landowners in the requested concession area did not support Pac Rim’s project was confirmed in 2006 at a forum at the University of Central America (UCA) with the Minister of Environment of El Salvador (pp. 27, 106-7, 133-34). Pac Rim’s attempts to get the land titles were not successful: Pac Rim had less than 13% of the required land holdings, lacking more than 87% of land estimated to be owned by over 1,000 people (percentages calculated from numbers on p.47).
- Pac Rim protestations (including Pac Rim Cayman LLC’s president and CEO Tom Shrake’s testimony [p.31] that he was “not aware” of the reality of such legal complications) to the contrary, the document makes it clear that Pac Rim well knew that it was not able to fulfill these requirements for an exploitation concession. Indeed, as early as 2005 (pp.30-31), Pac Rim was working with Pres. Saca’s vice-president and others to eliminate the requirement that it hold all relevant land titles. The plan to get around this requirement was that the Salvadoran Congress would amend or replace the mining law to remove this requirement. A first key point here is that Pac Rim was not an innocent bystander to the attempts to replace the Mining Law; in Tom Shrake’s own words: “This  bill was prepared with input from my advisors, and with indirect input from Pac Rim” (p.33 quoting Shrake and p.112). A second key point is that the law was never changed.
As to Pac Rim’s argument that the land-holding requirement is unconstitutional (see footnotes 170-171 on pp. 57-58): If this were indeed the case, then the proper venue for such an argument would have been El Salvador’s domestic courts, not ICSID. However, Pac Rim eschewed the Salvadoran domestic court system.
- The above points also refute Pac Rim’s argument that a key reason it did not receive an exploitation concession rests in the fact that it did not play along with the corruption of the Saca administration (2004-2009). “This is nonsense,” to quote a sentence used in the Rejoinder for another point (p.30). Beyond not complying with the requirements needed to get a concession (as explained above), Pac Rim clearly had its own plans to circumvent the democratic processes of El Salvador. Some of this appears to have involved hiring key people as employees or consultants, from former Minister of Finance Manuel Hinds to relatives of the vice-president, as well as providing funds to local individuals and groups in Cabañas. (See pp. 31, 32, 98, 141, 174, & 212.) In this regard, it is unfortunate that the ICSID tribunal did not require that Pacific Rim submit a list of those persons to whom it paid more than a certain amount, as would be required in a corruption or fraud case. More on Pac Rim’s attempts to subvert democracy in points 6 & 7, below.
- Pac Rim tried to silence opponents to mining in El Salvador. The Rejoinder details Pac Rim’s attempts to do so, some of which would be comical were the matter at hand not so serious. Point 4 above summarizes its attempts to get the Salvadoran Congress to pass a bill that clearly was in Pac Rim’s interest. So too, did Pac Rim work on pressuring the Catholic Church, and especially the then-archbishop “to soften…their stance” against mining. Emailing the Pacific Rim Board of Directors about the archbishop’s change in position from being opposed to mining to “just want[ing] to be sure of environmental protection,” Shrake writes: “This is the result of our demonstrations at mass the past seven weeks…. We will maintain these weekly protests, find an opportunity to surprise him in some other forum and increase the numbers” (p.35).
- The Rejoinder also demonstrates that Tom Shrake, in particular, seems to have had an inflated sense of his allies and of the importance of Pac Rim getting a concession to mine in El Salvador. Again, Shrake himself provides the evidence in his email to Pacific Rim Board of Directors. Not only did Pacific Rim spend considerable money on lobbying2 (“arm bending,” in Shrake’s terms in 2007; p.32) both inside and outside El Salvador, including working with a Washington, DC-based lobbying firm (pp. 34, 213), but so too “We also continue to pressure the Bush administration to intervene. We won’t know if they do.”(That last sentence seems right out of a spy novel.) It could be argued that global corporations seeking the help of the US government in pursuit of profit in poorer lands is not unusual or surprising. But Shrake also attempted to enlist the help of the Pope: “While in Washington I met with the former US Ambassador to the Vatican. We discussed the possibility of getting to the Pope with our issue. The Pope is anti-liberation theology and the statements by the ES [El Salvador] archbishop contradict the statements of the Pope made in January . We are identifying the right person in the Vatican for help” (quotes on p.35; see also p.112). While this may sound ludicrous and while there is no evidence of Vatican involvement, the Rejoinder provides undisputable documentation of both attempted and successful intervention by Pac Rim in the democratic processes of a sovereign nation.
Overall, the Rejoinder provides more than ample evidence and documentation that the case of Pac Rim Cayman LLC v the Republic of El Salvador has no merit. If the three ICSID tribunal members decide otherwise, it will prove the point of those who are arguing that ICSID is an institution biased towards corporations and unable to weigh the evidence using both the facts at hand and legal precedents.
Summary prepared on 8-28-14 by:
Dr. Robin Broad
International Development Program
School of International Service
Washington, D.C. 20016
 In May 2007, the Ministry of Environment (MARN) and the Ministry of Economy told mining corporations that there would be no more mining until a “strategic environmental review” was completed. That review was recommended in 2006 by Peruvian environmental lawyer Manuel Pulgar-Vidal (now Peruvian Minister of Environment) who was hired by the Salvadoran government as a consultant on mining. See Rejoinder, pp. 28-29, 109, 120.
 “Pac Rim spent around $2 million in 2007 and 2008 on public relations.” This figure is from Pac Rim’s own documentation and includes only “certified public relations expenditures” (p.32).