THE AUTHORS:
Marta Maciá, Associate at Clyde & Co
Irene Vázquez, Legal Trainee at Clyde & Co
Elena De Saavedra, Legal Trainee at Clyde & Co
THE EDITORS:
Milena Szuniewicz-Wenzel, Partner at Clyde & Co
Lola Dawson, Commercial Dispute Knowledge Lawyer at Clyde & Co
Clyde & Co’s Young Arbitration Group provides a unique insight into international arbitration issues through the lens of young international arbitration practitioners working across different jurisdictions. In this series with Daily Jus, Clyde & Co explores the role of arbitration in mining disputes.
Mining disputes often lie at the intersection between economic aspiration and regulatory frameworks, where major investments clash with evolving environmental and legal standards. In Spain, a country with a rich mining tradition, the sector remains a relevant part of the economy, despite its decline in recent decades. In this context, international arbitration has established itself as a key mechanism for resolving disputes between mining investors and the state, providing a neutral forum for addressing complex and high-risk conflicts.
Executive Summary
This article analyses the interrelationship between the Spanish mining sector and investment arbitration, highlighting how bilateral and multilateral treaties provide essential guarantees to protect foreign investors. Through a detailed examination of prominent cases, such as the Berkeley Energy Uranium Project (“the Berkeley case”) and the Corcoesto gold mine, we highlight the practical application of arbitration in the mining industry. These cases underline the growing relevance of arbitration as a tool for dealing with regulatory changes, addressing administrative decisions and protecting investments in an increasingly complex landscape.
Mining in Spain
Spain has a long history of mining operations, particularly during the country’s industrialisation phase in the 19th century. Spain’s rich mineral heritage is especially prominent in the north and south-east regions (Galicia, Cantabria, Asturias, Cataluña, Andalucía, etc.).
However, the volume of the mining industry has declined significantly since the 1980s, partly because its negative environmental impact clashes with current green policies.
Since then, Spain has sought more sustainable alternatives and has become a leader in the development of renewable energies such as wind and solar, which are now key assets in its energy transition.
Mining Disputes in Spain
Investment arbitration is an international legal mechanism for resolving disputes that investors believe arise from violations of their rights protected by international treaties.
These disputes often arise when a state adopts measures that significantly affect the operations of foreign investors, such as regulatory changes, revocation of licences or restrictions that limit the return on their investment.
In the mining field, characterised by its technical complexity and the need to resolve disputes quickly, this system of arbitration is an effective tool. The possibility of having specialised arbitrators and an expeditious procedure is particularly advantageous in this sector, where disputes can involve large sums of money, international agreements and highly specific technical issues.
The flexibility of the arbitration system, combined with its adaptability to the particularities of each case, makes it a preferred option for mining companies operating in Spain. Moreover, the binding nature of the arbitral awards provides a definitive resolution, reducing uncertainties and facilitating the continuity of the projects.
The Berkeley Case
The Berkeley v. Spain case, which concerns the company Berkeley Minera España (“Berkeley”), has attracted significant media, social and political attention due to the controversial uranium mining project in Salamanca, Spain.
This initiative aimed to develop Europe’s first open-pit uranium mine, proposed in 2012. In 2013, the Junta de Castilla y León issued a positive Environmental Impact Statement, followed in 2014 by the mining concession.
However, the situation became more complicated following the 2021 approval of the Climate Change and Energy Transition Law, which included an amendment banning new applications for mining of radioactive materials and their extensions. Berkeley argued that its previous concessions should continue under the previous legislation. However, in November 2021, the Ministry for Ecological Transition rejected the project following an unfavourable report by the Nuclear Safety Council (“CSN”).
The rejection was followed by a significant judicial blow in December 2022, when the High Court of Justice of Castilla y León annulled the licences granted to the uranium deposit. This ruling invalidated key authorisations and triggered a 15% drop in the company’s shares. In August 2023, the newly constituted Partido Socialista Obrero Español (“PSOE”) City Council revoked the planning licence previously granted by the preceding municipal government and reopened a disciplinary case for ‘very serious misconduct’.
Faced with this series of setbacks, Berkeley decided to resort to international arbitration under the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”).
After exhausting the three-month legal deadline to negotiate with the Spanish government without obtaining a response, Berkeley formalised its arbitration claim, estimating mobilised investments of more than 100 million euros and claiming potential compensation of up to 1 billion euros.
The arbitration process is moving forward with the appointment of arbitrators. Berkeley has appointed a recognised specialist in international dispute resolution, while Spain has appointed an expert in international law. Both parties must now agree on the third arbitrator to complete the tribunal (Berkeley v. Spain, Composition of the Tribunal (Pending), 30 September 2024).
The Berkeley case could result in two possible scenarios of interest to those with mining investments in Spain:
- The resumption of the mining project; or
- Significant financial compensation to Berkeley.
The arbitration process, one of the largest faced by Spain since 2011, will be key in determining the outcome. In the meantime, Berkeley stresses its willingness to reach an amicable solution and collaborate with the Spanish authorities. Whatever the resolution, the outcome will be a significant milestone not only for the energy sector but also for investment policy and environmental regulation in Spain.
The Edgewater Case
Galician gold mine, Corcoesto, located in the north of Spain, was a semi-abandoned mine until the 2008 economic crisis increased the value of gold. This prompted Edgewater Exploration (“Edgetwater”), a Canadian mining company, to identify potential in Corcoesto. In 2010, via its subsidiary company, Mineira de Corcoesto, the company initiated the exploitation of the mine.
At the time that Edgewater’s subsidiary acquired the project, it was not possible to extract gold nuggets from Corcoesto, only microscopic gold particles. Extracting gold particles from the rock required a complex chemical process that involved sodium cyanide and other substances. In addition to the environmental impact that the chemicals could cause, the expected waste and the water consumption necessary to keep the mine running were the project’s biggest downsides.
In 2012 the Galician government (“Xunta de Galicia”) granted Edgewater’s subsidiary an approved Environmental Impact Assessment. This decision caused great discontent in environmentalist groups, who began to express their concerns about the mine’s potential environmental impact and overall negative impact on the region.
The protests proved effective, resulting in Xunta de Galicia requiring Edgewater to complete a list of new environmental, financial and technical requirements, a year later.
The Xunta de Galicia’s final blow against the project was announced in 2015, when they declared the mine’s concession expired, adding that the adjudication process would not be reopening. This decision prompted Edgewater to initiate a lengthy legal battle in the Spanish Administrative Courts, which resulted in the revocation of the concession being upheld by both the Galician High Court of Justice and the Spanish Supreme Court by 2019.
At this point Edgewater initiated arbitration proceedings to recover the €35 million invested in the Galician mine up until the region’s government revoked the permit. The arbitration was held before the Permanent Court of Arbitration, under UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules (1976) and the Panama – Spain Bilateral Investment Treaty (“BIT”) (1997) was invoked.
In this case, the Tribunal upheld one of the four objections made by Spain’s defence by a majority of two to one, dismissing the miner’s claim.
Conclusion
Arbitration has proven to be a valuable mechanism for resolving disputes in the Spanish mining sector due to its speed, flexibility, and the specialised expertise of arbitrators.
Recent cases, including the Berkeley uranium project and the Corcoesto gold mine, highlight both the potential benefits and challenges of arbitration. These cases illustrate how arbitration can serve as a recourse for companies facing regulatory shifts or administrative decisions, potentially leading to compensation or other resolutions.
ABOUT THE AUTHORS:
Marta Maciá is an associate in Clyde & Co’s Madrid office specialising in dispute resolution. Marta has extensive experience of domestic and international litigation and arbitration. She has a particular expertise in the areas of insurance coverage disputes, construction, product liability, energy, fires, machinery breakdown, and professional liability. She advises clients at the pre-litigation stages and on out-of-court settlements.
Irene Vázquez is a legal trainee in Clyde & Co’s Madrid office working primarily in dispute resolution in all four procedural jurisdictions (civil, criminal, labour and administrative). Her work focuses on professional liability, medical malpractice, insurance coverage disputes, and arbitration.
Elena De Saavedra is a lawyer admitted to the Madrid Bar Association and part of Clyde & Co’s Madrid office team as a trainee lawyer. She works primarily in dispute resolution, both national and international, in cases related to insurance coverage disputes, construction, product liability, energy, fire and professional liability. Elena also assists in proceedings across all four jurisdictions (civil, criminal, labour, administrative).
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
