Cameron told to stop Jersey-registered shell company suing Romania in ‘corporate court’
Date: 14 August 2015
A coalition of environmental and human rights organisations from the UK, Romania and Canada have called on prime minister David Cameron to intervene in an international case which is pitting a Canadian mining company against the government of Romania. The group argues that under new trade agreements like TTIP (the Transatlantic Trade and Investment Partnership) such cases will radically expand, targeting the British and other European governments.
Mining company Gabriel Resources has filed a request for arbitration at the World Bank after a Romanian court annulled a critical environmental document that was required for the Rosia Montana mine to go-ahead in the Transylvania region of Romania. Part of the request uses a Jersey-listed subsidiary company which campaigners believe is a shell company – that is a company which serves as a vehicle for business transactions without itself having any significant assets or operations. Campaigners believe the company is doing this to give it access to a bilateral trade deal between the UK and Romania, under which such corporate cases can be brought.
In a previous interview, the CEO of Gabriel Resources has suggested that they would seek compensation of up to $4 billion if the mine were not to go ahead, despite having spent only a fraction of this amount developing its plans for the mine. According to WHO statistics, Romania’s entire spending on public health for a year is under $8 billion.
The case is an example of the Investor-State Dispute Settlement (ISDS) or ‘corporate courts’ system that has received recent notoriety as a result of their controversial inclusion in the free-trade deal being pushed between the EU and USA, the Transatlantic Trade and Investment Partnership (TTIP). The letter to Cameron highlights the European Commission’s desire to stop:
“so– called “shell” or “mailbox” companies, owned or controlled by nationals or companies not intended to be protected by the agreement and having no real business activities in the country concerned, to make use of an investment agreement to launch claims before an ISDS tribunal.”
Signatories of the letter, who oppose the use of ISDS in trade agreements, call on Cameron to investigate and call on the court to throw out the case based on the fact that Gabriel doesn’t represent a real British company.
Nick Dearden, the director of Global Justice Now said:
“It’s bad enough that Gabriel Resource’s ‘right to profit’ is being put forward as more important than the government of Romania’s right to act for the benefit of its citizens. It’s even worse that a Canadian mining company is able to do this by exploiting a trade agreement between the UK and Romania based on a shell company it owns in Jersey.
“Cheerleaders of TTIP, the toxic trade deal being pushed by the EU and the USA, have accused its many critics of exaggerating the threat that it poses to democracy. But this is a clear example of how we are leaving ourselves vulnerable to an enormous corporate power grab. Why should UK taxpayers foot the massive bills for compensating greedy corporations when the government rules that their operations are harmful to communities or the environment?”
Image: The church in the village of Geamana, Transylvania near Rosia Montana which is now buried in the tailings pond and surrounded by toxic heavy metals. 400 families were forced to relocate when the valley was flooded. Photo: Glyn Thomas Photography