CHAPTER 15 HOW RECENT JUDICIAL DECISIONS FROM THE HIGH COURTS IMPACT MINING AND OIL & GAS ACTIVITIES
| Jurisdiction | United States |
HOW RECENT JUDICIAL DECISIONS FROM THE HIGH COURTS IMPACT MINING AND OIL & GAS ACTIVITIES
Partner
Gómez-Pinzón Zuleta Abogados S.A.S.
Bogotá
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GERMÁN VILLAMIL-PARDO is a partner at Gómez Pinzón Zuleta Abogados, in Bogotá, where he leads the Oil & Gas practice and is a member of the Corporate law practice, leading the Foreign Exchange and Regulatory International Investments practice. Germán is also a member of the Banking, Finance & Capital Markets practice. Germán has more than 30 years of professional experience. In the Oil & Gas industry, he renders advice to exploration and production companies and also to service companies, oil transportation companies, and trading companies. He also participates actively in mergers, acquisitions, and financing transactions in the Oil & Gas sector. In the foreign exchange and international investments practice, he has rendered legal advice to, among others, companies related to the energy, gas, financial, communication and written press, real estate, public services, telecommunications, technology, beverages, and transportation sectors, in legal matters that include legal counsel in foreign exchange regulations, financings in foreign currency, structuring of international investments and counsel, and representation in administrative foreign exchange proceedings. Germán received his law school degree from Universidad de los Andes and has a post-graduate degree in Taxation from the same university. He worked for around ten years with Banco de la República (Colombia's Central Bank) where among other positions he served as General Counsel. He is member of the Mines and Oil Bar (Colegio de Abogados de Minas y Petróleos), board member of Grupo Aval and also of the Free Country Foundation (Fundación País Libre) and arbitrator of the arbitration and conciliation center of the Chamber of Commerce of Bogotá.
Table of Content
Introduction
1. Controversial Decisions in Colombia with respect to the Prior Consultation Process
a. Are the ethnic communities entitled to a power of veto?
b. Procedure to identify the ethnic communities
2. Autonomy of the local authorities
3. Negative Impacts in Latin America Oil & Gas and the Mining Industry
a. Peru
b. Chile
c. Mexico
Conclusions
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Introduction
Recent judicial decisions adopted by the highest courts concerning environmental matters and social consultation are raising concerns in the oil & gas and mining industry as they bring uncertainty about the ability to perform contracts and licenses originally negotiated with governments. In addition, concerns may discourage further investments, as it could be argued that the rules of the game are not clear and that may be subject to modifications based on the conjuncture of a specific moment in time. In most cases, rulings of the high courts, have faced a tension between the rights held by the oil & gas and mining companies and the social rights of the communities. Even being a constitutional guarantee, governments have failed to properly regulate those rights and promote laws in which such rights are clearly described and adopted clear rules on how they should be enforced. Finally, there also have been rulings concerning the autonomy of the local authorities in Colombia and their powers regarding the exploitation of the natural resources that threat to be a difficult challenge. This paper seeks to describe some of those events, particularly based on the Colombian experience. To that end, in a first section, a summary of certain relevant cases will be provided, analyzing the arguments which led judges to rule in such manner and providing some possible solutions to avoid uncertainty in judicial rulings for future cases. This section will also mention some recent cases in the mining industry in Colombia which bring new elements to the debate. In a second section, we will describe some recent rulings adopted by the Colombian Constitutional Court regarding the powers of the local authorities concerning the use of land over their territory vis-à-vis the faculties of the central government. In a third section, we compiled some similar cases in other countries in Latin-America. Finally, we will provide some conclusions that we expect may be useful and may contribute to the debate among the legal community.
1. Controversial Decisions in Colombia with respect to the Prior Consultation Process
The oil & gas industry has a fundamental importance for the Colombian economy. In fact,
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historically this sector contributes 55% of all the exports made from Colombia.2 However, the companies of this sector are not usually very popular among communities where operations are taking place. For instance, in many cases companies are seen by communities as great invaders which come to steal the natural resources without making payments or compensations. This negative image is reinforced by corruption in local governments which carelessly waste funds of the public budgets, which in turn receive funds from oil & gas companies by way of royalty payments. In this context, when there are cases involving this industry reaching the high courts, it is recurrent that there are deeply influenced by media and political pressure which at the end tend to balance in favor of the rights of the communities over the rights of the oil & gas investors. Moreover, this atmosphere is influenced by a legal framework in which there are not clear rules on how to proceed in certain topics, as is the case in Colombia with the prior consultation.
As most of the countries in Latin America, the right to prior consultation has it legal source in the Convention No. 169 of the International Labor Organization. However, from a legal point of view such provision is vague and does not properly provide the tools that are required in practice to correctly protect these rights and it just includes certain guidelines that must be specifically regulated to have a process in which all the interested parties are dully represented and able to exercise their corresponding rights. In Colombia, all recent attempts to pass a bill of law regulating the prior consultation have failed by different reasons. The last one was unsuccessful because it was not possible to previously consult the bill of law with the indigenous and other ethnic groups, as such communities do not have a clear and defined leader empowered to represent all their interests. In this context, judges have had to conduct an interpretation of the Convention No. 169 of the International Labor Organization trying to incorporate the Convention to the Colombian legal system. Throughout this task, they have created several rules which must be applied in each prior consultation procedure.3
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For instance, among others rules, nowadays in Colombia there is no discussion with respect to the fact that (i) prior consultation with ethnic communities is a fundamental right and therefore, the prior consultation process shall be implemented pursuant to this principle; (ii) adverse or confrontational postures...
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