Gabriel Resources Ltd. (“Gabriel” or the “Company”) announced that it has filed a request for arbitration before the World Bank's International Centre for Settlement of Investment Disputes ("ICSID") against Romania (“Request for Arbitration”). This action relates to the Company’s dispute with Romania over the development of the Roşia Montană gold and silver project (“Project”), of which Gabriel holds an indirect 80.69% interest, and violations by the Government of Romania of the protections afforded by the Treaties1.
The Project was, and still is, considered inside and outside Romania as one of the most important foreign direct investments in the country, with the potential to provide both a significant boost to the Romanian economy as a whole and to stimulate growth and development of the Apuseni region, which was a mining district for many centuries. The Company has always been firmly committed to the development of the Project. Gabriel remains certain that construction of the mine using state-of-the-art technology would demonstrate the extensive benefits of the Project including, importantly, for the environment and for preservation of Romania’s cultural heritage.
However, through its actions and inactions, Romania has blocked and prevented implementation of the Project without due process and without compensation, effectively depriving Gabriel entirely of the value of its investments. Romania thus has subjected Gabriel and its investments to treatment in breach of Romania’s bilateral investment treaty obligations, causing significant losses to Gabriel. In the Request for Arbitration, Gabriel is seeking the full relief owed to it under the provisions of the Treaties for the deprivation of its rights to develop the Project as a consequence of Romania’s treaty violations.
Arbitration proceedings have been commenced following the issue to the President, the Prime Minister and the Romanian Government (“Romanian Authorities”) of the written dispute notice given by Gabriel on January 20, 2015 (“Notice”). Such Notice invited the Romanian Authorities to engage formally with Gabriel to find an amicable resolution. Despite further letters of request for consultation sent by the Company in April and May 2015, the Romanian Authorities have failed to reply to any of the correspondence. Gabriel continues to seek engagement at a senior level with the Romanian Authorities in order to resolve the issues at dispute. However, Gabriel is also fully committed to the protection of its rights and interests in Romania and, in the absence of any willingness by the Romanian Authorities to engage in dialogue, the Company has been left with no alternative but to seek legal recourse through the Request for Arbitration. Gabriel has engaged White & Case LLP to advise it in this matter.
Gabriel held $32.1 million of cash and cash equivalents as at June 30, 2015 and will publish its Q2 2015 financial results together with Management’s Discussion and Analysis on or around August 3, 2015. The Company will continue to advise the market of any further material developments concerning the Project or the arbitration proceedings as and when appropriate.
Jonathan Henry, President and CEO of Gabriel, commented: “The Company still believes the interests of all stakeholders in the Project, particularly the Romanian State, would be served best by its permitting and development and Gabriel continues to be available to engage with the Romanian President and Government in order to achieve this objective. Whether this becomes a reality or not falls wholly on Romania’s political decision makers to demonstrate a commitment to the Project and to the mining industry in general. We have attempted dialogue with the Romanian President and Government in order to discuss an amicable resolution to the dispute. In light of their apparent and disappointing unwillingness to engage at all, it has become the Company's sole recourse to commence international arbitration. The Company remains willing to work with the Romanian Authorities and other stakeholders to build a world class mine from which Romania will benefit through massive economic stimulus and jobs.”
1 To protect their interests, Gabriel Resources Ltd. and Gabriel Resources (Jersey) Ltd. have filed the Request for Arbitration pursuant to the provisions of international bilateral investment protection treaties which the Government of Romania has entered into with each of the Government of Canada and the Government of the United Kingdom of Great Britain and Northern Ireland for the Promotion and Reciprocal Protection of Investments (together the “Treaties”). The Treaties exist as an encouragement and reciprocal protection of investments agreed between sovereign states, and each state offers various protections to foreign investors from the other state to give both parties to an investment confidence in their rights, the investment process and the expected outcomes.
About Bilateral Investment Treaties
Natural resource investments can be high profile and capital intensive, especially for large complex projects or projects in sensitive areas. They are highly susceptible to political risk and other risks associated with the jurisdiction of the assets for development. Domestic politics and governments can prioritise immediate political expediency over benefits to the country, available through successful exploitation of those assets. This political approach can induce risks for investors such as expropriation, resource nationalism, contract renegotiation, new royalty regimes, revised taxation laws, increased regulation, opaque legal process – all of which can impair the viability of a project. Bilateral Investment Treaties (BITs) exist as an encouragement and reciprocal protection of investments agreed between sovereign states. Each state offers various protections to foreign investors from the other state through a BIT which gives both parties to an investment confidence in their rights, the process and the outcomes. Without BITs countries would find it very difficult to attract foreign investment. Obligations are directly enforceable by investors against states through international arbitration in a neutral venue.
Among the protections offered to foreign investors under a BIT is “fair and equitable treatment”. This is an autonomous standard that protects investors against a whole array of potential acts and omissions attributable to the host state, which expose the investment to significant risks, such as bad faith, discrimination, protectionist treatment, breach of legitimate expectations of the investor, failure to act in a consistent manner, or failure to afford proper level of administration of justice. Many of the issues present in the treatment of the Gabriel Group’s investment in the Project by the Romanian Government and other Romanian authorities are typical of ways in which host states breach their obligations under the fair and equitable treatment standard. The treatment of the Gabriel Group’s investment also has been inconsistent with other standards elaborated in BITs.
Gabriel is a Canadian TSX-listed resource company that has focused on permitting and developing the world-class Roşia Montană gold and silver project over the past 17 years. The exploitation license for the Project, the largest undeveloped gold deposit in Europe, is held by Roşia Montană Gold Corporation, a Romanian company in which Gabriel currently owns an 80.69 percent equity interest, with the 19.31 percent balance held by Minvest Roşia Montană S.A., a Romanian state-owned mining enterprise. Gabriel and RMGC are committed to responsible mining and sustainable development in the communities in which they operate. It is anticipated that the Project would bring over US$24 billion (at US$1,200/oz gold) to Romania as potential direct and indirect contribution to GDP and generate thousands of employment opportunities. Gabriel has sought to build a state-of-the-art mine using best available techniques and implementing the highest environmental standards whilst preserving local and national cultural heritage in Romania.
Source: Gabriel Resources
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