A request for arbitration filed by EEPL Holdings Mauritius against the Republic of Congo on 29 October 2021 with the ICSID joins others previously lodged by mining companies Sundance Resources Limited / Congo Iron SA and Avima Iron Ore with the ICC, alleging that decrees issued in favour of Sangha Mining Development Sasu violate the Republic of Congo’s obligations under domestic law, relevant Mining Agreements and international law.
On 29 October 2021, the Secretary-General of the International Centre for Settlement of Investment Disputes (ICSID) registered a request for arbitration filed by EEPL Holdings Mauritius (EEPL) against the Republic of Congo (RoC) – (EEPL Holdings v. Republic of Congo (ICSID Case No. ARB/21/53).
EEPL is a mining company with its registered office in the Republic of Mauritius, a subsidiary of the Australian company Equatorial Resources Ltd (Equatorial).
As reported by Equatorial in its Interim Financial Report for the second half of 2020, the dispute allegedly arose in response to a series of measures RoC adopted which impacted its investments in two projects: the Badondo and the Mayoko-Moussondji Iron Ore Projects.
According to Equatorial, the measures adopted violate multiple provisions – such as those regarding the prohibition of illegal expropriation and fair and equitable treatment – of the December 2010 Agreement between the Government of the Republic of the Congo and the Government of the Republic of Mauritius on the reciprocal encouragement and protection of investments.
These new proceedings join others already lodged with the International Chamber of Commerce (ICC) by Australian mining companies Sundance Resources Limited / Congo Iron SA and Avima Iron Ore, on 25 March and 4 June 2021, respectively, which claim more than USD billion against the Republic of Congo on the same argument as those put forward by EEPL.
Unlike the two previous cases, however, some critics suggest that the EEPL proceedings amount to ISDS forum shopping. This is because EEPL, a Mauritius based subsidiary of Equatorial Resources Ltd – rather than Congo based subsidiary, Congo Mining Exploration Ltd SARL – has brought the request before ICSID in terms of the aforementioned BIT between the RoC and Mauritius.
In accordance with Article 7 of the BIT, six months of negotiations must first elapse before dispute resolution options, including ICSID arbitration, can be escalated. EEPL served a Notice of Dispute and Request for Negotiations on the RoC in December 2020, which ultimately failed to resolve the dispute.
According to Equatorial's website, in 2010, its subsidiary Congo Mining Exploration Ltd SARL (CME) launched the exploration and development of an iron ore mining project in Badondo, an area located in the northwest of the RoC. After obtaining three mining exploration licenses, the first for three years and the others for two years each, it then applied for a mining license for 25 years in 2016, in accordance with the Code Minier and other relevant laws.
Equatorial also notes that, in 2010, it began exploration and development of the Mayoko-Moussondji Iron Project, located in the southwest region of the RoC, obtaining a mining license for 25 years, renewable for periods of 15 years in accordance with Decree No. 2014-165 of 24 April 2014.
Equatorial later sold the Mayoko-Moussondji project to new owner, Midus Global, in 2015 – retaining a 2% royalty on all future production. In the first half of 2020, Midus Global announced a plan to advance the project to the production phase within the next two years, with the total production from the project expected to generate annual iron ore sales in excess of US$300 million.
However, on 30 November 2020, RoC issued Decree No. 2020-646, granting Chinese company Sangha Mining Development Sasu ("Sangha Mining") a mining permit for the Badondo project. Furthermore, that very same day, it also issued Decree No. 2020-647 and Decree No. 2020-643, awarding Sangha Mining the mining licences for Nabeba, previously held by Sundance Resources Limited, and for Avima, until then held by Core Mining Congo.
Equatorial is of the view that the award of Badondo, Nabeba and Avima to Sangha Mining constitutes a breach of the Government of RoC's obligations under the Code Minier, the relevant Mining Agreements between the permit holders and the Government of RoC, and international law.
According to Equatorial’s allegations, RoC's Code Minier provides that exclusive priority in the granting of a mining permit goes to a holder of an exploration permit who is successful in exploration and complies with that code (see Art. 32). It further submits that CME is the undisputed holder of a valid and exclusive exploration permit for Badondo since 2009, complying with all relevant RoC laws and regulations, and has successfully explored Badondo and legally applied for a mining permit for that project in 2016.
Equatorial contends that the RoC's action is unprecedented, unjust and illegal. The company points out that Sangha Mining has never held any research or exploration permits on Badondo, has never carried out any work there and has not made any investment in its exploration or development. Hence Equatorial alleges that, according to the applicable legislation, Sangha Mining is not eligible for the granting of exploitation rights over Badondo.
With Decree No. 2021-388 of 2 August 2021, the RoC Government cancelled the mining permit on Mayoko-Moussondji duly granted to CML, a company owned by Equatorial until 2015 and in which EEPL continued to have a stake (through royalty agreements).
In a statement on 30 September, Equatorial Managing Director and CEO, John Welborn, said that “the Republic of Congo government did not engage with Equatorial, or EEPL, in the consultation process. In fact, the government aggravated the dispute by also expropriating our remaining investments in Mayoko-Moussondji and CML.”