Australian mining company using ISDS to sue Polish Government
July 7, 2020: Prairie Mining, an Australian company using third-party funding from another Australian company, Litigation Capital Management, has announced an investment treaty claim against Poland over the obstruction of two coal projects. An LCM subsidiary in London has provided A$18 million to finance the action. LCM will get a profitable investment return if Prairie Mining wins the case.
Prairie Mining said its claim for compensation may include its historic expenditure on the projects, lost profits, damages and accrued interest. No dollar amount has been stated, but previous similar cases have resulted in awards of billions. Recently Occidental Petroleum won an almost US$1 billion payout from Ecuador, and Australian joint venture Tethyan Copper was awarded almost US$6 billion award against Pakistan last year.
In its June 30, 2020, announcement on the London Stock Exchange, Prairie Mining said that its claim was based on ISDS clauses in the Energy Charter Treaty and Australia-Poland bilateral investment treaty of 1992. The legal framework of ISDS tribunals pays more attention to whether the company deserves compensation than to whether the court decisions were consistent with national laws.
The Prairie Mining claim involves the Jan Karski soft coking coal mine in the south eastern Lublin province and the Debiensko hard coking coal mine in Upper Silesia in the south-west of Poland.
The Jan Karski mine project was awarded to a Polish company, Bogdanka, rather than Prairie Mining, despite Prairie Mining being awarded Priority Right to apply for a mining concession at Jan Karski in 2015. In April 2018, Prairie Mining filed a civil law claim against the Ministry of Environment due to its failure to grant it the concession and the Polish District Court granted Prairie an injunction against awarding the project to another company. In April 2019, an Appeal Court in Warsaw overturned the District Court’s decision and lifted the injunction. Prairie Mining claims that the subsequent awarding of the concession to Bogdanka represents an expropriation of the Jan Karski project.
Prairie Mining had acquired the Debiensko concession in 2016, and applied to change its terms so that mining could commence in 2025 rather than 2018. In its March Quarter 2020 Report, the company reported that it had received a favorable judgement from the Polish Administrative Court which formally revoked the MoE’s April 2018 decision denying the Debiensko concession amendment, and required the Ministry to reconsider Prairie’s application. But the MoE appealed this decision to the Supreme Administrative Court and Prairie Mining claims this effectively blocks its mining project.
Prairie Mining’s 2019 Annual Report shows that the company has no other mining projects than these two in Poland, and that it has cash reserves of just A$7 million.
This is yet another example of a mining company using ISDS to claim compensation for decisions of national courts, in the hope of making a huge financial gain, and of the speculative third party funding industry which profits from such claims.