Centerra Gold Initiates Arbitration Proceeding Against the Kyrgyz Republic
TORONTO, May 16, 2021 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra”) (TSX: CG) (NYSE: CGAU) announced today that it has initiated binding arbitration against the Government of the Kyrgyz
Republic to enforce its rights under longstanding investment agreements with the Government. Centerra seeks to enjoin the Government from taking further steps to implement recently adopted
legislation or to pursue recently procured fines and tax claims against the Kumtor Gold Company (“KGC”), all of which violate the Government’s investment agreements with respect to the Kumtor Mine.
Centerra also intends to hold the Government accountable in the arbitration for any and all losses and damage that result from its recent actions against KGC and the Kumtor Mine if no resolution is
Scott Perry, President & Chief Executive Officer of Centerra, said: “The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor Mine has been operated and has refused to engage with us on any matters it considers to be the subject of dispute. The Government’s actions have left Centerra no choice but to exercise our legal rights, through the pursuit of arbitration and otherwise, to protect the interests of KGC, Centerra and our shareholders. In the event the Government wishes to engage in a constructive dialogue, we remain willing and available to do so.”
The wrongful and illegal actions of the Kyrgyz Republic include:
- The passage by the Kyrgyz Republic Parliament in a single day on May 6 of a new law which enables the Government to impose an “external manager” to take control of the Kumtor Mine if the Government deems that KGC’s activities pose a risk to human safety and the environment;
- A Government-supported and hastily issued decision of a Kyrgyz Republic court on May 7 to impose a $3 billion fine against KGC on the basis of private civil environmental claims;
- The intimidation of KGC’s personnel by the Kyrgyz Republic State Commission and other Kyrgyz Republic state and law enforcement authorities, including police visits to the homes of several senior KGC managers and a raid of KGC’s office in Bishkek on May 15; and
- Numerous tax claims brought by the Government in the Kyrgyz courts regarding matters that were resolved fully and finally in previous project agreements and Kyrgyz court rulings, and expressly precluded by the Government’s agreements with KGC and Centerra.
This and other recent conduct by the Government undermines the fundamental investment protections guaranteed to Centerra and its Kyrgyz Republic subsidiaries under the 2009 Restated Project Agreements governing the Kumtor Mine. Under the 2009 Restated Investment Agreement and the 2017 Strategic Agreement on Environmental Protection and Investment Promotion (the “Strategic Agreement”), Centerra’s claims will be adjudicated by a single arbitrator in arbitration proceedings to be held at Stockholm, Sweden and conducted under the rules of the United Nations Commission on International Trade Law (“UNCITRAL”). The parties have 28 days during which to agree on an arbitrator, failing which Centerra will ask the Permanent Court of Arbitration at The Hague to appoint an arbitrator. Under the agreements, the governing law is the law of the State of New York.