Send this page to someone via email

Video: Calgary-based mining company suing Costa Rica over plans to build an open-pit gold mine. Jeremy Hunka reports

LA TIGRA, Costa Rica – A billion-dollar showdown is looming in Central America this week as a Calgary-based mining company announced it will sue the country of Costa Rica, infuriating residents who say their sovereignty is being taken away.

Infinito Gold was hoping to operate an open-pit gold mine in the Crucitas region of Costa Rica’s north.

On its website, the company says it “…completed all the environmental, social and technical studies and obtained all approvals required under Costa Rican law to develop and operate the Las Crucitas Project.”

But the project was held up in court, and after irregularities were found in the approval process the mine’s approval was declared illegal.

In 2011, Costa Rica banned all open-pit metal mining.

Story continues below advertisement

READ MORE: Protests, cyanide concerns may halt Canadian-Romania gold mine project

“It took a lot of effort,” says Otto Mendez, who fought against the mining project. “It took a lot of people and a lot of money.”

But now, Infinito Gold says it will take the country of Costa Rica to international arbitration.

In a press release, the company said it had “served notice” to Costa Rica in April 2013, and after the country did not respond, its subsidiary announced a massive lawsuit is “imminent,” the largest in Costa Rica’s history.

The company believes the country is violating its trade agreements with Canada.

Yokebec Soto, spokesperson for Infinito Gold’s subsidiary in Costa Rica, told Global News by email the company has already invested $92 million in the project and if the project does not proceed, could lose $1 billion in profits.

Some Costa Ricans are reacting in anger. “It is an insult to the intelligence of our people,” says lawyer Edgardo Araya, who also fought against the project.

The suit is also inciting anger in Canada. “I think it’s reprehensible,” says Jamie Kneen with MiningWatch Canada. “I think it is irresponsible and it is giving the Canadian mining industry a bad name.”

Story continues below advertisement

But international arbitration expert Gus Van Harten says Infinito Gold may have a case.

He says through international trade agreements signed between countries, international arbitrators have the power to override court and government decisions of sovereign countries.

“So on the one hand, in a way, it’s the Costa Rican government’s fault,” says the associate professor at Osgoode Hall Law School in Toronto.

He also says the international arbitration system is tainted, and that arbitrators, who are given immense power to settle disputes, aren’t proper judges.

READ MORE: Colombian labour union accuses Canada’s Pacific Rubiales Energy of intimidation

Some can actually double as lawyers at the same time they are arbitrators, even if they are arguing similar cases. Van Harten says this is a “well-known conflict of interest.”

“The point is the people making the decision are the wrong people,” he says. “And whatever decision they make, it will lack integrity as a result.”

In Costa Rica, the threat of losing a billion dollars to a Canadian company has some concerned.

“Is it worrying, yes it’s worrying,” says Alfredo Arias who lives near the proposed mining site.

“I feel awful, I don’t think that’s fair.”

Story continues below advertisement

Infinito Gold did not respond to numerous requests for comment.