Lupaka Wins $40M ICSID Dispute Against Peru

Can international investors hold states accountable for local harm? A $40M ruling in 2024 proves they can if legal protections and arbitration rights are enforced properly.

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Key Takeaways From Lupaka’s Arbitration Win

• Lupaka Gold won $40.4M after ICSID ruled in its favor

• Peru violated investor protection terms under a trade deal

• The government failed to stop illegal community actions

• Full compensation plus $4.2M in legal costs awarded

• The case sets strong precedent for future investor disputes

Background of Lupaka’s Gold Project Dispute

Lupaka Gold entered the Peruvian mining sector with its Invicta gold project in the Andean highlands. The investment was backed by protections under the Canada–Peru Free Trade Agreement. Problems started when the Parán community disrupted operations by blocking access, occupying the mine, and eventually taking control of the site. These actions sparked an international legal dispute that escalated to arbitration under the International Centre for Settlement of Investment Disputes (ICSID).

Tribunal Confirms Breach of Trade Agreement Terms

The arbitration tribunal ruled that Peru violated several provisions of the Free Trade Agreement. Key breaches included denying Lupaka full protection, fair treatment, and security for its investment. The ruling emphasized that the country failed to act against the Parán community's illegal actions, and these actions were legally attributable to the state. The tribunal included Professor John R Crook, Oscar M Garibaldi, and Dr Gavan Griffith KC, who all agreed on Peru’s liability.

Details of Peru’s Failure to Protect Investment

The tribunal found that Peru’s authorities showed a lack of due diligence by not intervening when Lupaka’s mine was seized. Instead of taking clear legal or protective steps, government officials relied on a passive strategy of community dialogue. This allowed ongoing disruptions, which led to Lupaka losing control of the Invicta site in August 2019. The legal panel ruled this inaction amounted to unlawful expropriation of Lupaka’s assets.

Full $40.4M Compensation Awarded to Lupaka Gold

Lupaka Gold was awarded $40.4 million in damages—the total amount it claimed. This sum represents the fair market value of the mine at the time Lupaka lost access. In addition to the principal compensation, the tribunal ordered the Peruvian government to pay interest and reimburse legal costs totaling $4.2 million. The decision reinforces the rights of foreign investors when local actions violate trade protections. Also read about the high-grade gold results found at Bill’s Luck.

Legal Team Behind the Investor Victory Explained

Swiss-based law firm LALIVE led the arbitration process on Lupaka’s behalf. The case was handled by partners Dr Marc Veit in London and Jaime Gallego in Geneva. Support came from legal counsel Luis Miguel Velarde Saffer and associates Stela Negran and Guillermina Huber. Timothy Foden from Boies Schiller Flexner served as co-counsel until shortly before the ruling was announced. The team credited their win to strategic coordination and detailed case preparation.

Peru’s Legal Representation and Funding Partners

The Republic of Peru was represented by a legal team from its Ministry of Economy and Finance alongside attorneys from Arnold & Porter. On the investor’s side, Bench Walk Advisors played a key role by funding Lupaka’s case. Litigation funding is becoming more common in disputes involving natural resources, especially when smaller firms face off against sovereign states. It enables access to legal resources otherwise out of reach.

Why This Arbitration Case Matters for Investors

This decision sends a clear message to global investors in mining and infrastructure: state obligations under trade deals are enforceable. The tribunal not only acknowledged the legal breach but also affirmed the direct link between state inaction and investor loss. With over $40 million awarded, this case could influence how investors view risk in countries with high community tensions or weak enforcement systems. It may also guide future arbitration rulings.

Major Lessons for Mining Investors in Latin America

Latin America offers rich mineral resources, but also legal uncertainty. The Lupaka dispute highlights why investors must factor in political risk, local community dynamics, and government enforcement when entering these markets. Even with a solid legal agreement like a free trade agreement, effective enforcement may require arbitration. This case emphasizes the importance of preparing for disputes from the start of an investment.

Investor Arbitration Is Evolving: Here’s Proof

Investor-state dispute settlements have become more prominent in recent years. The Lupaka ruling shows how these legal tools can deliver real outcomes. Instead of a partial win, Lupaka secured its entire claim plus legal costs. This sets a rare precedent and raises the standard for how future disputes may be handled. Legal experts suggest that this outcome could encourage more investors to use arbitration when agreements are broken.

Legal Accountability Strengthens Global Mining Investment

This arbitration case reinforces how legal protections matter in high-risk markets. By securing full compensation, Lupaka Gold’s win demonstrates that international investors can hold states accountable when agreements are violated. The tribunal’s ruling not only backed investor rights but also challenged how governments respond to community-led disruptions. For mining firms planning projects in Latin America or elsewhere, this decision underlines the need for strong legal planning and responsive risk mitigation.

Frequently Asked Questions

1. What was the Lupaka ICSID dispute about?

Lupaka Gold filed an international arbitration case after losing control of its Invicta gold project in Peru. The local Parán community blocked and seized the mine, and Peru’s government failed to act. The case went to the International Centre for Settlement of Investment Disputes (ICSID), where the tribunal found Peru had violated a trade agreement by not protecting the investment. Lupaka was awarded $40.4 million in damages, plus $4.2 million in legal fees.

2. Why did the tribunal find Peru at fault?

The tribunal ruled that Peru breached its obligations under the Canada–Peru Free Trade Agreement. Specifically, the state failed to provide full protection and fair treatment to Lupaka’s investment. It allowed illegal actions by the Parán community to go unchecked. Since the government didn’t intervene or protect the investor’s rights, the tribunal deemed the actions of the community attributable to the state itself, leading to the damages award.

3. What is the significance of the $40.4M award?

The $40.4 million award represents the full market value of Lupaka’s investment in the Invicta gold mine when they lost control of it. This outcome is notable because tribunals rarely grant 100% of the claimed amount. It shows how serious the breach was and sets a precedent for future investor-state cases. The award also included full legal cost reimbursement, strengthening Lupaka’s financial position after the dispute.

4. Who represented Lupaka Gold in the case?

Lupaka Gold was represented by the international law firm LALIVE. Key team members included Dr Marc Veit and Jaime Gallego, along with other legal professionals from London and Geneva. Co-counsel Timothy Foden also contributed until shortly before the final ruling. Their approach focused on proving the connection between the community’s actions and the state’s inaction, which was crucial in winning the case.

5. What does this mean for mining investors?

This case shows that international legal mechanisms can effectively protect mining investments, even when state actors fail. Investors operating in countries with social tensions or legal instability should consider arbitration options early. The Lupaka case is a strong example of how to enforce rights under trade agreements. It signals to governments that ignoring investor issues can result in large financial penalties.